The board of IBM (NYSE:IBM) has announced that Virginia Rometty will become the new CEO effective January 1, 2012. Ms. Rometty is a 30 year veteran of IBM who currently serves as a Senior Vice President with responsibilities over sales, marketing and strategy. She has been credited with effectively managing the PwC Consulting integration and broader strategic goals of international growth. Over the previous year, IBM recorded $99 billion in revenue under her leadership (yhoo.it/tJnCOv). IBM competes with other large tech companies like Oracle (NASDAQ:ORCL), HP (NYSE:HPQ) and Accenture (NYSE:CAN)in the enterprise segment.
IBM is one of the true behemoths of the global technology industry so a change in leadership will be closely watched. It has been a technology innovator in hardware, software and consulting over its 100 year history. Over the last nine years, the company has been led by the steady hand of Sam Palmisano. Under Palmisano, IBM prospered with a combined $100 billion created in shareholder value and dividends (ibm.co/uHXgGe).
Where Will Ms. Rometty Take IBM?
We believe that Ms. Rometty’s appointment will provide a strong sense of continuity for the strategy that Mr. Palmisano put in motion. Palmisano’s strategy includes more emphasis on the consulting and software side of the business serving large enterprises and government customers. In addition, the company will continue to manage the outsourcing of IT and business process operations (BPO) for major international firms.
The company’s consulting business provides a very stable and predictable source of revenue. Meanwhile the software business continues to grow by serving the increasingly complex integration needs of multi-national firms.
Ms. Rometty will be challenged by lower cost competitors in emerging markets such as Tata Consultancy Services and Digital China that will seek to copy IBM’s model. Rometty will also be challenged to produce continued growth at IBM’s massive scale.
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