How Ginni Rometty is positioning IBM to play a role in customers' future
If IBM Watson had a spouse, would Siri or Alexa get the pick?
"She's a woman of her own mind," said IBM CEO Ginni Rometty, speaking at the Gartner Symposium/ITxpo in Orlando, Fla. on Tuesday. She — Watson — doesn't need a spouse.
Diplomatic avoidance of choosing one competitor's technology over another aside, not many technology executives would have given that response. But then, not many technology executives are like Ginni Rometty.
Nearing her seventh year at the helm of IBM, Rometty remains one of a small handful of women executives at the head of a major company — and one of an even smaller handful of women leading a major technology company. Rometty has been in the top six of Fortune's Most Powerful Women list for her entire tenure at IBM, cinching the No. 4 spot this year.
Under her guidance, IBM raised revenue and returned to growth in Q4 2017 after almost six years of lackluster earnings. The company has tied more than half of its revenue around its strategic imperatives — cloud, analytics, mobile and social — with investment in innovative technologies such as blockchain, AI and enterprise cloud driving the lift.
There's a lot to be learned from a company in transition, and Rometty sat down with Gartner vice presidents and analysts Dennis Gaughan and Daryl Plummer at the conference for a keynote interview about IBM's potential for today's enterprises.
Finding a niche
IBM is less focused on its role in customers' pasts and more on its part in customers' futures, according to Rometty. "One of the greatest things you learn in a transformation is what you are and what you aren't," she said, and IBM has moved to specialize in what makes an enterprise work.
IBM's transformation has centered around one key. Data will determine the winners and losers, Rometty said, but almost 80% of data is not searchable today. The companies that learn to make something of this data will become the incumbent disruptors.
In one regard, IBM is a narrow company, focusing only on enterprises, and it's not moving into the consumer segment. IBM is "the only company that is actually an end-to-end tech company right now," according to Rometty.
But it's still big tech, and by most considerations IBM's portfolio is anything but narrow: hybrid cloud, big data, artificial intelligence, blockchain, quantum … IBM is aligning itself with technologies that are still in the works or plans for many companies.
Just having the tech products isn't enough. Customers used to look at an endpoint, such as artificial intelligence, and say "take me there," according to Ruchir Puri, CTO and chief architect of IBM Watson, in an interview with CIO DIve. That narrative has changed to what are the tools and technologies to get there — how to get there.
IBM is moving to a high value, not necessarily high growth model, Rometty said. This gives a company the fuel to change for each next era — an imperative as innovation becomes more continuous and impactful.
The company's key technology investments don't work in isolation. As companies move to the cloud, they free up data, which AI makes value of; blockchain can then protect and prove data authenticity, and quantum computing advancements are adding new value capabilities on this data, Rometty said.
Only ushering in new technology isn't enough: It is incumbent on the tech industry to be clear about its principles and live by them, Rometty said. Responsibility, not just regulation.
Getting in on the hype
Blockchain and quantum computing are two of the most talked-about technologies in the industry, for better or worse, and two core technologies for IBM.
Blockchain is tricky because the tech is only as good as the network. Blockchain needs a strong ecosystem and business cooperation, even among competitors, Rometty said. One company shouldn't own a network.
Businesses need to get involved now: In the next decade, most of global commerce will pass through blockchain, she said.
Business will start seeing impact from quantum computing in five years, Rometty predicted. It's probabilistic workloads are well suited for early uses in logistics, materials management and risk management.
IBM opened up client access to quantum computing through the cloud last year. Its 20 qubit processor already has racked up six million experiments, and its 50 qubit processor is "wiggling" but will soon be on the cloud, Rometty said. As the industry gets to the 100 qubit range, it will start surpassing what supercomputers can do.
Hybrid cloud, multicloud, cloud cloud cloud
Few organizations use one cloud. The average client today has six clouds, and many have up to 11 to 15, according to Rometty. Moving to hybrid and multicloud, the journey is just as important as the destination, but too many people get "killed in the middle."
The "low hanging, easy" parts have been moved to the cloud, and the industry is starting to tackle the remaining 80%, Rometty said.
Even though the majority of enterprise customers are looking at a multicloud strategy, less than half have the tools to carry it out, according to Robin Hernandez, director of IBM Private Cloud Offering Management. Multicloud will become the de facto standard, and cloud platform and service providers have to respond.
It's not just about infrastructure though: Customers need management tools to architect and deploy. Multicloud capabilities lower development time and time to market and serve as a market differentiator and customer loyalty driver, Hernandez said.
It's about meeting customers where they are, not at their destination. For cloud migration, IBM has roughly 90,000 cloud engineers and three thousand migration SMEs to help customers.
Walking the multicloud walk, IBM rolled out the Multicloud Manager on Monday, an operations console for business to run workloads and applications on any cloud — public or private, IBM or otherwise.
Big can be fast
AI is going to change 100% of jobs, industries and professions, and IBM is honing in on AI for business, building its cloud out for the technology and data, according to Rometty.
Over the years, Rometty has gleaned two main takeaways about enterprise AI:
It's more of a change management and workflow challenge than a technology issue
Explainability of AI systems and decisions is critical
Across technologies, and especially within AI, skills at scale are one of the greatest challenges. Every business is wrestling with the skills gap as it figures out how to move faster.
Sometimes failure will accompany meeting this challenges, but it's about learning from the experience.
In her first few years, Rometty saw the market moving fast and knew that IBM needed to move at that pace too. But after two years, people were exhausted: They needed to change how work was done, not necessarily the pace.
"I do believe big can be fast," she said.
Rometty and IBM started with design-centric thinking: Everything in the world is consumer-oriented, and everything at work needs to be easy, even B2B products. To carry this out, IBM has hired almost 15,000 design specialists.
Then the company began adopting Agile, starting from the core and steadily moving out; physical renovations to IBM spaces carried workflow changes out into the physical world.
These workflow and process changes have to bring in customer experience: If customers can only use 20% of a product's functionality, the other 80% doesn't matter, Rometty said.
Despite the strides, IBM is shifting from its traditional hardware products to cloud, AI and other advanced technologies.
After three quarters quarters of growth, IBM reported 2% revenue decline year-over-year on Tuesday. Strategic imperatives grew 13% year-over-year, with cloud revenue coming in at $19 billion.
IBM's Cognitive Solutions, which includes IBM Watson, and Technology Services and Cloud Platforms units brought in less revenue than a year ago while Global Business Services and Systems were up 1%. Mainframe and software sales slowed, though the headwinds were expected in the second half and strengthening of the U.S. dollar, said Jim Kavanaugh, SVP and CFO, on the conference call.
Rometty and IBM have their work cut out sustaining positive growth long-term and restoring faith in the old phrase "Nobody every got fired for buying IBM."
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