Cringley's attacks always struck me as being more hyperbole than substance. If IBM was not 'delivering' as a consultancy then it's highly doubtful they would be enjoying the growth and financial success that they are since it is their Services organisations that have, year on year, been amongst the most successful.
That said, IBM has changed and will continue to change. They constantly remix their portfolio, adapt and evolve and that has been the only way they have been able to survive over 100 years and prosper at a time when their traditional competitors, such as HP, are failing. One can see how they made the transition from a hardware-led business to a services-led business as a good example of that constant transformation.
Lastly, why is 'outsourcing' necessarily perceived as a negative thing? I see IBM and other multinational's ability to move work to the most effective -- from both a cost and skills perspective -- location as a very important tool in maximising shareholder value and ensuring profitability now and in the future. It's a fact that the world is evolving and, with it, labour traditionally sourced in local markets can now be found in low cost countries and hence in order to remain competitive globally companies must take advantage of this. Unfortunately, this often leads in a rebalancing of headcount in more developed (i.e. expensive) countries and this can sometimes lead to 'layoffs' but this is a fact of life and, I think, the consequences of ignoring it would be far worse for the other employees of the company as well as shareholders and the marketplace.
"If IBM was not 'delivering' as a consultancy then it's highly doubtful they would be enjoying the growth and financial success that they are…"
A priori reasoning doesn't work in Big Biz Land. As a (former) high-priced consultant, who worked with many other high-priced consultants, inside Fortune 100 companies and out, let me assure you… the actual effectiveness of a consulting co. has nothing to do with how many contracts they score or what their profit is.
Then what do you propose is the measurement that can be applied to determine the actual effectiveness of a consulting company?
Of course, it's true that GP is not a good measure, if taken alone, of the delivered value just as revenue and signings do not necessarily make good indicators. However, if one assumes that customers are able to gauge the effectiveness of the consultancy they receive then measurements such as backlog seem reasonable indicators of success; if clients are not receiving value, they would be cancelling contracts and/or not resigning and hence backlog would start to decline year on year. In the case of IBM, their services backlog went up 1 percent year on year and sits around 140 billion USD.
The only way to deal with very large companies is to think like Machievelli.
How to measure the success of a consulting company? Well, you have to ask "What are they REALLY hiring the consultants for for?"
Probably a third of the jobs I was hired for, inside large companies (and particularly corporate-y startups), were clearly (to me) about CYA. "Hey, we're doing something, look at all the money we're spending on consultants!" When you go in, as I did, trying to actually do a great job, this becomes incredibly disheartening. One more reason I came to loathe consulting. However, in that case, given the actual (unstated) goal, I was able to be very "effective" for the client, despite the fact that no matter what I did, they wasted endless hours of my & my partner's time at $500+/hr total. $2k on a meeting? Sure, why not? Changing "project managers" every week? Hey, why not? Putting a glorified secretary in charge of signing off on user interface designs? Sounds grrreat!
And yet… for their purpose… I was a tool they used effectively. Bummer.
Wasn't just me, either. Do you remember that "shocking" post a while back by an anonymous ex-McKinsey consultant? He detailed how McK hires kids out of college with no experience and gives them jobs pumping out Powerpoints to client specifications. That doesn't sound so bad, put that way, but he meant that he was told what outcome the client wanted to see, and that he should make the data (and the presentation) come to that conclusion. Given my experience consulting, I wasn't at all surprised (although it's a different type of consulting and I was never dishonest to a client).
We assume clients are rational actors, but they're not. They're people. And people often do things for all the wrong reasons. They will pay somebody to tell them what they want to hear; they'll pay somebody to look good; they'll pay somebody to listen to them, to have somebody have to obey them and their wishes on topics they know nothing about, because nobody listens to them usually.
As notable consultant Jerry Weinberg wrote, "No matter how it looks at first, it's always a people problem." And unfortunately it's not just "a people problem" but "problem people."
That said, IBM has changed and will continue to change. They constantly remix their portfolio, adapt and evolve and that has been the only way they have been able to survive over 100 years and prosper at a time when their traditional competitors, such as HP, are failing. One can see how they made the transition from a hardware-led business to a services-led business as a good example of that constant transformation.
Lastly, why is 'outsourcing' necessarily perceived as a negative thing? I see IBM and other multinational's ability to move work to the most effective -- from both a cost and skills perspective -- location as a very important tool in maximising shareholder value and ensuring profitability now and in the future. It's a fact that the world is evolving and, with it, labour traditionally sourced in local markets can now be found in low cost countries and hence in order to remain competitive globally companies must take advantage of this. Unfortunately, this often leads in a rebalancing of headcount in more developed (i.e. expensive) countries and this can sometimes lead to 'layoffs' but this is a fact of life and, I think, the consequences of ignoring it would be far worse for the other employees of the company as well as shareholders and the marketplace.