WebSphere Journal editor-in-chief Jack Martin recently chatted with Paraic Sweeney, IBM's VP of Marketing for Industry Solutions and Business Integration, Software Group. In this exclusive interview, Sweeney discusses IBM's Middleware Industry Solutions initiative, the drivers behind adding an industry-vertical dimension to the business, and the company's decision in 1999 to focus on middleware and get out of the application business.

WebSphere Journal: Paraic, how do you spend a typical day?
Paraic Sweeney: My typical day - especially now that we are in a launch phase around the Middleware Industry Solutions initiative - is a combination of working with early-adopter customers and business partners who want to participate and join us in this new market approach that is an extension of our middleware business and communicating with our internal product and sales teams, who are all working to use this approach to the market as a mechanism to better address customer needs in the market. So it's a combination of customers, partners, and internal teams.

WJ: What type of customers are you actually dealing with? Which industries do they represent?
PS: We are actually working across a wide range of industries, given the breadth of IBM's market presence - and many of those are existing customers, but they may not necessarily be broad-based users of our middleware technology. We see customers in a number of industries who are working to respond to regulatory or industry mandates specific to their industry. For example, in the insurance area there are institutions that are figuring out ways to respond to the new federal mandates around HIPAA (Health Information Privacy and Accountability Act) compliance.

In consumer goods manufacturing, a major driver is the requirement that Wal-Mart is making across its network of suppliers to increase the efficiency of its supply chain. This includes the ability to trace items within Wal-Mart's supply chain using new technologies like RFID [radio frequency identification]. It's customers in a range of industries who are wrestling with these business issues and looking for the software assistance to work in concert with their existing infrastructure.

WJ: You're dealing primarily with the line-of-business people inside these companies?
PS: In many cases we will be partnering with systems integrators and consulting partners. Many of the topics I have just described are really at the confluence of business and IT. They're neither purely an IT discussion about technology, nor are they purely a business issue around packaging or pricing. It's really about how these two issues - in what up to now have been relatively distinct roles - have to interact with each other. And in many cases it would still be an IT-savvy line-of-business guy or a very line-of-business-focused IT guy, but it's at a relatively senior level that they are wrestling with these business decisions.

WJ: So the decisions are not made purely from an information technology perspective with these people?
PS: That's really at the heart of why we are adding an industry-vertical dimension to our business, which traditionally has had a technology orientation. In the past we've seen decisions made around "I want to standardize my database infrastructure for a more cost-effective way of storing and retrieving and aggregating data." It doesn't really necessarily have a specific business driver. However, we see spending on software increasing among the customers we're serving. It is shifting from purely an IT-focused decision and we are seeing additional projects with a clear business driver; therefore, the decision is no longer purely an IT one but is project based, and it is a collaboration of the sponsoring business unit and the IT function that supports it. They usually face quite aggressive implementation time schedules, which in many cases are externally mandated by legislation or a trading partner in their distribution or supply chain.

WJ: Can you give me just a flavor of what type of business challenges these companies are looking at? What's a popular request that you hear?
PS: I think one challenge we are starting to see in a more broad-based way is how to implement RFID, not just to meet a customer requirement but to gain a business advantage in addition. It is a very new technology and there are significant players in the industry beginning to mandate its use. For example, Wal-Mart has asked its top 100 suppliers who ship goods into Wal-Mart's Texas distribution centers in 2005 to equip each pallet with an RFID tag. And now the federal government, specifically the military, has said "That's a pretty good idea - we've got a supply chain problem also. We want our top suppliers to do that also."

You can be fairly sure that once RFID proves its merit, it will be expanded from those distribution centers - from the top 100 to the next thousand and the next thousand after that. One company in that particular industry drives it and gets the business benefit out of it, and then you'd expect to see Staples and Target and other retailers adopting a similar approach in order to remain competitive in their industry. So, the question then becomes, "How do you go about it?"

If you look at an RFID implementation, it's a multidimensional problem in that you've got a lot of devices to manage; those readers will produce a lot of data. As with many new technologies, the standards on how to encode the information on the tags are changing, so you are going to have to transform and reformat the data.

Once you can automatically identify what goods are on the pallet, the retailer can now get a business value from this real-time data; for example, by doing an automatic three-way match. Wouldn't it be interesting before you actually accept a delivery, to do a check: "Well, what does the purchase order say and what does the manufacturer or distributor say that I am going to have on the pallet in terms of the advance ship notice? And then do a comparison across the three information sources - the purchase order, the advance ship notice, and the delivery data. We have described a piece of logic that does that match. If there is an exception, what do you want to do with that? It could be displayed for the procurement function and the supplier via a portal, which could in addition alert the store manager via pager or cell phone. What I have described is a classic information management, application integration, and portal scenario. So these questions - How do I respond to the RFID requirement? What technologies are available? How do I deploy? How do I manage it? - illustrate of the type of combined business and technology question that is being asked.

WJ: Taking RFID as an example, from what I've read and from what you are saying, it sounds as if you expect to see mass adoption of this technology over the next couple of years.
PS: I think over the next three to five years we will have a very significant adoption. What I have described is a starting point. You can obviously see it scaling in a number of ways: from one set of suppliers you can scale the number of suppliers. Instead of one set of distribution centers, RFID could be used for multiple distribution centers. The initial usage will put a tag on a pallet, but it could be all the cartons on a pallet. Potentially there is a massive adoption on the horizon.

WJ: Have you worked with any of the food supply people?
PS: On this particular issue, we are working with a number of consumer goods manufacturers.

WJ: How do you see this working in the automotive industry?
PS: There are similar requirements in the automotive world around early warning for warranties, and there are also some legislative pressures on auto manufacturers in response to issues with usage of parts from suppliers. These have been embodied in the TREAD (Transportation Recall Enhancement, Accountability, and Documentation) Act.

Another example is in connection with the maintenance of a car. There's now sufficient intelligence in an automobile to be able to detect problems early and communicate them back to the manufacturers so that they can prescribe appropriate maintenance. You're starting to see a variety of automatic capabilities being applied in a number of industries that deliver business benefit in addition to those changes that are being mandated by either market makers or regulators.

WJ: It sounds as if information technology is growing up to the next level, where business people come in with very, very clear ideas of what they are going to try to accomplish through the application of technology. Is that what you are saying?
PS: What I am saying is that there are a variety of business challenges that can be translated into the application of very specific technology, often with middleware combining existing applications and data. In many cases, the line of business that they're in is the driving force behind the initiation of these projects. So there is a growing awareness of what is possible - and the potential business benefit that can be obtained. This idea is the genesis or the reason behind expressing the value of our portfolio of middleware software in terms of the business issues that can be addressed. In addition to saying our application servers are J2EE compliant and our databases are scalable, our systems management manages a wide variety of devices, and our integration servers can support a wide range of B2B protocols, we are also starting to explain that we can assist with branch transformation in Banking, with dealer collaboration in Auto, with mobile service delivery in Telco, etc. That's the mechanism we're using to more directly address the issues our customers are working on but also, quite frankly, to allow our sales team to have a more meaningful conversation with people who are initiating software projects; that's the education program we are driving with our sales team. It's also a new focus for our engineering teams so that they think about these issues, and it's a partnering opportunity for systems integrators so we can work together to address these customer requirements.

WJ: You mentioned earlier that you are also working with systems integrators and business partners. How do they dovetail into this initiative?
PS: I would describe the middleware solutions for each industry as having four components. The first part contains the core IBM middleware products, for example, DB2 database, Lotus Domino, Tivoli systems management, Rational tools, WebSphere Business Integration, etc.

The second part comprises our industry-specific middleware extensions that make our core products more relevant in that industry vertical - we have adapters to vertical ISV applications, process templates for common business processes, portlets for user roles, and I expect additional extensions in the future.

The next two main components to the solution are both partner based. Number three is the ISV application or applications that a customer has, because any solution has to work in the context of the customer's environment. The fourth is the industry know-how in terms of consulting and implementation services that can take those middleware products and deploy them in the application environment that the customer has, to solve the business problem. That know-how can be provided by IBM services - from IBM Global Services, obviously - and it can be provided by our network of business partners, global and regional systems integrators, and solution provider partners.

When you look inside many of the large global systems integrators - Deloitte, Accenture, and so on - they're largely structured around industry. Many of the more specialized systems integrators are even more deeply specialized around particular issues in an industry-vertical domain. When we talk to the integrators, they see a very natural fit between their industry know-how and our middleware software and the business opportunity for the combination. They are depending on IBM for two things. Number one is market awareness for our middleware software and the second thing is the technical support that allows them to successfully apply those technologies in their customer engagements.

WJ: Is IBM research involved with this initiative? If a customer has a really interesting high-value problem to solve, are you bringing in the Watson folks?
PS: In many cases, the Watson Research lab is involved in what they call the "first of a kind." We've got this program - as usual we have an acronym for it - called FOAK.

WJ: It's IBM. There has to be an acronym.
PS: There was an article on this whole subject in Information Week just before the holidays. The cover is all about this topic and in the story is a discussion about a first-of-a-kind project with a customer called Boston Coach - a limo provider. IBM Research used some of the mathematical modeling that they have done for scheduling, which is typically used with airlines, where you have lots of flights coming in and out and so you need to optimize landing slots, planes, pilots, logistics, etc. We took that technology and that mathematical knowledge and applied it to Boston Coach's problem - scheduling limos in a city. Boston Coach is now able to expand their operations to other cities at a lower cost because they are able to share the systems that now automate a lot of that activity.

WJ: How are you getting the message out to the customers that all of these new vertical solutions are available? For instance, if I were an auto manufacturer, would I be coming to you or are you going out to that market?
PS: We are going out to the market - this article and others are part of an extensive communication initiative - but we are also training our customer teams - sales and product services - so they can initiate these discussions with our customers, and the partner community is a key channel.

WJ: So the partners in many cases have the relationship, and you are bringing in the technology muscle?
PS: Correct.

WJ: I've heard that you actually have an enormous portfolio of industries that you are covering. I have had a few people tell me that there are actually 12 of them. Is that true?
PS: It is, but let me qualify…. We are in startup mode - albeit starting very aggressively - and IBM covers 17 industries with a dedicated sales force. For this software initiative we are starting very aggressively in 12 of those 17 and are working to provide a middleware-based solution for a set of the top business issues in those industries. We see that as an aggressive starting point, but I don't want to focus on the number 12 as being an absolute statement or an endpoint. It is the start of a journey that we believe will make us more relevant and establish more leadership within the middleware category.

WJ: Are you able to say which 12 you are starting with?
PS: Absolutely, the 12 are banking, financial markets, insurance, telecommunications, government, retail, consumer products, automotive, electronics, energy and utilities, life sciences, and health care.

WJ: If a business partner wanted to get involved with this program, what is the appropriate channel and mechanism for them to get involved?
PS: We largely categorize business partners into either solution providers and systems integrators, or application developers (ISVs). The current programs for these partners will be extended to accommodate this additional perspective.

WJ: If a customer wanted to find out about these vertical middleware offerings, how would they go about it? What should they do?
PS: As part of our sales training in January, we equipped the direct software sales teams with in-depth education on each of these middleware solutions, so your usual IBM account contact will be able to describe them and will be able to get you more information.

The IBM software account team that you would have a relationship with today around Tivoli, Rational, WebSphere, and so on will be familiar with these solutions. If you wanted to have a more detailed conversation to understand the technical components of it, to maybe develop a deployment plan within your shop, then they can bring in industry middleware solution specialists to assist.

Paraic Sweeney is the vice president of marketing, industry solutions, and business integration for IBM Software Group. He joined IBM in 1980 and has held a variety of international positions, including managing product development, financial planning, marketing, and consulting in Dublin; Paris; and Somers, New York. Paraic is responsible for marketing IBM's portfolio of middleware industry solutions that exploit their market-leading middleware infrastructure and open industry standards leadership. He was instrumental in the acquisition and integration of the CrossWorlds Software and Holosofx companies, both industry pioneers in process integration technology and now key components of the WebSphere product portfolio. Prior to this position he worked in a range of software leadership roles with IBM's Software Group including VP of Marketing, Internet Technologies, where he launched the WebSphere brand.