Interview: IBM UK chief executive Stephen Leonard

Talk to IBM these days, and its executives are just as keen to tell you what it is not.

For example, IBM is absolutely not a hardware company: "Less than 10% of our revenue is hardware, more than 55% is services, the rest is software", says IBM UK chief executive Stephen Leonard.

IBM is not a cloud computing company: "[Cloud] is an IT delivery model that's all it is. Sometimes we call it cloud sometimes we call it something else. We can be a cloud if you want us to be, but we offer much more than that", he says.

And IBM is not a camera seller: "We don't sell consumer products, such as cameras. We don't sell desktops or laptops any more. We are a business service company, focused on delivering value to businesses. With that portfolio we think we are uniquely positioned and we are not going to be distracted by selling cameras."

Nonetheless, Leonard is one of the first new CEOs of IBM UK that finds himself no longer part of the world's largest IT supplier, ever since Big Blue was overtaken by that well-known camera company, HP.

But losing its mantle is perhaps a good way to reinforce the message that IBM is not the organisation it once was.

Changes ahead

Leonard took over as UK CEO in January this year, and in his first press interview the 20-year IBM veteran told Computer Weekly  that things are going to change even more.

"IBM's business model has changed a lot even in the last three years. Acquisitions have been a key part of helping us develop and change, but we have also changed our business and service lines with the move into management consulting and business process outsourcing", he says.

"Having already spent $35bn on acquisitions in the last 10 years or so, we are going to spend another $20bn in the next five years. We acquired a couple of companies last week - I struggle to keep up."

Leonard was working for IBM in the US during the worst of the recession, but he took over the UK at a time when businesses are still being careful over IT spending.

"Most of them came through a period of locking everything down in survival mode, but now they are looking ahead cautiously, no one is being gung ho," he says.

"Now they are saying, what do we need to do to thrive in this new economy and what are the challenges? Look at the pressures they have - regulations, green taxes all these things, they are looking at their business more holistically than ever before. And they are saying, how can I take advantage of what is happening in the market and leverage my uniqueness for business benefit?"

Public sector

In the public sector, IBM is determined to see the impending spending cuts as an opportunity, not a problem.

"The challenge for the public sector is how to take advantage of what is happening in the private sector and apply that to government. Policy makers and politicians have to make those decisions", says Leonard.

"If you look at the deficit and the intent of the coalition government, they are going to have to apply some of the best practices in the private sector which have not been applied in the public sector until now. It is about asking how do we adopt things quickly especially in an environment where there is very little capital to spend and we have to save more than we spend."

But Leonard believes that all organisations have a common aim now the worst of the economic turmoil is over.

"Clients are looking at how they get their business ready for the next 10 years after the financial crisis", he says.

"It is about using advanced technologies to get more insights into how end-to-end business systems work, and to make adjustments to make those systems work more effectively and efficiently. We interviewed 1500 CEOs from 60 countries and 33 different industries and they agreed that complexity was the single biggest challenge in their business. Anything that can mask that complexity or leverage it for a business advantage is a positive."

Interconnectivity driving growth

IBM expects much of its growth to come from the increasing interconnectivity of devices worldwide and the resulting explosion in information that is already starting to produce.

"There are more transistors on the planet now than there are grains of rice – think about that. More and more intelligence is going to be infused into these devices and become part of more and more business processes", says Leonard.

"There are literally billions of sensor devices out there that are intelligent, instrumented and interconnected. It is about how you can use advanced software to capture that data in real time and do something meaningful with it to improve business process", he says.

"By 2050, 70% of the world's population will live in cities – we have never before been close to that. That puts more pressure on already strained supply chains, water supplies, energy supplies. That touches businesses, governments, citizens. We are doing work with a number of cities to see how they can use these technologies to make cities work better - to make transport systems more effective, and use less resources."

In a further sign of the change at IBM, the company is increasingly looking to work with organisations it would rarely have been linked with in the past - Prince Charles, for example, on Start, an initiative "inspired by the Prince Of Wales that aims to show what a sustainable future could look like", according to IBM's website.

Start is an example of one of Leonard's favourite themes - that of IBM being central to a new "holistic" view of solving the world's problems.

"There is an acceptance that something needs to be done, that appealing to people's conscience about sustainability will only get you so far. Appealing to their self-interest might be better. I have heard it said that capitalism and business success cannot go hand in hand with sustainability - we would argue the opposite, sustainable businesses can drive economic success and growth because they take advantage of complexity better and use less resources. There is a huge opportunity for business, government, academia and NGOs to come together and make a big change", he says.

"No one of those groups owns the end-to-end. At all points in the chain people are doing things to be more efficient, but if you take it holistically and agree in a collaborative way what is the right thing to do, there are huge opportunities. IBM has a unique role to play because we can influence and affect the end-to-end. We can provide the service to help them model that, and the technology to manage that."

Implications for IT managers

But what do such worthy aims mean for IT managers whose day-to-day challenges are typically rather more mundane? Think big, but start small, is IBM's advice.

"First of all [organisations] have to recognise that they have to do something different. Out of that will come actions they have to take. There are already a huge number of interconnected devices, in business and in the supply chain. How can they take advantage of what is already there?" asks Leonard.

"Lots of the projects we do are about starting with a small project, a proof of concept, to prove that it works. The return on investment in these can be two or three times as fast as a traditional IT project. You don't need a massive change programme and to be re-engineering your IT systems."

This article was first published by Computer Weekly

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