The software group has been making its numbers mostly by increasing prices and through audits. They’ve been auditing customers and finding non-compliance, under-licensed software, then making quick sales to get customers back to 100 percent of software properly licensed. This is obviously not a business growth strategy.
The heavy layoffs (called Resource Actions (RA’s) because at IBM people are not people but resources) last quarter broke the back of many of the sales support teams. Ginni mentioned sales efficiency problems on today’s earnings call. Getting price quotes is now a very slow and painful process inside IBM. Last quarter’s RA’s clearly hurt this quarter’s sales.
IBM is now in a cause/effect, action/reaction phase. Layoffs now cause direct and immediate business problems. In large companies it normally takes years for the effects from actions to be realized. In IBM that reaction time is now down to quarters. It should now be clear IBM has cut too deep and too recklessly.... Continue reading