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Case Review - Change & Continuity Management at IBM

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5/14/2015
Case Study
Change & Continuity Management at IBM

By

SHAILESH KUMAR JHA (MBA, DMS, IIT DELHI)

 Change and Business Continuity at IBM

The Change & Business Continuity at IBM – A Constant Evolution

History of IBM
International Business Machines, abbreviated IBM and nicknamed "Big Blue", is a multinational PC
technology and IT consulting organization headquartered in Armonk, New York, United States. The
organization is one of the few information technology with a continuous history going once more to the
nineteenth century. IBM produces and offers PC hardware and software (with an attention on the latter),
and offers base infra services, hosting services, and consulting services in ranges extending from
mainframe computer to nanotechnology. Ginni Rometty is the president and CEO of IBM.
The bases of IBM go once again to the 1880s, decades prior to the improvement of electronic PCs.
Since the 1960s or prior, IBM has portrayed its development as a merger of three organizations: the
Tabulating Machine Company (with inceptions in Washington, D.C. in the 1880s), the International
Time Recording Company (established 1900 in Endicott), and the Computing Scale Company
(established 1901 in Dayton, Ohio, USA). The merger was built by noted lender Charles Flint, and the
new organization was known as the Computing Tabulating Recording (CTR) Company. CTR was fused
on June 16, 1911 in Endicott, New York, U.S.A. CTR was a holding organization; the individual
organizations kept on working utilizing their secured names until the holding organization was
dispensed with in 1933. The 1911 CTR stock outline expresses that four organizations were fused; the
three portrayed by IBM, above, and the Bundy Manufacturing Company (established in 1889). Stone
stayed an individual from the leading body of CTR until his retirement in 1930.
The organizations that blended to structure CTR fabricated an extensive variety of items, including
worker time-keeping frameworks, measuring scales, programmed meat slicers, espresso processors, and
in particular for the improvement of the PC, punched card gear. The product offerings were altogether
different; Flint expressed that the solidification.
In 1920, it propelled a representative daily paper, Business Machines, which brought together scope of
the majority of IBM's organizations under one distribution. It presented the Quarter Century Club, to
respect workers with 25 years of administration to the organization, and propelled the Hundred Percent
Club, to remunerate deals staff who met their yearly quantities. In 1928, the Suggestion Plan program
– which allowed money prizes to workers who contributed suitable thoughts on the best way to enhance
IBM items and methods – made its introduction.
IBM and its ancestor organizations set aside a few minutes recording items for a long time, climaxing
in the 1958 offer of the IBM Time Equipment Division to Simplex Time Recorder Company, IBM
produced and sold such supplies as dial recorders, work recorders, recording entryway locks, time
stamps and movement recorders.
The organization likewise extended its product offering through inventive designing. Behind a center
gathering of creators – James W. Bryce, Clair Lake, Fred Carroll, and Royden Pierce – IBM delivered
a progression of critical item developments. In the idealistic years taking after World War I, CTR's
building and examination staff grew as good as ever components to meet the expanding needs of its
clients. In 1920, the organization presented the first finish educational time control framework, and
dispatched its first printing tabulator. After three years the organization presented the first electric
keypunch, and 1924's Carroll Rotary Press created punched cards at beforehand incomprehensible rates.
In 1928, the organization held its first client customer engineering education class, showing an early
recognition of the importance of tailoring solutions to fit customer needs. It likewise presented the 80-
section punched card in 1928, which multiplied its data limit. This new organization, soon named the
"IBM Card", got to be and remained an industry standard until the 1970s.
The Great Depression of the 1930s introduced a phenomenal financial test, and Watson met the test
head on, keeping on putting resources into individuals, producing, and mechanical advancement

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

regardless of the troublesome monetary times. As opposed to diminish staff, he procured extra
representatives in backing of President Franklin Roosevelt's National Recovery Administration
arrangement – not simply business people, which he kidded that he had a long lasting soft spot for,
however builds as well. Watson not just kept his workforce utilized, he expanded their profits. IBM was
among the first enterprises to give bunch extra security (1934), survivor advantages (1935) and paid
excursions (1936). He upped his risk on his workforce by opening the IBM Schoolhouse in Endicott to
give instruction and preparing to IBM representatives. Furthermore he incredibly expanded IBM's
exploration capacities by building a modern research laboratory on the Endicott manufacturing site.
Before the end of the 1970s, IBM had met and surpassed the legacy of the Golden Decade, and the
arrangement of John R. Opel as CEO in 1981 agreed with the start of another period in figuring – the
time of individualized computing.
The organization procured Don Estridge at the IBM Entry Systems Division in Boca Raton, Florida.
With a group known as "Undertaking Chess," they fabricated the IBM PC, propelled on August 12,
1981. IBM quickly got to be to a greater extent a vicinity in the shopper commercial center, because of
the huge Little Tramp publicizing battle. In spite of the fact that not a dynamite machine by innovative
measures of the day, the IBM PC united the greater part of the most attractive peculiarities of a PC into
one little machine. It had 128 kilobytes of memory (expandable to 256 kilobytes), maybe a couple
floppy circles and a discretionary shading screen. Furthermore it had the esteem of the IBM brand. It
was not modest, however with a base cost of US$1,565 it was moderate for organizations – and
numerous organizations acquired PCs. Consoled by the IBM name, they started purchasing
microcomputers all alone plans went for various applications that corporate PC divisions did not, and
by and large proved unable, oblige. Commonly, these buys were not by corporate PC divisions, as the
PC was not seen as a "fitting" PC. Buys were frequently actuated by centre supervisors and senior staff
who saw the potential – once the progressive VisiCalc spreadsheet, the executioner application, had
been surpassed by a much all the more influential and stable item, Lotus 1-2-3.
Be that as it may, IBM soon lost this early lead in both PC equipment and programming, much
appreciated to a limited extent to its extraordinary (for IBM) choice to contract PC segments to outside
organizations like Microsoft and Intel. So far in its history, IBM depended on a vertically coordinated
method, constructing most key segments of its frameworks itself, including processors, working
frameworks, peripherals, databases and so forth. While trying to speed time to market for the PC, IBM
picked not to construct an exclusive working framework and chip. Rather it sourced these crucial parts
from Microsoft and Intel separately. Humorously, in 10 years which denoted the end of IBM's imposing
business model, it was this game changing choice by IBM that passed the wellsprings of its monopolistic
force (working framework and processor structural planning) to Microsoft and Intel, preparing for
ascent of PC compatibles and the making of several billions of dollars of business sector esteem outside
of IBM.
Key Events in IBM Case History:
Year Key Events Description
IBM began operation as the Computing-Tabulating-Recording (CTR)
1911 Began Operation
Company.
CTR becomes International Business Machines aka IBM. Here's a look at the
1924 Creation of IBM
history of the IBM logo from its birth through the CTR days until today.
IBM’s Punch The U.S. adopts Social Security and IBM's punched card machines to help with
1935 Card and US the massive record keeping required to keep tabs on tens of millions of
Social Security Americans.
IBM becomes involved in the war effort, helping keep track of vital statistics.
Handholding
1942 Below, we see an IBM tabulating machine below used in keeping track of
during War
freight traffic in the country.

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

Year Key Events Description

IBM co-develops its first computer, the Automated Sequence Controlled
1944 First Computer Calculator aka Mark I, with Harvard University. It was used by the Navy to
calculate gun trajectories.
This was the Golden Age of IBM. Thomas J. Watson, Jr., became the president
Golden Age of
1952 of the company, marking, by the company's own reckoning, the beginning of its
IBM
time as a modern corporation.
VNET was an international computer networking system deployed in the mid-
Mid 1970s, providing email and file-transfer for IBM. By September 1979, the
IBM VNET
1970s network had grown to include 285 mainframe nodes in Europe, Asia and North
America.
IBM introduces the 5100 Portable Computer, a 50 lb. desktop machine that put
computer capabilities at the fingertips of engineers, analysts, statisticians, and
1975 IBM 5100 PC
other problem-solvers. More “luggable” than portable, the 5100 can serve as a
terminal for the System/370 and costs from $9000 to $20,000.
The Enterprise, the first vehicle in the U.S. Space Shuttle program, makes its
debut at Palmdale, California, carrying IBM AP-101 flight computers and
Space Shuttle and
1976 special hardware built by IBM.
Laser Printer
The first IBM 3800 printer is installed. The 3800 is the first commercial printer
to combine laser technology and electrophotography.
First Multi- A communication-enabled laser printer and photocopier combination was
1979 Function Copier introduced, the IBM 6670 Information Distributor. This was the first multi-
and Printer function (copier/printer) device for the office market.
Deal between
Microsoft and IBM sign a deal to put the former's operating system on IBM
1980 Microsoft and
computers.
IBM
The IBM Personal Computer goes mass market and helps revolutionize the way
1981 IBM PC the world does business. A year later, Time Magazine gives its “Person of the
Year” award to the Personal Computer
IBM acquires ROLM Corporation based in Santa Clara, CA (subsequent to an
ROLM existing partnership) to develop digital telephone switches to compete directly
1984 Partnership/ with Northern Telecom and AT&T. Two of the most popular systems were the
Acquisition large scale PABX coined ROLM CBX and the smaller PABX coined ROLM
Redwood. ROLM is later acquired by Siemens AG in 1989–1992.
IBM Fellows Gerd K. Binnig and Heinrich Rohrer of the IBM Zurich Research
Nobel Prize:
Laboratory win the 1986 Nobel Prize in physics for their work in scanning
Scanning
1986 tunnelling microscopy. Dr. Binnig and Rohrer are recognized for developing a
Tunnelling
powerful microscopy technique which permits scientists to make images of
Microscopy
surfaces so detailed that individual atoms may be seen.
J. Georg Bednorz and IBM Fellow Alex Müller of the IBM Zurich Research
Nobel Prize: Laboratory receive the 1987 Nobel Prize for physics for their breakthrough
1987 High-Temp discovery of high-temperature superconductivity in a new class of materials.
Superconductivity They discover superconductivity in ceramic oxides that carry electricity without
loss of energy at much higher temperatures than any other superconductor.
National Science
IBM collaborates with the Merit Network, MCI Communications, the State of
Foundation
1988 Michigan, and the National Science Foundation to upgrade and expand the 56K
Network
bit per second NSFNET to 1.5M bps (T1) and later 45M bps (T3).
(NSFNET)
IBM makes its most comprehensive product announcement in 25 years by
1990 System/ 390
introducing the System/390 family.
IBM re-enters the computer services business through the formation of the
Integrated Systems Solution Corporation. Still in compliance with the
1991 Service Business provisions of the 1956 Consent Decree, in just four ISSC becomes the second
largest provider of computer services. The new business becomes one of IBM's
primary revenue streams.
IBM introduces a new line of notebook computers. Housed in a distinctive black
case and featuring the innovative TrackPoint device nestled in the middle of the
1992 Think-Pad
keyboard, the ThinkPad is an immediate hit and goes on to collect more than
300 awards for design and quality.

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

Year Key Events Description

IBM misreads two significant trends in the computer industry: personal
Billion Dollar
1993 computers and client-server computing: and as a result is poorly positioned in
Losses
the marketplace.
IBM reports a profit for the year, its first since 1990. Over the next few years
the company successfully charts a new business course, one that focuses less on
1994 Turnaround
its traditional strengths in hardware, and more on services, software, and its
ability to craft technology solutions.
IBM releases the IBM Personal Dictation System (IPDS), the first wave of
speech recognition products for the personal computer. It is later renamed Voice
Speech
1994 Type, and its capabilities are expanded to include control of computer
Recognition
applications and desktops simply by talking to them, without touching a
keyboard.
LOTUS IBM acquires all of the outstanding shares of the Lotus Development
Development Corporation, whose pioneering Notes software enables greater collaboration
1995
Corporation across an enterprise and whose acquisition makes IBM the world's largest
Acquisition software company.
Microsoft Microsoft's market value passes IBM's market value, as personal computing
1996 surpasses IBM’s explodes, largely led by IBM's competitors like Dell and Compaq running
market share Microsoft Windows.
The 32-node IBM RS/6000 SP supercomputer, Deep Blue, defeats World Chess
Champion Garry Kasparov in the first known instance of a computer
1997 Deep Blue
vanquishing a reigning world champion chess player in tournament-style
competition.
IBM coins the term and defined an enormous new industry by using the Internet
1997 e-Business as a medium for real business and institutional transformation. e-Business
becomes synonymous with doing business in the Internet age.
IBM Research starts a computer architecture cooperative project with the
Lawrence Livermore National Laboratory, the United States Department of
Energy (which is partially funding the project), and academia to build new
1999 Blue Gene supercomputers (4) capable of more than one quadrillion operations per second
(one petaflop). Nicknamed "Blue Gene," the new supercomputers perform 500
times faster than other powerful supercomputers and can simulate folding
complex proteins.
IBM scientists discover a way to transport information on the atomic scale that
Quantum Mirage uses electrons instead of conventional wiring. This new phenomenon, called the
2000
Nanotechnology Quantum mirage effect, enables data transfer within future nano-scale electronic
circuits too small to use wires.
IBM launches its low-power initiative to improve the energy efficiency of IT
Low Power and accelerates the development of ultra-low power components and power-
2001
Initiative efficient servers, storage systems, personal computers and ThinkPad notebook
computers.
IBM joins forces with Memorial Sloan-Kettering Cancer Center (MSKCC), the
Crusade Against Molecular Profiling Institute and the CHU Sainte-Justine Research Center to
2005
Cancer collaborate on cancer research by building state-of-the-art integrated
information management systems
Lenovo purchases IBM's personal computing division, completing IBM's
The Selling of transition into a services company and away from selling directly to consumers.
2005
PC Division The company makes tens of billions of dollars selling services - not machines -
to businesses.
IBM delivers an advanced speech-to-speech translation system to U.S. forces in
Translation Iraq using bidirectional English to Arabic translation software that improves
2006
Software communication between military personnel and Iraqi forces and citizens. The
breakthrough software offsets the current shortage of military linguists.
IBM is recognized by the US EPA for its leading green power purchases in the
Renewable US and for its support and participation in EPA's Fortune 500 Green Power
2007
Energy Challenge. IBM ranked 12th on the EPA's list of Green Power Partners for 2007.
IBM purchased enough renewable energy in 2007 to meet 4% of its US

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 Change and Business Continuity at IBM

Year Key Events Description

electricity use and 9% of its global electricity purchases. IBM's commitment to
green power helps cut greenhouse gas emissions.
IBM has been granted more US patents than any other company. From 1993 to
2007, IBM was awarded over 38,000 US patents and has invested about $5
2007 Patent Power billion a year in research, development and engineering since 1996. IBM's
current active portfolio is about 26,000 patents in the US and over 40,000
patents worldwide is a direct result of that investment.
IBM's supercomputer Watson competed on the TV show Jeopardy! Against
2011 Watson Ken Jennings and Brad Rutter and won convincingly. The competition was
presented by PBS.
June 16: 100 Mark Krantz and Jon Swartz in USA Today state It has remained at the forefront
2011
years of IBM through the decades

The first 30 years of this industry’s history consisted of the technology inventors inside IT companies
talking to the technology implementers inside business and institutions. For most of that era, the
applications of the technology were fairly limited – focused on the automation of back-office processes
like accounting and payroll, or desktop applications such as word processing and e-mail.

A high margin opportunity IBM invested heavily in was software, a strategic move that proved equally
visionary. Starting in 1995 with its acquisition of Lotus Development Corp., IBM built up its software
portfolio from one brand, DB2, to five: DB2, Lotus, WebSphere, Tivoli, and Rational. Content to leave
the consumer applications business to other firms, IBM's software strategy focused on middleware –
the vital software that connects operating systems to applications. The middleware business played to
IBM's strengths, and its higher margins improved the company's bottom line significantly as the century
came to an end.

As IBM recovered its financial footing and its industry leadership position, the company remained
aggressive in preaching to the industry that it was not the Old IBM, that it had learned from its near
death experiences, and that it had been fundamentally changed by them. It sought to redefine the Internet
age in ways that played to traditional IBM strengths, couching the discussion in business-centric
manners with initiatives like ecommerce and On Demand. And it supported open source initiatives,
forming collaborative ventures with partners and competitors alike.

Change was manifested in IBM in other ways as well. The company revamped its scattershot
philanthropic practices to bring a sharp focus on improving K-12 education. It ended its 40-year
technology partnership with the International Olympic Committee after a successful engagement at the
2000 Olympic Games in Sydney, Australia. On the human resources front, IBM's adoption and
integration of diversity principles and practices was cutting edge. It added sexual orientation to its non-
discrimination practices in 1984, in 1995 created executive diversity task forces, and in 1996 offered
domestic partner benefits to its employees. The company is routinely listed as among the best places
for employees, employees of color, and women to work. And in 1996, the Women in Technology
International Hall of Fame inducted three IBMers as part of its inaugural class of 10 women: Ruth Leach
Amonette, the first woman to hold an executive position at IBM; Barbara Grant, PhD, first woman to
be named an IBM site general manager; and Linda Sanford, the highest – placed technical woman in
IBM. Fran Allen – an early software pioneer and another IBM hero for her innovative work in compilers
over the decades – is inducted the next year.

IBM had subsidiaries and operations in 70 countries in its early years. They included Austria, Belgium,
Bulgaria, Czechoslovakia, France, Germany, Holland / Netherlands, Italy, Japan, Norway, Poland,
Romania, the Soviet Union, Sweden, Switzerland, Yugoslavia, and others.

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

Evolution of IBM’s Operating Systems: IBM operating system have paralleled hardware
advancement. On ahead of schedule frameworks, operating systems represented a relatively modest
level of investment, and were basically seen as an aide to the hardware. When of the System/360,
however, operating systems had expected a much bigger part, regarding expense, intricacy,
significance, and danger.

IBM Service Organizations: IBM's initial predominance of the PC business was to some degree
because of its solid proficient services activities. IBM's point of interest in building software for its own
particular PCs in the end was seen as monopolistic, prompting antitrust transactions. Thus, a mind
boggling, manufactured "arm-length" relationship was made differentiating IBM's PC business from its
administration associations. This circumstance persevered for a considerable length of time. A sample
was IBM Global Services, an immense administrations firm that rivalled any semblance of Electronic
Data Systems or Computer Sciences Corporation.

Why and How IBM Survive (IBM survived by listening to clients): IBM survived its near death
experience of 1993, it had little to do with funding big expensive long-term projects. At the time, IBM
was losing more money than any company had ever lost in US history – USD 8.10 bn loss for the 1992
financial year. This was because IBM’s core mainframe business had been disrupted by the advent of
the personal computer and the client server. IBM couldn’t compete with the smaller nimbler less
diversified competitors.

The then CEO John Akers decided that the logical and rational solution was to split IBM into
autonomous business units (such as processors, storage, software, services, printers,) that could compete
more effectively with competitors that were more focused and agile and had lower cost structures. If
IBM had continued to follow the Akers path, IBM would not be celebrating its 100th birthday this year.

What happened was quite different. After Akers was fired as CEO, IBM hired Lou Gerstner as the new
CEO. It was the first time since 1914 that IBM recruited a leader from outside its ranks. Even more
striking was the fact that Gerstner had no background in computing.

Not knowing much about computing per se, Gerstner had the good sense to start listening to clients. He
discovered that the biggest problem that all the big companies were facing in 1993 was in integrating
all the separate computing technologies that were emerging at the time.

So while continuing to cut costs, Gerstner reversed the move to spin off IBM business units into separate
companies. Having understood IBM’s customers, he recognized that one of IBM’s greatest strengths
was its ability to provide integrated solutions for customers – a firm that could represent more than
piece parts or components—something he would not have learned by listening to the proponents of
different technologies within IBM. Splitting the company would have destroyed IBM’s unique
competitive advantage.

The Key to Long-Term Survival: In today’s white-water world of rapid change and massively
enhanced customer power, the only road to resilience is, like Gerstner at IBM, adopting an outside-in
perspective by solving clients’ most pressing problems or finding unexpected ways to delight them.

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

1. Delighting clients is not enough

Merely focusing on delighting clients by itself won’t be enough. That’s because the hierarchical
bureaucracy of the traditional Fortune 500 Company will undermine and ultimately kill single-
fix initiatives to delight customers.

2. The principles of radical management

The other aspect of radical management – the shift in the role of managers from controller to
enabler, the shift in coordinating work from bureaucracy to dynamic linking, the shift in the
values from efficiency to values that will grow the firm and the shift from commands to
conversation – are necessary changes to support the goal of delighted customers.

By implementing all the principles of radical management, the firm can achieve disciplined
execution, scale and continuous innovation along with agility. By transforming the corporate
culture to create the capability to delight customers, the firm has a chance of long-term survival.

How IBM is Enhancing Business Continuity Management to Help Address Changing Business
Realities: A more business-centric approach to help reduce business continuity risk. The world in which
today’s companies operate is more complex, interconnected and social than ever. These shifts in the
business environment can also introduce new risks and often require implementing new business
continuity approaches.

At IBM, the risk created by their aggressive business strategy have led to an evolutionary leap in their
approach to business continuity management (BCM). This approach takes up beyond the traditional
view of BCM as a function of information technology and instead aligns BCM with senior executive’s
important business issues. It involves:

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

 Evolving their approach so that BCM is more closely tied to our business strategy and integrated
with the risk management (RM) process
 Taking a more holistic perspective of our enterprise BCM, which cuts across business units and
geographic locations
 Identifying interdependencies among organizational and location boundaries
 Prioritizing their focus to help validate and create end-to-end business continuity plans (BCPs)
 Establishing a consistent worldwide approach and common language across the enterprise for
BCP

Meeting the needs of their business and supporting the bottom line has never been more important. This
white paper details IBM’s innovative approach to BCM and uses their own experiences as case studies
to illustrate specific examples. The paper also provides guidance on how they can apply their approach
to the organisation and help make the case for proceeding to the next level in the evolution of their
continuity management plan.

IBM Business Continuity – A Constant Evolution: New challenges have required that they evolve
their business continuity approach and shift the business continuity risk profile beyond a traditional
view. Although IBM is a large company, organisations of all sizes - even much smaller companies –
face similar challenges when they expand into new markets, become increasingly complex or integrate
their operations.

As an innovation company, IBM pursues continuous transformation to maintain a competitive

advantage, both in what they do and in how they do it. They successfully compete within a fast-moving
and highly dynamic industry, often reinventing them or moving into new areas to effect change. Their
success can be attributed, in large part, to the aggressive business strategy outlined in IBM’s 2015
roadmap for growing income, increasing earnings per share (EPS) and remaining a profitable industry
leader in hard economic times. Furthermore, our rigorous, holistic approach to BCM contributes to their
success as well.

Exhibit: Expansion into growth markets and

Exhibit: IBM is pursuing an aggressive business global integration are integral to IBM’s business
strategy. (Source: IBM 2012 Annual Report) strategy and introduce new aspects to consider in
their business continuity approach.

As an innovation company, IBM pursues continuous transformation to maintain a competitive

advantage. This drives positive change but also introduces new business continuity risks (Exhibit
above).

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

IBM has been following the risk landscape changes for the past four years with a series of studies
created in cooperation with the Economist Intelligence unit.

Expansion into Growth Markets – A Flatter yet Riskier Planet: The expansion into growth markets
presents a tremendous opportunity for many organisations, but there are inherent business continuity
risks as well. IBM, which operates in more than 170 countries continued rapid geographic expansion in
2012 by opening 144 new branch offices. Driving expansion into growth markets has helped them to
significantly increase revenue and market share. In fact, between 2010 and 2012, their growth markets
delivered more than 60 percent of our geographic gross profit growth and by 2015, they expect growth
markets to approach 30 percent of our total geographic revenue.

Exhibit: Growth markets continue to be a significant contributor to IBM’s increased revenue.

IBM’s focus is not just about operating in more parts of the world, but it is also about operating across
the world in a more integrated fashion in order to improve efficiencies. Global integration of their major
enterprise functions - from service delivery (SD) to marketing - has helped enable IBM to deliver
enterprise productivity savings while enhancing quality. Consolidating operations was designed to
reduce costs and drive operational and process efficiencies, but it also has increased interdependencies,
making their business more vulnerable to risk.

An Evolutionary Leap in BCM: In difficult economic times, executives must implement a smarter
approach to risk mitigation while acknowledging balanced risk acceptance. IBM’s shifting strategic
direction required that they adapt their existing BCM approach so that it could also meet the new
challenges presented by their business strategy. They have decided to take the following actions to
further enhance their business continuity strategy:

 Advancing the approach to business continuity

 Taking a more holistic approach to business continuity risk mitigation
 Adding a process view

This approach allowed them to examine their business continuity risk more rigorously and helped
strengthen IBM’s longstanding continuity, recovery and emergency management practices in several
important ways:

 It allowed them to directly tie business continuity to our business strategy

 It gave them a pragmatic way to see the internal interdependencies among locations and
business units
 It created a means for viewing business continuity in a more holistic fashion - a top-down view
across virtually all lines of business - and established a ‘common language’ around the globe
through business continuity.

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

 Applying a more instrumented and intelligent view of risk relationships can provide value to
return-on-investment decisions.

A key advantage of applying a process view to tie business continuity to their business strategy and to
identify interdependencies was that it gave them a means of doing a top-down, corporate-wide business
impact analysis across all lines of business (LOB).

Establishing a consistent worldwide approach: In order to help enable more consistent planning and
risk mitigation across the corporation, IBM established a set of standard, consistent scenarios to provide
a common worldwide approach and terminology. Previously, individual business units had defined
scenarios independently. To help address the widest gamut of possible disruptions, IBM emphasized
planning for four impact scenario: site, people, IT and widespread events.

Aligning a BCM programme with Organization’s business strategy: A successful BCM programme
must be able to adapt to changes in the organisation’s strategic direction so that its business leaders can
move forward with greater confidence. In addition, it must be robust, business driven and take a smarter
approach to resiliency. Below are some suggestions for effectively aligning a BCM program with your
organisation’s business strategy.

1. Get participation from seniors business managers: The programme must create value for the
organisation while accounting for the organisation’s recognised culture and attributes.

Exhibit: IBM developed a risk framework for business continuity

2. Elevate the BCM discussion to the strategic level: Create value beyond simply protecting the
status quo by establishing business continuity as a means to support growth and better convert
business opportunity.

3. Establish a more business-centric approach: A business-centric BCM approach can have

lasting benefits for an organisation’s bottom line by tying business continuity to business goals.

4. Connect business resilience RM directly to your business strategy: A smarter BCM approach
goes further by driving resilience first rather than simply settling for reactive recovery plans or
underwriting risk.

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

Exhibit: Synergies can exist among seemingly opposing business objectives.

Business Continuity and Recovery Services (BCRS) helps businesses identify and define the most
critical risk and assess their potential business impact across reporting and business silos. In addition,
IBM is expertly qualified to design communication, training and continuity management programmes
that help administer and mitigate the effects of an event, should one occur. IBM BCRS has a broad
portfolio of resiliency solution for:
 Risk and business impact assessment
 Solution design, plan and implementation
 Infrastructure, managed and IBM SmartCloud resilience services

BCRS is ready to help:

 Develop key risk and performance indicators that offer a NRT view of the potential that IT
services bring to accomplishing your strategic business initiatives
 Design more robust and holistic resilience architectures for business and technology
 Reduce financial and operational losses due to an organisation’s inability to provide continuous
business operations during a crisis, stress or opportunity
 Create feature-rich solutions using infrastructure, managed and SmartCloud services to help
protect data and applications and provide quicker access to virtual or dedicated servers to
support reduced response time and capital expenditures.

The Flowing Stream Strategy for IBM (The Change & Continuity Framework)

1. Continuity Forces: Through the years, IBM has maintained a strong culture of inclusion. Key
issues addressed by the IBM Black Executive Task Force include hiring, early identification
and support for high-potential talent, and strengthening the pipeline of future black employees
and leaders.
a) Well-Entrenched Infrastructure: Infra is an important continuity force that holds back IBM
from taking major leap of change. IBM has both technology as well as people infrastructure.
It has strong presence in BRICS and setting up new offices in other parts of globe.
b) Core competence: It arises from the unique and distinctive way it builds, develops,
integrates, and deploys its resources and competences. IBM had the core competencies in
design, production, marketing, and sales of PC. It reconfigured its core competencies due
to imitations to customer centric computing service organization by building competencies
around the processes.

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 Change and Business Continuity at IBM

c) Technology: It has one of the world’s leading Intranets – a virtual work environment that
provides enterprise-wide information, applications, and collaboration tools.
d) Global Supply Chain and Distribution: It has global sales systems that capture opportunity
and enhance client service by improved sales pipeline visibility and common business
processes.
e) Existing Culture: It takes pride in a corporate culture that is more diverse than any other. It
is characterized by a culture of innovation, which might be value in this era of turbulent
and global business.
f) Performance: IBM has relentlessly pursuing innovation and commoditization in its
business practices. Understanding, anticipating, and managing the forces of innovation and
commoditization are essential to increasing shareholder value and mitigation risk
2. Change Forces:
a) Globalization: The revolution in information technology improved the quality and cut the
cost of global communications and business operations by several orders of magnitude.
Over the past decades, IBM and its clients have changed structurally, operationally and
culturally in response to globalization and new technology. Globalization has become a
critical change force for IBM, requiring it to safeguard itself from the emerging players of
developing countries and at same time ensure that it captures the market in their home turf.
IBM assesses its resource needs in a continuous manner to balance its workforce globally
and to improve its global reach and competitiveness.
b) Competition: The changing profile of competition seems to suggest that a vast number of
information utilities will evolves and rivals such as SUN are likely to give a healthy
competition to IBM.
c) New Technology: Since, IT industry is always known for cycle of innovation and
commoditization and associated high risk and linked rewards. For promoting innovation,
IBM invested nearly USD 70 bn in R&D activities.
d) Merger and Acquisitions: IBM has acquired companies to increase its capabilities in
technology, services, capabilities, or expertise. Some of the notable acquisition done by
IBM are Daksh, Maersk Data, Liberty Insurance Services and Ascential in various domains.
e) Environmental Concerns: IBM is working closely towards green and smarter planets. The
concept of smarter planets are to integrate all the utilities and services to a centralized ICT
(information and Communication Technology) enabled system. It will not only help in to
record all the information from various RFID units but also would enhance the overall
Operation and maintenance quality. The system would be able to manage the information
and analyse the data obtained from different utilities and help in atomization of processes.
f) New Opportunities/ Threats: The globally integrated enterprise like IBM can deliver
enormous benefits to both developed and developing nations. As the boundaries b/w the
traditional domains become more porous, it can contribute new forms of commerce,
learning, and goof governance.
g) Customer Needs: Over the next decade, customers would increasingly value companies
that could provide solutions integrating technology from various suppliers and more
importantly, integrating it into the process of enterprise.
h) e-Business: It’s a B2B focus. The e-commerce play for lowering costs and increase revenue
in B2B transactions.

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

i) Govt. Policy and Legislation: Various regulations regarding the environmental protection,
and public health will form an important change force to reckon with and IBM will have to
take this into consideration for its business performance and emerge with the image of
green enterprise.

Continuity Forces Change Forces

Core Ideology Globalization
Customer Base Competition
Infrastructure New Technology
Technology Merger and Acquisitions
Performance Environmental concerns
Core Competence New opportunities & threats
Supply Chain and Distribution Customer needs
Brand e-Business
Culture Govt. policy and Legislation, Global Standards

Mapping on the Continuity-Change Matrix: It becomes quite evident that IBM has been
experiencing a high level of both continuity and change forces. This clearly indicates that IBM is
supposed to develop strategic flexibility to synthesize the opposing forces of continuity and change and
thereby Flowing Stream Strategy Framework might be quite promising for its strategy formulation.
New Technology, New Market
Customer Base Cannibalization, Synergies Strategy
(Service and Solution)
(Continuity)
(Change)

IT industry has been experiencing high level of change forces presented by the emerging business
environment. The various strategic actions has been taken to cater these changes by dividing the change
forces on the basis of their impact viz., high, medium and low impacts.

The strategic crystal (shown below) is the central tool for formulating the strategy in terms of continuity
and change in the customer as well as enterprise factors. The same factors can be used both for setting
the strategic direction and deployment of the strategy and need to be periodically reviewed during the
implementation phase.

Exhibit: Flowing Stream Strategy Crystal for IBM (source: Book on flowing stream strategy, by Sushil)

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

Exhibit: Key Strategy Interactions (Illustrative)

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

Key Channel Frameworks: Linkage of strategic channels with principles of flowing stream strategy

Strategic Channels Principles

Divert R&D capabilities to the new PC platforms
Shift & Partition Restored to higher order channels
Integrated and acquire communication competencies resulted into
Integrate
Information and Communication Technology (ICT)
Identify business needs through a detailed assessment based on
Asses
business impact, risk, recoverability and resiliency.
Develop a business continuity management plan embracing business
Design requirements, disaster recovery, testing principles and technical
recovery solution design.
Create detailed execution plans for disaster recovery and business
Plan continuity, governance and processes to establish a risk management
culture.
Exercise the plan and assess the results through comprehensive testing
Test procedures, including walkthroughs and crisis management
simulations.
Build and implement on-going maintenance strategies to respond to
Maintain businesses changes and new threats, and develop broader awareness
across the organization.

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

Assessment of Continuity and Change Forces:

CONTINUITY FORCES
Assessment Score

Continuity Forces 1 2 3 4 5
Core Ideology & Culture
Serving for the people X 4
Continuous Improvement X 5
Customer Base
US Market X 4
BRICS Nations X 5
Technology & Infrastructure
Patents and Licenses X 5
Infrastructural support through centralized and
X 5
decentralized business models
Performance & Brand
Quality of work X 5
Efficient and skilled manpower base X 4
37

CHANGE FORCES

Assessment Score

Change Forces 1 2 3 4 5
Globalization
Your extent of globalization X 5
Infrastructural support to get across the globe X 5
Merger & Acquisitions
Aggressively involved in Acquiring different
X 5
businesses towards diversification
Competitors impact with M&A (-ve impact on
X 2
IBM)
Competition
Substitutes available X 5
Entry barrier and Threat from new entrants X 5
Standards and Govt. policies
Government support and Ecosystem X 5
Favourable E-Business model for B2B X 5
37

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

IBM’s Current Business Model: In 2010, IBM ranked No. 1 in the diversity in top 10 companies for
global diversity. That year, IBM was also voted the most gay-friendly employer out of 100 nominees
by the UK’s gay rights advocacy organization, Stonewall.

 Services:
 Business Services: Every industry is under pressure to change, to respond to the rapid
shift in customer expectations and take advantage of newly available technological
advances, from analytics to mobile connectivity, social networks to cloud computing.
As the world’s largest consulting organisation, IBM Global Business Services can help
to navigate ongoing change and increasing complexity, understand and respond to the
customers and capture new business opportunities like never before. Core services
offered in this domain are Application Innovation, Application management, Business
analytics & optimization, Strategy & transformation, and other business services.
 IT Services: Core focus on engaging the technology and infrastructure experts. Core
services offered in this domain are cloud services, mobility services, networking
services, outsourcing & managed services, resiliency services, security services,
system services and technical support services.
 Outsourcing Services: Business process outsourcing and IT sourcing are some of the
focused outsourcing services for IBM.
 Lab Services and Trainings: With high-quality IBM Training content and the reach and
experience of the Global Training Providers, one can develop a strong skills portfolio
to grow career and stay competitive in an ever-changing technical marketplace. These
all have been done by leveraging IBM’s abundant knowledge through Offerings,
Certifications, System lab services (US) and by Conference & events.
 Financing: IBM is helping companies all over the world to re-frame issues in
unexpected ways, anticipate, rather than react to events, and seize competitive
advantage. At IBM Global Financing help clients acquire the latest technological
solutions and services so they can innovate, grow and become smarter. It is done by
providing with robust financing and asset management strategies – helping ambitious
visions become reality. IBM Global Financing helps credit-qualified clients acquire the
IT solutions that they need in the most cost-effective and strategic way.
 IBM Solutions: A Smarter planet; Industry expertise; small & medium business
solutions; Big Data & Business Analytics; Business process management; IBM cloud;
Connectivity, integration & SOA; Data management & warehousing; Enterprise
content management, endpoint management, marketing management, modernization,
Integration & governance; Mobile development & connectivity, management &
security; Smarter City Operations, Social collaboration; Business partner solutions etc.
are under the umbrella of IBM core solutions.
 Social causes: Towards empowerment for gender equity and assisting elderly and
disabled, supporting LGBT cause
 IBM’s Shades of Blue program supports managers who lead multicultural teams or are
engaged in cross-cultural business interactions.
 Consultancy: Talent and Change Management Consulting
 IBM Mobile Smarter Process: A business process is a series of task or activities that
are performed to accomplish a specific goal in organization. IBM BPM (Business
Process Manager) includes coach forms, which are a set of web-based user interfaces

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 Change and Business Continuity at IBM

that guide or coach users through their interaction with the process. A business process
becomes a smarter process when it can be started in response to an event, for example,
someone applying for a loan, or submitting an insurance claim from a mobile device.

 Products:
 Software: Aspera (now an IBM company) software extends the IBM managed file
transfer portfolio with high-speed data transfer solutions. Some of the popular software
of IBM are Lotus, SPSS, PureSystem, Rational, Cloud & Smarter Infrastructure
(Tivoli), WebSphere (integration & optimization) etc.
 System and Servers: IBM servers and storage help to engage with customers and
partners, extend operations, and empower employees – because business outcomes
matter. To drive real-time insights, share information, support highly secure
transactions and improve the economics of IT, your infrastructure must be agile, fast
and intelligently open.
 IBM Storage: IBM is uniquely positioned to help transform storage models with agile,
simple to use and cost effective solutions. IBM has demonstrated market share
leadership in all-flash arrays and software defined storage platforms and continues to
expand its offerings and overall business value to clients. IBM FlashSystem™ helps
clients make better data driven decisions faster while IBM’s new family of software
defined storage – IBM Spectrum Storage™ allows massive amounts of data to be
efficiently stored in the cloud. IBM’s solutions enable clients to reduce costs and
improve business results.

Conclusion & Learnings: Today, IBM continues on its journey of creating a more pragmatic and
appropriate business continuity response to mitigate operational risk. Their approach allows the
company to make the changes it needs in order to be more competitive, while protecting its reputation
and future. With a smarter, more agile BCM framework, we have become better able to position and
articulate the value of our business continuity programme to IBM’s senior management in terms of its
role in supporting our business strategy.

These experience and examples are a reminder that changing times can imperil even the most successful
companies. Also the troubled companies can find their way back if they are willing to reinvent
themselves in ways that will make them viable and relevant in today’s global economy.

But to achieve this, one must accept that the complacency is a business killer and banish it from
thinking. Must understand that the transformation is a constant and continuous process that can never
end. Also, the notion that when faced with tough times the goal must be not merely to survive but to
succeed, and success comes through leadership.

Every business continuity manager has a duty to assess the risks and to determine the threats to their
organization. Business continuity is about the long-term survival of the organization and ecosystem
change may be one of the biggest threats you face.

Business continuity, which is primarily concerned with identifying, reducing, mitigating and preparing
for the impacts associated with disruptive events in order to reduce risk, minimize disruption and ensure
continued provision of service critical activities, can be used to prepare for a range of new threats and
challenges, including those associated with change.

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

 Change and Business Continuity at IBM

Bibliography/ References:
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4. Adapting to Climate Change using your Business Continuity Management System,
bsigroup.com, BSI Group, London, UK
5. Ahmed Abdel-Hamid et.al (Feb 2015). INTERNATIONAL TECHNICAL SUPPORT
ORGANIZATION: EXTENDING IBM BUSINESS PROCESS MANAGER TO THE
MOBILE ENTERPRISE WITH IBM WORKLIGHT, RedBooks
6. Business Continuity and Resiliency Service, IBM index reveals key indicators of business
continuity exposure and maturity, IBM Global Technology Services
7. Embedding business continuity management into the entity’s culture,
http://www.anao.gov.au/BetterPracticeGuides/section03/sec03page02.html, [Accessed 21-04-
2015]
8. https://hbr.org/1987/05/from-competitive-advantage-to-corporate-strategy
9. Innovation by Harmonizing Continuity and Change – A Case Analysis of Moser Baer Industries
Ltd (MBIL)
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September 2011
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WITH CONTINUITY, Delhi, India, Springer Publication

Shailesh Kumar Jha, Environment Engineer, MBA (DMS, IIT Delhi)

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