IBM Corp. is working to promote a “virtuous cycle of growth” within its
operations, according to a senior Big Blue executive. The hope is that
increased employee productivity results in collaboration which in turn
stimulates innovation which then drives productivity and so on.
“We’re trying to strike a balance at IBM,” Linda Sanford, senior vice
president for IBM’s On Demand transformation and information
technology, said during a speech at analyst AMR Research Inc.’s
Executive Leadership Conference in Boston this week. “We’re automating
and simplifying [business] processes to give employees back time to
collaborate and create breakthrough innovation.”
In her role at IBM, Sanford is responsible for continuing Big Blue’s
move to become an on-demand business, initiated by IBM Chairman and
Chief Executive Officer (CEO) Sam Palmisano in 2002, she said. Her work
includes creating both the necessary IT infrastructure and the culture
to support her on-demand transformation mission.
Instituting cultural changes is one of the hardest parts of her job,
according to Sanford, particularly in the area of increasing
IBM has nearly 330,000 employees, 42 percent of whom are mobile
workers. Close to 55 percent of Big Blue’s work force have been with
the company for less than five years with many joining the organization
To help encourage staff to work with each other across business units
and geographic boundaries, IBM has put in place its enterprise portal
On Demand Workplace, a central repository of information that is
receiving one million hits per day on its home page, Sanford said. The
portal contains what IBM calls Blue Pages Online a directory of all of
the company’s staff, not only listing their contact details, but their
background, their experience, which IBM customers they’ve worked with
and which Big Blue competitors they’re familiar with, she added. “The
basic idea is to make IBM seem like a small company,” Sanford said.
Also within the portal is ThinkPlace, a place for staff to submit
innovative ideas. IBM already has plans to implement more than 300
ideas it has received from ThinkPlace including creating Green Pages, a
directory of IBM customers listing their needs and requirements,
according to Sanford. “Our intention is to open up On Demand to our
suppliers, partners and customers,” she said, adding the portal was
designed with that goal in mind. Sanford didn’t provide details on when
this might occur.
“We’re redefining what it means to be a 21st century business,” Sanford
said. “We’re evolving from a multinational to a globally integrated
company.” IBM is undoing the work it embarked on post-World War II to
establish “self-contained IBMs” around the world, she added, a model
that has served the company well for decades, but is now obsolete and
“We no longer need to replicate IBM from floor to ceiling,” Sanford
said, pointing to the centralized structure the company is putting in
place, for example, by cutting the number of purchase order processing
centers from several hundred to three, one in Shanghai, one in
Bangalore and one in Budapest. The factors that are now making global
integration possible include employees’ high level of skills around the
globe, the strong growth in developing markets, world trade agreements
and a global networked infrastructure, she said.
IBM is working to continue changing the mix of its IT spend, according
to Sanford. Previously, the company spent about 90 percent of its
internal IT budget on maintaining its traditional IT infrastructure and
10 percent on IT innovation. That mix is more like 70/30 now, she said.
“We’re not done yet,” Sanford added.
One area IBM is focusing its attention on is operational innovation,
according to Sanford. “We need to reinvent what we do and how we do
it,” she said. Business processes are one of the biggest areas of
frustration for IBM employees. Big Blue is addressing the issue by
eliminating, simplifying, automating or sourcing out to partners some
of the business processes its staff are dealing with, Sanford added.
For instance, she cited the work some of her team had done to assist
IBM’s software sales force. “The deal size was getting smaller, so they
needed more smaller transactions,” Sanford said. “They were used to go
hunting bear, now they have to hunt rabbits.” Trying to find new
smaller size customers was equivalent to the sales people trawling
through phone directories or trying to sell door to door, she added.
Sanford’s team, the sales people and IBM’s research and business
intelligence software units all got together to develop a tool, On
Target, to aggregate customer data and create algorithms to suggest how
best to locate sales prospects and which IBM software to sell them.
“It’s improved our salespeople’s efficiency,” she said. So far, sales
staff have reported an 80 percent reduction in time spent on locating
prospects as well as a 50 percent increase in those prospects yielding
sales opportunities, according to Stanford. “It’s a reusable asset for
other groups,” she added. IBM started On Target with 60 sales people in
Canada and has since rolled it out across the U.S. The plan is to have
the tool in 10 European countries by the end of this year and also to
take it to Asia, she said.
Tony Friscia, president and CEO of AMR Research, agreed that
reinventing business processes was a smart move. “It’s less about
product innovation and more about process innovation,” he told
Friscia gave the example of the chemical industry when companies had to
react to regulations requiring them to track waste management. While
some firms simply complied by putting in tracking systems, the more
innovative companies set about trying to come up with ways to eliminate
waste altogether. The same approach can be applied to U.S. public
companies working on complying with the Sarbanes-Oxley (SOX) rules,
according to Friscia. “Most companies are spending money and getting
nothing back,” he said. “It’s like Y2K. But the smart companies are
looking to innovate” by overhauling their business processes as they
move to SOX compliance, Friscia added.
By China Martens – IDG News Service (Boston Bureau)