IBM forever rings the changes

IBM's Office of the CIO consolidated 128 country specific CIO roles

IBM used to employ 128 chief information officers (CIOs) in as many countries, but has now consolidated these into a single individual, supported by a large group of other executives and researchers, called the Office of the CIO. Fiona Capstick, vice president of geographic integration at IBM's office of the CIO, tells Computing how and why the company decided to create a single, centralised entity.

How did IBM re-organise its CIO structure?

We have gone from being a multi-national company where everything is decided by the country manager, to where we have a global strategy that allows people to make decisions based on localised markets. Within the CIO role there is a lot of work in collaboration software and making sure that teams come together, and IBM teams across the world now operate on common applications and processes. We have gone from using 16,000 applications globally to using 4,500 applications now. Using common processes across the business units and operating in the same way in the back office in different countries is a key element. Before, we could be doing one thing with suppliers and manufacturers in the UK, for example, and something completely different in Germany.

What other changes has IBM made?

We had to drive down our running costs. About 80 per cent of spending was on operations, and we needed to make dramatic changes to our systems. For years we lost money because the overall financial controller could not see rolling financial information on a country-by-country basis until the close of the financial year, for example. So we introduced tools that meant all the financial systems operated in a common way, with standard procedures and support tools for submitting finances to make sure they could be seen on a daily basis. IBM has also driven change in virtualisation within its existing server and datacentre environments [it now has just five datacentres across the world].

Have there been other staffing changes?

IBM has moved a lot of people into China, India and Bratislava. More than 80 per cent of all IBM application development is now done outside the US and Europe, and 60 per cent of service delivery is hosted in those countries. All of IBM's English speaking helpdesk staff are now based in Bangalore, and we can only do those things by using common services and applications.

What other systems have been consolidated?

We used to have 55 different systems to analyse the services and products IBM customers buy and predict what those customers were likely to be interested in. We have spent three or four years making sure those customers are now looking at the same thing in a common way but using localised information – the information warehouse is the same DB2 database with the same analytical tools that help staff identify new sales leads. That involves changes in the back office, and we are implementing a global ERP system across the company. We have used similar tools before, but on a brand-by-brand basis, around 17 in total, but we are going to simplify that and integrate it with an enterprise-wide management system.

How does this affect IBM's relationship with its customers?

It also helps IBM identify companies that have done business with IBM in the past, something that we were not good at in the past, and that has been very effective. We used to just ask a client to find out how much business we were doing with them, but now we can assess that ourselves. Most of those we were working with came from a pool of small companies that did business with IBM on a regular, but extensive basis. Now we can see any client that does business with us across all the different brands, and we are working on integrating all of those global applications now.

How is new technology being used to aid communication?

Technology innovation is not a huge spend for IBM's Office of the CIO, but it is an important part of what we do. In the Web 2.0 space we have a program which many employees use for internal blogs and wikis, and a key part of internal communications is instant messaging [IBM employees send around two million messages per day]. We have something that looks like Facebook, called Beehive, which is used by senior executives for big meetings, to bring people together and pass information to 400,000 people worldwide, for example.

When will IBM’s business transformation be over?

Things take time – we have been doing this now since 1994 – and for us now, it is a way of life. We cannot say if it will be finalised in 2015 because by then we may have moved on to the next set of things we need to transform. Nor is the transformation IBM has now necessarily where it originally set out to be because midway through its activities the business model changed. IBM's approach to acquisition in terms of bringing companies onto the shared information architecture quickly has altered, for example, to make it easier to transfer information from one business group to another. My team has used lean Sigma to examine how to focus this change, and the things that affect our clients. The vision of where we are heading is key, but knowing where we are along the way is also important.