Chief information officers commonly report to the financial director or chief executive. But at IBM, Brian Truskowski reports to the senior vice president for internal business transformation.

Truskowski says this is because management believes IT has unique insight into the internal workings of the giant company. But he concedes that he gets a lot of help from his friends – 329,000 other IBM employees.

Many companies do "business transformation", of course, but at the mother of all technology companies – IBM was making mechanical computing machines in 1911 – the concept has special importance. For decades, IBM bestrode the world of IT like a colossus, but it lost its hegemony in the 1980s and early 1990s in the face of the rise of Microsoft and other competitive forces.

Recognising that the company had to confront 21st century market realities, IBM chief executive Sam Palmisano decided in 2003 that it was time to update the "basic beliefs" set forth in 1914 by IBM's first president, Thomas Watson Sr. Using intranet-based collaboration technology, IBM polled its employees for their ideas, got 50,000 responses and – assisted by IT – distilled those into just three corporate values.

A sharp focus on those values has helped IBM regain its footing, Truskowski says. Last year, the company's $91bn (£45.5bn) revenues put it 10th on the Fortune 500 list of top US companies.

IBM's new values, which include putting client needs first and fostering innovation, may seem obvious, but Truskowski says the participatory, grassroots nature of their development gives them credibility with employees – something they would have lacked if they had been developed by a senior executive.

Armed with the freshly minted corporate values, senior management charged business unit managers with finding and closing the gaps between those values and actual business practices. To help, the IT department rolled out a so-called “jam” – a worldwide brainstorming session that Truskowski describes as "a blog on steroids" – in October 2004. This drew ideas from 33,000 employees and IBM implemented the top 35 suggestions chosen by a staff vote.

"A very obvious problem was our lack of integration in front of the customer," Truskowski says of one of the gaps identified in the jam. Indeed, the second most popular idea raised was to overhaul the way IBM sets prices for deals that include combinations of hardware, software and services.

Before this, every brand had had its own profit objectives and pricing policies. "Of course, that's crazy, because it's our ability to solve a problem – as opposed to selling piece parts – that makes us special," Truskowski says. So the company created what it calls its “deal hub”, a one-stop shop for sales teams working on bids that draw on offerings across several IBM brands and business lines. The hub helps sales teams worldwide come up with competitive bids faster, he says.

The top-rated idea from the 2004 jam was a programme allowing staff to anonymously rate their bosses. About 81% of eligible managers received feedback reports last year. Another idea, to simplify password use and administration, resulted in a single sign-on plan that is now being pilot-tested.

Jams are just one of the tools IBM developed with the support of its internal IT group to avoid a repeat of the stagnation that led to its stumbles in the 1980s and 1990s. The tools are intended to tap into the company's huge store of knowledge, whether this is in a client database in the US, in the mind of a software engineer in India or on the desktop of an accountant in England.

IBM has employees in 74 countries and thousands of them have innovative ideas, Truskowski says. So the latest jam sought ideas on new markets, technologies and products – and for the first time, it was opened up to IBM clients and employees' families. The exercise generated 37,000 ideas from 140,000 people in 75 countries and 67 companies.

This was quite a feat for the IT infrastructure, says Truskowski, noting that 31,000 “jammers” were logged on at one time on the first day. "I haven't seen much else that can handle this scale," he says. "From a CIO's perspective, it's 72 hours of hell." He says several IBM clients have asked for the technology to conduct their own jams, and IBM is providing it.

Another tool for harvesting ideas is the Technology Adoption Programme (Tap) an initiative aimed at the company's new goal of fostering innovation. "When I took this job 20 months ago, I had a lot of passionate IBMers tell me what great ideas they had about things we should be doing inside," Truskowski says. Tap, an intranet system based on WebSphere and the LAMPStack suite of open source tools, is the result.

Employees known as “early adopters” use an intranet-based testbed to try new tools and technologies posted by employee "innovators" around the world. There are now 1,000 innovators and 36,000 early adopters using the system. "We pick off the best ideas for internal pilots, and eventually some end up in our products," Truskowski says.

For example, some enhancements in the current release of IBM's Sametime instant messaging product – such as emoticons, broadcast capability and a link into Voice over IP – originated with internal users who had developed those features on an ad hoc basis.

The jamming and Tap initiatives are natural for IBM, says independent IT consultant Eileen Strider. "IBM has a very rich history around their values. I don't know of other companies doing this as aggressively as they are. And given that IBM is a technology company, the employees are attracted to 'blogs on steroids' kinds of ideas."

Strider calls it "a good thing" that IT falls under internal business transformation in IBM's corporate structure. "The people in IT sort of know how all the pieces fit together, and they see where the issues are and where the disconnects are," she says.

Truskowski says his biggest challenge is "supporting the hyper-growth markets in emerging countries". IBM has 43,000 employees in India, second only to the number of employees it has in the US. "Understanding the constantly changing business models in those countries is critical," he says.

He is experimenting with a new model in which employees are given tailored IT resources. In the past, he says, all employees received fully loaded ThinkPad laptops. "Now we are delivering just the right capabilities for your role -- just enough IT to get your job done," he says. "That simplifies people's lives [and] my life, reduces costs and better supports those emerging business models."

Paying close attention to the IT needs of individual employees has become increasingly important, because more than half of all IBM workers have been with the company less than five years, while 45 per cent do not report to a traditional office every day. "Employees used to say IBM stood for: 'I've been moved,'" says Truskowski. "Now I hear it means: 'I'm by myself.'" One of his challenges is ensuring that all employees have access to the resources they need and are connected with each other, even if this is only virtually, he says.

Asked what advice he would offer his successor, Truskowski says: "Be ready to get a lot of suggestions. There are a lot of IT experts at IBM, and probably half of them think they can do the job better than I can. And probably half of those are right."