Your Ofmos Case: End of IBM? Use the Board to Explain Your View

Oct 25

Written By Cristian Mitreanu

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The Business Big Picture Game

IBM to Split into Two Companies

"Client buying needs for application and infrastructure services are diverging, while adoption of our hybrid cloud platform is accelerating. Now is the right time to create two market-leading companies focused on what they do best. IBM will focus on its open hybrid cloud platform and AI capabilities. NewCo will have greater agility to design, run and modernize the infrastructure of the world's most important organizations." — Arvind Krishna, IBM CEO

109-year-old 'Big Blue' announced on October 8th that it will spin-off its managed infrastructure services toward the end of 2021.

"With tighter integration and focus on its open hybrid cloud and AI solutions, IBM will move from a company with more than half of its revenues in services to one with a majority in high-value cloud software and solutions. IBM will also have more than 50% of its portfolio in recurring revenues."

What Is Your Take?

Is this the end of IBM? Build a simple case for Why or Why Not with Ofmos.

READ AND PASS ON.

The Ofmos Approach

View companies as evolving systems of commoditizing ofmos (offering-market cosmos) — virtual worlds defined by an offering and a set of customers with the same behavior. (Page excerpted from the Ofmos Professional instructions.)

Question the CEO's Rationale

Scenario 1: IBM is spinning-off a collection of businesses to exit all spaces (ofmos) where its offerings are highly commoditized.

Scenario 2: IBM is spinning-off a collection of more-complex products to exit all ofmos where its businesses are less scalable.

Scenario 3: IBM is spinning-off a collection of interrelated businesses that share numerous resources and a diverging underlying nature.

Some Context

"We divested networking back in the 1990s, we divested PCs back in the 2000s, we divested semiconductors about five years ago because all of them didn’t necessarily play into the integrated value proposition.” — Arvind Krishna, IBM CEO

"Remember that the enduring companies we see are not really companies that have lasted for 100 years. They’ve changed 25 times or 5 times or 4 times over that 100 years, and they aren’t the same companies as they were.” — Lou Gerstner, Former IBM CEO

Think Big

+ Is this transformation similar to the more recent ones?

+ Has the company waited too long this time?

+ Will the company lose some value-adding integrations by splitting?

+ Is the "cloud" also a type of infrastructure?

+ Are the so-called "solutions" already significantly commoditized?
+ Is the company shrinking toward profitability?
+ What will fuel IBM's future growth?