IBM Corp’s European operations will account for 7,000 of the 20,000 or more job reductions planned by the company next year, IBM Europe chief Renato Riverso told the Wall Street Journal, adding that the cuts would fall hardest on headquarters in Paris. As part of the global restructuring, IBM has formed an executive steering committee to help co-ordinate an effective working relationship among the company’s large systems business, including the Enterprise Systems, the new Storage Products, Networking Products, Programming Systems and Technology Products lines of business. Senior vice-president Terry Lautenbach will head the committee. IBM also said that its new management and measurement systems are designed to bring autonomy to individual businesses to optimise their respective markets. Business plans and assessment systems applied to each business will vary since each market is different, it said. There will be individual reporting of financial results from IBM’s major businesses, salaries tied more directly to each unit’s performance, and operational changes that will inject more market discipline into the relationships between IBM’s business units. Marketing and services companies will become service companies creating value for customers through knowledge and skills, and depending less on product cycles and hardware volumes for their prosperity. They will also provide integrated offerings from among products, services and technologies from across the industry, including non-IBM products if required, and will segment markets based on customer size, industry, product or application, based on the companies’ assessment of the market opportunity and potential returns. They will also create and manage alliances and partnerships to enhance business results, set resource levels, and be measured on revenue, margins, cash and returns. IBM hopes its manufacturing and development businesses will make better investment decisions because they are more agile, faster and closer to the markets they choose to serve. It looks to them to gain responsibility for managing manufacturing and development investments, capacity and assets worldwide, working closely with country general managers, who will continue to be responsible for personnel, legal, and other local matters. Country general managers will continue to be the principal executives in their countries. The businesses will also be free to maximise sales through OEM and other distribution channels, create and manage alliances and partnerships to enhance business results, set resource levels and be measured on revenue, margins, cash and returns. Armonk, which reckons it will as a result be able to focus on pursuing promising growth markets, investing or divesting to maximise overall financial results, will set financial objectives for its businesses, review and approve individual investment and operating plans. The Management Committee will resolve operational issues only when necessary. Armonk will manage development and equity investments among current businesses, alliances, partnerships and new ventures, based on results and prospective growth opportunities. IBM’s holding in individual companies or businesses may rise or fall over time.
