Abstract

When CEO Sam Palmisano took charge of IBM (International Business Machines Corporation) in 2002, revenues were down by $5 billion and IBM was facing the worst tech downturn in its recent history. The case discusses Palmisano's turnaround strategy and his initiatives to generate growth at a time when most technology companies have been struggling. Palmisano has laid off 15,000 people, sold the loss-making disk-drive business, and written off the value of some unproductive chip technology. He has spent more than $6 billion on acquisitions, including the purchase of Pricewaterhouse Coopers Consulting and Rational Software and opened a $3 billion state-of-the-art chip plant. Palmisano is also leveraging IBM's research capabilities, expanding the business by pushing IT users towards radically different business models and partnering with once-rival software vendors. To keep IBM ahead, Palmisano is exploring the possibility of delivering different types of software as a kind of utility, which customers can use when and where they need. IBM is also engineering computers to manage 'themselves', cutting the amount of human intervention.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

IBM, International Business Machines Corporation, Information technology, Semiconductors, Sam Palmisano, Pricewaterhouse Coopers Consulting, Lou Gerstner, LAM Research, Software, Problem solving, Forecaster, IBM researchers,Mayo Clinic, DB2, IBM Business Consultancy Services