An Analysis of Historical Transformation of an IT Giant Based on Sound Strategic Vision

Abstract

INTRODUCTION Company Background and IT Industry IBM is short for International Business Machines. It is also known as Big Blue. IBM is considered one of the world's biggest Information Technology Company. In the 2009 Fortune 500 list, the company is ranked 14th best company in the world. It also ranks as the 28th best of global companies on the 2009 Forbes Global 400 list. IBM manufactures and sells computer hardware and software, and offers infrastructure services, hosting services, and consulting services in areas ranging from mainframe computers to nanotechnology. It is difficult to find a company that deals in so many areas. IBM faces intense competition from other major players in the industry such as Microsoft for desktop productivity application, Oracle for database products, and Cisco for cloud computing (IBM at 100, 2010). Even though being the second most profitable company in the world in 1990, IBM began posting considerable losses between 1991 and 1993. IBM lost a staggering $16 billion. Mainframe computers were the cornerstone of IBM till the '90s, which was the source of almost half of IBM's revenues. But at the time other companies such as Compaq and Dell gave priorities to interconnect mainframe, midrange and increasingly mobile personal computers with distributed data sources and applications that led to fewer sales of IBM's mainframe computers. The company was originally founded as the Tabulating Machine Company by Herman Hollerith; it was renamed and incorporated by Thomas J. Watson as IBM when Tabulating Machine Company was merged with International Time Recording Company and the Computing Scale Corporation in 1911. Presently, it is known as International Business Machine Corporation. IBM has operations in more than 170 countries; it has customer /client relationships with more than 219 companies such as 3Com, VMware, NVidia, and the like. IBM develops and manufactures information technology related products and services that help its clients to deliver business values and be more innovative. The company maintains its operations through its five key segments: Global Technology Services (GTS) unit, Global Business Services (GBS) unit, Systems and Technology unit, Software unit and Global Financing unit. Through the Global Technology Services unit, IBM provides critical information technology infrastructure services and business process services that help clients to integrate resources for continuous innovation. The Global Business Services unit provides professional consulting services and application outsourcing services which is intended to deliver business value for its clients. The System and Technology unit provides solutions for business clients that need advanced computing power and storage management. The Software unit provides middleware such as Web Sphere, Tivoli and operating systems that can be used to enhance the capabilities of a business's IT infrastructure. Additionally, the company assists its internal and external clients with financing through its Global Financing unit. IBM encourages people from diverse background to work for the company. It has employed 399,409 employees worldwide and five of its researchers have received Nobel Prizes. IBM reported revenue of $95.757 billion and total asset of $109.0 billion for full-year 2009. Samuel J. Palmisano now serves as the current President and Chief Executive Officer of IBM. The company is trading in New York Stock Exchange under the name of IBM (Bryan, 1990). Motivating Factors Under the leadership of Thomas Watson Jr., IBM became the leading player in the growing field of Information technology. IBM products such as its mainframe computers were universally considered as the best solutions to a variety of problems. The Company became so successful that it became the target of US Government's antitrust suits by the mid 1960s. IBM's domination started to dwindle from the early 1990s. …