To discuss the Oct. 30 Cover Story on IBM's new strategy, the guest was John M. Whiteside, general manager of the IBM Global Network, on stage with Ira Sager of Business Week.
OnlineHost: Copyright 1995 America Online, Inc.
OnlineHost: Material entered into AOL by persons other than those identified as Business Week's employees or authorized representatives, acting on behalf of Business Week, is material for which Business Week assumes no responsibility.
Good evening and welcome to Business Week Online. Tonight we'll be talking about the Cover Story in the current issue of BW (Oct. 30)--IBM: Gerstner's Growth Plan. CEO Louis V. Gerstner's new vision for Big Blue is called network-centric computing, and it's a strategy to speed up the giant's slow growth of the last 10 years, with a focus on networked computing and electronic commerce.
Our guests are John M. Whiteside of IBM and BW's Ira Sager, author of the Cover Story. Whiteside is general manager of the IBM Global Network, which serves more than 800 cities in 100 countries and is clearly a key to a network-centric strategy. Whiteside took that assignment last year.
Before that, he was senior vice-president for global alliance management at MCI Communications and earlier worked for Teletech, TML/The Compucare Co., and Bain & Co. and as a marketing representative for IBM. He holds a BS in geophysics from Yale and an MBA from Harvard. John's screen name tonight is Ignjohn.
Ira Sager (Isager) has followed the computer industry for 15 years. He has worked for -- and edited -- a number of journals covering information technology, including Electronic News, Computer Systems News, and Information Week. He joined Business Week as editor of its computer coverage at the start of 1994. Ira has a BA from Baruch College in New York City.
The moderator tonight is Jack Dierdorff (JackBW), consulting editor of BW Online and former managing editor of the magazine. And now on to our discussion -- and the questions you send us here on stage via the Interact button.
JackBW: Good evening to all of you on AOL. Welcome, John Whiteside of IBM. And hi, Ira Sager.
Ignjohn: Good evening.
Isager: Hi.
JackBW: Ira, you have the honor of asking the first question.
Isager: John, how will networking technology change the computer industry and the way people use computers?
Ignjohn: All computer hardware and software will become network-enabled, particularly TCP/IP. Individuals, both consumers and business professionals (often one in the same person), will use computers over the network to conduct their business, entertainment, and other activities.
JackBW: TomG123560 in Portland, Ore., asks this from the audience.
Question: How will Notes interoperate with the Internet?
Ignjohn: Notes will be fully Internet-enabled. For example, InterNotes enables users to move documents from Notes to HTML format on the Internet and vice-versa.
JackBW: Try this next.
Question: If networking develops the way IBM envisions, with most software resident on the network, what's the implication for operating systems and, specifically, for Microsoft?
Ignjohn: I believe that the client will get lighter with more power in the network. Players who focus solely on the client will be left behind.
JackBW: XENON37619 is one of a couple of people with questions about OS.
Question: Don't know if this is appropriate, but I am a user of OS/2 Warp, and I was wondering about the future of the OS. Will IBM continue to support it (other than a server OS), and if so, will upgrades include compatibility with Win32s v1.25 and Windows95 programs?
Ignjohn: IBM will continue to support existing products. I'm not the right person to discuss detailed product plans for OS/2. You might contact John W. Thompson, who runs this area.
JackBW: Ira Sager of Business Week has a question now.
Isager: How will IBM get broad industry support for Notes?
Ignjohn: Three key approaches: First, IBM Global Services will make it easier to implement Notes in the campus environment with systems integration. Second, IBM will assist carriers across the globe with providing Notes as a network service. Third, the IBM Global Network will continue its deployment of networked Notes and will support applications riding on top of Notes.
JackBW: The "Ign" in John's screen name stands for IBM Global Network -- hence this question. It's from MikeMerc in New Jersey.
Question: Can you tell us more about IBM Global Network? I didn't realize IBM did any Internet access providing.
Ignjohn: A little-known fact is that IBM helped develop the NSF Net, which was the Internet forerunner. The IBM Global Network currently supports Internet access (dial and dedicated), Internet Web server development and management, and Internet content hosting services for our customers.
JackBW: Ira wants to follow up.
Isager: John, Why isn't the Internet a more significant part of your network-centric strategy?
Ignjohn: The Internet, particularly TCP/IP protocols, is central to our strategy. However, many of our customers have legacy SNA and net-bios and other protocols, which they want the IGN to support and help migrate to the new world of Internet.
JackBW: MXSTRAT wants a definition, and after that perhaps you can elaborate on IBM's plans.
Question: How do you define "electronic commerce"?
JackBW: Plans for this commerce, I meant, of course.
Ignjohn: The inquiry into availability, price, and other terms over a network, followed by a quote from the provider, followed next by an order with electronic verification and establishment of payment, followed by electronic logistics to handle shipment, concluding with the creation of ongoing customer service online.
JackBW: AndyJawlik's question goes to the core of the new growth plan.
Question: What core competencies does IBM have that will enable it to succeed in network-centric computing?
Ignjohn: We are the world's leading provider of data networking, transaction processing, and mission-critical applications, all of which are essential utilities at the heart of electronic commerce and other forms of network-centric computing.
JackBW: Here's the next one.
Question: I heard that the Internet may be headed for capacity problems -- that there will soon be so much traffic that the Net will be overloaded. Talk about this, and the implications for private networks like AOL and IGN. Thanks.
Ignjohn: The Internet in its current form has many problems in the area of network management, security, and guaranteed delivery. Private providers of Internet services (TCP/IP) are able to manage many of these shortcomings. For example, the IGN runs a business-persons' Internet where security is accomplished via firewalls and network management occurs over a dedicated backbone.
JackBW: Prfctacct sends you this question, John.
Question: Do you believe that the continual cost-cutting plans of Gerstner [IBM CEO Louis V. Gertsner] can be sustained, or will new markets be the driving force of IBM's success?
Ignjohn: We must do both. We must continually reinvent ourselves through reengineering to remain cost-competitive. We must also reinvent IBM by entering new markets such as network-centric computing
Isager: But now IBM has to focus more on growing revenue, right?
Ignjohn: Yes, revenue growth is our major focus. This will come from creating ways to deliver new value to customers. I believe the network is the key to these new revenues.
JackBW: We've had a couple of questions about the famous IBM mainframe business. Here's one.
Question: Back in the late '80s, IBM had a strategy for making mainframes the center of networks -- corporate ones, anyway. Did anything ever materialize from that strategy? How does this new plan differ from the earlier one?
Ignjohn: Mainframes were the center of private networks, which worked very effectively for hierarchical and closed corporations. In the world of open and virtual corporations, servers in the wide-area public network are the key. IBM has the server and networking technology for this new era. We will bring customers from the '80s paradigm to this new approach.
JackBW: BobA in Teaneck, N.J., hits you with this.
Question: John, if IBM is counting on network-centric computing to reignite growth in its overall revenues, it sounds as though you, among others, are on the hot seat. Just how ambitious are IBM's financial goals in this area? Do you think you can make them?
Ignjohn: Global services now accounts for over 25% ofIBM's revenues and is growing in double digits. Network-centric computing in its various forms is at the heart of this growth. Yes, I believe we can sustain this. Otherwise, someone else will be doing my job.
JackBW: Back to Notes and your plans for that.
Question: Re Notes, why will anyone with a TCP/IP connection need it?
Ignjohn: There's a lot more to Notes than simple E-mail and bulletin boards. Complex groupware and collaboration require the simplicity yet power of Notes' replication engine. The database management system is the key, and IBM is coupling Notes to DB2 and CICS to give individual users the power of mission-critical utilities.
JackBW: MikeMerc is back.
Question: How hard a job do you think it will be to get customers to think of IBM when they think of networks? Isn't there an image problem to address here?
Ignjohn: Yes. However, growth rates in excess of 30% across all network services attest that the IGN is sprinting up this hill.
Isager: But people don't seem to know that IBM has any networking capability.
Ignjohn: Consumers are not aware of IBM's networking capabilities, but after all, IBM comes from a tradition of working with large, complex, global companies. It is this market that the IGN serves best, with the world's largest data network. Through our relationships with traditional carriers, and through the Internet, we will bring the power of the IGN to the individual. Haven't any of you seen the Greek fisherman ad?
JackBW: SEEMORE1 has a question for Ira about his story -- and John may want to comment.
Question: Ira, I read the article in BW, and it talked about the importance of John Landry to IBM's Internet effort. What happens if he leaves Lotus, like so many other executives have recently?
JackBW: Notably, of course, Jim Manzi.
Isager: Not much. Manzi wasn't driving IBM's Internet strategy. But IBM does have to make it much clearer just how Notes fits in with the Internet. And that, I believe, is partially a marketing problem.
Ignjohn: While individuals are clearly critical to any ground-breaking activity, Notes is now a solid and stable product with many individual contributors behind the scenes, all of whom are eager to unleash the power of Notes over the Internet. IBM will not miss this wave. With the IGN and our carrier partners, we will make Notes the standard for networked computing, including the Internet.
JackBW: ShusterB in New York City has this question for John Whiteside of IBM.
Question: What could network-centric computing and the IGN mean to the home computer user? I've been hoping I may eventually be able to stop buying more and more desktop power, and instead just tap into your supercomputer from something very like a dumb terminal (cheap!) at home. Is there any chance the future may look like that?
Ignjohn: Yes. However, I believe the first gains will be made in the commercial space of transaction business between individuals in an enterprise, and between enterprises. Once this is accomplished, corporations will use network computing to conduct business with consumers. I think we may even see the day when personal computers are given away as a facilitator to do business with consumers.
JackBW: MTM4717 wonders about the learning process.
Question: Applications resident on the Network will make the promise of collaboration and multimedia possible even faster for most businesses. Yet the enculturation of these tools is incredibly important. How crucial do you see IGN consultative services?
Ignjohn: Consulting and other professional services are absolutely the key governor on the rate of adoption of network-centric computing. Training, systems integration, reengineering, and customer-care help desks are just some of the elements of the IBM Global Services organization, which must all work together to make this take off. This is why I think IBM is uniquely well-positioned to bring this value to customers.
JackBW: Here's one of several questions on your network competition.
Question: John, who do you think will be your most ferocious competitors in networking? The phone companies, Microsoft, DEC -- who?
Ignjohn: All of the above. Actually, I believe our toughest competition will be ourselves. Can we shift from the legacy space to this new space and bring customers with us?
JackBW: On that note, we must wrap this up. Thanks so much for being with us, John Whiteside. And thanks for your help, Ira.
Ignjohn: Thank you all for coming.
OnlineHost: Thanks to John Whiteside of IBM, Ira Sager of Business Week, and all the BW Online team for this conference on IBM's new growth plan. And thanks to all of you on AOL -- with apologies to any of you whose questions we didn't have time for. If you'd like to continue the discussion, we invite you to move to the BW Online Chat Room.
Or you can post comments and questions on the BW Online Message Boards. Transcripts of this and all other BW Online conferences are available soon after the event (look under Talk, Special Events, or Search BW, or for this one also in BW Online's Computer Room, under What's New on the opening screen).
Mark your calendars for an online interview with author Jeff Madrick of "The End of Affluence" on Thursday, Oct. 26 (9 pm ET, Bowl). And remember to join us in the Globe every Sunday at 9 pm ET for our weekly conference with editors and newsmakers, usually featuring a discussion of the Cover Story in the current issue of Business Week. Thanks again and goodnight!
Copyright 1995 by The McGraw-Hill Companies, Inc. All rights reserved.
