I’ve been hearing since before Christmas about Project Chrome, the code name for what has been touted to me as the biggest reorganization in IBM history. Well, Project Chrome is finally upon us, triggered I suppose by this week’s announcement of an 11th consecutive quarter of declining revenue for IBM. Project Chrome is bad news, not good. Customers and employees alike should expect the worst.
To fix its business problems and speed up its “transformation,” next week about 26 percent of IBM’s employees will be getting phone calls from their managers. A few hours later a package will appear on their doorsteps with all the paperwork. Project Chrome will hit many of the worldwide services operations. The USA will be hit hard, but so will other locations. IBM’s contractors can expect regular furloughs in 2015. One in four IBMers reading this column will probably start looking for a new job next week. Those employees will all be gone by the end of February.
In the USA mainframe and storage talent will see deep cuts. This is a bit short-sighted and typical for IBM. They just announced the new Z13 mainframe and hope it will stimulate sales. Yet they will be cutting the very teams needed to help move customers from their old systems to the new Z13.
The storage cuts are likely to be short-sighted, too. Most cloud services use different storage technology than customers use in their data centers. This makes data replication and synchronization difficult. IBM’s cloud business needs to find a way to efficiently work well with storage systems found in customer data centers. Whacking the storage teams won’t help with this problem.
Project Chrome appears to be a pure accounting resource action — driven by the executive suite and designed to make IBM’s financials look better for the next few quarters. Global Technology Services, the outsourcing part of IBM, is continuing to lose customers. That rate of loss — one Lufthansa-size customer every six weeks — seems to be holding. The size of Project Chrome cuts suggest IBM is trying to get three or four quarters ahead of the expected business losses. At this point IBM’s business losses have become a self-fulfilling process with deep cuts followed by increasingly bad service, increasingly madder customers, and more lost business.
The biggest reorganization in IBM’s history will not really begin until the Project Chrome resource actions are done. People let go will be excluded from consideration for the new business units. In a few months those new business units will start to work calling on IBM customers to sell them on the new CAMSS (Cloud, Analytics, Mobile, Social and Security) stuff. They will walk into a hornet’s nest.
Some reorganizations are well thought-out and absolutely essential but Project Chrome won’t be one of those. It will traumatize the corporation and put most accounts into immediate crisis. While survivors dig out from the devastation IBM will change their managers and their job descriptions. With fewer people and changing roles, things IBM has contractual obligations to do for its customers will start to be overlooked. If you are an IBM customer you should probably should start working on plans to keep your projects moving forward and your systems running.
If you are an investor or Wall Street analyst it’s time to take a closer look at IBM’s messaging. Stop believing everything you hear from IBM. Big Blue is a master at controlling the discussion. They state or announce something, treating it as fact whether it exists or not. They build a story around it. IBM uses this approach to control competitors, to manage customer expectations, and to conduct business on IBM’s terms.
So while IBM is supposedly transforming, they are also losing business and customers every quarter. What are they actually doing to fix this? Nothing. In saying the company is in a transition and is going to go through the biggest reorganization in its history, will this really fix a very obvious customer relationship problem? No, it won’t.