The company said in a filing that it had been notified that the market authority wasn’t planning any action over its cloud business.
“Based on the information to date, the Division of Enforcement does not intend to recommend any enforcement action by the Commission against IBM,” it said.
Big Blue said last summer that the SEC was probing its cloud division, although neither the firm nor the authority revealed exactly what aspects of the way it was reporting its financial results the commission was looking into.
All of this was possible because the employees could trust the company to never ask them to compromise integrity, innovation, design, or quality. They would not be asked to forfeit the customer's faith, hence the stockholders equity. Employees could trust that they would never be treated unfairly, or arbitrarily, or without respect. If you worked for IBM, you knew this, because the company had "basic beliefs": clearly stated as a commitment to everyone that trusted the company. EVERYONE! It was family! You trusted family.
I am so tired of hearing how Gerstner saved the company; he did not! He trashed those sacred basic beliefs. IBM stopped being exceptional. Key employees left for competitors. Critical skills were lost as thousands were arbitrarily separated. Product plans and quality fell through the cracks. Customers were disappointed. Trust evaporated.
Gerstner spent that trust, especially with employees, to gain a temporary advantage in stock value. In the process, Gerstner destroyed an esprit de corps that had driven the company’s long term success for nearly a century. Once squandered, it can never be recovered. Today, with every relationship that IBM once enjoyed, "Trust" has been replaced with "Temporary".
That interdependent exchange of commitment between all parties - that had taken decades to establish, was extinguished in only a few months. Leadership became all about 90-day cost decisions. AND - When Gerstner left, he took a bonus that was comparable to all that he had saved the stockholders. The net gain was null, the damage lasting, the legacy subtly eroding the brand equity of the IBM name over time.
No wonder - no one "trusts" IBM anymore.
Starting in 2007, during that trip to Minnesota, I saw troubling things at IBM. I saw the company changing, and not for the better. I saw the people of IBM (they are actually called “resources”) beginning to lose faith in their company and starting to panic. I wrote story after story, and IBM workers called or wrote me, both to confirm my fears and to give me even more material.
Editor's note: In addition to Mr. Cringely's newly published book, he has posted several articles concerning IBM, including the following:
Selected reader comments concerning Mr. Cringely's announcement of his new book follow:
The purpose of a company cannot be solely focused on the shareholder and at the expense of everything else. There must be a balance in the values and goals of a company. To manage a company to the detriment of 100,000′s of workers, to cheat customers who are the biggest companies in the world, and to cause harm to society is simply not acceptable.
There is only one way such a strategy will end — very badly. I sincerely hope this book will open some eyes and minds. Thank you Bob!
I manage a team that uses one of IBM's more profitable tools and run it on their hardware. We are overrun by IBM resellers (‘consultants’ that get kickbacks when you buy stuff from IBM.) We are contractually required to run license manager software that eats up computer resources and requires us to purchase even more computers from IBM. If that weren’t bad enough, all the licensing is based on CPUs and you don’t get a discount for what these license managers eat (10 -25% on a bad day.)
It might be OK if the software wasn’t the most unreliable, outdated piece of crap I’ve ever had to deal with in the 15 years I’ve been in software development/IT.
Look at the April edition of Bloomberg Businessweek if you don’t think IBM is done. The CIA gave Amazon a contract in 2013 to build them a cloud when IBM bid at one-third the price. IBM sued and a federal court said not that IBM had “no chance of winning” the contract. This is codified in the federal court record.
Even if you’ve lost money on IBM you should sell now. It’s not going to get better. My main focus is to get our software off of IBM tools ASAP. Any sane, competent IT manager is planning to do the same.
As a former multi-decade IBMer who saw the handwriting on the wall and finally found a new gig, I could completely relate to the letter you quote in the introduction. All of it is spot on and exactly how I felt for quite a few years before I exited stage left. I simply could not, in good faith, work for these people anymore.
As a seasoned I/T practitioner, I knew I had to get out before some bozo bean-counter in Armonk eventually came after me. The joke of it was when I turned in my 2-week notice, an executive in my reporting chain had the nerve to call me and ask ‘did we do anything to run you off?’ I just laughed at him on the phone realizing how insulated and out of touch these pukes had become.
I humorously banter with I/T friends and colleagues that my new job mission can best be described by respectfully borrowing a famous quote from the movie ‘The Shawshank Redemption’, it goes something like this:
My new job is to replace IBM servers with Dell and HP. I am replacing IBM storage units with EMC Symmetrix machines, IBM automated tape libraries with HP Everstore. When all the big-blue equipment is gone, we’ll take all the dusty IBM manuals out in the back yard and build us a big bond fire, we’ll dance around the fire like a bunch of wild maniacs, they’ll see the smoke for miles. And when nothing even remotely related to IBM is left in the facility, our (former) IBM rep will feel like he’s been fu.ked by a train.
Nice job IBM senior leadership, you deserve it.
Successful products when they do happen to come along (Printers, DB2, Websphere, DS8000, SVC etc) aren’t invested in or grown. Instead they are constantly “trimmed” to make them more efficient. Tons of $$ is poured into losing propositions whether they be ill thought out acquisitions (not going to mention any names here, but it’s not a short list) or in house idea’s that failed iteration after iteration (NAS).
I could go on for days, but then you wouldn’t be reading Bob’s book, so I’ll stop now and go buy it like everyone else should.
I’ve always assumed that this nonsense about putting shareholder value first was really all about stock options for the big boys. If you don’t put customer value first, you usually don’t have a viable business.
Thanks again for a great eBook, Bob.
Last year we had horrible retrenchments, lots of people were let go (both the good and the mediocre). One of the key problems IBM faces here seems to be how to make a profit from massive outsourcing to low cost countries whilst maintaining quality and client satisfaction. Project targets such as 80% offshore, 20% onshore delivery models are common, not necessarily because we know this is a great formula, but because the demands of customers and competitors push the price down in order to win contracts.
I hear a lot of comments within management circles about “if Infosys (or insert competitor name) can do it then why can’t we?” Reality is, in today’s globalised market, having a large onshore contingent means making losses or no contract wins and then inevitable retrenchment.
I hope the book addresses this issue and attempts to provide some solutions.
I recall as long ago as the 1980s an experienced manager from another organisation shadowing me for a week as part of an national industry programme. When asked her view of IBM she said -”Karl Marx would be delighted – it is the best example of a command and control economy I have ever seen!”
And, pretty much like the other examples, it is imploding because it is too attached to dogma, benefiting only those at the top and bullying and screwing the rest.
Today I still have direct dealing with IBM and can attest that there are great people there – but massively demoralised and unmotivated; there is real intent and desire at the “worker bee” level to do the right thing by the customer – suppressed and frustrated by the choking and repressive management system and bureaucracy.
Even the best people I know there are cowed into self preservation as their primary motivation. We will all know IBM is finally going over the edge when Warren Buffet sells his stake. Bear in mind that he usually invests only in industries he understands, but admits to not understanding technology. What he does understand is financial manipulation and has seen that he can do nicely out of IBM on that basis alone – for a limited time.
Now, to the average American looking in, one would think these so-called great minds are doing a service to this country. However, if you are inside there, you know that most of these proposals that are funded by the US govt do not really achieve anything for the nation. Instead, it has become IBM’s way of using the gov’t funding to do their own R&D.
The IBM Research employees working on govt funded projects are required to keep time sheets on the actual time they work on these projects. IBM needs for the employees to bat more hours so that they can recover most of the funding. And this is where the other end of the fraud happens. Basically, employees are encouraged to bill all their hours to the projects, even if they didn’t do any work. It is really sad what is going in on there.
If most Americans know what IBM Researchers are doing here, they would ban IBM from getting any funds from the govt for any research work. The stupid executives at IBM Research have succeeded to transform the place to the abode of the fraudulent welfare queen!
Time cards have been an issue for a long time. Employees are told to put in hours using creative covers. The same employees can be billed to customers for joint studies such that the same individual generates 2, 3, 4X real dollars. This is spread to others that are not covered by joint studies.
There are managers that spend over 60% of their time on the road – (drumming up business comes out of another budget bin) so they are not available to actually manage.
Employee wise, there has been such a drain of people leaving, most of the H1B visa holders Research gets are Chinese National PhD’s to the extent that over 85% of new hires are from there. One wonders how much IBM and US technology goes out the door because of that? It would be a good expose what goes on Bob.
I don’t know if I’ll read your book, as it may be too depressing and maddening at the same time, but I’m really glad it’s out there. Thanks for that!
Among the 1,277 U.S. companies that reported before yesterday's deadline, 68 listed the Central Bank of the DPRK in their filings with the Securities and Exchange Commission. DPRK stands for the Democratic People's Republic of Korea — as in North Korea, as in the country run by a 31-year-old dictator who had his uncle killed last year just to prove a point. The U.S. has had economic sanctions against North Korea since 1950, and the United Nations maintains sanctions of its own to deter further development of nuclear weapons there.
Claigan Environmental, a corporate-compliance firm, compiled the data showing dozens of companies listing North Korea's central bank as a supplier and shared its findings with Bloomberg. International Business Machines and Hewlett-Packard were among those reporting that North Korea was in their supply chain. ...
IBM's filing said North Korea processed gold that may be used in its products. Douglas Shelton, a spokesman for the company, declined to comment, saying only that IBM expects suppliers to "procure minerals from responsible sources." ...
Many companies took advantage of a two-year window allowing them to tell the SEC they don't know whether they have conflict minerals in their products. The biggest exceptions are Intel and Apple, which have been at the forefront of investigating and reporting on their supply chains, according to Calder. HP has also been known as a leader in this space, but the surprise from North Korea shows just how difficult it is to get a full picture into the supply chain.
The paper, authored by Donna Conroy, director of Bright Future Jobs, collates all references of advertisements that single out Indian software workers and H1-B holders for tech jobs. According to the petition, ads posted on Indian job portals between October and December 2013, were at least one year ahead of possible employment dates with some job requirements dated as late as March 2015. “They didn't give U.S. workers a chance. They are still doing this,” the petition said, referring to Manpower. The petition demands that the three companies start accepting applications from “qualified Americans in a fair and ethical way”.
On Thursday, Inspur told Chinese media the company is ready to “comprehensively” take over IBM’s server business in China. Some 80 IBM former employees have already joined Inspur, according to the company. ...
Inspur’s vice president Zuo Baichen said its server and minicomputer products now have the ability to fully usurp IBM's traditional position. The company has also strengthened after recruiting a large number of professionals from IBM and other foreign server vendors.
Pros: Great opportunities to take your capabilities to the next level. Opportunities to win Hundred Percent Club. Easy access to 400,000 super employees. Watson is the #1 Game-Changer for IBM.
Cons: Little to no training (except online boring courses). All perks/benefits have been slowly removed over the last 10 years. Most people just sit at home and work from home since IBM is eliminating work office sites. All meetings are by conference call. Can't travel because of expense tracking. Pay and bonus have suffered.
Advice to Senior Management: Quit being stingy with storage and give every single employee at least 1 TB to work with in the IBM Cloud instead of everyone being in Mail Jail weekly because of a 100MB or 250MB limit.
Bring back the incentives and perks to entice new people to stay longer. Of course the long timers will stay but there is a high turnover with new timers.
Don't forget about "Services". Cloud is not the #1 future of IBM as all the EVP and SVP are drilling in our heads. Once a customer has Cloud then what? He/She will still need Services.
Pros: Good company to work for if you are lucky enough to land the right job with the right manager. Reasonable opportunities to grow your career, but you have to absolutely drive it yourself. Great education programs, and great products.
Cons: As with any any corporate, it can sometimes be frustrating dealing with internal politics. IBM is a big company and finding the right people or tools or help to get the job done can take up huge chunks of unproductive time! Starting salaries are OKish...however you will find that after some years in the job the increases in salary are very minimal and are no where near the market standards. Which has cost IBM dearly over the years as it has lost a lot talented people to competitors.
Advice to Senior Management: Get your operational processes in order! I'm astounded by the amount of complex processes employees have to follow, to get simple things done total waste of productivity.
Pros: Huge network of opportunists. Veterans to server as mentors; a big company to put on your resume and you can transfer to other departments, countries and subsidiaries for upward career trajectory.
Cons: This is an old company with old people. Tons of complacency. Slow to adapt and extremely reactionary. The company is attempting to be agile, but is just too darn big and cumbersome to do anything quickly. Small tasks take forever to complete because of antiquated systems that create unneeded bureaucracy and overhead.
Advice to Senior Management: Cut the clutter, shift towards meritocracy and reward employees.
Pros: I'm well paid. I get to work from home. The people I work for are great. I get to work on new cloud platforms, which requires constantly learning new skills. I have a good work/life balance. IBM is a big company so I can move around to another team if I ever get bored working on this one. I have a good health plan.
Cons: The switch from matching 401K contributions from each pay period to one lump sum at the end of the year was really annoying.
Advice to Senior Management: I hope the run up to Road Kill 2015 does not distract from the momentum building in cloud.
Pros: Free parking and being in low traffic location.
Cons: Besides the low pay, this offshore "answer" ends up being the mojo contributing to a culture that exemplifies the many absurdities that might be found in a Dilbert cartoon (i.e., on demand seating policy at this facility for instance). It's Beige Man, in not only the physical surroundings, but in the energy, the vibe, the leadership/management of people. Creative, Innovative, and status-quo challengers will find it stifling and consistent with the same ole' lumbering bureaucracy where people are just numbers to be manipulated.
Advice to Senior Management: Re-think...even revolutionize what being an offshore answer means. It doesn't have to mean "cheap" and bland and perpetuating silly and outdated measures of success. Go for bold. Rebuild around a client focus (internal and external) that captures the imagination. Imagine Being Magnificent and gain a success that is far greater than your current 2-star rating.
Pros: If you're looking into just floating around, then you might enjoy your time here because they are very lenient with tardiness/absence/leaves. They pay enough for you to live. So if you're not looking for career growth, learning, and relevance, then IBM is not that bad.
Cons: The company does not know how to:
Advice to Senior Management: Know the difference between cost cutting and revenue generating. Identify your long-term goal. Learn how to motivate people and keep good talent.
Pros: Broad growth opportunities provided you work 2 years in the brick and mortar building first. Numerous opportunities to learn from other PMs with similar projects.
Cons: Very few legacy IBM employees transferred to the new Service Delivery Center in Columbia. The "true" IBM culture is being lost. Some managers are focused on "filling seats" to meet their short-term goals rather than bringing in tier-1 talent. One second line managers came into the center without previous IT experience. Pay-rate is among the lowest in the US for a PM.
Advice to Senior Management: Stop trying to pay bottom dollar for top tier talent.
Pros: There are some great people and forward thinkers if you can find them. Opportunities to work from home.
Cons: Your quality of work does not matter. It's all a numbers game.
Advice to Senior Management: Invest in people that do quality work. Cogs in the machine don't grow a company long term.
Pros: Great benefits. Competitive salaries. Many work from home positions. Quality professionals to work with, for the most part. Many opportunities available if your manager will let you pursue them.
Cons: Company-wide "respect for the individual" is gone. Decisions (including forced weekend work) are now driven mostly by meeting financial goals and quarterly executive measurements. Primary corporate focus now seems to be meeting an advertised 2015 earnings per share at any cost, it seems. Therefore, frequent large layoffs and common.
Advice to Senior Management: Bring some of that IBM-unique respect back to your individual employees.
Pros: Working remotely is the biggest plus if you're fortunate and the pay is pretty good if you were an acquisition. If you can handle the almost government like atmosphere, then this is a good place to stay until you retire.
Cons: Too hard to put into words, but it's a pretty suffocating environment. They churn out too many people that are zombie-like in their approach to everything. Oh, and there's a metric for metrics, so have fun doing everything more than once just to make your FLM happy. It's too big of a company where in-fighting happens way too often, it lacks a "one team" feel.
Advice to Senior Management: IBM needs to understand that not everyone expects to take their work home with them everyday.
Pros: There are a million things you can do in IBM, and they'll help you learn new skills or give you the opportunity to do something really cool. You really have to make something of it yourself, no one's going to give you anything.
Cons: Politics. So much bureaucracy that you spend 85% of your life dealing with that instead of what's actually important. Management manages to numbers instead of asking, "does this actually matter?" Only business goal is a stock price. They've lost track of what made them great, the people. The culture isn't fun for 95% of IBM; it's all about the dollar.
Pros: You're working for an industry leader in their field. There is something to be said about that. I love telling people I used to work for companies they've heard of. It also gives you some credibility in the industry as well.
Cons: So many layers of management that decisions are made by people who seriously don't understand anything they are managing. They also do not value the individual; everything is team or group based. While teams are important, everyone knows there is usually a "QB" or "Captain", and IBM does not really acknowledge this at an institutional level.
Advice to Senior Management: Recognize that while process and procedures are important, individual super heroes often save the day. If IT was so easy that you could "assembly-line" it, no one would need your services.
If someone does apply for one of those jobs the manager has to review the resume and qualifications and perhaps interview him, then write an explanation of why he wasn't qualified. So if you want to have some fun, have friends and family apply for those jobs. The company can't ignore them legally so they have to spend time and effort disqualifying them. -Lost in Band 10-
-Former IBM employee-
So my point is that if a were to roll my PPA balance over to an IRA, I would be rolling over an amount that is less than my protected benefit, and would have to be concerned about managing it for the next 30-40 years. IBM would love for me to do that and wishes everyone would. Instead I happily returned the cash balance and got a joint life annuity that provides an 8.4% payout rate for the rest of 2 lives (myself and my wife). Hope this helped. -Use Caution Before Rolling Over PPA-
Since interest rates rose slightly, and October was only a month away, I called Fidelity and told them I wanted a printout of exactly how my annuity was calculated. My intent was to see what 3-tier blended rate they used, and then have them recalculate it with the new 3-tier blended rate. When Fidelity sent me the printout it showed that the amount of my pension in 1999 just before they converted to the PPA, which is called the PROTECTED BENEFIT, was greater than the annuity amount that they were going to provide based on the PPA cash balance. This is the definition of WEARAWAY.
So from 1999 - 2007 when IBM froze the plan, my pension did not increase. So the value of the annuity that Fidelity calculated was the PROTECTED BENEFIT (since under federal law your pension can never be less than what you earned). Fidelity then told me that even using the higher 3-tier unblended rate, my PROTECTED BENEFIT was still significantly higher than the calculated annuity based on the current balance and current 3-tier rates. -Use Caution Before Rolling Over PPA-
Since I started IBM at age 22 right out of school, and missed being 40 by 7/1/1999, my PROTECTED BENEFIT monthly amount was 50% higher than what www.immediateannuities.com would pay. Obviously, if I had rolled over the cash balance of the PPA to an IRA I would have had to find a way to make up the difference that I left behind, and guarantee I could get a suitable return every year for the next 40 years over two (joint) lives. This varies by age, years of service, and your situation may be different. -Use Caution Before Rolling Over PPA-
I completely missed point A — taking an IMMEDIATE annuity. In my specific case, option A would pay for groceries and maybe my excellent [non IBM] health insurance. So I never even considered it.
Anyway, sorry for such long posts, and I have no more questions for 'Use Caution'. Appreciate his/her patience, as I entirely missed the original point. :) -Two Questions / aka Former IBM Employee-
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