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Last Exclusive JDJ Interview With "IBM's" John A. Swainson, Now CA's Newly Appointed CEO

The Last Exclusive Interview With "IBM's" General Manager of Application & Integration Middleware Division

This exclusive interview with John A. Swainson was conducted by JDJ publisher Jeremy Geelan and originally published in the print edition of JDJ's May 2004 issue.

Jeremy Geelan: Let's start at 35,000 feet: What's been the main impact of IBM's "On Demand" vision on the Information Technology scene to date?

Swainson: Let's start by defining "on demand." First, on demand reflects what our customers are doing with their businesses - streamlining their business processes to make them more flexible and adaptive to new markets and opportunities. They use information technology as a tool to integrate these processes, so obviously IT is a critical enabler of on demand. In the case of IBM software, our focus has been on making sure customers can use our products - WebSphere, DB2, Lotus, Tivoli, and Rational - to establish what we call an on demand operating environment, which is a middleware infrastructure that gives our customers a way to build, integrate, and manage their new and existing applications.

 Making it possible for people to do this required that we create a new, standards-based computing model. This model is based on the technical principles of a service-oriented architecture. It is delivered in our products, ones like WebSphere Business Integration, that customers can buy today. However, more and more, we are seeing customers starting to approach this from the business process angle, using our business consultants to define the business processes, and then tying the delivery of those processes to a set of technology models that help them achieve their goals.

Many customers have begun to realize the business benefits of on demand. Charles Schwab has implemented a WebSphere-based solution to allow their financial advisors to deliver portfolio analyses to their clients in near real time. By taking advantage of grid computing features in WebSphere, they have been able to make more efficient use of server resources and reduce the elapsed time to run these transactions from 8 - 10 minutes to just 15 seconds.

Jeremy Geelan: How favorably does it resonate with your customers, the fourfold typology of 21st century businesses as needing to be responsive, resilient, variable, and focused? Are there any further attributes that have emerged as being equally important?

Swainson: On demand resonates very well with customers because it maps to what businesses today are trying to do - find ways to be more flexible and responsive in order to stay competitive. It manifests itself in things like our WebSphere and Tivoli products, where systems become self-monitoring and self-healing, cutting down on system outages and enabling employees to spend more time on higher-level tasks. We're also seeing more interest in business process integration projects geared to specific industries.

Jeremy Geelan: How large do SOAs loom in IBM's vision for the future?

Swainson: IBM has been helping customers build service-oriented architectures for more than 10 years, because SOA is a design pattern, not a product per se. We have thousands of customers who have built these on WebSphere and MQ. Based on this experience, we have worked with the industry to define a set of standards and have codified successful implementations into a set of templates and guidelines for our services teams to use.

We have worked with thousands of customers on Web services and SOA engagements, and we lead the industry in every aspect of SOA, including products, standards, education, services, and experience. Our work includes standards created by the big market share of products like WebSphere MQ enterprise messaging, as well as more formal standards. IBM was a primary driver behind the Web Services Interoperability Organization, and we work with other vendors to introduce specifications for transactions, reliability, management, and grid computing. JSR109 is a recent example.

Jeremy Geelan:  And grid computing - where does that fit in?

Swainson: Grid computing is another technical underpinning of an on demand environment. We've been helping our customers develop grids for years, primarily for scientific analysis. Now IBM is introducing technology that can be applied to commercial grid environments to make them easier and less expensive to implement.

Jeremy Geelan:  In terms of the competitive landscape, since Gartner reported that 37% of all deployed application servers were WebLogic vs. IBM (at 22%), things have changed dramatically. What are the current statistics in terms of market share between you and BEA?

Swainson: Last year Gartner reported that IBM's share of the application server market rose to 37% in 2002 from 31% in 2001, making us the market leader. BEA dropped to second place, with market share declining 5 points, to 29%. Our goal was to become the market leader, and we think we're extending our lead.

Jeremy Geelan:  When talking to your customers, what are the key integration drivers from their perspective, and how is IBM delivering on each of them?

Swainson: Integration is a must, but the integration priorities of customers are unique depending on the size of the business, the industry they compete in, the customer's long-term goals, and the customer's technology capability. There are a couple of key themes that rise to the top. Customers want to link different areas of their business with those of their clients and partners, and they want to leverage as much of their existing infrastructure as possible.

We help them get there with IBM's open, standards-based approach to integration, with WebSphere. We enable customers to automate the flow of information and process transactions to help them become more agile and responsive. We use horizontal end-to-end integration to leverage existing investments to increase business flexibility and efficiency and drive ROI. IBM can tailor integration solutions to best suit the needs and priorities of any customer, no matter the industry. IBM offers 63 industry-tailored software solutions spanning 12 industries. And every one of those 63 solutions is based on WebSphere.

Jeremy Geelan:  How about the breakdown between large enterprises and SMBs - where does IBM see the most growth? What kind of things are you doing for the SMB space?

Swainson: The SMB marketplace represents a big opportunity for top line revenue growth for IBM. According to AMI-Partners, the overall market opportunity for SMBs last year was $300 billion, and it is the fastest-growing segment of the IT market - growing faster than the IT market as a whole. SMB is also the fastest-growing market segment for IBM. We just announced a strong start to this year with first quarter SMB growth at 15% year to year - thanks in large part to a partner ecosystem that delivers more than half of IBM's total SMB revenue. Local and regional ISVs represent a cornerstone of IBM's SMB strategy - more than half of all mid-sized customer IT investments are based on the application decision.

Also, while SMBs may not have the size, global reach, and revenues of larger organizations, they still have the desire to have a successful, profitable, and growing business. IBM's Express portfolio of middleware, hardware, services, and financing is a comprehensive suite of offerings built from the ground up for SMB customers and priced with their needs in mind.

Jeremy Geelan:  Jonathan Schwartz went on record in JDJ as saying "middleware is history." Clearly that wasn't meant literally, but he was saying that end-to-end "systems" will supplant it as a focus. Is the IBM view that middleware, on the contrary, is just beginning?

Swainson: Saying that middleware is "history" is laughable. IBM has tens of thousands of customers who need and use middleware for transactions, data management, development tools, systems management, security, and collaboration in a heterogeneous systems environment. The WebSphere platform experienced 12% revenue growth in 2003 over the previous year. The WebSphere platform grew 24% in 1Q04, marking its twenty-second consecutive quarter of revenue growth

Jeremy Geelan:  Scott McNealy once said "We're down to three - IBM, Microsoft, and Sun." Does the recent Microsoft-Sun pact change anything as far as IBM is concerned?

Swainson: Sun is a distant fourth or fifth in middleware market share, depending on which study you're looking at. We haven't heard much about what the deal really means for Sun, Microsoft, and the future of Java, but we haven't heard that Sun is backing away from Java either. I expect that Microsoft will continue to try to convince people to move from Java to their proprietary language environment, and I expect that Sun will continue to strongly support Java.

Jeremy Geelan: Some of IBM's moves in the Java space appear to be moving away from Sun - Eclipse tooling rather than NetBeans, SWT instead of Swing, and now a new virtual machine. From one perspective it looks like IBM is trying to break away from having any licensed Sun code in its product offerings. Is this the end game?

Swainson: IBM created Eclipse because there was no industry standard for building and integrating application development tools. We see Eclipse as very supportive of Java, and it has made a large contribution to Java's success in the marketplace - and with more than 18 million downloads, it is by far the most widely adopted Java development environment. Interestingly, it is also being broadly used in non-Java environments as well, with a great deal of activity in the community now to build C and C++ tools based on Eclipse.

SWT was developed because many of our customers demanded user experiences that the Java Swing code couldn't provide. The whole notion behind Swing is to have a consistent UI model across clients; SWT, on the other hand, allows people to build UIs that are deeply integrated with the look and feel of the host platform. So you can build Windows applications with that look and feel that fully integrate into the Windows desktop, and the same goes with Linux and pervasive platforms. Having said that, Swing is part of the Java standard, and IBM delivers more products using Swing technology than anyone else in the industry.

Jeremy Geelan Scott McNealy told IBM to stop pushing him to open source Java until you do the same with DB2. If Java is not open sourced, how does this affect IBM's licenses with Sun in the future? How serious was the call to Sun to collaborate with you on an open source implementation of Java?

Swainson: We have been stating for years that we'd like Sun to make Java a true open standard, and we remain optimistic. IBM's long-standing support for open source is based on our conviction that openness creates new opportunities and spurs innovation. Open source also gives customers choice and helps them meet their IT needs more quickly and effectively. An open source Java platform would be good for the industry, good for customers, and good for Java.

Jeremy Geelan:  What major product announcements is IBM likely to make this summer, or should we be waiting for the fall for the next big additions?

Swainson: Later this year we'll be announcing the next generation of WebSphere Application Server, Version 6. It will be the foundation for IBM's on demand operating environment and will advance IBM's leadership in things like grid and autonomic computing, security, systems management, application development, and SOAs. We'll also begin rolling out software that will closely integrate IBM's market-leading WebSphere MQ messaging software with high-level integration to form a single Enterprise Service Bus infrastructure.

All these products are part of IBM's effort to help customers compete more effectively in the marketplace. We will continue to help customers solve pain points, such as integrating far-flung silos of information across the enterprise and with trading partners. And we will continue to deliver on IBM's on demand vision through industry leadership in open standards, ongoing investment in research and software development, strategic acquisitions of companies like Rational and, more recently, Trigo and Candle, and our unmatched portfolio of software, hardware, services and financing. That's how we are making on demand a reality for our customers.

More Stories By Jeremy Geelan

Jeremy Geelan is Chairman & CEO of the 21st Century Internet Group, Inc. and an Executive Academy Member of the International Academy of Digital Arts & Sciences. Formerly he was President & COO at Cloud Expo, Inc. and Conference Chair of the worldwide Cloud Expo series. He appears regularly at conferences and trade shows, speaking to technology audiences across six continents. You can follow him on twitter: @jg21.

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Most Recent Comments
Janelle Hill 11/23/04 05:26:14 PM EST

You have a fact backwards. One place you say (webLogic BEA product) has 37% according to Gartner but IBMer says last year''s Gartner report put IBM at 37% (Websphere). Which was it last year? I think IBM had lead. Would like to know this year''s numbers.

Elvisita''s Dad 11/23/04 05:25:44 PM EST

Who Cares! IBM is the world''s leading "outsourcerer" and hence on my Sh*t list. Boycott them I say!

Claudia 11/23/04 05:25:09 PM EST

According to a recent Barron''s article, IBM''s software unit did not receive any bonuses as a result of their poor performance over the past year and only grew about 1%, primarily from growth in the Rational software division. Also who has a WSJ subscription can read the follwing article, very interesting: http://online.wsj.com/barrons/article/0,,SB107671594816229855-search,00 Extracts: "...IBM''s software execs were shut out of a portion of their 2003 bonuses because of lackluster sales growth. Smith Barney software analyst Tom Berquist, who tracks IBM''s software performance relative to the companies he covers, estimates that Big Blue''s software sales grew only 1% after accounting for foreign-exchange gains. And he agreed with us that the bulk of that came from IBM''s Rational software outfit, which it acquired in 2003..." "...Berquist points out that IBM reported that WebSphere, which competes directly with BEA Systems'' WebLogic software, was up 10% for the fourth quarter. But a closer look at the numbers, Berquist says, indicates little change from previous quarters wherever the two companies compete head-to-head.

"IBM in most cases bundles software with mainframe sales, [and thus] it is likely that most -- if not all -- of WebSphere''s growth is on the mainframe side," Berquist notes. ..."

Not to mention the fact that many sales and managers of the software division from IBM left...

towatatalko 11/23/04 05:24:34 PM EST

Few years back when IBM first started looking into Linux as the means of support for mainframes and later zSeries they picked four Linux developers: Red Hat, SuSE, Turbolinux, and believe it or not Caldera. Out of those Caldera was out and behind in development, so they were counted out. Turbo and SuSE were the strongest and delivered timely products for S/390, AS400, RS6000. But Turbo had to close its US operations and laid off its staff in South San Francisco in July 2001 and 2002. So, naturally only SuSE and RH remained. But RH was far behind in development of mainframe products as compared to SuSE and Turbo, simply put Red Hat was not even a player among mainframe community who were already well versed with SuSE and Turbo. In other words when Investing $50M in Novell/SUSE, IBM just naturally picked the best out there for their mainframes, that's all it is to it, they rewarded SuSE, because they got most consistent and best software development from them.

barthrh2 11/23/04 05:23:46 PM EST

In December 2000 IBM committed to invest $1Billion in Linux software, hardware, services, the open source community and partnerships during 2001. That's only 2001! If anything, they have only increase their rate of investment.
Add to all of this their strong commitment to WebSphere and Java, and you have a company that has more than embraced Linux. When IBM invested 2.5 Billion in a new semiconductor manufacturing facility,they automated the facility using Linux.

slackr 11/23/04 05:23:03 PM EST

IBM is huge. They retooled as a consulting company so they deliver "solutions" more than hardware, and that is why they've been big on Linux. Basically, there are a ton of little Linux consultants out there but for top-tier corporations you would only hire a company of large standing. IBM is really the only player in this type of (growing) Linux market (although Sun is moving in that direction, but my boss thinks that Big Blue will want to buy them out.)
IMO, IBM could be thinking about buying Novell. A move like this helps them suss that out, but the acquisition of their own Linux distribution combined with a surprisingly large Netware install base is pretty attractive. Especially since just about all of the Netware sites are looking to move out of it there's a real opportunity for IBM to come in and make that happen on Linux before they go Microsoft.

sofist 11/23/04 05:22:08 PM EST

IBM is not stupid. They do not want to create another Microsoft. They are going to play on two horses, one being Red Hat and the other SUSE/Novell. This makes room for IBM to make A LOT of money by selling hardware. Don't worry, in five years, there will still be Red Hat *and* SUSE - both having around 30% of the market. IBM will make it so.

jdifo88ol 11/23/04 05:21:29 PM EST

None of the 5 mentions: how long until IBM buys out Novell?

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