IBM Reorganizes Hardware Sales

In one of its biggest restructurings in years, IBM's Systems and Technology Group (STG) is reorganizing its server and storage system sales and marketing efforts around types of customers rather than platforms. Thursday an IBM executive said the new customer-focused business units created in the restructuring will provide solution providers with more "customer-facing resources" to help drive channel partner opportunities.

"It was clear that we needed to shift our axis from a product-outward approach to a partner- and customer-in approach," said Tom Jarosh, who as vice president of transformation for STG is the architect behind the reorganization.

While Jarosh said the restructuring would result in a small number of layoffs, he said most of the changes involved shifting staff from internally-focused staffers to positions that deal more directly with customers. Details of the cutbacks weren't disclosed.

The re-organization "will put STG in a much stronger position to set the agenda for the next generation data center or for innovative solutions in SMB," said William Zeitler, senior vice president and STG group executive, in a memo sent early Thursday to managers throughout STG. "And we will be better aligned to deliver a rapid, well-orchestrated response across our platforms and partner offerings as new standards and important trends emerge, like cloud computing and data center integration," the memo said.

IBM's hardware sales could use a boost. A Gartner report in November said IBM's server sales plunged in the third quarter of 2007, dropping nearly 11 percent from the same period one year earlier to 92,582 units, according to Gartner. Server-related revenue fell 6.5 percent to $1.5 billion during the quarter while IBM rivals Dell and HP both gained in server sales.

STG is creating four new business units: Enterprise Systems focusing on large clients, Business Systems for small and midsize customers, Industry Systems that cater to customers in specific industries such as retail and healthcare markets, and Microelectronics for customers that buy IBM's custom microprocessors and ASICs.

Under the old organization, customers and channel partners often ran into inconsistent business practices from one business unit to the next, such as different contract terms and conditions, loaner programs and bidding processes, Jarosh said.

The Business Systems unit will be of particular importance to channel partners given its SMB focus. The unit will be managed by Erich Clementi who once led IBM's z Series mainframe division and most recently served as general manager of Managed Business Process services within IBM Global Technology Services.

The Enterprise Systems unit will be led by Jim Stallings while Industry Systems will be managed by Curtis Tearte and Microelectronics led by Adalio Sanchez. The business units will have staff dedicated to working with channel partners and distributors in conjunction with IBM's Global Business Partners organization which remains largely unchanged, Jarosh said.

One significant change is the move by Deborah Thompson, currently vice president of marketing for the Business Partners organization, to the new Enterprise Systems group where she will be vice president of offerings management. Her replacement has not been named.

Each business unit will be supported by "integrated sales teams" led by more than 300 systems sales managers, according to Zeitler's memo. "These new client-facing roles will have more impact and will be more central to the success of STG," the memo said. Sales representatives will continue to be compensated for sales through channel partners as they are today to avoid channel conflict, Jarosh said.

IBM will maintain four platform business units that support the customer business units: Mainframes led by Anne Altman; Power Systems, including the System p and System i servers, managed by Ross Mauri; Modular Systems, including System x servers and IBM BladeCenter, overseen by Rich Hume; and Storage led by Andy Monshaw. Those units will manage product-specific tasks such as product market research, quality assurance and inventory management, according to Jarosh.

This story has been updated.