Shake-up after head of leading IBM unit quits

The head of IBM's information technology services unit is leaving the company, prompting a management restructuring of the group's largest division.

John Joyce, appointed last year to run IBM Global Services, quit to join Silver Lake Partners, a private equity group. Following his departure, the services division, which accounts for more than half of IBM's revenue, will be run by a triumvirate of executives reporting directly to Sam Palmisano, chairman and chief executive.

The services business was IBM's growth engine through the 1990s as Big Blue evolved from a computer-maker into a seller of information technology “solutions”.

IBM's stock price has been under pressure in recent quarters amid signs that services was losing momentum. The appointment last year of Mr Joyce, a former chief financial officer, to run the business was interpreted by Wall Street analysts to mean that IBM would seek to maintain competitiveness by cutting costs. The company confirmed this week it was cutting 14,500 jobs, or about 5 per cent of its workforce, with a large proportion of the cuts falling on services.

Under the new management structure, basic IT services such as outsourcing will be run by Mike Daniels, formerly head of IBM's US sales operation. Higher-value services, such as business process outsourcing and consulting, will be run by Ginni Rometty, until now head of IBM's consulting business.

Bob Moffatt, responsible in recent years for IBM's supply chain, will take charge of “services delivery”, organising the workforce and technology in order to remain competitive.

IBM played down suggestions that the new management structure pointed to a break-up of its services unit and said it would continue to report results for the entire division, although it would also look at a higher level of disclosure for the different parts of the business.

Analysts said Mr Joyce's decision to leave IBM was not a surprise after his name was linked with a number of high-profile CEO jobs in the technology industry, including Hewlett-Packard. The 51-year-old executive is just two years younger than Mr Palmisano and had been with IBM for 30 years.

Amid a number of executive changes, IBM also said that Janet Perna, general manager of information management solutions and long-time leader of the group's successful DB2 database business, would retire.

Mr Joyce traces the route taken by other senior tech executives who have worked in private equity or venture capital while waiting for a chance to run another big company. Ed Zander, formerly chief operating officer at Sun Microsystems, left to join Silver Lake before going on to run Motorola.