back to article IBM shuffles units, axes staff, sees profit shrink

IBM's attempts to re-organize its businesses and focus on its Watson cloud-AI-offering-thing did not prevent Big Blue from tumbling to its sixteenth consecutive quarter of falling revenue. The enterprise giant said on Monday that its new "reporting structures" will show how it is focusing on growth markets like cloud services …

So what do you do when staff are miserable and revenue is drying up? Here's an idea. Roll out a mandatory task monitoring app that requires everyone to record exactly what they are working on, including breaks, minute by minute.

I. Kid. You. Not.

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What?

I know nothing of this. Is it general IBM, or GBS?

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When Titanic is sinking you have to keep a detailed log of deckchair movements.

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Anonymous Coward

Re: What?

TVC is supposed to be general across all divisions. 3 or so time recording systems now, 1 system to predict your hours for the next 4 weeks, Claim to record actuals and TVC to record individual tasks, meetings, breaks so they can data match your hours against other teams doing similar roles so they can beat you up if you have excessive hours against the 'model'.

Nothing like having to predict your hours for next 4 weeks and having the tool question you about the hours because it's over the predicted default you should be working. All as a result of you working 70 hour plus weeks fixing issues as a result of escalations by the customer unhappy with GD teams and wanting a local to work on the issues.

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Anonymous Coward

There's no task monitoring app being used in engineering in the UK.

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Anonymous Coward

Sheesh.

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Anonymous Coward

They are trying to process manage/execute their way out of a content problem. I was in GBS for a couple of years. It worked out well for me, this was several years ago, but I got the impression that it was not a sustainable model. There are only so many giant SAP projects to sell... and those SAP projects, IBM as the SI or not, are largely nightmares.

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Anonymous Coward

Re: What?

Are you serious? So every IBM employee has to account for their time this way, or just billable people from services?

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Taking bets on when I'm a Blight on Mankind goes belly up. This is the pattern of a company that is beginning to fail and eventually is liquidated.

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Anonymous Coward

IBM won't go belly up. They still have the mainframe homeland to fall back on, which is large and profitable. Will they continue to give up ground everywhere else? Yeah, most likely.

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mainframe homeland

"large and profitable"? Are you sure? ISTM that each time I look at the numbers, it's less large and less profitable than last time. For example, total revenue for servers is listed as $5,223M for 2015, $7,320M for 2014 and $9,946M for 2013, in the latest annual report.

System z, which is the traditional mainframe line, lost 23% of revenue from 2013 to 2014. You can't have that rapid a decline in revenue and make a profit on manufacturing.

That's exactly why Gerstner, Palmisano and now Rometty have been pushing IBM into services for the last 15 years and more.

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Anonymous Coward

Re: mainframe homeland

They did sell of their System x servers in Q3 2014, so it makes sense server revenue fell off. That accounts for most of that fall off. The other IBM server brands are not growing, but not falling off that fast.

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Anonymous Coward

GDM coming home to roost, the customers have found them out..

Selling entry level skilled workers at a premium outsourcing price was always going to bite them in the end.

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Anonymous Coward

you mean just like everyone else then

IBM are not alone in this.

The Indian (Tata, Wipro etc) companies are actually even better at it.

I caught one so called expert cutting/pasitng code sent to him from a slightly more competent expert in India.

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Premium Outsourcing

I could not agree with "anon coward" more. Most large companies are driven by greedy managers and owners that think they can replace experienced staff with low to no-skilled workers just because they are cheap, is poisoning the entire IT market. When you take this with the move to open-source, many customers now think that all aspects of support and post-sales-aftercare should be completely free.

It looks to me that I Believe in Miracles is now seriously wounded and I would not be suprised if they go the way of Sun MIcrosystems very soon.

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Anonymous Coward

Re: you mean just like everyone else then

The crazy thing is how profitable these SO business models are... like 50% gross profit for IBM, TCS, etc, on selling bodies for admittedly commodity tasks (that is the whole outsourcing pitch, you cannot add any unique value to your business by doing server admin, etc in house). If I were a CEO of a large company looking at those numbers, I would ask 1) We are a global company. Why can't we hire Indians ourselves for IT and avoid the giant mark-up while not being locked into a long term contract for specific services we may or may not need in the future? 2) Why can't we use that cloud thing I was reading about in BusinessWeek? Wouldn't that be less costly and more flexible?

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About four years before it is split into three

Is my estimation of how long the current IBM will survive at its current rate of losses->resource actions->more losses. IBM's choice of growth areas is already crowded enough with big players and IBM simply is too risk averse and not flexible enough to beat them.

So after about four more years of trying, IBM will be split into three companies: mainframe(y), patents (will be called R&D but will not convert any research into real products but instead have patent royalties as its main revenue source) and services. The first company will last forever, as long as big banks continue to rely on big iron. The second will become a patent licensing shop that will slowly die (decades) as its patents expire and no new ones make up for the lost revenues.

The third one will at that point have its majority of workforce already off-shored, so it will shortly be sold at a discount price to some well established provider of global services that already has its workforce located in India (Tata?)

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Anonymous Coward

Re: About four years before it is split into three

What losses? IBM still makes a large profit. It revenues that are decreasing.

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Anonymous Coward

Re: About four years before it is split into three

"The third one will at that point have its majority of workforce already off-shored, so it will shortly be sold at a discount price to some well established provider of global services that already has its workforce located in India (Tata?)"

You may be confusing IBM with HPE........

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Anonymous Coward

Re: About four years before it is split into three

The second will become a patent licensing shop that will slowly die (decades) as its patents expire and no new ones make up for the lost revenues.

Why no new ones? There's lots wrong with IBM but the R&D division is probably the best in the business.

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Re: About four years before it is split into three

<<What losses? IBM still makes a large profit. It revenues that are decreasing.>>

You're technically right, I should have said "less profits" instead of "losses" Anyway, after enough round of less profits-> resource actions->customers jumping ship due to decreased quality of products and services->less profits, profits will turn to losses.

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Anonymous Coward

Re: About four years before it is split into three

And then it can forever be remembered as a place where Idiots Became Managers

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Re: About four years before it is split into three

" IBM still makes a large profit. It revenues that are decreasing"

Exactly. The margin has been pretty stable (due to good business management) but on smaller revenue. So they really need to buy back shares. Lots of shares.

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So long, it's been (kinda) good to know ya

I'm glad I worked at IBM; I met some great people, and learnt stuff.

I'm delighted to have left earlier this month. I couldn't wait to get away, and passed up the opportunity of being considered for their latest, and meanest, redundancy scheme. Wasting another summer there just wasn't worth it.

It's like a weight has been lifted off my chest.

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Anonymous Coward

Re: So long, it's been (kinda) good to know ya

I left two months ago myself to go work for another large tech company. Meh. The problem, greed and short term thinking, isn't unique to IBM. It is the way the corporate sector now operates. Same stuff, different business card.

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Anonymous Coward

EPS

EPS $2.35 for the quarter. Say <$10 for the year.

How much money was wasted trying to get EPS $20 in 2015?

IBM (& IBMers) are still paying for that target.

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Profits sinking

I guess that management will get a bonus for this come the end of the year. It's not clear at the moment how they will justify it but it will be instructive to see how they sell it. Basically IBM has been in a death spiral for a number of years now yet if you talk to your "Investment Advisor" the chances are that they will tell you that it's a great time to buy some IBM stock because prices are down.

So Management Pay is rising, Wall Street is looking good, Tech stock is a bargain, there are lots of job openings - by classical terms the economy is doing well ... wage stagnation is just a blip, I'm sure they will improve next year, or the year after that maybe?

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new "reporting structures"

Still safely inside the legal limits, but essentially fiddling with the books. When the accounting department ot a tech company is more creative than the R&D departments, things start going south. I agree with SecretSonOfHG, in a couple of years Big Blue will be split into several companies. Which will delay the inevitable, but not prevent it.

After all, nobody was ever fired for replacing IBM with something cheaper.

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It's not just IBM

Like most people who've been in this industry for a long time, I've moved around over the years (BT, DEC, Compaq, IBM) now retired. Ex-colleagues are telling me that the (bad) behaviours of senior IBM management are increasingly the norm in this industry and many others as well, all of it boiling down to the poisonous combination of only focussing on the short term while having no vision or leadership ability. Net result is that when you're (like I was) nearer the bottom of the food chain you get inconsistent multiple goals, measured almost on a minute-by-minute basis, with the near certainty that you can't meet all of them and the consequence of that is going to be "career" damaging. It's very easy to say to those who are left after this round of redundancies "Leave before it is too late ...it'll happen to you sooner or later" but it is surprising how working in that type of environment damages self-confidence and motivation to move on. To all those left I'd say that it can be damned hard to escape but it's worth it

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Childcatcher

Zombies

Zombie shows and movies are NOT popular with IBM'ers. It's too close to reality for them.

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Cut

"We will cut our way to growth." The MBA's employed by IBM have been trained in nothing but cost-cutting, cost-containment, expense control, and monitizing, monitizing, monitizing. Developing or exploiting a new technology is not something they know anything about. Buzzwords, hype, and verbal complexity is all they know how to do. It is a total shame that IBM has come to this. But it was inevitable that the virus of B.S. would spread uncontrollably across the Apple Orchard and beyond. The IBM Fellows were not listened to, and the empty suits (and dresses) were listened to. Too Damn Bad.

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