Sam Palmisano, Chairman and CEO, IBM
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IBM will lose its claim to being the world's largest technology vendor when Hewlett-Packard reports its fiscal year-end results. But that may suit IBM Chairman and CEO Sam Palmisano just fine.
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Palmisano, 55, is instead focused on what he sees as a more strategic prize: being the world's largest technology services company. Last year, he sold Armonk, N.Y.-based IBM's PC business to Lenovo to focus on
and services, stripping IBM of $11.5 billion in revenue but jettisoning a money-losing unit.
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Palmisano's strategy is paying off. Software sales were up 8.5 percent in the third quarter, compared to overall growth of 5.1 percent. Better yet, profits reached $2.2 billion, up 46.5 percent from the year-earlier period. And IBM Global Services accounted for $12 billion of IBM's $22.6 billion in third-quarter sales. Now IGS is packaging "service products" that could be deployed in partnership with the channel.
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Some partners say Palmisano has done a good job implementing consistent channel programs that stress partner profitability, but he could be more vocal about stressing the channel's value to his field sales force. "He needs to say more so that the field gets it," says Rick Kearney, president and CEO of Mainline Global Systems, Tallahassee, Fla., one of IBM's largest solution providers.
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Palmisano's support of the channel is crucial as he shifts the company toward software and services, says Jim Simpson, president of MSI Systems Integrators, Omaha, Neb. "There is still conflict between partners and IGS in
accounts," he says.