Slimmed-down Big Blue heading for the world of the cloud
The head of IBM, Ginni Rometty, challenges people to judge her by her actions, which are many
By late afternoon, IBM chairwoman, president and chief executive Ginni Rometty’s day has already been chock-a-block – meeting Government representatives, talking to IBM clients, and visiting the company’s Mulhuddart campus.
Now, the Chicago native is relaxing briefly in the Shelbourne Hotel before the relentless official timetable resumes. A small army of IBM staff bustle about the hotel’s halls, stairs and landings, making sure arrivals and departures are frictionless, refreshments are supplied, and schedules are adhered to.
Their boss – one of the business world’s most powerful executives – is pleased with the historic resonance of being where she is. Some 62 years ago, in 1956, IBM opened its new Irish operation with three employees, running the fledgling business out of the Constitution Room in the hotel.
IBM’s presence here dates back to the days when the punchcard was state of the art. Now, the company employs more than 3,000 people in Ireland, out of a total IBM workforce of more than 380,000.
IBM was among the first to develop a large dedicated “campus” in Ireland. Its expansive Mulhuddart technology site opening in 1997. Then, it was building computers and electronic components: three decades later, manufacturing is gone, replaced with higher-end jobs in services, in research and development, and in design.
What struck Rometty most when she visited the site and spoke to researchers? “I’ll tell you what it’s about to me: vibrancy, energy and absolutely being at the intersection of business and technology. What I viewed today was a lot of advances in technology but applied to industry, and I do think that is a distinguishing characteristic of IBM. Energy and application.”
Over a cup of tea, Rometty muses that IBM Ireland’s transformation has mirrored that of the overall group, while also reflecting Ireland’s growth as a technology centre. “I think in some ways we’ve spearheaded change that’s happened in the country,” she says. “Go back when we started. We originally did hardware here and we did manufacturing. Then this was one of the very first places we actually built industry services, you know, a professional services business operating out of Ireland.”
These days at IBM Ireland, “it’s all around data, AI [artificial intelligence], cloud.” So, “what we’ve done here is an interesting microcosm of much of IBM. You have research, true research, and you have real development here, plus you have a number of our back-office functions. You in fact have embodied every era with us.”
Driving that arc of change for a company more than 100 years old and creating a broader market has been one of Rometty’s greatest challenges since she took on the CEO mantle in 2012.
Controversially, she was at the rudder through five consecutive years of declining sales and has overseen redundancies, sharp changes of focus, and outsourcing.
Disruptive strategic view
But taking a long and disruptive strategic view also is one of her innate skills: prior to becoming CEO, she was on the team negotiating IBM’s acquisition of PricewaterhouseCooper’s IT consultancy business in 2002, at a time when such a move seemed well outside the company’s core business.
That decline in sales has been reversed this year, with shares rising recently on several bullish analyst “buy” recommendations due to improving quarterly results.
Rometty – who is passionate about AI and cloud technologies – knows many people still think primarily of big computers when they think of IBM.
“If I talk to someone who doesn’t know IBM, I ask, ‘What do you think IBM does?’. Sometimes they’re like, ‘Well, hardware?’ And I’ll say, ‘Well, it’s 10 per cent of IBM today, hardware’. Now, it’s a very important 10 per cent. This is the really advanced systems that are cyberproof, that run the banks of the world, the airlines of the world, the biggest companies of the world. However, the other 90 is software and services. And last year, $18 billion is cloud. We are top three in cloud now in the world.”
The company has been reinvented around data, she says. “We believe [data] will change all industries and all professions. And so we moved from that hardware company, we added software, we moved into services; and now, today it’s around data, AI and cloud.”
Given IBM’s long residence in Ireland, what’s Rometty’s take on what the State should be doing now? Without hesitation, she fires back, “I think of three things.”
Hub for the future
First off, policy. “Ireland has a wonderful opportunity to continue to be a hub for the future, around data and AI. But that, of course, is dependent on having the free flow of data between countries. And that doesn’t mean you don’t honour GDPR.”
Ireland needs to be “an advocate for the free movement of data and then honouring privacy, however it’s outlined, in every local area.”
Second is “be an early adopter of [new] technologies in Government and in its own businesses. You want to eat your own cooking: if you want to be a hub of this kind of activity for the world, you also want to implement it.”
To be an early adopter and to be a hub, Ireland will need to adopt her third recommendation: develop a broad range of skills.
“I feel strongly that these new technologies have got to be ushered safely into the world. Some of that has to do with privacy and trust and transparency, but some of it has to do with then preparing people to work with these technologies, because I believe these technologies are going to change 100 per cent of people’s jobs. They’ll solve some of the most important issues, but they can also create some of the biggest divides in the haves and have-nots of the world.”
IBM is focusing on a range of training initiatives because “you’ve got to prepare people”.
Tech companies generally push the idea that society needs more college graduates, especially in Stem subjects, but Rometty says that, while such degrees are critical, this view overlooks the need for skilled workers of all types that can work with new technologies. An overemphasis on university degrees and loss of vocational careers risks creating “a bifurcated society everywhere”.
To counter this, Rometty has championed a training programme called Pathway to Technology, which starts at secondary-school level, involving company mentorship (more than 400 companies now participate) and internships.
“If you give them a curriculum, offer internships, your employees are mentors, you’ll be amazed what these kids can do. We’re now in 120 schools and have 100,000 kids coming through.”
Some of the disengagement people feel, reflected in a roiling political landscape, goes back to education and skills. “People feel they don’t have a better future. I don’t believe Government can solve this by itself. But a public/private partnership can make a big dent in this issue. And every company I know is willing to help, and they’re willing to do more. This is infinitely solvable.”
So far, IBM is finding that young people finishing its programme “make two times the average median income”. She points to cybersecurity as one area in which the pathway programme can produce skilled employees to fill fast-growing job markets.
She’s also pioneered an IBM programme to bring women back into the workforce, having seen at first hand, women leaving to have children then lacking the confidence that they still had the requisite technical knowledge to return. “I said, go check how many women have left for these kinds of reasons, great scientists, and why aren’t they coming back? Sure enough, what we found was that it was confidence.”
IBM now has training “returnships”. “You can go for as little time or long as you want. We have women who come one day, and they’re like, ‘you’re right, I haven’t forgotten anything. I’m in.’ Others go for a couple weeks or months. It has made a huge difference.”
In contrast to many tech and social media companies, Rometty has long pushed a distinctive emphasis at IBM on data privacy, security, ownership and transparency. The company also has developed sets of public ethical principles around AI, data security and data use.
“If society doesn’t trust these technologies, they’re not going to adopt them. We exist because clients trust us, and the biggest currency they trust us with is their data. We manage 70 per cent of the world’s data, business data. And I’ve always said to our teams that just because you can do something with it doesn’t mean you should,” she says.
‘Augment what man does’
IBM’s formal principles can be summed up in three points, she says. “The first one is you really have to believe the purpose of the technologies you build is to augment what man does, not replace man.
“The second is key in this day and age: it’s on ownership of the data and the insights. We believe, simply put, the creator owns them. We have built our AI in a way that we can say, even though you, Walmart, bring all your data, and this gets trained, it won’t go to Amazon. Others cannot say this.”
The final principle is “the idea that these technologies have to be explainable; they can’t be a black box”.
On broader privacy issues, she is adamant that the embattled Privacy Shield data flow agreement between the US and EU needs to be strong and functional.
“Look, we were a big advocate of getting Privacy Shield. We’re going to continued to advocate, both in the EU and the US. You want to have free flow of data with the proper governance over it.”
Even with governments pushing for weakening encryption and secret “back doors”? Her gaze sharpens. “We have never put in a back door. Never have; never will. For anyone.
“And we’re the only tech company that can say that, by the way. That gets back to living by your principles, right? I always say these things are easy to chatter about; judge me by my actions.”
You have research, true research, and you have real development here, plus you have a number of our back-office functions. You in fact have embodied every era with us
IBM chief executive Ginni Rometty in the Constitution Room at the Shelbourne Hotel, where the company established its Irish business.