This is turning out to be a not so memorable if not brutal week for those in IBM’s workforce, especially in the United States.
Numerous social and business media reports are indicating that massive workforce layoffs are underway and according to published reports from Information Week, as well as IEEE Spectrum, could impact up to a third of IBM’s U.S. workforce. Many of these reports indicate that the bulk of the current layoffs are impacting IBM’s Technology Services groups which are essentially the consulting arm of Big Blue, but other groups may be involved as well.
We ourselves had been hearing speculation that workforce re-balancing was coming very soon for IBM and thus the news is not surprising given IBM’s recent financial performance and lackluster growth. Multiple quarters of disappointing revenue growth, earnings and growth momentum are wearing thin on investors. IBM is instead aggressively moving toward what it believes are higher growth segments such as analytics and cognitive computing. Supply Chain Matters recently highlighted IBM’s most important and far-reaching acquisition, that of the Weather Company.
A published report from Bloomberg indicates that the current re-balancing is a strategy to shift the workforce towards more cloud computing and artificial intelligence operations, while a commentary published by Business Insider indicates that IBM hired and fired in equal numbers last year, as much as 70,000 people. According to this commentary, the “Watching IBM.” Facebook page maintained by Lee Conrad indicates the big difference with the current layoffs is that IBM has severely cut severance pay to one month total, no matter how many years of service the employee worked.
To no surprise, IBM’s public relations and HR teams are declining to acknowledge any specific workforce layoff numbers, rather inserting their own spin on events with indications that there are currently more than 25,000 open positions. Thus the churn continues. Reports from business and social media that we have read indicate that the open positions are more than likely in other global geographies such as China and India.
Since ours is a blog focused on the broad umbrella of supply chain management business process and technology support, we will confine our commentary to our observations of IBM’s efforts in this area. After many strategic acquisitions and nearly $3 billion invested, Big Blue’s overall execution of broad based supply chain process support spanning Buy-Sell-Plan- Service never seemed to gel. Acquisitions such as Emptoris, Sterling Commerce, ILOG or DemandTec have not come together as a suite of integrated capabilities. One component of ILOG, LogicTools, was recently sold. There was, from our observation, too many layers of redundant management and decision-making with little execution and time-to-market.
The supply chain technology market continues to move on, and the notions of more predictive analytics and the potential for integrating the physical and digital aspects of industry supply chains via Internet of Things (IoT) technology is near. IBM is from our lens, not keeping pace with the current clock-speed of market change because of organizational inertia. Meanwhile, supply chain best-of-breed, and even select ERP and enterprise software providers such as Infor, Oracle, PTC and QAD are, by our lens, keeping pace.
We know our words are not going to be of comfort to the thousands of IBM employees currently impacted and for that, we openly and sincerely, apologize.
This author having been himself been directly involved in tech company layoffs can readily recall the anguish of efforts to accomplish a mission and a program plan, only to be stymied by unnecessary organizational complexity and inertia.
We trust that IBM will learn from its past mistakes and instead focus on not just the grand vision, but the execution mentality and structure of a growing start-up. Paranoia sometimes adds to resolve, as does team empowerment.
© 2016 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters® blog. All rights reserved.