Dennis Balogh

Print E-mail |

Samuel Palmisano

How are companies changing the way they do business?

The way companies do business is undergoing a major shift, triggered by what historians will come to see as “a rolling crisis of global integration” that has spanned the entire first decade of this new century, says Samuel J. Palmisano, chairman, president and CEO of IBM Corp. (IBM). “If the last decade has posed a series of tough questions,” he adds, “the next one will offer up a rich array of answers.”

Those answers will be born out of innovation and technology, according to Palmisano, 58. “Technology is providing us with unprecedented means to unleash economic growth and societal progress,” he says. “If the last few decades have made our planet smaller and flatter,” he adds, the next few “will see it become smarter.”

This smarter planet will leverage technology and innovation to fix its overtaxed systems — ranging from health care to transportation to supply chains to energy to food and water — while balancing the concerns over data security and infrastructure reliability. “Companies and governments are excited about the competitive, economic and environmental advantages of smart infrastructure, from grids to rails, sewers to buildings,” Palmisano says. “But does that mean that our essential infrastructure is only as secure and reliable as a laptop PC? CEOs will have to step up to serious questions like these that require serious consideration and collaborative decisionmaking across all stakeholders of civil society.”

“If the last decade has posed a series of tough questions, the next one will offer up a rich array of answers.”

Palmisano envisions the world as moving toward “an interconnected global commons.” Corporations — and governments — need to prepare themselves to operate within “a system of systems,” he says. “Just think about it: None of the systems that run our world today is the responsibility of any one entity or decisionmaker.”

In response to these trends, IBM has transformed itself from perhaps the world’s best-known computermaker to a provider of global-size solutions. This effort began following the end of the dot-com crash in 2002, when IBM acquired PwC Consulting, the consulting arm of PricewaterhouseCoopers. In fact, IBM reports, since 2000 it has spent $22 billion to add 108 software and service providers and upped its research budget (to some $6 billion in 2009) to concentrate on analytics research and supercomputing breakthroughs.

The company also shed what it considered its “commoditizing businesses,” selling its hard-disk drive, display and printer systems units 
as well as its PC division, all in the past seven years. Its mission today, says Palmisano, is to help clients build sustainable growth by addressing the underlying systemic issues that caused the 21st-century crises.

The company’s main vehicle to help do that is the Building a Smarter Planet program, launched in 2008. “Over the past several years, we have all learned a lot about the promise of a smarter planet and about what it takes to build one,” the CEO says. “At the same time, we have also learned about the issues it raises — such as challenges to protecting personal information and securing critical infrastructures.” Palmisano notes that the public’s concern about the security of data in a Smarter Planet system is an issue that companies will have to address as they move forward. IBM’s thousands of mathematics and advanced analytics experts are charged with solving the seemingly impenetrable problems facing business, government and society (for example, the environment, security, and even higher Internet traffic and identity theft) by seamlessly adding various sensory tools and computer technology to new and existing devices. Likewise, IBM’s Smart Cities program targets the challenges of municipalities as the world’s population becomes more urban and requires a more efficient delivery of services.

“Times like these create winners and losers,” Palmisano says. “The winners will seize the opportunity to open new markets and to develop new capabilities and skills.” — Sharon Kahn