Virginia Rometty To Take Over As IBM Chief

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IBM has announced Virginia Rometty, an IBM veteran, will replace CEO Palmisano when he retires

Virginia Rometty, IBM’s senior vice president and global sales leader, is to become the company’s next chief executive and president, succeeding longtime leader Samuel Palmisano, who is retiring at the end of the year.

As the new chief executive, Rometty not only takes over one of the world’s largest and most important tech companies, but she is now effectively the most important female executive in the United States.

IBM’s first female boss

Rometty will join Big Blue’s board of directors, but Palmisano will remain the board’s chairman, according to a 25 October announcement detailing the change in leadership from IBM.

As the group executive for sales, marketing and strategy, Rometty has been responsible for revenue, profit and client satisfaction globally. She has been responsible for IBM’s worldwide results, which exceeded $99 billion in 2010. She has also been in charge of strategy, marketing and communications at IBM.

Rometty will be the first woman to run IBM. With Meg Whitman newly appointed to the top seat at Hewlett-Packard, women now run the two biggest IT companies in the world by revenue.

Before heading up the sales division, Rometty ran IBM Global Business Services as senior vice president and oversaw the integration of PricewaterhouseCoopers Consulting in 2002. The $3.5 billion (£2.1bn) acquisition was the largest in professional services history and resulted in a global team of more than 100,000 business consultants and services experts.

Rometty has compiled “an impressive list of accomplishments, but what it essentially translates to is that Rometty has a tangible understanding of IBM’s entire business and its corporate culture. That will be hugely helpful in her work as chief executive, and could well be extremely beneficial to both the company and its shareholders,” Charles King, principal analyst with research firm Pund-IT, wrote in an email to eWEEK.

She is entering the chief executive’s office “at a time when many of IBM’s biggest competitors (HP and Oracle, particularly) are either in some disarray or transitioning to new business models. That should provide some breathing room in the short term but you can’t expect them to be fumble-footed for long,” King wrote.

Speculation

Industry observers had long speculated whom Palmisano would select as his successor as rumours swirled about his impending retirement. Palmisano turned 60 this year, the typical age at which IBM chief executives retire. Rometty was one of the three top candidates being considered to take over the top spot at IBM, and the only female on the list.

She was considered a front-runner and has been recently showcased at major IBM events, such as the Centennial Celebration in June and the THINK Forum earlier this month. At the event, she introduced the company’s Corporate Service Corps and how it applied to the company’s leadership agenda.

“Ginni Rometty has successfully led several of IBM’s most important businesses over the past decade – from the formation of IBM Global Business Services to the build-out of our Growth Markets Unit,” Palmisano said in a statement, adding that she brings “a unique combination of vision, client focus, unrelenting drive, and passion for IBMers and the company’s future” to the position.

Rometty’s experience leading IBM’s consulting and services division makes her a natural fit in leading IBM, especially since services has become such a big part of the company’s business and a driver for growth. IDC ranked IBM in the “leader” category in an analysis of services companies in August.

Business transformation

Palmisano became the chief executive in 2002 and chairman of the board in 2003. Under his watch, IBM exited increasingly commoditised hardware businesses, including PCs and printers, and transformed the company into a global services-oriented organisation, with more emphasis on providing consulting advice to some of the world’s largest enterprises. Big Blue is also now more invested in software and high-value technologies such as cloud computing and “Big Data” analytics.

“Sam taught us, above all, that we must never stop reinventing IBM,” Rometty said in a statement. She has been with IBM since 1981, when she joined Big Blue as a systems engineer in the Detroit branch.

IBM reported earlier this month that its third-quarter revenue rose 8 percent to $26.2 billion, largely based on the company’s performance in growth markets, software and services. Software saw revenue growth of 13 percent, and services revenue grew 9 percent, IBM said. Growth markets revenue and business analytics revenue both were up 19 percent, and cloud revenue year-to-date was double IBM’s cloud revenue for all of 2010.

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