IBM consolidates top management jobs

IBM CEO Samuel J. Palmisano has concentrated power in the hands of fewer managers, including putting one person in charge of both software and hardware products, in an executive reshuffle announced in an internal memo on Monday.

Steven Mills will take on the role of senior vice-president and group executive for systems and software. Mills has been with the company 36 years, and was previously senior vice president for just the software group. Reporting to him will be Rodney C. Adkins, senior vice-president for the systems and technology group.

Combining management of hardware and software is a big break with the past for IBM, said Forrester Research senior vice president and research director Christopher Mines.

One reason for the move is internal: Hardware now represents less than 20 percent of IBM’s revenue, so it’s just not the dominant factor that it once was, Mines said.

But another force for change is external.

“Hardware and software integration is part of a macro trend towards systems specialization and diversity,” Mines said, with different systems for different workloads. That’s a change from the one-size-fits-all approach of the past two decades, ruled by Wintel architectures, he said.

IBM faces a rival combining strengths in hardware and software, following Oracle’s acquisition of Sun Microsystems.

In addition to that merger, IBM must also respond to other trends toward diversity in hardware-software platforms, illustrated by the rise of specialized chip architectures and operating systems for smartphones and tablet computers, and the greater share of GPU chips in processing tasks, he said.

Palmisano also brought other major activities under one manager in Monday’s reshuffle.

On the services side, Michael E. Daniels will step up to the role of senior vice president and group executive for all of the IBM Global Services business, after running the outsourcing and integrated technology services side of it. Frank Kern, senior vice president responsible for the business services side of the division since January 2009, will report to him.

Integrating service business is “back to the future,” said Mines. “These two units have a lot of synergy, so it makes a lot of sense to reintegrate under common management.”

Virginia M. Rometty will add new functions to her current role of senior vice president of global sales and distribution, becoming senior vice-president and group executive for sales, marketing and strategy. She will have two direct reports: Erich Clementi, vice president for strategy and general manager of enterprise initiatives, and Jon Iwata, senior vice president for marketing and communications.

Beyond a search for synergies, some have suggested succession planning as a motive for Palmisano’s changes.

“In theory, Palmisano retires next year at the ‘mandatory’ age of 60. This is IBM precedent from way back. Some think he may be asked by the board to stay on; it would not be a huge surprise for another year or two,” Mines said.

“Either way, Daniels and Rometty are the clear successor candidates,” he said.

Finally, Chief Financial Officer Mark Loughridge will become senior vice president for finance and enterprise transformation. He joined the company as a development engineer in 1977 before moving on to a number of financial management roles. Linda S. Sanford, senior vice president of enterprise on demand transformation and information technology, and Robert Zapfel, senior vice president of IBM Global Financing, will report to him.

An IBM representative confirmed the existence of the internal memo, but declined to comment on its contents.

Another IBM representative provided details of the new roles, adding that no one had left the company, and no one else had moved to a new role, as a result of the changes.

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