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Crystal gazing with big blue

How tough is it to strategise for a company that sells everything from supercomputers to blade servers to plain vanilla software services—a company that’s more than a century old and has a market capitalisation of over $150 billion?

By T.V. Mahalingam | Print Edition: Dec 02, 2007

IBM has grown over 10-fold in five years in India.

How tough is it to strategise for a company that sells everything from supercomputers to blade servers to plain vanilla software services—a company that’s more than a century old and has a market capitalisation of over $150 billion? It’s not that easy, says Bruce Harreld, Senior Vice President for Marketing & Strategy for the company the world knows as Big Blue. “I have a lot of help. If there is one thing you learn at IBM, it is that you cannot know everything,” says Harreld, who has been instrumental in turning around the company from its “near-death” experience in the mid-90s.

Reminiscing about those dark days, Harreld believes that some of the company’s failures lay in the success it had had in the earlier decades. “IBM was a very successful company in the 1970s and 1980s.

Bruce Harreld
Bruce Harreld
 And the more successful a company is, the more it hardens its processes and its methods around the way it sees the world,” explains Harreld. “Then the world changes but then the company is so hardened that it has a tough time changing. IBM’s story in the ’90s was that it knew what to do but couldn’t do it because it couldn’t change.”

But then under a new management, IBM did what most management gurus thought was impossible— it reinvented a 100-year-old company that looked close to extinction. For starters, Big Blue exited businesses like personal computers (which it sold to Lenovo) and harddisk drives (which was sold to Hitachi).

The company then strengthened its offerings around high-growth, high-value areas. Harreld, for example, directs IBM’s Emerging Business Opportunities (EBO) program, a management system that has produced more than 20 new businesses for IBM—including multi-billion-dollar activities in areas like life sciences and pervasive computing. The metamorphosis of IBM from a hardware-driven company to a software and servicesoriented company had begun.

India has been a crucial part of IBM’s growth strategy. Like Harreld says: “We are very proud of what the India office has done. From 2002, when we were a few thousand people in India we have gone to over 53,000 people in 2006. That’s more than a ten-fold in five years,” says Harreld.

However, he is very clear about the fact that TCS, Infosys, Wipro and the others in the first tier are serious competition. “In some cases they are partners. But in most places, they are coming right at us and we take them very seriously. However, it is one thing to grow off a small base rapidly. There are new business models emerging here other than outsourcing. We’ll see how some of our new competitors change as the market changes,” he adds with a smile.

Ask him about the probability of a recession in the US and the man who plans for IBM has a circumspect outlook: “I think it’s a tense time. We are taking a look at 2008 right now and making sure we have financial flexibility,” sums up Harreld.

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