Original URL: http://www.theregister.co.uk/2009/04/01/who_will_run_ibm/

Who is going to run IBM?

Chuckle or curse - you decide

By Timothy Prickett Morgan

Posted in Data Centre, 1st April 2009 16:02 GMT

There is a tradition, but certainly not a rule, that the person running IBM retires at 60. In years gone by, as one chairman and chief executive was getting ready to retire, an up-and-coming executive from the direct reports to the CEO has been tapped to be president, and thereby anointed next CEO.

Sam Palmisano, currently holding the triumvirate of chairman, CEO, and president, is 58 years old. And whether or not people on the outside are thinking about who his successor might be, you can bet there is plenty of talk and jockeying for position inside Big Blue.

When Louis Gerstner took over as chairman and CEO at IBM on April Fool's Day in 1993, the company was a mess, and I have always contended it was such a mess that Gerstner quickly figured out that IBM could not be broken up into Baby Blues as many at the time had suggested because the process of breaking IBM up would have exposed how weak the IT giant really was thanks to a decimated mainframe business, a joke of a Unix server and open systems software business, and a services business that was not much more than hand-holding for mainframe shops.

Gerstner, you remember, was formerly the head of American Express's charge card business, and a few years after private equity firm KKR bought RJR Nabisco, he took over that company. But for a dozen years before all that, Gerstner was a McKinsey consultant, and that is where he learned his chops in business.

Palmisano's rise coincided with Gerstner's arrival. When Gerstner decide to emphasize services sales at Big Blue, Palmisano had been put in charge of that unit after Dennie Welsh, who had run IBM's Integrated Systems Solutions Corporation, the arm's-length services company that was created by the settlement of the 1969 antitrust lawsuit against IBM by the US Department of Justice and who was tapped to be the first general manager of Global Services in 1995, had to leave for medical reasons.

In 1999, when Palmisano was 48, was tapped to run IBM's Server Group, and spearheaded the company's move into Linux and open source. Soon after that, he was tapped to be president and chief operating officer at IBM, and everyone knew Sam was The Man. In March 2002, Palmisano was named CEO, and Gerstner, who was 60, stayed on as chairman until the following December to let Wall Street got used to the idea that the man who saved IBM from itself might retire. (He didn't stay retired for long. In January 2003, Gerstner took the position of chairman at private equity giant The Carlyle Group.)

IBMers are pretty secretive about their birthdays, and reasonably so. But the question now is this: who is experienced enough, and yet young enough, to take the reins at Big Blue? Palmisano has not tapped a president or COO, so he isn't helping us figure it out. And without birthdays, which I cannot easily get, you are going to have to trust my age gauge as we sort through the top brass.

Let's take a look at Palmisano's direct reports alphabetically.

Erich Clementi, general manager of enterprise initiatives (mostly cloud computing), is a smart mainframer who is probably not young enough to take over, if history is any guide. Ditto for Mike Daniels, GM of the Global Technology Services group which is a huge piece of IBM.

Jon Iwata, who is the senior vice president of marketing and communication, can't run IBM, but will help the next CEO do the job; Iwata helped create the image of Palmisano as an IT statesman, one who doesn't speak publicly very much, unlike the maniacal egotists at Apple, Oracle, Microsoft, Intel, Sun Microsystems, Dell, and such. John Kelly, who is the director of research at Big Blue, is young enough, but it seems unlikely that he will run IBM. (The highest-level technologist at IBM was Jack Kuehler, who rose to the position of president under chairman and CEO John Akers, who presided over the near bankrupting of IBM in the late 1980s and early 1990s.)

Frank Kern, who runs Global Business Services now (only recently appointed), is probably not young enough to take the helm (again, that's not a judgment on my part on their capabilities, but rather on the general idea that you get someone in their late 40s or early 50s to run Big Blue). Mark Loughridge, IBM's chief financial officer, is probably young enough, but come on, the CFO? I know he has some printer patents, but Loughridge is good at what he does now. Randy MacDonald, the SVP of human resources, is almost certainly not in the running, and Steve Mills, general manager of Software Group and one of the most capable executives at the company, might be too old for the job based on historical precedent.

This is where it starts to get interesting in the IBM top brass alphabet.

Bob Moffatt, who was tapped to be general manager of the company's Systems and Technology Group last summer when lifer Bill Zeitler, who has been an IBM systems exec since he left college, retired, is a probably a contender. Moffatt ran IBM's PC business (sold off to Lenovo) and its printer business (sold off to Ricoh) and has spent years running IBM's supply chain and cutting costs as operations have been moved overseas. Running STG is his first stab at running a big piece of IBM that actually has a hope of making money. I just hope Moffatt doesn't sell off the server business.

Ginni Rometty is also a contender, I think. She started out her career at General Motors, and eventually ran IBM's vertical industry business dedicated to financial services and insurance, including stints in Switzerland and Japan. (IBM likes its best executives to get a global perspective.) She eventually was put in charge of Global Services for the Americas and then was put in charge for marketing and sales for all of Global Services.

When IBM bought the consulting business of PriceWaterhouseCoopers, Rometty was put in charge of that integration, and when Global Services was divided into two pieces because it had become too big, she was put in charge of Global Business Services. This bit of IBM has about a quarter of its employees and about a fifth of its revenues.

Linda Sanford, who has the nebulous title of senior vice president, on demand transformation and information technology, is also a contender. Sanford helped found IBM's supercomputer business in the early 1990s, and has been a general manager in charge of storage (when it grew) and mainframes (when IBM made the difficult transition from bipolar to CMOS mainframe engines). The job she has now is really something akin to chief technology officer at Big Blue, where she is tweaking and tuning the company's systems and business processes. (Don't you just hire Global Services to do that?)

There's one more possible contender who is not on the direct reports list. The IBMers I spoke to say that Rod Adkins, who is senior vice president of development and manufacturing within Systems and Technology Group, could be in the running. Adkins was a general manager for desktop PCs way back when, and was once general manager for Unix systems within Server Group when that was a separate job. He has experience as a high-level executive in printer, mainframe, storage, and software products at IBM, too.

Of course, there is one other possibility that is not yet on the list of direct reports to Palmisano.

Like Gerstner, this person is an ex-McKinsey consultant. (If such a thing is possible.) He was the founder of a small software company that was acquired by a much bigger one during the dot-com buildup. He rose through the ranks at that company very quickly, like Palmisano, and who found himself in charge of a struggling IT giant that he is trying to transform, like Gerstner. Yes, ladies and gentleman, I am talking about Jonathan Schwartz, president and CEO at Sun Microsystems. Well, for maybe another week or so.

$8bn seems like an awful lot to pay for some software and servers and a potential new CEO some day. Anyway, the idea seems to strike the IBMers I spoke to with a kind of horror. (Many cursed, some spat, but then they all laughed.) Which was the fun bit about April Fool's. It will be even funnier should it, by some strange twist of fate, come to pass.

Stranger things have happened. Like AT&T buying NCR, or IBM buying Sun. ®