According to the Wall Street Journal, IBM sales chief Virginia Rometty (right) is the front runner to become Palmisano's successor. Global Services chief Michael Daniels (left) is the No. 2 choice with Rodney Adkins (bottom right), senior vice president of hardware, No. 3.
Palmisano is reportedly seeking advice on the transition and expect the successor to become president or chief operating officer in the next year or so. IBM CEOs typically hand over the reigns at 60 and Palmisano hits that age in July.
Rometty would be a logical pick since she's directly tied to IBM's revenue line given her sales perch. Bloomberg Businessweek noted that Rometty would be the choice if Big Blue had to launch a succession plan this minute. Daniels is another solid choice given he also accounts for a big chunk of revenue via services. Adkins was able to keep the hardware business humming after senior vice president Robert Moffatt was arrested for insider trading.
In any case, the next IBM CEO will have a tough act to follow. Since becoming CEO in 2002, Palmisano has shed units with low profit margins and transformed the company into a software and services giant. In addition, IBM has kept its research and development efforts humming along as it plots new growth markets such as mobility and commerce. The company has also bet big on analytics.
Meanwhile, IBM has set some heady earnings growth targets. Palmisano last year outlined Big Blue's 2015 roadmap and said he expects non-GAAP earnings of at least $20 a share in five years. IBM is also targeting $100 billion in free cash flow over the next five years.
Add it up and the next IBM CEO will have a solid plan already worked up. That plan revolves around the following:
- Generate 30 percent of revenue from emerging markets by 2015;
- Deliver $7 billion in cloud revenue in that time frame;
- Lock in $16 billion in business analytics revenue.
In other words, the biggest part of the job description for IBM's next CEO will revolve around not screwing up a good thing. Keep in mind that Palmisano also had big shoes to fill. All he did was follow Lou Gerstner, who was credited with starting the IBM renaissance starting in 1993.