Volume II, Issue 40 - Trends, Stats & Insights: IBM


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IBM's consulting revenues were hit hard in its most recent fiscal quarter. While profitability has increased, those increases have been driven largely by expense reductions as a result of changes in IBM's global delivery model; and the company has no plan to pass those savings along to clients in reduced fees.

This Research Note explores the impact of IBM's transformation and shifts in consulting resources on the company's ability to deliver on its promise to provide higher quality services to clients, while simultaneously providing higher margins to investors, given the firm's strategy.

Our Note offers perspective on IBM's Q2-2009 financial results for services, along with recommendations on what clients should do to assess the ongoing transformation at IBM and potential impacts on strategic sourcing initiatives for consulting, IT services, and outsourcing

Table of Contents:

IBM Global Services: Summary of Financial Results -- Q2 2009 3
Global Business Services 3
Global Technology Services 4
Strategic Initiatives and Large Transactions 4
Looking Forward 4

MR Perspective 5

Our Assumptions: Based on IBM Statements 5

Impact on Client Service Quality 6

Effects of Strategic Actions on Client Engagements 7
Deteriorating Service Quality 7
Decreased Morale 7
Decreased Productivity 7
Client Contract Awards Shift Business Away from IBM 7
IBM Does another Round of Cost Cutting 7

Client Recommendations 8
Be sensitive to any deterioration in IBM service quality 8
Identify and Vet Key Staff 8
Identify Deliverables and Timeframes 8
Advanced Planning 8
Give IBM Feedback 8

Conclusion 9

IBM's Strategy 10
Our Strategy 10
IBM Business Model 10
Related Reading 10

Research Note is 10 pages in length. Delivery is via PDF, and includes an enterprise license for the procurement organization and internal users for any size non-consulting organization.

Consulting firms and internal consulting operations must call for a customized license quotation based on number of professionals. MR.net client discount is applied at checkout (10 percent for this item). Use email address on-file at checkout to receive discount.

· Consulting Category Management: Client Roadmap to Value Leadership ( MR Vol. I, No. 84)

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