iSeries Top Brass Commit to the Platform and Growth

by Timothy Prickett Morgan

A year ago, at the May 2004 COMMON in San Antonio, IBM hosted the first party that the user group had seen in many years. While the alcohol was flowing and the loud music was playing, it was almost possible to forget for a minute that the iSeries was facing some pretty big challenges. Fast forward a year to the COMMON show in Chicago. For the first time since the late 1990s, there is actual cause for optimism concerning the iSeries business. This is much better than a party. It is a living.

During the opening keynote at the Chicago COMMON gathering, IBM briefly wheeled out Malcolm Haines, the chief propagandist for the iSeries line, who had created a slick, fast-moving video that showed IBM was dead serious about the growing the iSeries business and getting its "fair share" of the market, which as Haines has said many times before is "100 percent." (This kind of talk goes down well with the COMMON crowd, of course. It is a pity Haines isn't allowed to say these things on national television.)

Mark Shearer, who became the new general manager of the iSeries line after some executive reshuffling earlier this year, has been running different aspects of IBM's server business for many years. His predecessor, Mike Borman, was only in the job for about six months after being asked to head up sales for IBM's Software Group in the wake of John Swainson's departure from Big Blue to go run Computer Associates. Shearer has been intimately involved with the Server Group since January 2000, and has held many different sales, marketing, and management positions across different IBM divisions. He is someone to watch. He is a precise thinker, and seems motivated and focused.

In his keynote address, which you can read in full by clicking here, Shearer explained his background at IBM and his involvement with the iSeries, which harkened back to the System/36 days when he was selling these boxes on Wall Street. And because the iSeries has had three different general managers in the past year, he wanted to make sure everyone at COMMON--and therefore the entire iSeries community through publications like this one reporting what he would say at COMMON--understood that he would stay in his job as general manager for the long haul.

"Although I'm new to iSeries, I'm really not new to the product line," he said. "And I made a commitment to Sam Palmisano, our chairman, that I'm going to be here for a period of years until we get this business back to where it really needs to be."

In an interview the next day, I pressed Shearer for details on how long he was committed to the job of turning the iSeries around, because this is not a resurgence that will happen overnight. It took many years for the OS/400 platform to shrink as much as it has, and it will take almost as long (if we are lucky) to grow it again. Shearer smiled and gave me the kind of lawyer answers I expect from my wife and children--my wife is a litigator and my children might as well be. "Several means more than two," he informed me. Well, yes.

Humor is important, and so are energy and stability. These latter two terms might seem mutually exclusive in physics, but they certainly are not in business, particularly in a business that is trying to regain its bearings and attack competitors in a very tough market as the iSeries is trying to do. In two months' time, Shearer has traveled the world, talking to iSeries customers and ISVs and has got his brain wrapped around the iSeries culture, the iSeries business inside IBM and in the community at large, and with the help of his team--which includes a new vice president of marketing, Peter Bingaman, who the energy of five IBMers and more than ever seen in the iSeries--he has put together a plan to spend money promoting and pushing the iSeries. Shearer was one of the key executives behind the resurgence of the mainframe, he was one of the key players behind the eServer branding strategy, and he was one of the key players in the development of the BladeCenter blade servers. And you can bet Louis Gerstner's last $5 that he wants to be known as the guy who turned the iSeries business around.

Shearer got right to the point as he opened his keynote address: "I want you to take one thing away from this meeting: 2005 is the year that IBM is going to speak out again about the unique position the iSeries plays in the industry, and you have my permission to use every asset I can touch to really re-establish this category of computing that iSeries represents, and make dramatically broad awareness of the iSeries."

I've been watching the OS/400 platform for a long time now, and the one thing that always struck me in the past decade was that the hardware and software engineering side of the product was generally calm and confident. They knew they built a good product, and declining sales had nothing to do with the engineering. The engineers at IBM (at least the ones I know) are generally pretty jovial, particularly for people who rarely see the sunshine (except when IBM lets them out of the lab to go to COMMON and such). The marketing side of the iSeries line, which often included the general managers, seemed under siege, stressed. They were in a tough spot, and they knew it. Something is different now. At COMMON, they were looser, confident, smiling. The confidence comes from IBM's commitment to grow this business and its having ponied up the funds to do it. Shearer's team, which includes Joyce Bordash, the new director of iSeries channel marketing, smiled more during the keynotes and the iSeries Town Hall meeting than I have ever seen any similar-sized group of IBMers smile before.

Shearer said that when Bill Zeitler, the guy in charge of IBM's Systems and Technology Group and arguably the second or third most powerful person at IBM, called him up over the Christmas holiday, he wasn't expecting to be given the iSeries general manager job. "But as I thought about it, I really developed a very strong sense of confidence, that this product, the iSeries product, would in fact grow again in IBM and in the industry," he said. "And it really has to do with some marketplace fundamentals. It's really not just about having some advertising for the first time in 10 years. It's not just about speaking out. It is really about some fundamental shifts in our industry."

Those shifts include customers wanting to simplify their IT infrastructure--cut down on the number of hardware and software platforms they support--and a move away from piece-parts acquisitions of technology and toward buying whole solutions. This, as we all know, is what an iSeries does best. And he also said something that I have been saying until I was hoarse: Of IBM's 500,000 customers, about half of them are OS/400 shops. The iSeries might not bring in the biggest revenue, but it is the one thing that half of the company's customers have in common. "In our systems business, the iSeries product line and its future is absolutely essential if IBM is going to stay in the hardware business," he said.

Shearer also explained the iSeries Initiative for Innovation, which has been covered over the past few weeks in The Four Hundred. This program aims to pump up iSeries advertising, opens up the iSeries Developer's Roadmap to a much broader set of tool vendors, and is trying to get some 3,000 iSeries independent software vendors reinvigorated and motivated. Shearer also said that he was making a personal commitment to ensuring that the quality of iSeries machines remained the best in the business.

Bingaman, who flew up from Florida in the middle of his family's vacation to address the COMMON audience and to take part in the iSeries Town Hall meeting afterward, gave a few more details about exactly what IBM was doing to boost the iSeries in terms of money. He gave the COMMON crowd a short lesson in marketing:

"What we're looking at from a marketing standpoint on iSeries is really very simple," he said. "In marketing, there are a lot of metrics we look at, but this is what it comes down to for us in iSeries. It's awareness and consideration. Awareness is truly a measure of how much of a market we're actually playing in. So we're probably addressing anywhere between 15 to 20 percent of the market, depending on the country you're looking at, and the job you're looking at, and that's a bit of a problem. The great news is that when people do become aware of us, just about 60 percent of the time, we're in the process of taking them through what they're looking at in the iSeries, explaining the value of the iSeries. We are actually being considered. So the challenge here is simply one of awareness. It's simply one of bringing the voice of our customers out to the market, bringing your energy, your success stories, all the great experiences you've had, and sharing them with the rest of the world. That's what the job of marketing is all about, that's what our team is focused on, and that's what we're expressing in all of our work."

This, of course, was exactly the kind of thing that Al Zollar, the previous general manager, and Cecelia Marrese, the previous vice president of iSeries marketing, were trying to do before they changed jobs last year. The difference now? I believe that IBM has watched the iSeries drop to $1.5 billion in sales and has figured out that the decline is not just attributable to the i5 transition, and has figured out that it has to spend a lot more money to raise awareness now so it might get much more sales later.

To that end, Bingaman said that IBM would spend anywhere from 20 to 30 percent more money in 2005 for basic organizational support for the iSeries (in Bingaman's chart, this was labeled SG&A, and it means people and facilities), that channel incentives would be boosted by about 40 percent, and that advertising spending would be up by anywhere from 200 to 300 percent, varying by country. As best I can figure, in 2005, IBM has committed over $100 million to iSeries advertising and over $230 million in channel incentives, not including the $125 million that IBM has committed for providing tools and services to the 3,000 key iSeries ISVs. This is serious money, and people are staking their careers on it.

Perhaps as significantly, IBM is ready to experiment, and is looking at blogs by top iSeries executives, a full-court-press on the IT press and analyst community (specifically, the general business press that hardly ever writes about the iSeries), and new developments such as pod-casting (think of it as using MP3 as an asynchronous Webcast) to build up awareness of the iSeries.

"There should be no doubt, in this room or anywhere else, that we are coming back, we're bringing your voice to the market and we're going to make a statement about the iSeries in 2005," Bingaman declared. And he ended his speech by not saying directly that IBM was shooting for double-digit revenue growth for the iSeries, but that 7 out of the 10 key partners who push the iSeries are now, after the i5 has been launched and IBM has opened up its wallet, expecting to see double-digit revenue growth in their businesses.

Bingaman was followed on stage by Frank Soltis, the chief architect of the iSeries line, who shared some of his observations about what is happening in the iSeries business. He only spoke for a few minutes before the iSeries Town Hall meeting. "The personal observation that I've seen over the last six months is there's been a tremendous amount of enthusiasm for this product inside of IBM and outside of IBM," he said. "And now we're going to be delivering on those promises." A refreshing thought, indeed.

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Remarks By Mark Shearer, COMMON Spring 2005 (transcript)

Remarks By Peter Bingaman, COMMON Spring 2005 (transcript)

Remarks By Frank Soltis, COMMON Spring 2005 (transcript)