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MANAGEMENT INNOVATION
years ago, two-thirds of our revenue came from hardware. Today, services represent nearly 60pc of our revenues, software over 20pc and hardware is just under 20pc and declining.” O’Neill said Gerstner’s external perspective enabled him to
identify and promote those IBM values that were positive and valuable and at the same time challenge and defeat the dys- functional aspects of the culture that had built up in the organ- isation in the previous decades. “The transformation programme frequently challenged
vested interests and the status quo, but it generally resonated with the core values of our grassroot employees. The changes made it easier for IBM-ers to innovate, to drive value with our clients, to make a difference, and ultimately that is why the transformation has succeeded.” Adeeper transformationwas driven by global economic shifts
and some fundamental changes in technology. “For most of the 20th century multinational companies organised themselves market by market within the traditional boundaries of the na- tion states in which they operated. The companies replicated mini versions of itself wherever it wanted to do business.” However, the removal of most barriers to international trade
and investment and with the availability of vast reliable and cheap networking meant that a new model of a globally inte- grated enterprise became possible. “You no longer need a mini company in
everymarket.The company’s supply chain and sup- port services are spread across the globe and work flows to where it best can be performed. This has radically changed the way we work and run every aspect of our company. “We’ve concentrated expertise and decisionmaking into glob-
ally networked centres and thiswas hugely significant for IBM’s operations in Ireland and allowed us to turn IBM’s global trans- formation froma threat into an opportunity.”
CAPITALISING ON OPPORTUNITY At the time of the corporation’s crisis in the early Nineties, O’Neill said that IBMin Ireland represented about a thousandth part of the overall organisation in terms both of its revenue and its employee numbers. “And in truth, we probably got a thou- sandth of corporate headquarters’ attention,” he added. IBMwas the first ITmultinational to set up in Ireland in 1956.
“Our first four decades in Irelandwere essentially about selling our products and services to our Irish customers,” said O’Neill. “With the scale of the cutbacks that were going across the cor- poration in themid-1990s, themanagement teamin Ireland had very good reason to be worried, because there was a very real threat that IBM in Ireland would essentially be reduced to a branch office managed fromthe UK. “But the shift fromthe traditional multinational structure to
being a globally integrated enterprise meant that the size of IBMin Irelandwas no longer limited by the size of the localmar- ketplace for our products and services. Andwe could genuinely compete against other IBMlocations to host international and global missions here.” And that’s exactly what the Irish man- agement team set out doing. O’Neill said Ireland had a range of factors in its favour,
including availability of skills, the tax rate and membership of the EU, but some very real barriers also had to be overcome. “One practical issue at the time was I don’t think a senior IBM
70 INNOVATION IRELAND REVIEW Issue 4 Spring/Summer 2012
‘Today,whilewe employ roughly the same number of people in Ireland aswe did 10 years ago, the profile of our employees has changed hugely over that time’
Ireland manager had ever been inside corporate headquarters in theUS.We simply didn’t have a network of contacts at exec- utive level in the corporation and we didn’t have anyone on the team with experience of working at headquarters. “So,without that high level network itwas very difficult for us
to get any insight into what opportunities might be coming up. Ridiculous as it sounds, back in theNinetieswe started by look- ing up the internal directory for seniorUS executiveswith Irish surnames and then giving themto the IDA to call on.” Gradually, relationshipswere established and,with the help of
the IDA, the Irish operation pitched for certain projects.One of the first was a technical support call centre for a PC product IBMsold at the time. “IBM needed to build a multilingual 24-hour support centre
very quickly,” O’Neill explained. “The IDA had an empty ware- house inBallycoolin and in just 90 dayswe turned it into awork- ing call centre, including deploying all the physical and technical infrastructure and finding, hiring and training a couple of hun- dred people. It was flawless execution by the team at the time and it certainly earned us the right within the corporation to compete for further investment opportunities. “IBMsurvived and thrived by reinventing every aspect of the
company. That process of transformation turned out to be Ire- land’s opportunity and we capitalised on it.” Over a period of five years, IBMIreland’s employee numbers
increased from 350 to over 3,000 people. Initially, lower value activities such as manufacturing and phone-based technical support were targeted. “However, over the past 15 years,we have successfully grown
and evolved our portfolio of operations to the point where we now have one of the most diverse country operations within
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