IBM Reorganizes, Buys XIV

IBM Corp.'s Systems and Technology Group (STG) announced a major reorganization, moving from a product to a client focus. In addition, the IBM System Storage business unit of STG announced it has acquired XIV, a privately held storage technology company based in Israel.

Focal Points:

• IBM STG has restructured its business units into client facing and platform units. The reorganization is effective immediately. The client segment model is comprised of the Enterprise Systems, Business Systems (SMB), Industry Systems, and Microelectronics divisions. In addition to these four divisions reporting into Bill Zeitler, Senior VP of STG, there are four platform groups – Mainframe, Power Systems, Modular Systems, and Storage. The development/technology manufacturing unit and the business partner organization remain unchanged. Enterprise Systems will work with the large accounts and address issues such as business resilience, green data centers, and technology while the SMB unit will focus on innovative and integrated solutions for SMB accounts. Industry Systems will address unique industry solutions for industries such as healthcare and retail. Power systems will include both the system i and p product lines while Modular Systems will handle the blades and system x platforms.
• At the sales team level, all client systems managers, sales specialists, and systems engineers will report into a systems sales manager for an account or set of accounts. This staff will be fully dedicated to the territory covered by the team. To further reduce conflicts, the team will have team quotas as well as product quotas and the client systems managers will lead the strategic systems directions for clients.
• On December 31, 2007 IBM completed the acquisition of XIV, a storage company run by Chairman Moshe Yanai. Yanai joined EMC Corp. back in 1987, where as one of their architects, he designed and built the first Symmetrix system. Yanai owns 18 storage system patents, which are core to EMC's storage intellectual property, while XIV has more than 50 patents. No financial terms were disclosed although it has been estimated to be in the $300 million range. The acquisition brings more than 50 talented storage experts into IBM, according to IBM officials. XIV's Nextra architecture offers high-end features such as automatic configuration, autonomic self-healing, I/O load-balancing, and unlimited snapshots that can be deployed on relatively inexpensive commodity hardware.

Experton Group believes IBM STG's reorganization is long overdue and will be welcomed by its clients, as it should make the sales and sales support teams more focused on solving customer problems rather than pushing siloed platform solutions. The new structure will also better enable IBM in addressing SMB requirements, a prerequisite if IBM expects to gain market share. This is an aggressive move by IBM and should help the company grow in all the markets STG serves. The acquisition of XIV is another bold move by STG and demonstrates its commitment to the storage market, which has needed a boost. IT executives should meet with their IBM teams to understand the impacts to them and to determine how to best utilize the new structure to achieve enterprise goals. For IT executives with dedicated IBM sales teams, an early joint account planning session could assist in accelerating IBM commitments and resources to enterprise initiatives.