IBM moves executives to boost services arm

International Business Machines has begun shifting executives from its traditional computing business into senior positions in its giant services arm in an effort to inject new momentum into the flagging division.

The process is part of a broader effort by IBM to revamp the services division, which accounted for 52 per cent of revenues last year but which has become a drag on overall growth.

Company executives described the unusual injection of hardware talent as an attempt to bring traditional product disciplines to bear on the services business. Mike Daniels, one of the three heads of the division, said executives with backgrounds in product planning, marketing and brand management had been moved as IBM tried to overhaul the way information technology services were designed and sold. The move puts executives from IBM’s traditional businesses in charge of key functions in a division whose growth helped stave off a disastrous downturn in its hardware fortunes in the early 1990s.

As the number of new multi-billion dollar outsourcing deals that fuelled the growth of the services division has slowed, IBM has faced fresh pressures. Mr Daniels told the Financial Times that IBM started the process late last year. The aim was to make services more consistent and “repeatable” by designing standardised processes that could be delivered in a uniform way around the world, he said.

Traditional product management disciplines have also been used to identify new markets and to design and market services to take advantage of these opportunities. The shift in focus represented a move to turn services into a global operation to match IBM’s other product-based units, he said.

Hardware executives moved into key jobs in the services unit have included Val Rahmani, formerly in charge of part of the server division and a personal assistant to Lou Gerstner, the chairman who led the push into services, and Erich Clementi, a former mainframe executive and now general manager of business transformation outsourcing.

The emphasis on applying product-style marketing and brand management to services has drawn hardware executives into some key marketing roles in the global technology services unit.