ITCandor is very lucky to have been invited along with a couple of other analysts and IBMers to a dinner meeting with Marc Dupaquier, the worldwide head of IBM STG marketing. In fact I’ve attended many key IBM meetings over the last few weeks, including a deep dive on its systems management software approach and dinner with Rod Adkins, which we wrote about recently. I make no apologies for writing about IBM again here, since I know how important getting the views of key industry executives are to our readers.
Dinner At Great Fosters
Great Fosters is an Elizabethan house – now a restaurant and hotel – to the West of London. It has an original small oak door through which all guests have to duck through to get into the house. Oak panelling covers all of the rooms I saw, which for me mirrors IBM’s position in the IT industry – full of heritage and value. Marc headed IBM’s mid-market business some time ago, but was keen to talk about the future.
He outlined three major trends affecting the future of our industry. In particular:
- The Consumerism of Enterprise IT
- Smart versus Tight
- Cloudisation of the Cloudable Cloud
He took a wider approach than Rod, adding some clear extremely well thought out views from his own experience, while linking them to IBM’s strategy and strengths.
The Consumerism Of Enterprise IT
Marc sees major challenges for CIOs from the fact that end-users believe they can now do anything they want through the Cloud. In comparison everything in the enterprise is expensive, taking a long time to implement. The great emphasis they had not so long ago on implementing firewalls is going away now. He illustrated the conflict with a couple of cases. In particular:
- About how an FBI operative got into the press for saying he was bored watching Fox TV all day on his official (rather than personal) Twitter account
- Similar incidents include one where a European police officer is thought to have discussed the interrogation of a suspect on Facebook
Why, we might ask, would organisations like these sanction the use of social media at all? They certainly illustrate the conflict between traditional and social media. Marc believes these will be further exacerbated by the acquisition of Cloud services by ‘Line of Businesses’ parallel to their purchasing of minicomputers such as the DEC Vax in the 1980s. In fact he suggested that a lot of IT managers today are the children of those of 25 years’ ago, forced to tell their constituents ‘you can’t do that’. He sees Cloud as ‘an unbelievable sale maker’.
Smart Versus Tight
STG has a meeting once a year with its research people to discuss the ‘art of the possible’ – where its Smarter Planet and Smarter Computing ideas came from for instance. From these meetings Marc is convinced that for ‘everything is now possible’ with the Cloud all the way to putting micro-servers in bodies to monitor blood pressure.
For the last 25 years he believes the main role of CIOs has been to make business processes better by the application of technology, but that is changing now, enabling the creation of new businesses processes or services. He sees organisations changing the people responsible for IT now that Smarter Computing requires you to do new things without extending the existing budget. In fact IBM’s latest research suggests that IT budgets in Western enterprises will increase by only 0.8% this year, although by much more in emerging countries. Our small discussion group brainstormed the proportion of revenues different sectors spent on IT and for what it’s worth decided on the following:
- Overall 4-8%
- City Government 1-2%
- Banks 8%
- Retail >8%
He says that IBM’s Smarter Computing initiative came at a pivotal moment when everybody in the industry assumed the future was just about x86 servers and VMware hypervisors, while IBM had a very different point of view. He illustrated this by talking about a visit to a multi-storey building opposite the New York Stock Exchange stuffed full of x86 servers – their proximity necessary to assure low network latency for their trading activities. The massive demands on power in the facility makes everything very hot and leads to the prediction from one Bank’s IT Manager that it might burn down one day.
The Cloudisation Of The Cloudible Cloud
My spell checker won’t work on the title of Marc’s third current trend, but his points were well made. He believes that there is a view in our industry that everything is possible with the Cloud. When he looks at his competitors’ web sites (something he tends to do on the weekends) he sees lots of Cloud marketing – Cloud is a kind of magic there. IBM believes that you also need to concentrate on meta-data management and how Cloudable processes work with existing internal systems. Other challenges are around data, server verses services and systems management. He particular likes the idea that Cloud Computing is a journey.
One of IBM’s first Smarter Computing case studies is the University of Pittsburgh Medical Center (UPMC), where it’s developed the concept of ‘Smarter Beds’. The hospital’s initially wanted to build a new data centre, because it was running out of space and had constrictions because it was located close to a river. Its ability to innovate was borne from the consolidation activities IBM helped with and the savings made in avoiding the data centre refresh.
We had a fun time discussing IBM’s Watson system, which competed and beat the champions of the quiz show Jeopardy! Marc said that IBM had many calls following its win from companies wanting to buy something similar. Interestingly in the early stage of the development Watson struggled to beat even average players, creating anxiety among its senior line execs, while the development team never had any doubt about Watson’s learning curve and their ability to win eventually. In fact Watson lost the first round, before winning eventually – testament to its inbuilt learning capabilities. Since the show IBM took a slimmer x86 version of Watson (as opposed to the Power7-based full system) to challenge US Congressmen and lost to Republican Rush Holt who is now heralded as the smartest in the country.
IBM’s broad spread of different servers is playing a role in Cloud Computing. Marc said that about a third of the new System z Mips sold recently were used to run zLinux for server consolidation activities. He points to Oracle’s Exadata and Exalogic machines as competitive activities supporting the implementation of optimised systems designed for a specific task and similar in approach to IBM’s acquired Netazza systems.
IBM will launch more integrated systems in future Marc indicated. He also suggested that IBM would probably continue to expand its portfolio through acquisitions as it did recently with XIV, BNT or StorWize.
Generation Y Employee Challenges
We discussed the possible changes in user organisational structures towards less integrated models and the importance of Social Responsibility strategies – noting the shift from government to corporate activities. Marc is well aware of the connection between CSR and brand image, citing consumer suppliers as an example of where bad actions by manufacturing subcontractors could seriously impact their own brand image.
We spent some time discussing Generation Y towards the end of the meeting. Others around the table gave little encouragement to my idea that, as the father of two twenty year olds, I was in a good position to understand the various implications of their growing influence on the acquisition and implementation of IT.
Marc is worried about the high levels of unemployment among this age group, mentioned recent research outlining the depth of the problem for example in Spain, He said that IBM was entering a time in many Western countries (‘the UK and many others’) in which its employee profile would shift to younger staff. He noted some extreme differences in approach from some already there – especially one from its Unica acquisition ($480 million in August 2010) who joined a meeting he was attending in Armonk. While accommodating younger employees is a challenge for IBM and possibly even more for IBM Business Partners, he believes it is also a great opportunity.
He is well versed in the comparative costs of employees around the world however, although staff retention is a growing problem in places like Bangalore, where experienced people tend to be headhunted. For IBM STG marketing Marc is shifting from a centralised to a more regional model, deciding to run Chinese marketing locally for instance.
Some Conclusions – IBM’s Approach Is Refreshing For An Enterprise Supplier
IBM is a strong brand, but it lost a lot of consumer awareness when it decided to sell off its PC business in 2006 and it’s refreshing to hear that its head of hardware marketing is so focused on the shifts in technology usage and acquisition the younger generation brings.
IBM remains a ‘top down’ supplier, as we’ve noted many times before and, having run its mid-range business Marc is conscious of its opportunities in selling to smaller organisations. However I did not sense any major change in approach. I believe it will continue to support large and medium companies in their challenges – not least in their attempts to progress along the Cloud journey. It also has partners who can encapsulate its technologies to address the needs of SMBs and consumers.
The market is moving IBM’s way: users of Cloud Computing by definition (at least in ITCandor’s) should know and don’t care about data centre technologies and IBM’s advanced virtualisation in its extended server, storage and systems software approach helps it deliver low ‘cost per workload’. It’s wrong to over-generalise, but if Generation Y doesn’t care so much about technology either, it looks as if Marc will succeed in moving the future way from the assumption that all we need are x86 servers and VMware hypervisors.
To compare STG executives, Marc was more expansive and Rod Adkins more focused, although that was no doubt more a question of the time and nature of the two events. Dinner was good, the company enlightening and I didn’t bang my head on the door on the way out.