IBM is the latest to blame poor performance on sales execution

IBM has become the latest in a string of IT companies to blame their sales people for their poor financial performance. 

The company's sales during the first three months of the year were $23.4 billion, down 5.1% from the same period of 2012. Its non-GAAP earnings per share was $3 – missing analysts predictions for the first time since 2005, news agency Bloomberg reported. 

On a conference call with analysts, IBM CFO Mark Loughridge blamed the performance on its salesforce failing to close down deals near the end of the quarter.

"We had solid profit performance in January, but as the quarter ended hundreds of millions of dollars of very profitable software and System z mainframe deals fell short of the goal line," he said.

"On the software side of the house they had a very good listed deals and I think this was just pure execution," Loughridge added. "We should have closed those on a sales side."

Last month, systems and software giant Oracle made similar remarks. After the company reported a 1% drop in sales to $9.0 billion, company president Safra Catz blamed it on "the lack of urgency we sometimes see in the sales force as Q3 deals fall into Q4".

Then middleware vendor TIBCO said the same thing after reporting a 5% sales increase for its latest quarter – well below the double-digit growth rate the company has maintained for the last couple of years. "Our issues are primarily execution-related," said CEO Vivek Ranadivé. 

Commenting on Oracle's numbers, Berenberg investment analyst Daud Khan noted that poor sales execution "is fast becoming the favoured scapegoat", especially among software companies.

"Almost every software company we follow and many that we monitor have had “execution” issues in the last 12 months," he wrote

It is possible, of course, that the enterprise IT industry has suddenly been overcome by an epidemic of lazy salespeople. But it may also be that "sales execution" is a more palatable excuse for poor performance than existential threats that are beyond the companies' control, such as the uptake of cloud computing. 

A report by financial analysts Baird Equity Research recently estimated that every dollar spent on cloud computing services replaces $3 or $4 that would otherwise have been spent on traditional IT.

Ed Reeves

Ed Reeves co-founded Moneypenny with his sister Rachel Clacher in 2000. The company handles more than 9 million calls a year for 7,000 UK businesses and employs almost 400 members of staff. Reeves remains...

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