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IBM Global Technology Services: New Leader, New Revenue?

Published
  • November 05 2014, 1:09am EST

When Martin Jetter takes over IBM Global Technology Services on Jan. 1, 2015, will he be able to jumpstart the business unit's revenue? Or is the classic IT services revenue model due for an overhaul amid cloud and on-demand applications?

IBM CEO Ginni Rometty announced the IBM Global Technology Services leadership change in an internal online memo. When Jetter moves into IBM top services slot, his predecessor -- Erich Clementi -- will move to a new role that has yet to be announced, according to The Wall Street Journal.

Word of the services shakeup comes less than a month after Rometty abandoned IBM's 2015 financial goal of $20 per share earnings. The shift from traditional hardware and software toward cloud and mobile apps essentially made it impossible for IBM to reach that original profit goal, set by Rometty's predecessor Sam Palmisano. While abandoning the profit goal, IBM in October also punted major chip operations to GlobalFoundaries.

Meanwhile, IBM is trying to show strength -- or progressive changes -- in multiple ways. In a nod to the shift from on-premises hardware running complex applications, IBM announced a range of Big Data cloud moves last week.

Reinventing IBM Global Technology Services

Now, the bigger challenge: On the one hand, it's obvious that IBM must push cloud and mobile apps to offset traditional hardware and software sales challenges. On the other hand, the path forward for IBM Global Technology Services is less obvious -- since many traditional on-premises consulting projects could disappear into the cloud.

For its Q3 2014, IBM Global Technology Services revenue was $9.2 billion, down 3 percent from Q3 2013. Rometty is calling on Jetter -- who has a strong track record in IBM's Japan -- to figure out a fix.

But here's the thing: It seems like most of the major IT consulting companies are struggling to grow revenues as big CRM and ERP projects -- which used to required multi-year engagements -- are replaced by cloud projects that take days, weeks or months.

How can IBM continue to monetize its global services amid the market changes? Jetter will get his chance to solve that riddle starting in January 2015.

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