As IBM prepares to close the books on another strong year, you and your team clearly have a lot of successes to savor: Smarter Planet, analytics, your revamped hardware line, and surely your financial results and stock price.
But since you didn't get to where you are and IBM didn't get to where it is by focusing on how wonderful you both are, I wanted to toss out some questions that reflect some of the market's concerns about IBM.
As you'll see,some of these concerns or questions are mildly tactical and are posed to clarify the perception of IBM in a turbulent economic time, and others dig more deeply into your company's unfolding strategies during a time of massive change within the technology industry.
Your perspectives on these issues are vital, Sam, because IBM is simply not viewed by the world as just one of many excellent tech companies. Rather, by virtue of IBM's 100-year legacy of innovation plus your own 10-year record of transformation and vision, the IBM company is seen as a leader of not just the tech business but as one of the foundation pieces of the global economy.
So when you have a chance, we'd love to get your thoughts on these 10 questions to understand more fully where the company that dialed up the Smarter Planet is heading:
1) IBM's powerhouse in microprocessors and chips. I think most people have something of a vague idea that IBM at least dabbles in microelectronics, but that also means that very few people understand the depth and breadth of your position in this field where world-class science meets the market-accelerator of engineering.
From your extraordinary successes in the high-tech games industry to your advanced nanotechnology work, there's a great story to tell here of how this extraordinary chip-level expertise will underpin IBM's next wave of growth as Smarter Planet evolves from a brilliant concept to a powerful reality.
2) The Smarter Planet gets real. Your company has succeeded in inspiring not only itself but also huge portions of the global business community to think very hard about this idea of a planet that is deeply instrumented, interconnected, and intelligent.
That vision extends out to a dazzling array of prospects that need to become smarter:
Roads, oil and gas, food, healthcare, power grids, retail, water, supply chains, public safety, weather forecasting, transportation, and cities. Clearly, IBM's going to have a hand in all of that intelligence enhancement, but along the way, what exactly does IBM become? Computers will be involved, but is IBM a computer company? Software will be involved, but does IBM become a software company? A services company? An electronics company? What's your vision, Sam, for what IBM becomes as it becomes the master contractor in raising the intelligence and engagement of cities and supply chains and weather forecasting and energy production and healthcare and water supplies? How will you define IBM as the Smarter Planet becomes less of a vision and more of a reality?
3) "We are NOT like other IT companies." About 18 months ago, at your Investor's Day meeting, you spoke with great passion about how and why IBM had transcended the established model of a big IT company and had become something else entirely. You chided the analysts and institutional investors—rather pointedly at time!—for having been blind to the fact that IBM had already transformed itself into the type of company it needed to become, while other big IT companies were still struggling to understand what their own transformations would entail. I sense that IBM and the tech industry are approaching a similar inflection point—particularly with the Smarter Planet initiatives outlined above—and the world probably needs to hear again on how or why you feel IBM has again begun separating itself from competitors.
As a reminder, here's a slice of what you said at that investor's briefing in May 2009:
"A lot of people have said to me, 'You guys are defying gravity.' We're not defying gravity – we had a record year in 2008. We got out ahead of it. It's not about defying gravity – we got out ahead of it.
"We took out a lot of stuff last year, and a lot of stuff earlier this year, to reduce our run rate of cost and expense by $3 billion. So we're not fighting physics. We just had the financial flexibility to get ahead of it—one might call it insight; call it whatever you want to call it, conclude whatever you'd like to conclude; we just didit; we're done. Most of it's done. . . .
"Now look: we got it all. Why? Since nobody's asking us why--'No one expects you to [make projections], so why would you do it?' Because you need to keep things in perspective: We are not like the other companies in the IT industry. We're not. We've completely transformed the IBM company. We're not.
"And we're not crazy kids. So we don't throw numbers out to throw numbers out. Y'know, we're not that short-term oriented. I'm an old guy—and Mark's [CFO Mark Loughridge] not getting any younger in his job—so, you've gotta reflect on that—this is IBM, this is not, y'know, we're not running around up here dressed in fads, and sunglasses, and whatever kinda designs, so, what is it?"
What is it, indeed—early 2011 would be a great time to revisit that discussion.
4) The state of R&D. You recently criticized HP for not spending enough on R&D. So closer to home, what are your thoughts on IBM's R&D investments—not just raw dollars, but ROI on those investments and how those billions are tying into the company's vision of the future? How is R&D today more or less of a competitive weapon than it was 3 years ago or 5 years ago? And what about in 2015—will R&D be more or less important then than now?
5) Competition, collaboration, and the spaces in between. More than perhaps any other company, IBM embodies the multifaceted dynamics of life in the 21st-century IT business whereby a ferocious competitor in one arena (e.g., Oracle in databases and middleware) is a very close partner in other areas (IBM's the #1 integrator of Oracle software). How do you manage to keep these relationships spinning harmoniously in a world where the sources of highest-level value are constricting into tighter confines into which everyone's trying to fit? You and SAP have a long and powerful history, yet you're both racing headlong to become world leaders in analytics. How will IBM address these strategic relationships that are becoming simultaneously more valuable and more volatile?
6) What's up with IBM's server share? No, I don't want to get in line for a tongue-lashing like you gave above to the analysts and institutional investors, so I want to be careful here: I know you and Steve Mills have been pushing IBM out of any product categories that even hint of commodities, and that includes some types of servers. HP has recently trumpeted the fact that they've overtaken you in worldwide server sales, and that the momentum is in their favor:
Global CIO: HP Claims Software Supremacy And Tells IBM: Migrate THIS!. Is this solely a matter of you being willing to give up market share in favor of smaller numbers of higher-value systems? Or is there something else at play here?
7) What's IBM's mobility strategy? No one's expecting you to come out with a new mobile device called the ibmPhone to challenge Apple, but what's IBM's strategy in the booming mobility market? Beyond the handheld devices, how is IBM capitalizing on the huge effort that's underway among businesses of every type to equip their workers with ubiquitous access to the mostly timely information and insight?
8) Lessons from developing countries. IBM's got a long history in what the rest of us call "emerging markets"—I think IBM Brazil's been around almost as long as IBM itself? What's happening in those high-growth areas that enriches your view of what IBM needs to do around the world? How are IBM's experiences and engagements in China and India and eastern Europe accelerating new ideas and new approaches within your company and, in so doing, changing the very nature of who IBM is and what it offers to the world?
9) The strategic role of workload-optimized systems. Your friend Larry Ellison says Oracle is totally committed to overtaking IBM in a business that IBM created half a century ago: high-performance and deeply integrated systems. And in the past year or so, dozens of IT companies have jumped into this dynamic new sector of the market. How will you weave your company's own optimized systems into IBM's broader strategy? Can optimized systems help fulfill your vision of creating a Smarter Planet? How much of an advantage does IBM's unmatched expertise in end-to-end integration—from the physics behind chip design to middleware to analytics—give your company in this new market sector that has grabbed the imaginations and dollars of customers?
10) IBM's position in cloud computing. We know you don't like the term—in an exclusive interview a year ago, you referred to cloud computing as "an unfortunate name"—but the phenomenon is very real. Here's what you said about it a year ago: "Cloud computing—what we're really talking about is 'highly virtualized infrastructure'—it's also just beginning, but it's an unfortunate name.
"There's tons of hype in the beginning and then the industry starts to ascertain what's real and what's not, and that's where we are now. It's starting to take off on the consumer side, which has been very visible, but we don't play there, we're an enterprise company—but even with all the talk and rhetoric about cloud starting to slow down, the real thing behind the name is starting to ramp, with everything from Lotus Live, to Desktop Cloud, to Test Cloud." Since you made those comments a year ago, the level of hype and talk and rhetoric has certainly continued, but as with the mobility question above, many people would like to understand more fully what your current view of cloud computing is, where it offers great opportunities for IBM, and how that fits into IBM's overall strategy.
Well, Sam, sorry for the long letter, but that's part of the price you have to bear as head of the #1 most influential tech company in the world. Thanks for your time, good luck in 2011, and we hope to hear from you on the issues above.
Merry Christmas and Happy Holidays,
Bob Evans is senior VP and director of
To find out more about Bob Evans, please visit his page.
For more Global CIO perspectives, check out Global CIO,
or write to Bob at [email protected].