From Big Iron to E-Business Juggernaut

The bold moves that Gerstner made early on proved that IBM's CEO was among the first leaders of long-established companies to grasp the mind-boggling potential of Internet technology. The IBM chief regards the Internet not as simply another new technology, but as the leading edge of a bona fide paradigm shift:

Every day it becomes more clear that the Net is taking its place alongside the other great transformational technologies that first challenged, and then fundamentally changed, the way things are done in the world.

Gerstner's $300 million Internet gambit, launched in 1995, gave IBM a decisive head start in the digital arena and helped it to transform itself from a mainframe company into a modern-day knowledge-based business. Gerstner knew that to complete the transformation, he would have to push the Internet into every nook and cranny of IBM, from its products to its practices and marketing.

He also knew that embracing the Internet created enormous challenges for most companies, and that the majority of organizations—including the majority of the organizations in IBM's client base—needed help in figuring it all out. This involved everything from selling existing products online to coming up with a cohesive Net strategy for the future. In short, these companies needed the new IBM to help them fully integrate the Internet into the way they did business every day:

The Internet is ultimately about innovation and integration. But you don't get the innovation unless you integrate Web technology into the processes by which you run your business.

By the late 1990s, evidence of IBM's transformation into a solutions provider was everywhere. By 2000, IBM was the top e-business solutions provider: It had an astounding 130,000 consultants who had completed 18,000 Internet service engagements in 3 years. Those assignments included everything from helping to create web site designs to devising entire Net strategies for its customers. This meant that IBM was doing three times more Net business than three of its larger competitors combined! Some $20 billion in revenues was derived from IBM's Internet initiative—proof positive that Gerstner's gambles on the Internet paid off.