Remarks of Mark Shearer, General Manager, iSeries Division

iSeries Town Hall Meeting, Fall COMMON, September 18, 2005

Welcome to the iSeries Forum. I am delighted to be joining you at this conference in Orlando and it is just a pleasure to be seeing you at our forum.

This actually is my second consecutive opportunity to participate in the COMMON meetings and some people were teasing me in the Expo that it was really nice to see a general manger at two consecutive COMMONs.

I think I told you earlier this year that IBM is really committed to your success with the iSeries platform today and the iSeries platform going forward. And I signed up for a multi-year opportunity to lead this business for IBM, and to represent all of you to IBM Corporation. And I really am delighted to be here. This is actually my third COMMON event because I had the chance to participate in COMMON Europe earlier this year. Later this week, I'll be going to COMMON Norway. I really believe in user groups. I'm trying to personally spend as much time as possible listening to you, listening to the requirements that come out of user groups like this, and I really am delighted to be here today.

I just wanted to mention, in a few minutes, we'll be introducing a number of my colleagues. Two very special colleagues joining me from IBM today, first of all the head of our marketing for all of IBM hardware, is here, Maureen McGuire, welcome.

[Applause]

And also I have with us the head of all of IBM's hardware development, our Power processors, our storage, and our servers, Vijay Lund.

Now, as you all know better than me, the real value of the iSeries is that to some extent, it is IBM in a box, it's everything that IBM does integrated into a single solution. I think it's so important to include and involve our leaders, like our marketing leader and our development leader, and you'll be hearing them over the next few hours.

There are three key messages that I want you take away today. First of all, we believe that the marketplace in the industry are moving in a direction that is right over the sweet spot of the iSeries offering. Second, IBM is absolutely committed to your continued success using the iSeries platform. And third, we are committed to continue to invest in the solutions, the tools, and the ecosystems around the iSeries platform. I mentioned last time at the spring event that a personal priority of mine is just an obsessive focus on the quality of everything in the platform, and you'll certainly continue to see that from me and my IBM colleagues.

Let me show you what we have in store from the Town Hall meeting. While I was in the Expo earlier, several of you came up to me and said for goodness sake keep up the marketing. So after I make these opening remarks, we're going to bring up Peter Bingaman, who is our vice president of marketing, to give you an update on the initiatives that we introduced to you back at our spring COMMON meeting. Then Maureen McGuire is going to tell us about our overall IBM Systems Agenda and share with you some marketing content that I think you will find amusing and I would be shocked if you did not applaud loudly. It is fascinating to me having come from the marketing organization how many clients from around the world have really urged me to continue to get the world out in the industry about what the iSeries is all about, so I think we'll have some fun there.

So we have a really completely renewed product in our i5 product, we have a new marketing agenda that you have begun to see the impact. Right now, another key priority of mine is to overhaul our business and sales leadership capability in each of the 16 sales regions around the world, and Bill Donohue [vice president of worldwide iSeries sales] is going to share his thoughts on that.

So let me quickly move on to my own remarks. And this really has to do with some fundamental shifts in the marketplace. Since I've seen you last at a March meeting of COMMON, I've had a chance to visit literally hundreds of clients in over 40 cities in 15 countries. What really is fascinating to me is the pain points or pressure points that each company faces. There is tremendous pressure on IT departments to enable growth for businesses and still contain costs. And I have this very vivid picture in my mind of what I have seen everywhere from China to the U.S. to Russia.

I walk into a client installation and I will see the entire business systems of the firm being managed by one or two or three IT professionals and an iSeries. And they will often take me for a tour of the rest of the IT department and I will see dozens of people supporting the file, print, and Web servers, and it just is really fascinating to me to see the IT staffing productivity that many of you have been able to achieve by leveraging these really highly integrated solutions.

So I think, more than ever, some of the classic strengths of the iSeries and the AS/400, some of the benefits that may have drawn you to the platform in the fist place, are becoming more and more relevant again in the industry. And you'll hear Maureen share some quantitative data from IT analysts about the cost of ownership. But from everything that I see, the industry is moving to a place where solutions is more important, integration of infrastructure, simplicity is more important, and that is one of the things that gives me great personal confidence in the future of the iSeries platform, because it's so well geared to provide the capabilities that I think more and more of our clients are asking for.

The other thing that I see is great momentum in many respects. During the first half of this year, our iSeries business in IBM was restored to growth. And we got to a solid double digit growth in the quarter. Just to put this in a historical context, the iSeries business growth during the first half of this year was the best it's been since 1998. Once again, I view this as an indicator that the value proposition is more relevant again.

One of the other very exciting things for me to see is the business partners and the solution providers that are coming to the iSeries platform for the first time. People that are discovering i5/OS and the benefits for the first time. Just a couple of examples. A company, ITI, is the number one solution provider in the United States market for community banks. They just recently completed a port from the Unisys environment to the i5/OS environment, and so far this year, they've sold their solution on i5 to 15 banks in the U.S. marketplace. We're seeing smaller providers, like Rippe and Kingston, that provides solutions for legal firms, helping a firm, a very conservative legal firm in Connecticut, called Tyler, Cooper, and Alcon, achieve 45 percent operational savings over their prior Microsoft environment. So it's very exciting to see new solutions providers, new clients, coming to the platform for the first time.

The other interesting thing that I've heard everywhere I go, literally, is many of you have told me that we've got to enable skills for the iSeries offering starting at the university level. And many of you in every country that I've been to have asked us to re-energize our university programs, which we're planning to do right away. We actually do have iSeries curriculum for programs of some sort in nearly 300 universities around the world. But we're going to try and get a bit more scientific approach. We are renovating the iSeries curriculum that we provide them, and we're going to try to partner with clients and business partners in the local markets to continue to develop university programs. But we are seeing a great deal of young skills in the marketplace, we simply need more.

One of the great COMMON groups that I just love, is this Young iSeries Professionals group that I had a chance to spend some time with at the last iSeries meeting. What's really fascinating as I travel the world, I have seen so many people coming out of university. I've got a photo up here of about 20 people, these are universities students that were interns at our Rochester, Minnesota, location this past summer. These people that grew up on Microsoft were teamed up with our core software development team working on future capabilities in i5/OS. They are the most articulate group people in terms of the business value of the iSeries platform. I wanted you to know that we're not where I want to be, but as a personal project I am really adopting this focus on improving our university presence and our university programs.

Innovation. What really matters is not what we do in the product, but how you innovate your business, how you advance your businesses with the iSeries platform. And I was really delighted that COMMON and IBM joined up to celebrate the innovative applications on the iSeries platforms that many of you have experienced. And these pictures are from a recognition event that we had at our last meeting of GHY International, Ubix-Konica-Minolta, Fashion Institute of Design and Merchandising, KY Systems, and Scott Klement.com. And we had an independent panel of judges look at the very creative submissions we got from many of you, and these five winners really were demonstrative of the great things all of you are doing with the platform.

As Bev mentioned at the opening remarks earlier today, COMMON and IBM are going to continue this annual recognition program to celebrate innovation on the iSeries platform.

If you go to the COMMON Web site, or the iSeries Web site, you'll be able to see the timing and the process for submitting a nomination. I really encourage you to consider doing this. I do think it is one of the most wonderful things that we and COMMON can do to celebrate your success, so I encourage you to check that out.

I want you to know that across IBM we really do have a renewed commitment to this platform this year. We introduced these plans to you earlier this year about focusing on our brand presence, our partnerships with solution providers and our distributors, and later Peter Bingaman will tell us how we're doing against those intentions. After Peter gives you an update on our key initiatives, Maureen McGuire is going to take us through a look at our Systems Agenda, which is our vision for hardware for the next five years going forward. The headline there is that the iSeries and everything that the iSeries stands for is right at the heart of IBM's hardware strategy for the next five years.

Everyone keeps telling me, the iSeries and the AS/400 are the best kept secret in the industry. Would you agree?

[Applause.]

So what I'd like to do now is bring up Peter Bingaman, our VP of marketing worldwide, and have him tell us what we're doing to tell the rest of the IT world about the best kept secret.