IBM: Spend Optimization Opportunities at Year End

We are still waiting for the great IBM turnaround led by Ginny Rometty since her installment as CEO in 2012.  IBM has pinned its turnaround on Watson AI, Blockchain and now “Hybrid Cloud” with the RedHat acquisition.  IBM’s “turnaround” has resulted in 22 out of 25 quarters of declining earnings.  To be fair, it’s the last three quarters that have shown growth, not driven by its strategic imperatives but rather has been provided by (drum roll please) – mainframe. Yes, the good old mainframe, with upgrades and increased storage needs driving strong revenue in Q2 and Q3.

How the mighty have fallen, or better said, continue to fall as we have been saying since 2012 in our original articles:

IBM’s stock looks like a value trap as key business units continue underperforming. Don’t just take our word for it, consider that Warren Buffet sold ALL of its IBM positions as of May 2018.  If the Oracle of Omaha bailed on your stock, then there is probably something wrong.  Or even as of Oct. 31st 2018, where a Yahoo Finance panel discusses their failures (video).

While IBM business struggles, don’t let them make their problems, your problem.  We see three areas of focus where you can avoid pitfalls and find opportunity with IBM:

1. Audits

If you are not prepared, get prepared and assume it’s coming.  Like any company that is desperate to show growth and operating margin, IBM is resorting to squeezing and strong-arming customers for leverage.  If you are thinking about, worried about, or currently in an audit, you probably should call us to assist with remediation.  Often you can turn what looks to be a bleak situation, into a long-term win.

2. Market Disruption

Simply stated, there are other products now in the market that are better, faster, cheaper, and more efficient.  Where you can move and or migrate to another supplier away from IBM – you should.  There are migration paths open, and more specifically, steps you can and should take to start.  The first step is seriously considering an alternative in just a small part of the business.

3. Mainframe Optimization

We love IBM.  In reading this that may sound contradictory, but the fact is they are so inefficient we have a consistent workstream of business because of it.  We don’t love what they do to their customers however, by significantly over charging and leaving them sub optimized in their agreements, investments, and relationships.  There is no IBM engagement where we have not found significant areas of improvement, which can equate to millions back to your ledger.

The end of year can be a feast or famine proposition for some IBM customers.  Some will feast on the opportunities presented by the supplier’s desire to finish the year strong, and use that as leverage to optimize their agreements, investments, and relationships.  Others, however, will miss out on these opportunities and be controlled and intimidated by them, sometimes without even knowing until they find out they’ve been paying a 32% to 60% premium for the same products and services as their peers. This does not even consider the cost from other Software suppliers that charge you based on MIPS usage. See how we saved one global bank 50% on just one area of IBM spend.

We have been here for 16 years, helping clients like you solve these and other problems, while minimizing costs and risks, and maximizing the realization of value and benefit.  Contact us today to start a conversation and see how we can help you. 

About NET(net)

Celebrating 16 years, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get and keep more economic and strategic value. With over 2,500 clients around the world in nearly all industries and geographies, and with the experience of over 25,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, resulting in incremental client captured value in excess of $250 billion since 2002. NET(net) has the expertise you need, the experience you want, and the performance you demand. Contact us today at, visit us online at, or call us at +1-866-2-NET-net to see if we can help you capture more value in your IT investments, agreements, and relationships.

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