IBM changed with times; focus shifted to services

BOULDER — The standard uniform at IBM these days is polo shirts and Dockers. IBMers toil for a few years, then move on to further their careers at other high-tech firms. TV commercials feature irreverent comedian Denis Leary pitching IBM softwar e arm Lotus’ Internet solutions.

Whatever happened to Big Blue?

The days of gray suits, lifelong careers, and not needing to advertise because you’re the only game in town are over.

It all has to do with IBM’s “remissioning” that occurred in the mid-’80s in response to the birth of the personal computer and, much to its horror, competition. No longer able to rely on sheer size to dominate the computer marketplace, IBM began to shift its focus from manufacturing to services.

The change was dramatic at the Boulder campus.

The forward-thinking company had purchased 160 acres along a lightly traveled, two-lane road (now the Diagonal Highway) between Boulder and Longmont in 1957. The land had lain idle until 1965 when orders for the System/360, IBM’s popular mainframe computer, outpaced production in the company’s three New York plants. Boulder was chosen as the manufacturing and development site for magnetic tape products and memory units for the 360, and ground-breaking was June 28, 1965.

The first 20 years in Boulder brought extraordinary growth. Among the products developed and/or manufactured at the site were:

* Magnetic tape drives;

* High-speed ferrite core memories;

* Plastic storage containers for half-inch magnetic tape;

* Photocopiers;

* Floppy disks;

* System printers;

* Copier/printer supplies.

But in April 1986 the company’s new direction was to transform the site into a development, business systems and distribution center.

Of the old “missions,” printer/copier development and supplies manufacturing were the only ones to remain as the company took a new direction. During the initial $120 million, eight-month remissioning project, a variety of software, service and information-processing organizations began to operate in buildings once devoted to manufacturing.

Retraining was the order of the day as many employees revamped their skills so they could find new jobs within the company. Offices housed programmers developing new software, computer rooms hummed as workers started supporting worldwide service organizations, and meeting rooms were filled with employees who once worked on the assembly line.

Mel Allred, advisory education specialist, has seen changes first hand. The 33-year veteran who oversees site education (primarily training programmers in the latest software techniques) began his career in Boulder working on the factory floor making tape drives.

“I’ve done four major career changes all in the same organization,” he says. Allred moved up in the ranks, including production, programming, teaching programming and education, and has been moved to Raleigh, N.C.; Kingston, N.Y.; and Lexington, Ky.; returning to Boulder in 1987.

Allred was also a victim of IBM’s tremendous losses of the early 1990s, when layoffs were rampant. “I passed up 25 offers to leave over the years, and then I was laid off in 1993,” he says. “I had 29 « years with the company, and my whole department was given its notice.”

The story, however, has a happy ending. The department was given 60 days to dissolve, but the site manager realized the importance of an education department and managed to keep the group intact.

Allred notes some cultural changes at IBM over the years. The IBM “uniform” is a good example. For years, Allred wore a tie to work on the factory floor, even on second shift. Now, his suits hang in the closet.

Also gone is the company’s traditional paternalistic attitude, Allred says.

“When I jointed IBM, we did all our promoting from within. I don’t think you could have been hired in as first line manager.”

Now top-level people are brought in all the time, including Lou Gerstner, chief executive officer, who came on board in 1993.

IBM’s focus on service will continue, says Carolyn Maher, vice president of managed operations — west for the IBM global services division. Over half of the company’s worldwide population of 229,000 is in services, as are about half of Boulder’s 3,500 people.

“We’ve taken a lot of the infrastructure and used it to get into the services business,” says Maher. “We had a lot of physical plant capacity (some 2.2 million square feet of floor space) that led to our running data centers for customers.”

Boulder is a uniquely diverse site, Maher says. A typical IBM site has one or two major tenants, while Boulder houses upward of 15, including a number of major divisions — global services, printing systems, software manufacturing solutions and worldwide distribution (see box).

Maher attributes much of the success of the Boulder site to Gerstner’s vision when he took over as head of the company.

John Akers, IBM’s previous chief executive who spearheaded the remissioning effort of the mid-’80s, “was getting a lot of pressure to decentralize IBM, and when Gerstner came in, he said he needed time to figure it out,” Maher says. “What he saw was that we had some good technology, and the problem was getting that technology into the marketplace. His overall goal is make IBM the worldwide leader in the technology industry, since he saw business going increasing global. He saw that no other company that had the ability and the worldwide presence, and he wanted to capitalize on that and bring IBM back together.”