There are several new data points this week in the ongoing cratering of IBM as an IT vendor. The state of Pennsylvania cancelled an unemployment compensation system contract that was 42 months behind and $60 million over budget. Big Blue has been banned from the Australian state of Queensland after botching a $6.9 million SAP project that will now reportedly cost the people of Queensland $A1.2 billion to fix. That’s some botch. Credit Suisse analyst Kulbinder Garcha says IBM has a cash flow problem and downgraded the stock. At IBM’s Systems & Technology Group, management announced to employees a one week mandatory furlough at the end of August or beginning of September. And finally, I’m told that there is now a filter on the IBM corporate e-mail system that flags any messages that contain the word Cringely.
These are acts of desperation and I can only conclude that IBM can no longer make the decisions necessary to save itself. It is so fixated on its goals and so sure its process is the only right way of doing things, it cannot see alternatives.
The Australian IT project debacle is a classic example of IBM’s unique way of managing projects. The core of project management is “documented deniability.” They will do exactly what you tell them. They will document it. They will work against the documented requirements. When done, you have to pay them because they did exactly what you told them. The key problem to this approach is “does it work?”
The ultimate goal of every project is to build something that produces value or income. A factory makes products. A bridge assists transportation. In IBM’s project management IBM does not care about the ultimate goal. That is their customers concern, not IBM’s. This is very important for IBM’s customers to understand. It is the reason so many big IBM projects are failing.
This is the way IBM historically does its business, even in better times. Remember the mantra has always been to fulfill customer requirements. But somewhere along the line the whole idea went horribly, horribly wrong.
IBM will sell you hardware, software, programming, and support services. What you do with it is your responsibility.
When a highway department wants to build a bridge, there are both stated and unstated requirements. The project manager and engineers start with the stated requirements and find and analyze all the unstated requirements. A highway department will have a general idea where the bridge should be built. In the analysis the bridge building firm may discover important reasons to build the bridge in a different location. The firm will look at traffic patterns and recommend and optimal design to meet the highway departments ultimate requirement — to make long term improvements in transportation.
If IBM built that bridge, they’d build it exactly where the highway department suggested and how they suggested. If the foundation was weak the the bridge started to tilt, it’s not IBM’s fault. You told them where to build the bridge. They did what you told them. They also never analyzed every aspect of your requirements. They did no testing. They did no prototyping. They just do what you tell them to.
They fulfilled customer requirements.
Fixated solely on its 2015 earnings target, IBM is making decisions based solely on their balance sheet. They are ignoring and damaging the overall operation of their business. They have the time and the money to save the company. Yet they are doing more and more things that are ultimately destructive to the very survival of IBM.