IBM's Turnaround and its New Business Model

During these interactions, he learned that customers still appreciated IBM since it offered solutions for a host of their computer- related needs under one roof. However, having seen the facilities himself, Gerstner realized that the quality of IBM products had to be significantly improved. Gerstner felt that different business units of IBM had to be integrated in order to produce products of better quality within a specified time period. This led him to take a crucial decision to reverse Akers' plans to split IBM into eleven entities. The plan did not made any sense to him as he felt that customers would find it inconvenient to select from thousands of suppliers to develop a working system.

IT had become fundamental to how a company operated and the prime source of a company's competitive advantage. Clients wanted to integrate different computing platforms and applications in networks and they turned to specialist computer service companies like EDS, and the consulting arms of big accounting firms. Gerstner felt that given IBM's size and scope, it could provide 'complete solutions' to its customers. Gerstner also felt that IBM was moving in the direction of using the same computing architecture for different product lines. This required tight integration of different businesses. He visualized that the PC era would come to an end and would be replaced by network computing...