IBM Services Chief Flexes Internet Muscle

Last week when IBM Corp. announced new software to make its Notes groupware product more "Internet friendly," no IBM executive expressed greater excitement than Dennie Welsh, general manager of IBM Global Services and chairman of Integrated Systems Solutions Corp. While the explosive rise of the Internet has caused some to wonder whether Notes' momentum will be undercut by cheaper Internet products, IBM's top services executive is reminding users not to forget the synergies that can be gained when a product has a $20 billion global integrator behind it. In an exclusive interview, Welsh describes how the Internet is now at the center of IBM's Global Services. This is the first of a two-part interview.

WT: Can you describe what impact the Lotus acquisition has had on IBM Global Services?

WELSH: The whole acquisition has been very profound for us. In the last three months, there were more Notes sold than in the whole previous history of the product. So, we are seeing tremendous growth in the marketplace and we are making Notes totally a network computing offering. Notes is a system that performs corroborative computing, and this means both Internet and intranet. With the same software and same [Internet Protocol] interface, it will now be part of an Internet environment. So, you can use it with your own employees within the company, and through a [secure] interface ,you can go to your customers or vendors with the same software and database access.

WT: What role is IBM Global Services playing in the modification of Notes?

WELSH: We are a fully integrated team and I think that's the new IBM. We're an integrator and servicer of the Notes capability, therefore we are a requirement generator for Notes. We team with Lotus, we have strong integrator requirements and [we] also have a large involvement with integrating Notes in the field. The Lotus team has supplied us with lots of knowledge on how some of the consumer interfaces work and we have been helping them with business interfaces and complex communication protocols. It has been a complementary relationship.

WT: What modifications are being made to the IBM Global Network to accommodate intranet and Internet standards?

WELSH: We started out as an SNA (systems network architecture) network because that was where most of the business was four years ago. We quickly started adding [Internet Protocol] capability to better serve the client/server environment. We have continued to invest heavily in the [Internet Protocol] environment. We had initially started strongly supporting ATM and we saw that frame relay and the whole router technology became an interim step to get to ATM because the telephone companies and others were extending their frame relay capability. We modified our network to focus on frame relay and router technology and therefore [we] could implement more economically and quicker around the world with Internet interfaces.

ATM is coming along and is as robust as it ever was. But because of cost and the increased Internet activity, the frame relay and router have been extended longer, so we will have ATM hubs and frame relay and router extensions into the remote workplace. Other changes we have made [relate] to Internet security such as firewalls. We have spent a lot of research and investment to help distinguish the Internet and intranet.

WT: Are you rethinking the role of the IBM Global Network?

WELSH: We first started thinking we should deploy a strong network backbone around the world. To implement that would be several billion dollars. For us to be successful and extend our reach, we should concentrate on the logical network, software, Internet protocol and network-enabled applications. We have developed alliances with the private and public telephone companies around the world, RBOCs [Regional Bell Operating Companies] and AT&ampT. We are getting from them voice capabilities on a preferred customer basis and in many cases we are selling them Internet access. Later, when they come up to speed and have greater Internet access capabilities, we will buy it back from them. So, today they are buying our product and services and sooner or later we'll switch and they will take our assets. It's a partnership and we have partners.

WT: Can you describe how these relationships have matured over the last six months?

WELSH: We changed our strategy 12 months ago. We began focusing on alliances rather than doing it ourselves. We have some strong alliances and [often] we outsource the desktop data processing applications for these phone companies. In turn, we buy the pipes and infrastructure from them and they are getting the logical network and applications from us. We're doing this as part of a partnership where we go to market together. [Often,] we are silent partners for their customers where we go through their marketing interface. In the case of Ameritech, it sells desktop management, WAN and LAN interfaces, and network-enabled applications. In many cases, all of the data center's desktop interfaces are supplied by IBM, but to the customer, it's Ameritech's. It's that relationship that we are going around the world with and that's combining what they do best with what we do best. The Internet is the protocol. We are riding on a lot of their existing networks, changing a lot of their digital networks and we're using a lot of our software and networks.

WT: How important has the telecommunications sector become since you changed your focus to services?

WELSH: Probably one of the most profound ways is that it was one of our 10 top industries as far as revenue. In only a year it has become one of our four top. There has been a profound change in our focus, but there has also been a profound change in how we invest. We see this opportunity, and we're extending that into media -- newspapers, on-line publishing capability and content hosting. We had the basic network and we were going to go for it on our own. Now we are doing alliances where we focus on the logical network and let our partners focus on the physical network.