For those of you who were worried that the AS/400 Division was going to lose yet another top executive after another IBM reorganization, don’t worry anymore. In the wake of a massive reorganization, Tom Jarosh is still in charge of the AS/400 marketing organization since earlier in the year, when Sam Palmisano, formerly the head of IBM’s Global Services unit, took over as the head of IBM’s Server Group.
The funny thing is, though, there is no AS/400 Division anymore. There is no Server Group, either. There is just the new and improved Enterprise Systems Group (ESG), which markets S/390, AS/400, and RS/6000 servers and Shark storage arrays and various other storage products. (The Storage Systems Division, formerly under the control of Jim Vanderslice, was merged into the Server Group in December 1999 to create the ESG because Vanderslice split to become second fiddle to Michael Dell at Dell Computer, one of IBM’s staunchest rivals. Linda Sanford, who used to run the S/390 server biz years ago, took over the Storage Systems Division last year.)
In the midst of the PartnerWorld 2000 trade show in late January, Palmisano reconfigured the former Server Group from the inside, this time effectively removing the brand bias that has time and again hindered IBM’s ability to sell to its own customers, much less against its competitors who have much simpler product lines and much simpler marketing stories to tell. While IBM’s marketeers in the ESG organization have rejiggered the facts to fit their new story a bit, the fact remains that the ESG organization is certainly looking to be a far better organization than the Server Group it replaces, in terms of IBM’s effectiveness in selling in the midrange server market and helping customers and Business Partners who sell its products to meet their goals and expectations.
Under the new ESG organization, which will also help position IBM Netfinity and Sequent NUMA-Q Intel-based servers alongside the ESG offerings (Intel-based servers are technically under the Personal Systems Group), IBM has realigned the divisions in ESG to more accurately reflect the needs of the customers who are buying IBM servers. In a letter to ESG employees dated January 25, server czar Palmisano put it succinctly: “The reality is our customers operate in a heterogeneous IT world consisting of numerous operating systems. With the continuing maturation of e-business, there is simply no one-server architecture to meet their increasingly complex computing requirements. We have the multiple architectures to meet those needs, but we’ve failed to take advantage of our industry-leading value proposition. Until now, we’ve made, marketed, and sold by brand.
We’ve forced our server customers to talk to different parts of IBM to get a solution. The competition took advantage of this at our expense. And more importantly, they got momentum. Our job now is to take it back.”
To that end, the ESG now has four parts, including the aforementioned Storage Systems Division. The Enterprise Server Division—headed by Dave Carlucci, former head of the S/390 Division—will handle IBM’s top 1,500 accounts worldwide and will sell a complete, integrated server solution to these customers. The top 1,500, by the way, are roughly ranked by the revenue they bring into IBM, and they use a mix of server technologies. While these accounts will certainly be dominated by S/390 mainframe servers, there are hundreds of big RS/6000 and AS/400 customers in this same class. These customers will also have access to a single point of contact for services and financing. The idea is to simplify the process of buying IBM gear and paying for it.
The Mid-Market Server Division will be headed by former AS/400 General Manager Tom Jarosh. He will be responsible for any enterprise account not in the top 1,500 covered by the Enterprise Server unit. Jarosh won’t just be pushing the AS/400 in this role. It will be his job to make sure IBM sells the right box, whether it runs OS/400, AIX, Monterey/64, or Windows NT. This unit will be focused on selling gear through the Business Partner channel, IBM’s Web site, and its new telesales organization.
Finally, the Web Server Division of the ESG will have its sights firmly locked on Sun Microsystems, and it will be headed up by former RS/6000 Division General Manager Rod Adkins. It will consolidate the sales and marketing efforts of the RS/6000 line and the NUMA-Q line for e-business and Web applications for Net Gen and dot-com companies as well as for the departmental server market, which Sun also plays in. A special Web server sales team under John McAdam, former chief operating officer of Sequent, will promote IBM’s offerings in this area, and McAdam will report directly to Palmisano rather than Adkins, who will just handle boxes.
While I am optimistic that the new ESG will be able to make a better case for AS/400s as IBM sells into the midrange, the distinctions IBM has made between AS/400s, RS/6000s, and NUMA-Qs do not necessarily wash with who buys its machines and how they use them. But given the complexity of the installed IBM server base, its legacy applications, and IBM’s desire to move forward, it would be hard to come up with a different marketing strategy, short of spinning the server lines out and letting them attack each other directly. And IBM is certainly not going to do that. The thing to remember is that the AS/400 is in a better position now than it was last year, when Jarosh controlled only AS/400 marketing.
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