Mills' balance sheet-oriented philosophy could well be one of the reasons that IBM has bucked the slump afflicting many competitors. The company's most recent quarterly results were bolstered by Mills' rising software revenues, which increased 6 percent to $3.8 billion, compared with the fourth quarter of 2000. Like other interviewees in ZDNet Tech Update's Unplugged series, Mills talks about reducing technology's total cost of ownership as a top priority for business technologists. However, Mills is the first to subjugate that priority to the business's overall bottom line. His message: IBM is more than just a technology partner. Its respect for the customer's bottom line makes it a business partner, too.
Even so, Mill realizes that a technology company can contribute only so much to a customer's bottom line. His focus now is to maximize the contribution that information technology can make and to demonstrate that IBM software does it better than the competition. Mills identifies integration as bottom-line enemy No. 1. Lack of integration standards, Mills says, is keeping integration costs at an all-time high. Not only are proprietary integration solutions expensive to acquire, deploy, and maintain, but getting locked into these solutions also eliminates vendor substitution as a potential option to reduce costs.
Standards, according to Mills, offer the greatest promise for reducing integration costs. For Mills, Web services is integration's Holy Grail. This is why IBM has played--and will continue to play--such an active role in evolving the de facto Web services standards like Simple Object Access Protocol and Web Services Description Language.
IBM's standards efforts are not purely altruistic. While the potential payoff in terms of cost relief is huge, the interchangeability that standards enable plays strongly into IBM's hand. Standards will make it easier for companies to switch from IBM's competitors to IBM. More importantly, in the event that an existing IBM customer is looking for a better-performing or more reliable substitute, standards make it possible for IBM to keep that customer in the fold by substituting one of IBM's more robust solutions. For example, if IBM's Java-based WebSphere running on the AIX operating system no longer meets a customer's needs, moving to the highly clusterable Oracle 9iAS (also based on Java) may be an option. But that customer could address the same performance issue by moving to WebSphere running on a mainframe-based version of Linux. Standards aren't the only things in Mills' bottom-line bag of tricks. Improving bottom line and shareholder value, according to Mills, depends on increasing an organization's efficiency, velocity, and acceleration. While standards and the integration they enable are a means to those ends, Mills points to one other key enabler: collaboration.
Mills concurs with one of his direct reports, Lotus general manager Al Zollar (see my interview with Zollar), that collaboration isn't an application--it's a feature. Mills says the time required to complete a project can be reduced dramatically if the processes are re-engineered to replace the serialized collaborations with what he calls a "federated set of activities around human collaboration." Collaboration is accelerated when the back-and-forth communications typically associated with the vicious change-approval circle are eliminated. To make that happen, collaboration has to be a feature of all applications, which, in turn, requires a robust collaboration infrastructure. Although Mills wastes no time in pulling out the Lotus card, he notes that it's time to bring that division's flagship collaborative engine--Domino Server--into the shop for an overhaul.
That overhaul, due in 2003, will feature a re-engineered data store based on IBM's DB2 relational database. That puts Domino Server on a parallel track to its main competitor, Microsoft's Exchange Server. Microsoft has announced plans to replace Exchange Server's data store with SQL Server, its rival to DB2. Mills' software road map places Domino at the confluence of IBM's entire software portfolio where Notes, Domino Server, and even parts of IBM's Tivoli management framework are enabled through WebSphere and the native XML services of DB2.
As is customary for IBM's software division, the vast set of offerings will be available on more platforms--from PC servers to mainframes, from Windows (or Linux) to z/OS--than any competitor's offerings. If nothing else, that means Big Blue's customers can probably move at whatever efficiency, velocity, or rate of acceleration they see fit. It's only a question of how much they're willing to spend. Then again, Mills promises that whatever businesses spend with him, the positive returns will show up where it counts most: on the bottom line.
David Berlind is Editorial Director of ZDNet's Tech Update.