By an anonymous IBM employee
IBM just released its 2Q 2016 results, and I waited with bated breath to see if the truth would come out this time. I’m used to waiting with bated breath. All of us IBMers do it regularly, as we await the next resource action (round of firings) by the company. As they do regularly with press releases (which have misled investors and the media about things like self-driving cars and other false accomplishments), they again managed to obfuscate the truth. Most of the analysts simply regurgitated that IBM had beat the analysts’ very weak forecasts, with the same drumbeat optimism that the ‘transformation is finally working’ and the ‘ship is turning around’ that we have been hearing for going on five years now. A few managed to look behind the curtain of Ginny and Martin and see the truth (see http://seekingalpha.com/article/3989639-ibms-transition-much-written-many-instruct and https://www.thestreet.com/story/13644848/1/ibm-got-a-little-bit-worse-bernstein-analyst-sacconaghitells-cnbc.html). Reading those, the house of cards that is built on IBM’s financial engineering strategy will ultimately come crashing down-probably by the end of the year, or when the 2016 yearly results are disclosed, since the targets are essentially impossible to meet, and IBM can’t afford to prop up the dividend much longer while it hemorrhages cash and increases debt during a five-year revenue slide.
It makes me a little angry to see them getting away with the deception, and I feel bad about the poor people that are buying this and investing their hard-earned money in a stock that will certainly tank sooner rather than later. It’s never good to invest in a company solely based on the numbers. It’s important to try to find out what’s going on inside, what the strategy is, and other non-numeric factors. A few months back, someone wrote a great Open Letter to IBM’s Board of Directors, which reflected the thoughts of many IBMers. I’m a long-time IBMer too. Until recently, I had always attached ‘proud’ to that statement. I’m sure it fell on deaf ears though, as we live in a time when excessive greed and anti-heroes are put on a pedestal in movies, TV shows, games, and publications. Think Walter White, Donald Trump, Tony Soprano, Wolf of Wall Street, Big Short. The executive leadership of IBM and the Board of Directors are all busy rewarding themselves with massive bonuses, looting the coffers as the ship sinks, and they probably think they are awesome for getting away with it. Let those little people eat cake.
For the average employee, who cannot schedule a family vacation because of fears that they might be caught up in the next round of firings, who is worried about fulfilling that promise to their children about helping them with college, weddings, life, the actions of the leadership are disgusting and demoralizing. Ms. Rometty doesn’t have the courage to appear for the earnings reports, and flaunts that she is building a chalet in France and that a neighbor in her swanky neighborhood can drop a quarter million dollars on IBM stock on a whim. She doesn’t have the courage or care to address the employees that she is systematically dismantling for her own profit. The leadership and board all know well what they are doing.
The average person, even those that are not employees, should care about the actions that are being taken. The barely functional, poorly educated and trained workers that are being brought in-country on H1B visas and are doing work from underdeveloped countries are working on the systems and have views to the data that contain your financial, health care, and other sensitive transactions. That includes developers, call center workers, support staff, and others that can view logs full of sensitive data, write code that could be malicious, and other problematic things. These are the people that are replacing long-time dedicated, knowledgeable, experienced IBM workers who know their customers and their customers’ businesses well. This is all being done for greed and profit, and not only by IBM but IBM seems to be the leader in these shady activities. IBM lies about job openings that either are not real, or are flagged as for “global resources” (from underdeveloped countries) only. They lie to congress about the lack of employee’s skills and the lack of qualified graduates, insulting their employees and all of our children just to get more visas and more profit into their pockets. The people I see getting fired are sharp and have maintained their skills in all of the latest technology. All are eager to take any kind of retraining if it were offered, and this would certainly be less expensive than firing them, but this isn’t about skills. It’s about replacing dedicated employees who are about to become retirement eligible, or who have earned their way to good salaries through hard work and dedication, with barely functional, barely trained workers that will be paid a fraction of the price. And those actions do come with a price, as you can imagine the impact on quality and morale.
To get back the point of this piece, I wanted to provide those “numbers people,” particularly the IBM fan-boys on the financial sites, a view to what is going on inside the company. Morale is, of course extremely bad. I am in a position that has visibility into a number of areas in IBM, and due to my long tenure I have many friends (fewer than I used to, of course) in various areas of IBM. Whereas we all used to speak privately about our displeasure about the company’s direction, they all now speak openly and in a hostile fashion in meetings. Due to reductions in staff, and needing to interact with “new” incompetent workers that were described earlier, product quality has suffered greatly. Essentially, the people who are coding, testing, architecting, working on strategic customer projects no longer care and are just riding out their time waiting to get a layoff package or interviewing with competitors. They are tired of trying to sell or demonstrate bug-riddled products, and increasingly having their compensation tied to being able to do so, an impossible task. IBM has nothing new. It is cramming old products and acquisitions shoe-horned into what are being called new products. Things are being done in a very shoddy manner, with quality control and testing being left up to the customers. It is sloppily painting over top of wallpaper, rather than doing the job properly. The mantra within the company, internally, is that it “should” work and customers are getting fed up with having to expend so much time managing support tickets. There are increasing production outages in big-name customers, and the highly-touted Bluemix cloud environment is down very often. IBM is over exaggerating the capabilities of “strategic” technologies like Watson. There is no longer any will, money, or brain power to create great new products. The fact that they got the vast majority of the media and public to believe they had developed a self-driving car was humorous and depressing. Watson simply provides a Siri-like interface to the driver, and IBM reportedly bought its way into being a part of this, so that they could issue the misleading hype, similar to how they had to pay Global Foundries to take its failed chip manufacturing business off its hands.
There have been very damaging defections at all levels, to major competitors. Technical talent within IBM are sick of being forced to do sales and marketing tasks all day – blogging and tweeting when they would prefer to be heads-down engineering great products. They are sick of the stress on their families and their selves of waiting to see if they are on the next list of firings. The IBMers that are leaving either through RA/firing or their own volition are going out with a major anti-IBM chip on their shoulder and showing up to crater big deals, even at some of IBM’s most loyal customers. They are showing up with the competition and exposing all of the many, many warts in IBM’s products and strategy. The vast majority of very smart, talented, motivated, IBM-loving people I have worked with are now gone, and I’m not going to be around long either. Like most employees, I am biding my time, going through the motions, hoping to get a package on the way out (an insulting package anyway, these days) and hoping to see the company crash and burn for its sins.
To add insult to injury, IBM recently re-organized (yet again) to be aligned around industries, rather than geographic regions. This has stressed and angered employees even more, as they are now subject to much more travel, rather than being home in their own regions with their families. This travel cost will of course be passed on to customers, and work will be done by even more exhausted employees. The employees are being pulled away from customers they know well and have been embedded with for a long time, with strong knowledge of their customers’ business and strategy, and being plunked down into industry areas that they have no knowledge and experience in. This is yet another example of the panicked thrashing that is going on within IBM daily. Employees are angry and openly challenging their management about these destructive decisions in every meeting these days. There are frequent no-shows in meetings, probably due to people being out looking for jobs or simply not caring. Once thriving technology centers, full of engaged and collaborative employees, are now boarded up ghost towns with empty parking lots.
This is today’s IBM, caveat emptor.
That’s my only real motivation is …the fear of losing my job. But you know, Bob, that will only make someone work just hard enough not to get fired. … Good luck with your layoffs, all right? I hope your firings go really well.
—Peter Gibbons, Office Space