Wikibon Blog

IBM's CIO Jeanette Horan

IBM’s CIO Jeanette Horan addressed the analyst community in what I call the dogfooding segment. That is the degree to which an IT supplier uses its own technology to drive competitive advantage. Two recent comparative examples I have of such sessions were done on the Cube, SiliconAngle Wikibon’s Live TV operation. These include CIOs at EMC (Sanjay Mirchandani) and SAP’s Oliver Bussman.  I also recently heard Mirchandani address EMC’s CIOs in October at a meeting in Boston.

My impression is that while all the CIOs at tech companies that I’ve interviewed/listened to are driving costs down and trying to transform their organizations, IBM’s CIO is more internally focused than those CIOs at EMC and SAP. This is probably due to the fact that IBM’s opportunity to cut fat and drop profits to the bottom line far exceeds most competitors because of its sheer size. Nonetheless, I found both EMC generally and SAP specifically much more aggressively touting initiatives around mobile computing.

In addition, I found IBM’s CIO to be less “salesey” in her pitch than for example EMC’s Mirchandani and SAP’s Bussman. Having said that, while I appreciate the quality of the information, the CIO dogfooding segment is one of the best proof points for customers. CIOs at tech companies should be strong sales people, providing early adopter feedback, voice of the early customer, process maturation and best practice feedback and proof points for external consumption.

It appears that Horan’s approach is to let the metrics do the talking – here are notes from her remarks after which I provide a few quick questions that I wish we’d had time to ask:

Horan is IBM’s CIO and she admits that unlike other CIOs she doesn’t have a big choice of platforms. Basically three – z, p, x

1)   Business transformation – IBM’s business is chaning all the time – getting out of commodity, moving to higher value, growth markets

2)   Operational excellence

3)   Deployment of core technologies inside IBM

IBM’s 2011 CIO Study. Big takeaway is CIOs need to think about four things:

• Expand the mandate
• Transform the mandate
• Leverage the mandate
• Pioneer the mandate

IBM claims 60% of spend is on running the business while 40% is on transforming the business. Horan says she needs to keep driving the ‘run’ piece down and leverage streamlined operations (do more with less) and increase the spend on transformation.

IBM’s strategy and 2015 roadmap – driving toward $2.3B in savings through shared services.

Operational Excellence

How to virtualize new systems

How to deliver applications from a new service management perspective

In the 1990’s IBM was a free-for-all with no standardization strategy. Server sprawl was a huge problem. The company embarked on a huge consolidation effort and went through an application rationalization exercise. IBM then introduced an application hosting environment that was running on standard infrastructure. It was a real “sell” to the business.

IBM and Virtualization:

Consolidated 5700 servers onto Z Linux environments. Resulted in:

• $100M in cost reduction since 2008
• $50M in 2011
• 93% reduction in software licenses
• 47,000 sq feet in reduced floor space
• 55% reduction in physical network connections
• 20K MWh in energy saved
• 15,000 applications in 1997 down to 4,500
• Increased storage utilization from 50% to 90% with storage virtualization, thin provisioning and pooling (moved from DAS to shared storage)

IBM’s been able to move the percent of total budget that is spent on transformation from 30% to its current 40%.

Core Technologies Deployed Inside IBM

• Cloud
• Analytics

With respect to cloud, IBM is nworking on numerous areas, including: 1) Production cloud; 2) Collaboration (Lotus Live); 3) Analytics (Blue Insight); 5) Develop/Test Cloud; 6) Desktop Workplace Cloud; 7) Storage cloud

Cloud Business Results (Development/Test, Analytics, etc)

• 50% reduction in labor costs from simpler configuration and management
• 40% reduction in end user support costs
• Federated analytics from 100 different information sources (Cognos, System z, Blue Insight)
• More than 1PB of data stored for more than 165K users
• 275 million meeting minutes in LotusLive (public cloud – hosted by IBM)

Storage and Big Data

• 10PB of operational data
• 15PB of backup
• 70-85PBs in other parts of the business
• 25%+ growth per annum
• IBM services information warehouse is a 5TB app built on DB2

There was no Q&A session after Horan’s talk (there may be a q&a panel later) but my big questions are:

• As you transform from run the business to transform the business how are metrics changing – I’m always skeptical about such transformation claims and a changing metrics view is proof of real transformation. I found this lacking for example in Mirchandani’s presentations and he admittedly cited the need to improve the tracking of business value metrics beyond cost cutting
• I’m curious what storage infrastructure – hardware, software, backup, etc. IBM is using to drive utilization to 90%– is it sustainable?
• IBM talks about the Desktop Workplace Cloud. Desktop seems to be such an outdated concept – especially in this post-PC era. What about mobile, end user applications, user data…seems that should be the point of centricity, not the desktop
• What is IBM doing with Hadoop?
• Is IBM doing anything with Devops? For example in a way that is allowing Facebook to automate operations and cut staffing costs?

Bottom line for me: Credible. Impressive results, big numbers, clearly IBM is executing. Lost opportunity to pitch the analyst community on the greatness of IBM’s products in the biggest real world situation imaginable.