IBM: Managing Change During Turbulent Economic Conditions, Research Paper Example

Change in an organisation is an important undertaking for the survival of the organisation. The organisation needs to change to improve their product offerings, become profitable and meet the customers’ ever changing demand. Change in an organisation also helps business organisations control on cost they incur in production. This helps the business organisation to survive.

The current economic conditions of today are characterized by high costs of doing business, stiff competition, ever changing customer tastes and preferences, difficulties in obtaining financing among other challenges. In order for business organizations to survive in the current economic conditions, many organizations have adopted strategies that are geared towards ensuring that they can survive and continue being profitable organizations.

Many organizations have resulted to mean such as new product development in order for them to remain being profitable. For instance, IBM has in the past engaged in the development of new products to enable it overcome the challenges of doing business in the current economic conditions. IBM has developed new software and services that are geared towards helping clients to build connected and collaborative environments to utilize the rapid customer demand shifts that have transformed how the businesses woks. These new service offerings by IBM are designed to help clients not to resist the changes in the today’s economic conditions. They are designed to help these businesses to embrace this change and use the products to their advantage. These new products are aimed at improving collaboration within and outside the business organizations, utilizing technology to enable them meet the business requirements quickly and to make business processes more responsive and easier to change.

These new offerings are also designed to help business organizations to make business processes more responsive, easier to change and more agile and to help them support the increased workers and processes collaboration. The frameworks are geared towards turning software modules matching specific industry needs, make business solution deployment faster with low project cost risk, avail more choices via a validated ecosystem of partners and accelerate the adoption of business IT standards.

IBM has also designed new social networking tools that derive intelligence through crowd sourcing and social dynamics. The development of new mash-up software and offering solutions to enable unified communications, portal communities and mobile collaboration enable business organizations solve the daily challenges. These new initiatives by IBM have enabled it to overcome the current economic conditions.

IBM has also been able to cope with change in the current economic conditions through market innovation. Market innovation can be defined as the way a company has segmented its markets, clearly defining its customer needs and how it has used these into new products. IBM has moved into an e-business consumer and has focussed on particular vertical markets from a transaction processing organisation for corporate users. Through market segmentation, IBM has put its customers into various market segments so as to enable it handle the needs of a certain market segment. For instance the financial institutions market where IBM produces various software and hardware products for the market segment. This expands the market for IBM products.

IBM continues its endeavours of new product development to enable it survive the current economic conditions. In October 2009, the company introduced groundbreaking enhancements for managing data centers. This new product development has the capability of dramatically cutting down the cost of operations and at the same time making the deployment of new applications to minutes from weeks. These products give businesses a single terminal for controlling multiple kinds of IT systems and enables virtualization technology. This new product by IBM is VMControl products. The VMControl enables the combination of virtual and physical IBM servers to be managed as a single entity. This expands the advantages of virtualization by helping corporate data processing centers to simplify complicated management functions and enables the simplification and prioritization of critical resources such as the storage, memory and the CPU.

The VMControl can also help corporation that have embraced virtualization to cut on infrastructure costs. The enables centralization of controls of virtualized environment brings intelligence to data center operations. This in turn enables companies to manage huge amounts of information and information processing resources and steer them out to applications when they are required. This customer oriented innovation enables instilling confidence and loyalty to the consumers of IBM products and hence the IBM Corporation is able to command a huge market share that has enabled it to be profitable.

Technology innovation has also contributed largely to the success of IBM in the current turbulent economic conditions. IBM had two distinct generations of product architecture in IBM’s mainframe renewal. IBM replaced the old 31-bit bipolar processor with a 31-bit CMOS designs. The old bipolar circuits needed a constant supply of electric charge and a lot of cooling that in turn required huge expensive engineering. These old processors were mainly utilised for computing, task management and output / input to communication networks or storage devices. The new innovation of CMOS processor architecture use metal oxide semiconductor transistors that use energy only when switching them. This as a consequent requires less energy and cooling.

In order to hep IBM integrate the new product line development teams; the post of empowered program manager was created. The program managers hold the platform subsystems and specific products together.

IBM has also done restructuring of the hardware line of its business in order to survive in the current economic times. This announcement was made in June 2008 and was geared towards improving IBM’s ability to innovate and design new products for small and medium sized businesses. The restructuring was done in the Systems and Technology Group (STG) division and was the largest restructuring to be done by IBM in 15 years. This restructuring was triggered by a reduction of the STG division revenues by 10 percent in the third quarter of the 2007 year of income. The reorganisation led to the creation of four client focussed segments. These segments are: Business systems segment that is focussed n serving large organizations, the enterprise systems segment that is focussed on small and medium sized customers, the microelectronics segment that is focussed on serving customers who buy IBM’s microprocessors and ASICs and the industry systems segment to take care of the consumers in particular industries like health care and retail. The restructuring involved mainly transferring internally focussed workers to positions that require dealing more closely with the customers.

IBM has also lain off some of its staff in order that it can survive being a profitable venture. This was demonstrated in June 2008 during the restructuring of the STG division that led to some of the staff members being laid off. This is a cost cutting measure to ensure that the company’s costs are attainable without leading to cash flow problems. However in carrying out the activity of lying off the staff, the company did it wisely to avoid having to pay huge sums of money as termination benefits. This was done through restructuring and transferring the staff to positions where they would deal more closely with customers.

To be profitable IBM also instituted a widespread efficiency schemes. This scheme was instituted to aid in cutting cost and making sure that the company is profitable in its all its product lines. In fact this enabled the company to better its second quarter net profit for the year 2009 by 12 percent compared to the 2008 year of income. This restructuring is expected to better the 2009 full year earnings for the company.

IBM has also adopted pricing system that is meant to make its products more common to customers. IBM changed the basis of processor value units instead of actual processors. This system will lead to a closer link between the horsepower of the computer’s software and the cost of the software. This move is one among several adopted by the computing industry to ensure that the software pricing is a full reflection of the new technology. At first, the actual prices for IBM will not change. However where a user purchases a software license in the past, it will now buy 100 processor value units. Then IBM will adopt a pay per use policy that shall address virtualization.

IBM has also ventured in new untapped markets to enable it expand its revenue through increased sales. In October 2008, IBM extended its most commonly used product, Lotus Notes software, to new markets by delivering a hosted service, Lotus Notes Hosted Messaging. The company has been busy innovating and driving Lotus Notes and Domino into new markets in social networking, iPhone users and unified communications clients. This product by IBM has made it possible for IBM to enter into the nascent cloud services market with product like IBM’s Bluehouse extranet collaboration service and Sametime Unyte Web conferencing software. The company has extended the cloud service strategy to its franchise, Lotus Notes, in an attempt to attract and retain new customers that includes insurance companies, global manufacturing and in retail businesses. Customization of the Lotus Notes Hosted Messaging to meet the customer needs is possible. This customization is done by an IBM services team. This again has enabled the IBM Corporation to win more customers for its products.

The advantage of the hosted service is that it does not require the customer to buy, house or supply energy to hardware required to run the software. This enables the customer to concentrate on using their IT resources on other strategic business operations.

The pricing of this Lotus Notes Hosted Messaging service is also affordable. For instances prices starts less than $10 for each user a month. This product is designed to serve companies with between 1,000 to 10,000 employees; however the product can be tailored to suit smaller and larger corporations. This makes the product common among customers.

In an attempt to expand its market, IBM has also made it products more accessible to the consumers. This helps more people to make use of the services provided by the companies. It helps the consumers of IBM products to understand and to embrace the varied needs of their customers. This can be seen I the various product that IBM has made for the financial institutions. In the banking sector, incorporating accessible solutions helps to make banking easier and more convenient to the bank customers. This reflects that the banking organization is committed to corporate social responsibility through removing the barriers that inhibit interaction. With the removal of these barriers, new customers and existing customers are able to utilize the services of these banking corporations. This helps the organization reach its mission. With these benefits accruing from making use of IBM innovations, many financial institutions become IBM’s customers; hence IBM is able to enlarge its market.

IBM focus on customer service has also ensured that the corporation remains profitable. IBM has established an online support to help the consumers of its products deal with the any challenges in using IBM’s products. The online customer support system also enables the customers to check the status of their orders, invoices, payments, inventory and maintenance. This is convenient to the customers and eases the workload on the customer’s side and hence many consumers would purchase IBM’s products. This again has served to increase loyalty of IBM customers and hence IBM market share rises.

IBM has also established a dedicated customer service team that is responsible for dealing with all customers queries and also helps in customizing IBM products to suit the consumer user requirements. This team is also involved in marketing of IBM products which makes IBM products to be common among consumers.  In most countries, there is a customer service representative who is responsible for handling customer issues in that particular country. This has helped to instil confidence to the consumers of IBM products and hence the corporation is able to remain profitable.

IBM has also established the IBM Software Services for Websphere team which consist of highly skilled consultants who have broad architectural knowledge, very competent in technical skills, which exhibit best practices expertise and have close ties with the IBM research and development laboratories. The services offered by this team consist of skills transfer, migration, implementation, architecture and design of services. It also consists of a customized workshop and education that fits IBM’s customer’s goods. This has enabled IBM to have a competitive advantage over its competitors in the market.

Through IBM Financing Advantage, IBM is able to help small and medium sized enterprises to acquire IT infrastructure from IBM. This is made possible by use of leases, loans on IT infrastructure and other complex transactions. The IBM Financing Advantage has enabled a simplified structure, has streamlined the quoting and application processes, made it possible for the creation of offline tool capabilities and accelerated contract delivery. This financing plan by IBM has made it possible for the customers of IBM to obtain IBM products easily. This in turn has made it possible for IBM to expand its market share.

In conclusion the IBM Corporation has undertaken various changes in its operations and in the way it conducts it business in order to survive and remain profitable in the current turbulent economic times where corporations are faced with challenges such as financing, competition, ever changing consumer tastes and preferences and government regulation and interference.

References

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