Global CIO: IBM's New CIO Sheds Light On Priorities And Plans

To all those IT leaders—and I'm happy to say it's a steadily diminishing number—who believe it's not part of the CIO's job to connect with customers and tout the company's business value, please consider IBM's new CIO who in just two months on the job has "lost count" of how many fellow IT leaders from around the world have called him for advice on how to help transform their companies.

Going into the job he took in early September, Pat Toole knew he'd be straddling the worlds of transformation agent, process optimizer, technology visionary, and business leader, but it's also turned out that he's become one of IBM's most-valuable sales consultants as well. After all, he's the CIO at what he calls "the world's largest showcase for IBM solutions."

But Toole doesn't set his own experience or priorities apart because of his employer's status as a top global technology and services firm; rather, he warns that no matter what industries CIOs happen to be in, "if they don't come out of that cost-cutting mode and help drive the transformation of their company, they're going to be irrelevant."

(Additional analysis and insight on subjects mentioned in this piece can be found in the "Recommended Reading" list at the end of the column.)

For Toole, an IBM vice-president with a blend of business and technology experience in his 25 years at the company, that outlook is expressed across a handful of business imperatives and priorities that underpin a series of major IT-based initiatives he's leading, including the consolidation of 155 data centers down to five; the consolidation of 3900 x86-based servers down to 24 or even 22 systems, including some System Z mainframes; an ongoing battle against the maintenance/innovation budget ratio; the consolidation of a huge number of disparate SAP instances around the world into a single global instance; and two major cloud initiatives that will serve as proof points for future sales opportunities to IBM customers.

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In describing those efforts, Toole constantly refers to business value, leverage, process optimization, cost reduction, speed, customer focus, and an ongoing effort to transform the company, which he says is inextricably entangled with each of those major IT/process projects outlined above. Asked about his efforts to reverse the 80/20 maintenance/innovation ratio, Toole said, "I'm incredibly focused on this because I have a fixed budget and need to continually shift dollars and effort from maintenance to transformation. It's something we simply have to keep after, and our goal is to keep shifting the ratio by about 2% each year."

IBM's current ratio is 63% maintenance and 37% innovation, Toole said.

Two places to start, he advises other CIOs, are virtualization plus cloud computing, and business analytics to drive process-transformation work—and CIOs are in the ideal spot to drive that change because "they have one of the very few jobs that allow the executive to see the company's entire processes end to end. And CIOs need to realize that as they're under tremendous pressure to deliver great outcomes, they can do that first by understanding all those processes end to end, and then by standardizing their systems and processes that can allow them to gain a cost advantage of 3:1 or even 4:1."

In that context, Toole and his team are looking to dramatically simplify IBM's global hardware infrastructure to make it easier for IBM to monitor and refine its processes and its applications and the information and insights those optimized processes and applications can generate. And some of the numbers are eye-popping: That's why IBM is swapping out 3900 System X servers for 24 or possibly even just 22 newer and more-powerful servers, including some System Z mainframes. That greatly reduced number of new machines will provide the infrastructure driving the company's "Blue Harmony" global single instance of SAP applications, which we wrote about yesterday in IBM Taps SAP For Global Single Instance Project.

That standard set of applications is one element of the company's goal to become a truly globally integrated enterprise, and on a parallel path Toole and his team have been attacking a separate example of out-of-control application sprawl by cutting the number used across the company from 16,000 down to 4,500.

The outcomes go well beyond cost savings, Toole said, by also offering the resilience and flexibility IBM needs as it pushes its people out to where its emerging customers are, as it refines its set of products and services with a particular emphasis on business analytics, and as it looks to further optimize the 200 or so applications that Toole says are absolutely critical to IBM's global operations.

And as he speaks with CIOs from outside IBM and pursues these massive IT projects that have allowed IBM to take out $3 billion in costs over the past three years with more to come, Toole says he tries to think on three levels simultaneously:

--Short-term: how IT can help leverage the ongoing financial performance of IBM;

--Strategic: where is the enterprise going, and what will the potential impact be of things like the SAP project, the infrastructure consolidations, the cloud projects, and gains from virtualization;

--Risk and compliance: what are you doing each day to ensure I'm always improving our stance on this?

With those in mind, Toole believes, CIOs can avoid the fate he said awaits those who refuse to shake off the supremacy of cost-cutting: "If they don't come out of that cost-cutting mode and help drive the transformation of their company, they're going to be irrelevant."