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

The Irish Times - Business - - BUSINESS | INTERVIEW - Kar­lin Lilling­ton

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.

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