IBM’s Rometty Demands Faster Reactions From Staff

The CEO of IBM, Ginni Rometty, has urged staff to move faster and respond more quickly to customers after last week’s poor first quarter earnings report.

Rometty delivered the unusual reprimand in a five minute video message to IBM’s entire 434,000 strong workforce that was posted on an internal IBM website, according to the Wall Street Journal which apparently reviewed the video.

Video Message

In the video Rometty said that Big Blue had become too sluggish and unresponsive, and bluntly told staff that they had to be more responsive. She also issued a new order that staff should respond within 24 hours if a client has a request or question. She said staff must respond within 24 hours.

“And if anything slows you down, call it out,” she reportedly said. “Engage management, engage leadership, and let’s deal with it.”

Rometty also said that that the company needs to quickly move to new computing models to get back on track.

“Where we haven’t transformed rapidly enough, we struggled,” Rometty said in the video. “We have to step up with that and deal with that, and that is on all levels.”

The reason for the video reprimand is clear: last week IBM failed to meet Wall Street estimates for its first quarter 2013 earnings. It blamed the miss on its sales staff, which it said did not close big value deals in time.

Speaking on the video, Rometty cited one of those deals, which was apparently a big software pitch to what she said was a major client in the retail industry.

“We were too slow to understand the value and then engage on the approval and the sign-off process,” she said. “The result? It didn’t get done.”

“As the quarter ended hundreds of millions of dollars of software and mainframe opportunities, they didn’t close; and in a number of cases because we didn’t move fast enough,” she said.

Disappointing financials

Last week IBM revealed that net income was down 1 percent at $3 billion (£2bn), whiles sales were down 5 percent at $23.4 billion (£15.3bn). Analysts had been expecting revenues of $24.7 billion (£16.1bn).

The Wall Street Journal also revealed that IBM has reassigned one of its most senior executives – the head of the company’s computer hardware business – following a sharp drop in first-quarter sales at the unit. The journal cited a person familiar with the matter as its source.

It is understood that Rodney Adkins, formerly head of IBM’s Systems and Technology Group, will now be senior vice president for corporate strategy. This management move comes after reports this week suggested that IBM and Lenovo are actively in talks over the latter acquiring IBM’s commodity System x x86 server business.

The speculation is that IBM may be looking to exit the low-end x86 server space in anticipation of continue margin declines. Matters are not helped by the fact that this part of the server market is getting increasingly crowded. Not only does IBM have to compete with HP and Dell, but also now with the likes of Cisco Systems and Lenovo.

During the video, Rometty also made clear that she believed IBM was on the right track. She also praised staff for delivering new technologies that help to transform the way companies operate.

“Our performance reminds us that there are profound shifts under way in our industry, and when we move to the new high value spaces we do well,” she reportedly said, citing the ability to manage and analyse big data sets.

“Our fundamentals are strong and our future is in our own hands,” she concluded in the video. “I know we will confront this honestly and with urgency, and moments like this are when IBMers rise to the occasion. We don’t retreat; we go on the offence.”

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