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Why Im Leaving IBM

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					                               Why I’m Leaving IBM

Dear Mr. Palmisano,

You and I have a lot in common—we’ve both gone as far as we can at IBM.

There is one question that has given me pause on the annual employee satisfaction
survey—paraphrased, it goes something like this; “If offered a job with similar
compensation at another company, would you leave IBM?” I’ve always answered “yes”
but wondered if I was being honest. Come to find out, I’m leaving IBM, after 27 years of
service, for less.

The Bottom Line

It’s easy hurl criticism when you’re not the one responsible for making things happen.
I’m not saying I could do a better job because I know that I can’t. I greatly appreciate the
dedication and sacrifice that executive management has expended to make IBM a great
company. I came here with nothing and leave greatly enriched.

I’ve been pursued by Lockheed Martin to work on projects contributing to our national
security. Given the choice between that or outsourcing American jobs (my current
position), I prefer the former. It’s that simple.

As an IBM stockholder, I hope you make IBM even better and more prosperous. If I
come to regret my decision, you will have succeeded.

You may be thinking I’m about to embark on a list of what’s wrong with IBM and you
would be correct but that does not negate the fact that IBM is among the best of
companies. There are two areas where IBM has no equal: The ability to manage complex
projects on time and on budget and the ability to react to solve a crisis. Notwithstanding I
would like to highlight a few areas that have concerned me over the years. It’s difficult
to articulate these without sounding disgruntled. I am not, I couldn’t be more gruntled.

Outsourcing and Off Shoring

It’s easy to grasp the rational and the reported benefits of off shoring are irresistibly
seductive. The problem, as I see it, is that the benefit is rarely realized. My last job at
IBM was to develop outsourced, off shore resource for E&TS—primarily ASIC design
skills in Eastern Europe and Asia.

I saw several flaws in this strategy. First and foremost being training. IBM has
habitually ignored or underestimated the commitment and expense associated with
training an off shore facility. Aside from the 12 to 24 months it takes to get the facility
up to speed, IBM never applied sufficient personnel and management to pull it off.

Given the minimum of about 18 months it takes get the facility productive (36 months
with IBM’s lack of commitment), the geography is no longer the lowest cost location by
the time it’s up and running. We then have to start all over in a new geography and the
cost savings is never realized.

Moreover, all of the “real” expertise that can only be gained by struggling with the day-
to-day problems of doing real work now resides at the outsourced facility and not within
IBM. In essence, we eat our seed corn then bail out of the market segment claiming it’s
not one of our core competencies or business—which is true at that point because we
unwittingly destroyed our expertise.

In addition, the need for E&TS to develop addition resource was specious at best.
Headcount projections were based on revenue projections and scaled accordingly. The
problem is that E&TS revenue was artificially pumped by the Microsoft X-Box business
that was channeled from MD to E&TS. Excluding Microsoft, E&TS revenue has been
flat. Clearly, E&TS will be in the position of having excess available headcount overseas
at a low cost and not enough work to keep it utilized. Not wanting to waste the
investment, work will be channeled off shore and US workforce will be appropriately
“right-sized.” Management cautioned me that we weren’t outsourcing “jobs,” we are
outsourcing “work.” Having a low threshold for duplicitous obfuscation, it became clear
to me that this was an activity for which I wanted no part. I’m not implying that my
management consciously planned the demise of our USA workforce, only that they
haven’t thought it through to its logical conclusion.

Fortunately, there is an easy remedy to make outsourcing successful. First move
(preferably outsource) management to the new geography. This gives the appropriate
focus and commitment to the endeavor. The reluctance to move work from the US to the
new geography will be eliminated. Redundant and bloated management in the US is
reduced, as is employee discontent when they see that management is making the
sacrifice as well. Of course, the US based managers to be outsourced will offer a myriad
of reasons why they should keep the management function in the US. Most of this will
be self-preservation (and easy to spot) but some valid arguments may surface as well.
These will be very useful for executive management to consider and analyze when
determining if outsourcing is the right move.

Too Much Management

Let’s look at my management chain:
   -   Randy Kerr, E&TS Deleivery Operations Manager
   -   Tim Ravey, Vice President
   -   Kevin Carswell, Vice President
   -   Satish Gupta, General Manager
   -   Adalio Sanchez, General Manager
   -   Bill Zeitler, Senior Vice President
   -   Sam Palmisano, CEO
As I see it, there’s two too many Vice Presidents, and an extra General Manager getting
in the way between you and me. It’s time to cull the herd. With all the moaning and
complaining about our cost structure being out of line, I’d look here before launching an
aggressive outsourcing program.

This may be difficult to implement if you know these guys personally but I can help. I
would arrange meetings where you have an opportunity to continue chatting as you walk
out to the parking lot with the unsuspecting target. Take note of the automobile they are
driving. If it’s a Lexus, Jaguar, BMW, Mercedes or other symbol of conspicuous
consumption, that’s the guy you need to “right-size.” If he’s driving a Chevy Impala,
Ford F-150, Hyundai Sonata, etc, he’s a keeper. You want someone who’s more
concerned about transportation rather than “neighbor image.” You’re welcome.

Plain English

I’ll be honest—I never fully grasped “e-Business” or “On Demand.” I never understood
what a customer would get when they picked up the phone, called IBM and ordered “e-
Business.” I understand hosting, networking, software to make it all work but somehow
“On Demand” never connected in my mind. Similarly, I’ve had enormous difficulty
understanding “Practice” and “Delivery” here in Engineering and Technical Services.
Apparently our customers don’t get it either, judging by the glazed-over look in their eyes
when we try to explain it.

Perhaps it’s just me but I think we would sell much more and more quickly if we simply
described what it is we’re offering in plain English. I think “design and development” is
much more clear that “Practice.” “Purchasing” means more to me than “Procurement” or
“Integrated Supply Chain,” etcetera. You get the point.

Turning nouns into verbs, to me, is a sign of depleted creativity. I’m immediately
suspicious of those who dollarize, summarize and itemize—izing nouns should be
grounds for dismissal (although I’m guilty of the practice).

Again, I’m an electrical engineer, not a marketing and advertising specialist but along the
same line as “Speaking in English,” I feel there is a bountiful harvest for IBM to reap if
we only told folks what it is we’re selling.

For as long as I can remember, I’ve seen IBM ads with guys on a park bench speaking a
foreign language, a guy yaking on a cell phone, lots of artful image. I’ve heard about “e-
Business” and “on Demand” but I have not a clue as to what IBM is selling—and I work
here. I’ve asked friends, family and associates if they “get it” but they all say no too.
Perhaps I associate with idiots but statistically, one of them should be smart. I know that
the agencies producing ads for IBM are winning lots of awards but they should be more
concerned with generating for IBM, lots of business.

For example, take the IBM ThinkPad. Many people know they are good machines but
view them as too expensive. I never saw an ad showing that a ThinkPad was price
competitive. I never saw an ad showing what happens when you drop a Dell vs. an IBM
ThinkPad. I never saw an ad showing what happened to an HP laptop when you spill a
cup of coffee on it vs. the ThinkPad. I never saw an ad showing how a simple bevel on
the front of the ThinkPad made it infinitely more comfortable to use. I never saw an ad
showing how our battery connector doesn’t break. I’m convinced IBM could have
quintupled ThinkPad sales simply by informing the general public via mass media
(television) why we spent so much on research and development and what that means for

In short, if you advertise it, they will buy. But you have to tell them in plain English.
Don’t sell image, sell servers, software and services.

The Rolex
Not so long ago, IBM used to give a Rolex as a 25th anniversary gift. I can kind of
understand why they don’t now. Employees bring their problems to work, immerse
themselves in petty politics, actively search for reasons to resist corporate initiatives,
complain about every minor difficulty and demand more and more from the company
that’s after already paying them for their effort (Kersten, 2005). Why give them a nice
watch just because they survived the axe for a quarter century? Call me shallow and
materialistic but I really wanted the Rolex.

This is, perhaps, my greatest disappointment at IBM. Yes, it’s silly, yes it’s depraved but
I really really wanted that Rolex. Sure, it was just the Datejust in a stainless steel case
and yes, I would prefer the Bi metal Submariner but it was something I was really
looking forward to. I would never buy one on my own, but if IBM was willing to give
me one just for a quarter century of servitude, I’d take it. I passed up several good job
offers over the years because of that Rolex and probably would still be here out of
gratitude. Sadly, when I hit 25 years of service, the Rolex was history.

On the off chance that you would like to discuss this further, I may be contacted at or 914-475-3664.


John C. Ceccherelli S/N 018014

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