Checking in on the US Enterprise Software Industry

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Part 9
Checking in on the US Enterprise Software Industry PART 9 OF 10

A Look at IBM’s Return to Office Order

Remote workers recalled to the office

IBM (IBM) recently shocked thousands of its employees with a call to return to the office or leave the company. For years, IBM has promoted a work-from-home culture, but it now looks determined to undo it.

The company is asking thousands of its remote employees in the United States (SPY) to return to the office. According to IBM, recalling remote workers back to the office presents several benefits to the company, such as accelerating the pace of work and improving innovation.

A Look at IBM&#8217;s Return to Office Order

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Pressure to stem revenue decline

It’s clear that IBM is in need of accelerating work and improving innovation. For nearly 20 quarters in a row, IBM’s sales have been falling. In 1Q17, its revenue fell 3.0% year-over-year to $18.2 billion, as shown in the above chart.

IBM is eyeing opportunities in technology fields such as cloud computing, enterprise mobility, data analytics, and cybersecurity, which together form Strategic Imperatives, to catalyze growth.

Strategic Imperatives need more innovation

While the Strategic Imperatives segment has been growing at a nice pace, it comprises areas of cutthroat competition. IBM competes with Amazon (AMZN), Microsoft (MSFT), and Cisco Systems (CSCO) in areas such as cloud computing and security.

IBM needs to innovate more and quickly in its newer businesses to beat the competition and build up its top line. If recalling remote employees back to the office is going to speed up Strategic Imperatives’ growth, then IBM seems to be making the right moves.

However, the move to recall remote workers could also signal a serious underlying problem at IBM. Did the company hope to make financial savings by encouraging employees to work from home, but failed? Time will tell.


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