IBM Sells of Retail Equipment Business

If anyone had any doubts the direction IBM would head under Virginia Rometty's leader ship the article on the Wall Street Journal's Market Watch web site pretty much states the case.  IBM has been quietly selling off its hardware manufacturing divisions with Printers, Disk, the PC Division, and now its Retail systems hardware!  

How long before they sell of the computer business?  Lest anyone have any doubts, IBM has become a technology consulting company.  Services are now their entire focus for the future.  

Quite frankly as sad as this may make some of us who saw IBM as the ultimate leader in computing equipment for many years, this makes total sense.

Today, IMHO, cloud computing is the future turning Thomas Watson's 1943 quote: "I think there is a world market for maybe five computers." into a reality!  

Well there may be many more than 5 computers, but with cloud computing you no longer need computers in your place of business and today's millions of servers may shrink to thousands in cloud based provider data centers.  

It is however interesting to theorize why IBM could not longer be profitable in businesses that it dominated for years.  Being an ex-IBM'r, I can't help but wonder if it is IBM's management structure and the incredible overhead they have everywhere you turn (except in actual R&D) that makes them too inefficient to produce anything any more?  

It is time to start carefully evaluating your use of IBM equipment and systems and look at alternative solutions if you have not all ready.

Time to Change the IT Name

IT or Information Technology has evolved into the standard for what businesses are calling their computer systems department today.  It is fascinating to note that the term "Information Technology" was coined by Harold Leavitt and Thomas Whisler in their 1958 Harvard Business Review article entitled “Management in the 1980’s”  which was a prediction of what things might be like in business management 30 years into the future.  

Isn't it ironic that we use a 54 year old term to refer to today's 2012 organizations that manage computer systems for today's business enterprise?

Maybe its not so inappropriate considering the people working for the IT organizations of many business enterprises today.  Many of your IT staff have been working for nearly as many years!  I think it is time to modernize the name however and perhaps use something realistic like "Computer Systems".

Clerity Moves Mainframe Apps to Windows Platform

Check out Clerity this new application lets IBM Mainframe users move applications including batch, CICS On-Line, and other applications to the Windows platform without modification.  This can dramatically reduce the cost of hardware, operations support, and give you a basis for modernization.

In many of our customer interactions, a key factor driving modernization is the need for a direct cost reduction in current mainframe spending. 

I find it totally ironic that I would be advocating software such as this and a move away from IBM mainframes to Windows based servers.  I spent over 20 years working with mainframes and an additional 20 years with IBM midrange machines.  I designed and built large scale enterprise systems and would never think of buying 3rd party solutions in most situations.

Today, I see that IBM has not kept pace with the world and its large zOS iron with mega dollar pricing has become obsolete and unnecessary.  Companies can save millions of dollars per year in hardware, system software, and labor costs by moving to Windows or LINUX based technologies.  Furthermore, they can leverage cloud computing and outsource the support of their systems for a fraction of what they are paying today.

Check out Clerity.  It is one more excellent solution to break away from costs of mainframe computing.

Do you know what your IT people are doing?

If you work for a large company, you will may have hundreds if not thousands of people in your IT organization with job titles that boggle the mind of mere mortals.  Do you have "Enterprise Architects"? How about BI Architects or BI Analysts?  How about "Solutions Developer" (aka programmer). 

How many "architects" do you have?  There was a well intentioned set of methodologies based on the work of J.A. Zachman and his 1987 IBM Systems Journal article entitled: "A Framework for Information Systems Architecture".  Today several major consulting organizations and universities have "methodologies" and teach "enterprise architecture".  Sadly like most of the products that come out of the university or research environment they have great ideas and concepts but lack the practical experience and reality to make it commercially viable.

It is critical for someone who has no investment in your organization structure or bias to any specific methodologies to  conduct an objective assessment of what your IT people actually do.  I think you will find that while they kill trees (at least electronic trees today) with millions of words written the majority of these people produce little of any value to your organization.  Your CIO often embraces methodologies that are popular feeling that he or she has covered their proverbial tails by adopting methodologies that sound credible to other managers and executives. 

Often the average business executive wants to compare IT people, roles and training to engineering or other professions where their college curriculums are precise and meaningful.  After 50 years, IT jobs remain voodoo and black magic.

You can take the best elements of various methodologies and apply them to your business, but you must do so with a thorough understanding  of the methodology and how it works or should be adjusted to fit to your organization.  Perhaps entire sections should be thrown away. 

I am a huge advocate of methodology, but I am an advocate of creating methodologies that fit your organization and work for you.  I am totally opposed to following frameworks from various "experts" as is and not questioning what they recommend or how it makes sense for you.

Who does your CEO Trust Today?

When it comes to computer systems today and the effectiveness of your IT organization, who can your chairman or CEO trust?  Who can come in today and conduct an objective assessment that you can trust?

In the old days prior to 1991 if you were President or Chairman of a major company, you could depend upon IBM to help you figure out a mix of technical solutions that would fit your business requirements.  If your local sales team with sales reps and systems engineers needed help, they could call upon the industry specialty team for your industry (i.e in my case it was Insurance). 

If the sales team felt that IT was not buying the right mix of hardware and software a very senior executive would come out from the industry group and walk directly into the chairman's office.  He (there were never any women in those roles) would offer to evaluate your IT organization.  He would bring in a team and do a "free" assessment that usually concluded that you needed a new CIO and that you needed to buy some IBM hardware and software.  It was done in such a way as to be totally believable by your senior most executives.  Senior executives of major corporations could trust IBM. 

They knew they were paying top dollar for computer systems (software and equipment) and they knew they could buy stuff cheaper from competitors, but...  they knew they could trust IBM to help them build or buy the systems they needed to achieve business goals.  Any savings the company could get by buying from IBM competitors was insignificant when compared against the value the company got by following IBM advice.  In those days with those people, IBM truly did put its customers first.

Lou Gerstner dismantled the field sales organization and industry specialty support groups.  He got rid of almost all of the system engineers and most of the sales organization.  He moved to a partner based sales model (similar to distributors selling crackers for Nabisco) and more importantly, he focused product development around IBM Research. Many financially oriented people will say that Gerstner saved IBM.  I would argue that he has killed it and it just hasn't laid down to be buried yet. 

The idea that IBM Research can figure out what products to create and sell to customers is ABSURD!  I'll be the first person to tell you that the folks in IBM Research are the absolute BEST technicians on the planet.  I will also be the first to tell you they know nothing and care nothing about business and business problems.  Look at IBM's cloud solutions, SAA and all of the servers built to support SAA.  Look at the IBM Portal Server, WebSphere Application Server and on and on and on.  Thanks to Lou Gerstner IBM has lost focus on business.  It is focused introspectively on brilliant technical solutions from research in search of a problem created by folks who have no clue what the market needs or wants. 

Marketing is collection of everything but professional marketing people.  Almost everyone I met from senior level VP's to low level marketeer's came from somewhere else and have no training in marketing.

As part of the cost cutting initiatives they have eliminated "user centered design teams" that would conduct user tests, video tape users using products, conduct surveys, focus groups, etc. All gone.  Basically IBM has cut itself off from reality leaving a gigantic hole in the world of corporate systems!  That is the role of a trusted adviser. Who can your senior executives trust?

Open Source for Business?

"Open Source" has been the buzzword for the past several years in the computer software industry and has generally been associated with highly technical software such as web and application software and development tools.  Today proprietary software like IBM's WebSphere and Oracle's Weblogic which are incredibly expensive software packages have been displaced by free open source software such as ApacheTomcat, JBOSS, Jetty, and GlassFish.

You may have heard of languages such as PHP or Frameworks like Hibernate, Spring, or Ruby on Rails, again very popular technical offerings.

Have you however seen the hundreds of open source business software such as OpenERP, SugarCRM, and thousands of ERP, CRM, Financial, HR, and special purpose open source packages that are freely available today?

I don't want free, you get what you pay for...

That couldn't be farther from the truth today!  Successful Open Source projects and software are the result of coalitions of companies with needs similar to yours open source is free but funded by contributions from the companies using the software.  You may freely download, install and use most open source software packages with absolutely no cost to you.  You may also have your developers modify and customize the software.

You are encouraged to contribute customizations to the open source organization who maintains the software.  You may also wish to contribute money to help fund ongoing projects that enhance and improve the products.  Note: these projects are customer driven and tend to be exactly on target in meeting current business requirements experienced by many of the companies using the software.

Choose carefully!

There are many remnants of open source projects out on the web that continue to hang on by a thread but are no longer active or viable products.  Here are some steps to help evaluate open source software:

• Try to determine how many companies use the software and who they are.  Avoid narrow focus limited use products.
• Look at the blogs and forums that are present on the products web site.  Who is commenting?  Are the comments constructive or negative?  Are problems being resolved?  Are people helping each other use the product?  
• Look at the "project" list to see what is being worked on.  Check the project start dates, status, and estimated completion.  Are the projects stagnant or active and moving forward?  Who are the people working on the projects?  Are they employees of the underlying organization that sponsors the project or volunteers.  Are projects adequately funded?
• How good is the documentation?  Is it readily available and written for people or programmers? Is the documentation comprehensive and complete or are major sections missing with notes like "to be written soon..."?
• Check YouTube and see if their are videos demonstrating or training people in the use of the product.  Popular products have a relatively large number of videos.
• Do a Google search on the product and look for both positive and negative articles on the product. 
• Finally, contact some of the people you find on the forums who are using the products and get some personal references and opinions.  
• Check out the underlying organization that sponsor's the product.  If the organization is a US based 501 C non-profit organization you can get financial reports from the IRS and companies that track non-profits such as GuideStar.  
• Read the "About Us" links on the web site which usually lists key member companies, board members and their corporate affiliations.  This information will tell you who is sponsoring this initiative and give you a good indication of the depths of its funding.  Sometimes you can find lists of key contributors in this area also.  

Note that many of the companies developing open source software are for profit companies who develop and give away an open source license for their software and sell an "Enterprise Version" with additional features and support that are not available in the free version.  If you are interested in software from this type of company be sure to understand the differences between their free software and their fee based software.  In some cases you get everything except for professional services and support.  In other cases the free software is limited in function with the majority of enhancements and advanced features going into the commercial version. 


The process of selecting open source software is not much different than buying commercial software.  A couple of key issues to look at is who is going to support the software after you acquire it?  Many open source software products have communities of consultants or service providers that make their living supporting open source software.  Many of the development organizations provide support for a fee, and of course you can hire or outsource support.

My personal preference are non-profit organizations organized by user companies with common interests. 

Managing IT Today

I just finished a manuscript of a new book tentatively titled "Managing Computer Systems in the 21st Century".  This will be published by MC Press soon.  I am also building a consulting practice based on the principles set forth in this book.

What I am finding is that most companies do not take firm control over their computer systems or IT organization.  I do not like the term IT (Information Technology) because I do not like the word "technology" which implies a focus on technology.  Interestingly enough the term Information Technology and its subsequent abbreviation to "IT" can be traced back to a 1958 Harvard Business Review article by Leavitt and Whisler taking about the future of computer based technology and claiming that the new technology needed a name.  It wasn't until the late 1980's or 1990's when the term became popular.

Your computer systems organization should be a service organization and not have its own initiatives.  It only needs resources including hardware, software, networks, etc. to support the business objectives of the business enterprise it supports.

We have lost track of the reason that computer systems exist over the years and we have focused on "technology".

Enterprises who have control over their computer systems (and the department that supports them) have a strong governance program starting with the board of directors and moving into steering committees headed by the senior most executives in the company.

All projects should originate from key business units of the company and be under the responsibility of a business unit executive.  The value and justification for a project should be that of the business unit.  It is your computer systems department's responsibility to provide the resources required to implement projects.  They must provide high quality services in a cost effective manner and deliver the services in the time frame agreed to prior to project initiation.

The IT or computer systems organization must provide services at competitive costs with external vendors or even offshore contract service providers.  Attitudes about the value of in-house programming or development (or even in-house equipment and technology) need to change.

All that is relevant is that the company's computer systems and new systems projects are meeting business objectives.

Throughout my career a goal was to build computer systems that were stable, durable, and could last for years.  With today's constantly changing business environment, we are now looking at disposable systems.  Today you can build a system for a specific customer, problem, or business opportunity that may cease to exist within a relatively short time.  It is up to the business to determine if their is an adequate ROI to justify the development of the system with the idea that it will be discarded when the business requirement no longer exists.

That is quite a concept.  Many of the systems that currently exist in many major corporations no longer have a business reason to exist.  They simply exist because they always have existed and no one has the knowledge to know where the system "might be used".  It is deemed safer to just keep them around.

Modern computer systems management positions IT or the computer systems organization as a service to the business units and positions business unit executives with full responsibility for all system projects.  A structured approach makes most sense where key business unit executives have discretionary authority to approve projects below a certain cost that only affects their area of responsibility.  Projects that exceed the cost limit, or affect multiple areas of the company must be approved by the corporate steering committee consisting of the CEO and senior executives and must have a single executive responsible for the project.