IBM Chief: Big Blue is committed to future in Scotland
IBM’s first female executive at the helm of the company’s giant operation in Greenock yesterday told The Herald that Big Blue was “absolutely committed to a future in Scotland”, and that she intends to use her new position to lead the way to a “smarter planet”.
Linda O’Donoghue, who was last month appointed as the first female site executive at IBM’s Renfrewshire plant, also said the company’s transformation from computer maker to a global conglomerate focused on services had been misunderstood.
At the same time, she declined to reveal capital investment figures for the Scottish plant, but she said the next few years would be among the most exciting in the site’s 59-year history.
“Most of IBM’s revenue now comes from services and that’s also the biggest growth area,” said O’Donoghue, who is originally from Port Glasgow and joined IBM in 1988 as a sponsored CIMA (Chartered Institute of Management Accountants) student.
“Greenock is now 100% services, so we are positioned to grow.”
IBM first established a factory in Greenock in 1951 to make electronic typewriters. It later developed a plant on the same site to manufacture computers for sale throughout Europe, the Middle East and Africa.
When Big Blue sold its PC-making business to China’s Lenovo in 2005, many regarded the move as the death knell for its operations in Scotland.
However, those fears were unfounded. While IBM no longer employs 6000-plus staff in Greenock, it still has a 2000-strong workforce at the Renfrewshire site and a further 1000 at a sales and marketing unit in Edinburgh.
Asked about her plans for the Greenock operation, she said: “I’m particularly excited about our Smarter Planet strategy. This is about using technology to cut carbon footprint, to capture data to reduce crime, to help solve climate disruption and financial crises, to reduce healthcare costs and make better care more readily available – and this is just the beginning
“The world is becoming instrumented. We use sensors to see the exact condition of everything. Sensors are being embedded everywhere – in cars, appliances, roads, oil pipelines – even in medicine and livestock.
“At the same time, the world is becoming interconnected. If we use the technology, connectivity and our people in the right way, Scotland can innovate, just like it has done for centuries and transform the next generation into another story of success.
“I believe we can lead the way from Scotland and take it to the rest of the world.”
The success of IBM’s transformative business model – from a hardware maker to a global services and software conglomerate – is not only good news for Greenock as a whole, it has also pioneered a path for the corporate technology sector.
Services and software now account for some 81% of IBM’s worldwide business, up from about 50% in 2000.
Since Samuel Palmisano became chief executive in 2002, IBM has spent more than $25 billion acquiring mostly services and software companies. In that time, it has sold off hardware businesses including flat-panel displays, disk drives, PCs and printers.
O’Donoghue said: “In Greenock, we do supply chain management services for companies globally. Most of our client services are focused on procurement outsourcing. We also do logistics, asset management and customer relationship management.
“I believe our transformation was generally misunderstood. No, we don’t make PCs here anymore. But we do multi-level customer solutions in 20 different languages from one Greenock location.”
The shift to services has also generated some hefty deals over the past 18 months across the sector. Dell bought Perot Systems, a technology services company, for $3.9bn and Xerox paid $6.4bn for Affiliated Computer Services. Hewlett-Packard acquired Electronic Data Systems for $13.9bn.
At the same time, other technology giants, such as Cisco Systems and EMC, have spent billions building up their own services and software businesses – all of them following a trail blazed by IBM.
O’Donoghue added: “We’re the ones who walked the talk.”
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