Soft at the centre

IBM's software division has been driving the industry heavyweight's profits over the last year and the company has been keen to capitalise on this growth through acquisition and innovation. Andrew White met up with Steven Mills to talk about the opportunities ahead

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By  Andrew White Published  February 8, 2007

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 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.

"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 at the root of the industry's latest buzzword, service-oriented architecture (SOA). Last November, IBM hosted an SOA summit in Dubai, and Mills is in the city to launch 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. "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."

Such an approach should prove appealing for customers here in the Middle East as well as globally, Mills argues.

"Customers in the Middle East are no different to customers anywhere else," he states. "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. 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."

IBM is keen to tap the potential that Mills sees in the region. As well as hosting CIO and SOA conferences in the region within the last few months, the firm has also established the Middle East's first on-demand supercomputing centre in Abu Dhabi. 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 (R&D) 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 adds. "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 continues. "It's not that the basic skills aren't present, it's just the deeper skills that are lacking at the moment."

IBM has been adding to its own resources in recent years with a string of acquisitions in the software sector; last August alone the firm spent US$3.64 billion 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."

"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 up one Middle Eastern company, Holosofx, based in Cairo, which was 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 team 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."

That is certainly true, with the software business currently IBM's most profitable unit, and Mills sees a lot more potential. He is particularly intrigued by the possibilities of technology solution integration.

"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?

"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," Mills states.

Steven Mills, Senior vice president and group executive, IBM Software

In his role as senior vice president and group executive of IBM Software, Steven Mills is responsible for shaping IBM’s overall software strategy and directing IBM’s software business.

Mills has played a leading role in the growth of IBM Software Group since its inception in 1995. At that time, he was general manager of IBM Software Group strategy and solutions, responsible for IBM’s strategy for middleware and software solutions, as well as managing business units for business intelligence solutions, pervasive computing, e-commerce solutions and solution technologies. He was named to his present position in 2000.

Mills is leading the next phase of IBM’s software strategy. This includes the development and marketing of new industry-specific offerings as well as aligning IBM’s 13,000-person software sales force, which IBM claims is the world’s largest direct sales and support team, along technical and industry lines.

He also oversees the company’s relationship with independent software vendors (ISVs).

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

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