Ibm's Case Study: An Overview Of IBM

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1. Company background IBM arose from relatively obscure beginnings to become one of the giants of the 20th century. It was officially founded in 1911, the result of a merger of three companies whose operations dated back to 1890. In 1914, Thomas J. Watson joined the firm and within a short time rose to the top. With the advent of computers in the 1950's, IBM quickly moved to the industrial forefront and gained a significant position in the industry. It was under Thomas Watson Jr. that IBM became the dominant force in the IT industry. The turning point was when Watson boldly invested 5 billion dollars to develop the System/360 computer, the first family of computers using integrated semiconductor chips and offering interchangeability of internal…show more content…
Structurally, IBM had become internally divided into a number of autonomous divisions, each responsible for its own supplies, sales and product development. By 1990, there were 20 separate business units responsible for over 25,000 products, which resulted in different designs for components that served the same purpose. Different business processes were employed by different divisions to accomplish the same purpose, which again was a costly duplication. All of this duplication of functions naturally drove up costs, sometimes 2 or 3 times the industry average. At the same time, top executives were insulated from the growing problems because they were sheltered behind a bloated hierarchy of middle managers that waited on them hand and foot. Executives had huge staffs that prepared their reports and handled their presentations so that top executives were only dimly aware of the problems facing IBM. Because of a lack of close coordination among divisions, the firm, while continuing to innovate, was notoriously slow to get it innovations to the marketplace and was therefore losing market shares where it had once seemed invincible. IBM was ironically especially poor in its supposed area of expertise: integrated internal IT management. The company had 125 separate data centers around the world, 128 corporate information officers (CIO’s) as well as hundreds of different configurations of PC installations, leading to a chaotic situation that drove data processing costs up to over 3 times the industry average. Too many managers had begun to focus on short-term goals and profits instead of searching for ways to exploit the new IT revolution based on the Internet, indicating a lack of strategic vision on their part. A number of promising ventures were failing simply because of poor execution, and there were no established procedures in place to guiding
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