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IBM Partners Applaud CEO Succession Plan

Solution providers say helping partners move from relying on hardware sales to selling cloud computing services will be Rometty's biggest challenge.

IBM channel partners see a channel advocate in Virginia "Ginny" Rometty, the company's top sales executive who was named this week to take over as the company's CEO on Jan. 1.

"Ginny has always been very supportive of the channel, always been a big backer of the channel," said John McCarthy, senior vice president and chief operating officer of Mainline Information Systems, one of IBM's biggest channel partners.

And solution providers are reveling in what they see as IBM's stability and clearly defined business direction -- a "well-oiled machine," one partner called it -- contrasting the smooth executive transition with the turbulence at rival Hewlett-Packard.

But they say Rometty faces a big task in helping IBM's channel partners transition from reselling hardware, a major business for many IBM partners, to providing cloud-computing services. "How do we make money as a midmarket partner in a cloud-computing world," said Tony Merendino, president of ServIT, a Kennesaw, Ga.–based IBM partner.

Tuesday IBM's directors named Rometty, currently IBM's senior vice president and group executive sales, marketing and strategy, to succeed CEO Sam Palmisano as of Jan. 1, 2012. Palmisano, CEO since 2002, will retain the post of chairman.

Rometty will be IBM's ninth CEO since the company's founding and its first woman chief executive. A 30-year-veteran of IBM, she joined the company as a systems engineer in 1981 and in her current post is responsible for leading IBM's global strategy, marketing and communications functions.

Most solution providers interviewed for this story expressed little surprise that Rometty, 54, was named Palmisano's successor. "It shows that IBM was looking for the best possible executive leadership, with the right skills, to take the reins," said Ray Scardelli, sales and marketing vice president at Micro Strategies, a Denville, N.J.-based IBM partner. He noted that Rometty has held a range of jobs at IBM and it was pretty clear she was being groomed for the top job.

Prior to her current position, Rometty was senior vice president of IBM Global Business Services, where she led the successful integration of PricewaterhouseCoopers Consulting -- acquired by IBM in 2002 for $3.5 billion -- and built a global team of more than 100,000 business consultants and services experts. Rometty also served as general manager of IBM Global Services, America, and general manager of the company's Global Insurance and Financial Services Sector.

"It appears she has what it takes," said Merendino. He saw Rometty deliver a keynote speech at IBM's Partnerworld Leadership Conference in Orlando earlier this year and he was impressed by her articulation of IBM's direction, including the company's strategic plans for its software acquisitions, and its cloud-computing and managed services plans.

Next: What Partners See As Palmisano's Legacy


Mainline's McCarthy was a bit surprised the succession plans were made on such short notice rather than, say, six months or a year in advance. But he agreed it's probably better to move promptly with a change once the decision has been made rather than have a lame duck CEO for a lengthy period.

Another partner who asked not to be named expressed some surprise that Steve Mills, senior vice president and group executive – software and systems, wasn't named to succeed Palmisano. But Mills is 59, almost the same age as the current CEO. IBM has not said whether he sought the job.

The success of Rometty's tenure will largely depend on how well she guides IBM's channel partners into the cloud-computing era. Merendino noted that many IBM partners sell IBM servers to mid-market customers and that model will have to change as hardware becomes less important and IBM itself focuses more on cloud services.

McCarthy agreed, saying that helping partners monetize the cloud will be among Rometty's greatest challenges. Several partners pointed to her experience with IBM Global Business Services as a plus in that regard.

A number of VARs at the UBM Channel Best of Breed conference in Dana Point, Calif., this week also cited the need to guide IBM and its channel partners into cloud computing services as the most important task facing Rometty.

Partners, meanwhile praised Palmisano's success at setting IBM's long-range strategic direction while returning consistent, short-term financial results. The company has recorded 32 quarters of earnings-per-share growth and it has a clear strategic direction with its focus on such growth markets as cloud computing, business analytics, security, emerging markets such as India and China, and forward-thinking initiatives such as "Smarter Planet."

Scardelli at Micro Strategies called the Smarter Planet initiative, which foresees increased use of IT and analytics in everything from building environmental control systems to national power grids, "visionary" and getting customers and partners to understand it and buy into the concept will go down as one of Palmisano's biggest accomplishments.

"It's hard to argue with results and his tenure has been results-driven," McCarthy said.

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