IBM Announces Top Management Reshuffle and Software Reorganization

Strategic Insights -

IBM's chairman, Louis Gerstner, has announced a major restructuring of the company's top management and software division, aiming to give greater cohesion to the world's largest computer maker. The changes come 18 months after Mr. Gerstner took over, and include the appointment of John Thompson to lead a new integrated software group. The move is seen as an attempt to address IBM's struggling desktop software division, currently dominated by Microsoft and Lotus.

Key Takeaways:

  • IBM's new integrated software group will have full development and marketing responsibility for all IBM software, valued at $11 billion.
  • Ellen Hancock, IBM's top-ranking female executive, has resigned after being put in charge of the software division only eight months ago due to being too slow and conservative for Mr. Gerstner.
  • John Thompson, who helped turn around several businesses, including mainframes and the AS400 mid-range computer, will lead the new software group.
  • Mr. Gerstner wants IBM to move more aggressively into desktop software, an area where the company's OS/2 has made few inroads into sales of Microsoft's Windows operating system.
  • Despite a $2 billion effort, IBM's OS/2 has struggled, and its success will determine the fate of Lee Reiswing, in charge of OS/2.
  • The appointment of Ned Lautenbach to run a worldwide sales force is aimed at unifying regional units in the US, Europe, Latin America, and Asia.
  • Mr. Gerstner's reorganization efforts include slashing the company's workforce by 35,000, and now extending to changes at the top level.

Statistics:

  • IBM's software operation is valued at $11 billion.
  • IBM has invested $2 billion in its OS/2 desktop software.
  • 35,000 IBM employees have been let go as part of Chairman Gerstner's restructuring efforts.

Sources:

  • "I.B.M. Reshuffles Top Management and Software," The New York Times, [no date]