True blue

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Global giant: The company’s headquarters in the US.

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Enthusiastic: The Middle East region has long been a pet project for Mills.

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Supercomputer: The IBM eServer mainframe is nicknamed ‘T-Rex’.

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Answer me: Mills is interested in the potential of advanced collaboration.

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For the last 30 minutes, Steven Mills has faced a barrage of questions from a series of associates at IBM Middle East. The queries are quick, and littered with tech-speak — the responses equally so. Impressively, there is a distinct lack of brown-nosing. Mills may be senior vice president and group executive of IBM’s Software Group, but his colleagues are encouraged to raise any subject they see fit.

Even in the most relaxed corporate culture, high-level management figures within global, multi-billion-dollar firms cannot often hold frank, open dialogues with their lower-level staff. IBM, however, is an established exception to the rule. ‘Big Blue’, which numbers over 400,000 employees, has a proven track record in such vertical interaction.

“It’s very useful to us, and we’ve got so many skilled people with us that it would be crazy if we didn’t listen to them,” explains Mills, genially, an hour later. “Talking to our people like this helps us to be innovative, and helps us to be flexible.”

Flexibility is the order of the day within software engineering, and at the root of the industry’s latest buzzword, Service Oriented Architecture (SOA). Last November, IBM hosted an SOA summit in Dubai, and today Mills is launching the region’s first SOA Leadership Centre in the emirate.

“We began pushing SOA a number of years ago, as a way of making things more flexible so that services can be combined and recombined in various ways, in order that you can serve a new market, or deliver a new product rapidly without having to build everything up from scratch,” he explains, without drawing breath. “It is a buzzword to be sure, but buzzwords are very popular in the tech industry, and it’s grounded in a set of principles and structures that have been worked on for many years.

“It has a business appeal, and the reason why there’s so much buzz around SOA is that customers see the idea of service orientation as a good technique and methodology for solving business problems,” he continues. “It’s absolutely an evolution rather than a revolution.”

The Middle East, Mills argues, has an opportunity to step straight onto one of the higher rungs of this evolutionary ladder. While the region may have had less historical IT investment, there is now no need for the region to repeat the mistakes of others.

“Customers in the Middle East are no different to customers anywhere else. You’re looking for efficiency and speed, and you have a fast-growing market here so you like to build things that are flexible and adaptable,” he insists. “There has been an acceleration in recent years, and there’s less legacy, so there’s a lot more potential to leapfrog everybody else and do it right the first time.”

“In this region we’re very focused on growth — you have a double-digit growth market for IT, and a lot of project activity is taking place,” he adds. “We’re focused on how we’re going to grow faster than the market in this region, how we want to sell more and deploy more to the customers we already have, and how we want to extend our reach to new customers.”

Mills’ words are reinforced by the company's actions. As well as hosting CIO and SOA conferences in the region within the last few months, IBM has also established the region’s first on-demand supercomputing centre in Dubai. The project, in cooperation with the UAE’s Centre of Excellence for Applied Research and Training (CERT), will be used to enhance research and development capabilities in various sectors. Such development, Mills argues, is vital to the region’s future success. “We see a lot of interest on the part of universities in producing more skilled software engineers, and the programmes here are pretty active for computer science and software engineering," he says. “However, the demand in the market right now exceeds the supply for deep skill.

“You really have to judge the skill issue across a spectrum of different types of skills, because you’re dealing with many different kinds of products,” he continues. “Some of the deeper skills are obviously with the most experienced people, and with a relatively young population of people that are knowledgeable in IT, obviously you’re not going to have as deep an architectural skill set as you might in another country that has been producing these skills for longer.

“The bigger demand is for deep architectural knowledge — the people that have done sophisticated projects, sophisticated transaction processing systems, business transformation projects — and that’s where the shortage is,” he adds. “It’s not that the basic skills aren’t present, it’s just the deeper skills that are lacking at the moment.”

The Middle East has been a particular “pet project” of Mills’ for some time, and he has been pushing members of his team to come to the region and explore how they might build the business and accelerate growth.

“My perception was that here in the region you had large potential for growth,” he explains. “You’ve got a lot of money here — oil money represents a significant financial capital capacity on the part of the companies and governments that are here — and where’s that money going to go to?

“If you think about economic development and what the long-term prospects are for the Middle East, it’s going to have to be predicted on broad-based commerce, some level of manufacturing, and service industries as well,” he clarifies.

"Our desire is to obviously benefit from the growth of the market. We anticipate having a bigger presence over time, and we see ourselves being able to position more tactical resources to support our customers,” continues Mills. “The model that we follow elsewhere is very much the model that we’re applying to the Middle East. It’s very systematic, but very forward-looking, with growth investment based on the rate and pace at which the market is growing, and our sense of what it takes to penetrate new accounts and get more business.”

Mills emphasises that an aggregate of the Middle East countries already represents a sizeable market, in comparison to countries of a similar size.

“The rate of growth would imply that the market’s going to get bigger and going to be even more significant,” he explains, adding that as time goes on, the variation in the levels of IT adoption across the region will become less pronounced.

Additionally, and as a strategic alternative to simply waiting for the market to mature, IBM has hungrily snapped up billions of dollars’ worth of specialised IT companies since the new millennium. The plan is to use the takeovers to tap fast-growing new software lines, while milking the business’s mature products for profits. In August last year alone, IBM spent a record US$3.64bn on a series of acquisitions.

“We’ve been spending billions of dollars a year every year for a while now, but everybody only woke up to the fact in 2006,” chuckles Mills. “We’ve actually done 44 acquisitions since 2000.

“There are multiple ways to grow a business, and we’re trying to grow the IBM company so that we can grow organically from within,” he continues. “We look at buying companies because it provides another way to potentially fuel our growth.

“However, we buy very carefully because we’re trying to create an end-to-end software architecture,” he insists. “We buy things that fit into the overall structural model that we have in the market, so we’re certainly very selective.”

This selection process has so far picked one Middle Eastern company, Holosofx, whose Cairo headquarters were taken under the IBM wing in September 2002.

“Their expertise was in business process modelling, and that technology is part of our WebSphere modelling tool,” explains Mills.

“That tool is industry-leading, very sophisticated, and is the outgrowth of the work done in Cairo, and the work that the Cairo team continues to support.”

According to Mills, the Cairo lab offers IBM a significant advantage in the region. The staff of 500 skilled software developers is a unique asset, far outstripping any competitor’s comparable presence in the Middle East. This expansion, he argues, could not have happened without IBM’s aggressive acquisition strategy.

“The prospect of buying a company that gives us incremental skills, gives us a customer base, and accelerates our activities in the market, is an attractive one if the price is right,” he explains. “Of course, we have to fit the company into the organisation, and leverage it effectively, but we’ve been running this strategy now for quite a long time. We’ve learned a lot of lessons along the way, and found ways to make these things pay for themselves very quickly.”

IBM’s sales are healthy.

Software, IBM's most profitable unit, had a revenue gain of US$5.6bn in the fourth quarter of 2006, an increase of 14% over the previous year — and Mills feels there is much more to come in 2007.

“There’s still a lot of growth in the IT industry, as there is billions of dollars of venture money flowing into it,” he explains. “2006, when the numbers are added up, will be a record venture year for software, certainly rivalling the late 1990s during the dot.com boom.

“Of course, the dot.com boom was unique in that there was a level of optimism that was well beyond business reality. That proved to be a somewhat weak strategy,” he smiles wryly, adding: “I see the market as continuing to expand, and we’re acquiring to grow our business — not because we’re trying to eliminate competition, or in some proactive way cause the industry to consolidate.”

So who are the competition? In such a potentially lucrative market, firms such as Microsoft, Oracle, and SAP Arabia are investing heavily in expectation of some handsome rewards, however, Mills claims that IBM’s most immediate competitors are not the usual suspects.

“We get more competition from specialised companies such as BEA and Tibco,” he insists.

“These are companies that specialise in middleware technology and they’re reasonably adept at understanding what the customer issues and challenges are. The larger firms — SAP, first and foremost — are trying to sell more of their applications, and the integration of other things, which is our focus, is less important to them.”

Mills is particularly intrigued by the possibilities of IT solution integration. As such, he is convinced that the industry has matured to the point where the next ‘gadget’ will no longer be what fuels market growth.

“It really starts with the customers and what are they trying to accomplish — their lives are very much about all the IT that they have and how they make use of it effectively,” he explains. “If they’re going to add another piece, then how does that new piece fit in with everything else they have?

“In many respects they’re not looking for ‘absolute new’, as much as they’re looking for us to evolve it, modify it, and improve it,” he continues. “That’s very much in keeping with the theme around SOA, and we see it as fitting in with where our customers want us to go.”

Another personal interest is in the potential of social networking and advanced collaboration — “a very hot area,” in Mills’ own words.

“We’re looking at unified messaging, different ways of interacting, and combining that with expertise location, for example,” he says. “If I’m interested in a particular topic, can I find the experts? Can I find links to the subject matter that I’m looking for?

“For the employees at IBM as well as for our customers, their needs are a moment of truth. Someone needs to get an answer to something; it’s a business decision,” he continues.

“If you can short-circuit the long, crooked path that most people follow to get answers to things, then amazing efficiency derives from that,” he adds.

“There have been third-party studies that indicate that in some businesses as much as 70% of company employee time is spent trying to find answers to questions, either through information look up, or finding the experts that know the answer.”

No wonder such a goal is close to Mills’ heart. After all, for nearly two hours now, he has fielded hundreds of questions — and provided an expert answer to each one.

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