IBM, After Selling Federal Business, Returns in a Big Way

Even as a low-level systems engineer at the FBI in her first assignment with IBM, Anne K. Altman felt she was fulfilling a higher purpose. She thought that her work with computers was helping her country, making it a bit easier for law enforcement agents to solve their cases.

It was a personal and professional passion that would come to define her career over the next two and a half decades. Today, Altman is the head of a newly powerful group: IBM Federal, a Bethesda-based unit whose technology, software, hardware and services are used in more than 90 percent of U.S. government agencies.

But the road to that position was not a direct one.

International Business Machines Corp. has a long history of federal work. The inventor of the machine that helped tally the 1890 Census founded the company in 1896. But a century later, the company, which had grown profitable on mainframe-computer technology, was faltering in a new world of small, powerful computers being built by competitors. Facing a dangerous shortage of cash, Chairman Louis V. Gerstner Jr. decided to sell assets, and one of the first to go was the company's relatively low-margin federal business. IBM sold its Federal Systems Division to New York-based Loral Corp. in 1994 for $1.5 billion.

Altman, who had joined the division only two years earlier, was chosen to help complete the divestiture. It wasn't the career move she had been hoping for, but she said she had "kind of a hit a personal wall at that point in my career," and took on the job so she could learn new skills and advance in the company.

After the sale, Altman moved through a series of jobs at corporate headquarters in Armonk, N.Y. -- software, global sales, marketing. But she never forgot that first FBI job, the one that gave her a sense of mission. She wanted to return to federal work and the Washington area.

IBM, meanwhile, was getting back on its feet and expanding the hardware, software, research and consulting services it offered a broad range of clients. The company realized that it wanted to offer those same services to the biggest potential customer in America -- the U.S. government. It slowly began winning back federal clients, and, in 1999, Altman returned to Washington, joining the effort in a marketing role. By early 2001, the company formalized the new federal group, and Altman was named its managing director.

The first challenge was reassuring the government that this time, IBM was seriously committed to the federal business.

"We had to convince people we were still very interested in what was going on," said Nicholas M. Donofrio, IBM's executive vice for innovation and technology. The company "had to build that back up from scratch."

Altman immediately sought to expand IBM's role from that of computer supplier to consultant. "My point of view was there is so much more we can do and so much more we can bring," Altman said. To that end, she formed an advisory group at headquarters, hoping to get the top people at Armonk more in tune with what was needed in Washington.

"I want you to understand this is not just my obligation, but yours," Altman says she told the board members, who included Donofrio; Irving Wladawsky-Berger, vice president of technical strategy and innovation; Steven A. Mills, senior vice president of software; and William M. Zeitler, senior vice president of the Systems and Technology Group. "I didn't just want to be empowered. I needed support."

Altman stayed in constant contact with those executives in person, by phone, and via instant messages. "Over time it became so socialized that I didn't really need that board anymore because they were so active in the business," Altman said. Today, she says, key officials at IBM headquarters are so attuned to their defense and intelligence clients that they have security clearances.