Last October, IBM completed the acquisition of Pricewaterhouse-Coopers Consulting for a price of $3.5 billion in cash and stock, creating the world’s largest consulting-services company. The merger, which involves 60,000 employees in more than 160 countries, is an aggressive move by IBM to augment its position in the technology-services industry and become one of the world’s leading professional-services companies. In command of this effort is general manager Ginni Rometty, a 20-year IBM veteran and founding member of its business-and-IT consulting division. This month, Rometty is in the hot seat.
Why now? This was a very strategic acquisition for us and a part of the journey we’ve been on to change the face of IBM: This merger helps us become even more of a services-led business.
Why them? We obviously could have looked at other options — PwC experienced a recent decline in revenue clearly linked to auditor independence. But that’s something that could be reversed by changing ownership of the firm. The key thing is that we have the same vision: We both have the view that clients want a partner who can conceive of an idea, build a strategy, operate business processes itself, operate the technology as well, and take accountability for delivering the benefits.
We have a wonderful complementary set of industry process skills. IBM had built strong technology services, a global applications business, and strength in outsourcing. PwC built business-advisory services, application skills, and process skills. This isn’t about making them stronger. We’re creating something new together — a new category of service for clients that’s completely end to end.
What this merger is not about is compromising between the two firms. This is about combining a very strong services culture and a very strong sales culture. It’s easy to make decisions when things are bad on one side. When both sides bring something good — but different — the hard question is how to create something new based on both sides.
Speed is important. Everyone we talked to said the same thing: Move fast. Pick an operating model, pick your leaders, have closure in two months. Because the faster you can take the uncertainty out, the higher your odds are for retention — and for people staying excited about what they do.
This is a business of people, and if you can’t integrate, no amount of money will make it worthwhile.
I call what we did “adopt and go.” I liked PwC’s business processes, so we went with theirs and integrated IBMers into it. We looked at their leadership and wanted to retain the strong talent they’d built. And we knew that seeing familiar leaders would help make PwCers feel comfortable in the new company, so we put them in key positions.
The challenge is to stay focused on things that impact clients and not get distracted by internal integration issues. We still have an integration project office, with people from both IBM and PwC, and we’ll have it until every aspect of integration is completed. Their job is to deal with things behind the scenes that should be left behind the scenes.
I want to build an image of IBM as a business-services partner that’s as strong as our image as a technology-services partner. We want to bring more value to clients, deliver bottom-line business value, and bring about business change at the same time as technology change. The services marketplace is very fragmented. But the goal is to gain increasing share in the professional-services market.
How will we know when we’ve arrived? That’s something that your clients vote on: when they turn to you — and then continue to turn to you over time.
What keeps me up at night? Just being sure that we are constantly able to evolve our ideas and our capabilities. My top priorities for the next few months are, first, to be maniacal about the focus on our clients. We’re now the largest services company in the world. Above all, we need to bring bottom-line value for the client. And second, to continue creating a new culture that’s a result of these two firms coming together. That’s what will sustain the company for the long term.