Cloud computing has transformed the tech world in a short time, pushing businesses of all kinds to adopt software and services that can be used anywhere and on any machine. Some huge hardware and software companies have been left behind, but others have changed the way they work and what they offer to become major providers of cloud computing technology. This is the third article in a three-part series on the CEOs of some of the largest tech companies in the world and how they’ve helped their organizations adapt and thrive in the age of cloud computing.
Advancing IBM’s legacy
IBM hasn’t survived for more than 100 years by playing it safe. The tech world is littered with the corpses of companies that rose quickly and fell just as fast by clinging to one technology paradigm. IBM, on the other hand, has undertaken not one, but several generational shifts in focus and function since it was founded in 1911.
Executing these shifts has required bold vision from the top, and IBM has been fortunate to have visionary leaders to help it navigate through multiple new worlds of technology. Virginia “Ginni” Rometty is IBM’s latest chief executive to chart its course to the future, a course that leads straight through cloud computing and artificial intelligence. But she’s not the first.
To understand why Ginni Rometty is at IBM’s helm today, it helps to understand the leaders in its past, some of whom are among the most legendary business leaders of the past century, and the traits she shares with them.
The company known as International Business Machines was born as CTR, the Computing-Tabulating-Recording Company. CTR was created by combining four companies, each of which produced an important piece of turn-of-the-century business technology.
IBM’s (or rather, CTR’s) first visionary executive was Thomas J. Watson, for whom IBM’s artificial intelligence (AI) technology is named. Watson was an early pioneer of modern sales and customer service practices, and he oversaw a rapid expansion that focused on offering the company’s tabulating machines (essentially analog computers that ran on punch-cards) to large enterprises and government clients. By the 1930s, CTR had been refashioned as IBM, and its tabulating machines were integral to the U.S. government’s effort to administer its newly-created Social Security program.
Watson helmed IBM until 1952, when his son Thomas J. Watson, Jr. took over. This was one of the rare examples of successful dynastic corporate leadership, as Watson, Jr. pushed IBM into digital computing, eagerly cannibalizing the company’s flagship tabulating machine business with a technology that would soon dominate the rest of the century. IBM’s mainframe computers would be integral to the operations of thousands of businesses worldwide, and the revenue IBM derived from these computers made it one of the world’s largest and most powerful companies by the 1960s.
IBM was also integral to the development of the U.S. space program, as its technology helped monitor and control most of NASA’s missions, from Mercury onwards. As the world’s largest and most advanced technology company for much of the 20th century, IBM was well-equipped to supply the world’s largest and most powerful government with cutting-edge systems, whether they happened to be punch-card driven tabulators or Apollo flight computers.
The shift from large, expensive, proprietary computing systems to smaller, more personal, and more configurable computers nearly undid IBM, even though it seemed set to be the dominant PC company at the outset of the PC era. Despite its early successes, IBM stumbled badly during the 1980s and 1990s, largely as a result of its failure to secure the hardware design of PCs the way it had with mainframes. By using off-the-shelf components, IBM ensured it would be swarmed by competition — and when that inevitably happened, the company had no choice but to shift gears.
Rometty’s origins at IBM
Ginni Rometty was with IBM through this period, having joined the company’s Detroit location as a systems analyst and engineer in 1981.
Rometty studied computer science at Northwestern at a time when few people, and even fewer women, were pursuing this academic pathway. This was before IBM even built its first PCs, so the machines available for aspiring computer science grads were massive, bulky mainframes that ran on punch-cards, not too far removed from the tabulating machines on which IBM had built its fortunes decades earlier. Her degree, paid for with a scholarship from General Motors, led to a position at the automaker in 1979, which she held for two years before moving on to the company where she’d work for the rest of her career.
While she has a strong background in technology from her college education and early career, Rometty quickly found her footing at IBM as a sales and marketing executive. Joining IBM’s Consulting Group in 1991, Rometty was part of the changing of the guard as IBM shifted from a hardware approach to a focus on software and services. Her breakout role with the company came in 2002, when she spearheaded the buyout and integration of consulting firm PricewaterhouseCoopers while serving as general manager of IBM’s global services division. The $3.5 billion acquisition was at the time the largest buyout of a professional services company in history, and her work on this deal earned her a place on TIME’s Global Business Influential list for 2002.
Rometty’s ascension in the 1990s coincided with IBM’s reinvention of itself as a software-and-services-focused technology powerhouse, led by Louis Gerstner. Under Gerstner, IBM sold off most of its hardware manufacturing lines. This culminated in 2005, when Gerstner’s successor Sam Palmisano sold IBM’s once-dominant PC business to Lenovo. Palmisano served as Rometty’s mentor while she worked as one of his most trusted lieutenants, and she later credited him with having taught her to “never stop reinventing IBM.”
Leading IBM into the cloud
By the time Rometty became CEO in 2012, IBM’s hardware lines were primarily focused on server sales. This segment, which represented roughly a fifth of IBM’s revenue in 2010, now accounts for roughly 10 percent of its revenue. The company’s technology and cloud services segment has grown from contributing a quarter of IBM’s revenue to contributing half of its revenue over the same time frame. This transition reflects Rometty’s efforts to drive IBM into cloud computing, a form of professional pushback against Palmisano’s dismissals of the technology toward the end of his tenure.
Rometty was also integral in turning IBM’s Watson artificial intelligence platform into a commercial product after its viral success on Jeopardy! In 2011. This was a natural extension of her drive to build out IBM’s data analytics business, which is now a major component of its cloud service offerings.
Rometty’s approach to AI resembles that of another CEO in our cloud series. Like Oracle CEO Mark Hurd, she’s focused her company and its messaging on promoting AI as an integrated component of wide-ranging cloud software suites. At this year’s IBM Think conference, she noted that “only 20 percent of the data we have is searchable and being used productively… the other 80 percent is held inside companies, generally not being used. IBM is now building out IBM Services Platform for Watson so that [we] can start to offer AI tooling as a layer embedded into services for every use case.”
Rometty is also one of the biggest “big tech” proponents of blockchain technology, a breakthrough originally designed to facilitate the creation of bitcoins. In many ways, blockchain technology is one of the ultimate cloud applications, as it operates without any central servers, relying instead on the interaction of thousands or millions of computers distributed across the world. She’s noted the potential for blockchain applications to revolutionize transactions and transport, among other industries, at recent conferences. IBM has become a significant blockchain company in its own right as well, having recently signed an agreement with the Australian government to deploy blockchain technology in various Australian agencies.
Ginni Rometty has pledged to “never stop reinventing IBM.” Since 2012, she’s taken that pledge to heart and has pushed Big Blue firmly into the cloud and into cloud technologies most of her peers have scarcely touched yet. This is the reinvention that created the IBM of today. What shape will IBM’s persistent reinvention take tomorrow? That’s a question you’d have to ask its CEO.
There are many CEOs who claim to be “cloud computing” executives, but only a few can claim to have transformed tech companies of earlier eras into leaders of this new paradigm. Rometty is one, and we’ve also written about the roles Oracle CEO Mark Hurd and Microsoft CEO Satya Nadella have played in their companies’ cloud-focused rebounds. Can you think of any others who have changed huge companies in such a major way? Are there any huge tech companies today who could sorely use a CEO who understands the importance of cloud computing?