On February 8, MC Press Editor in Chief Thomas M. Stockwell conducted a 45-minute interview with IBM's new marketing manager for the System i5, Elaine Lennox. We polled our editorial staff to put before Ms. Lennox the most compelling questions about the future marketing of the System i5 in the coming year. Ms. Lennox had been in the position for just a few weeks, but already her agenda is full to overflowing.
The Re-branding of the iSeries
TMS: The re-branding of the iSeries i5 to the System i5 is the latest naming turn of events in IBM's marketing strategy for the i5. The question many are asking is, is there a psychological element in using the "system" nomenclature?" Is IBM trying to harken back to the days of the System 36 and System 38 and other past IBM systems?
EL: It's not just about the iSeries i5, but about the entire IBM Systems Group. There is now the System p5 and the System z5 within the IBM Systems Group. We wanted to send a message—both internally and externally—that this is not just about servers. It's not just about the box! It's about the whole experience that the customer has. And when we talk about systems, we're talking about the software, the manageability, the storage, the actual server itself, the virtualization technologies—essentially the whole experience of your IT department when it owns that box and everything that goes around it. So it was a conscious move within the IBM Systems Group to really think in this way about all of our products.
Heritage! Not Legacy!
EL: Now what's interesting about the IBM iSeries is its heritage of thinking about the system—and not just about the server. That is our heritage, and that's been our story for several decades now. So it's not so obvious that we had to change our name because of this larger move by IBM Systems Group. But given that the whole group was going to move to this "systems" message, it would have been a bit strange if iSeries remained as iSeries and everyone else had taken on the System name. Especially when we are the best example of an integrated system that IBM currently sells.
So that was the real background of this decision: creating a message both internally within IBM and externally outside in the larger world that IBM is taking a holistic view of what customers need and want in IT today.
IT Refocusing on Information Systems: The i5 Sweet Spot
TMS: This is interesting, because we too are seeing a historic shift in how IT is looking at information systems. During the 1990s, the focus of IT was on the technology of the server, almost to the exclusion of the information systems that ran upon them. Today, IT management seems to have made an about-face and is starting to pay attention to the overall operation of the information system in its purchasing decisions.
EL: One of the things that [IBM System i5 General Manager] Mark Shearer says—and which I agree with—is that the market is shifting back over the sweet spot where the iSeries traditionally plays. And we are starting to see customers coming back to the questions of how the entire information system works, how it will work in the IT environment, and how easy it will be to live with all the elements of the system once they are installed.
And when you look at the budgets of IT today, I think it's about 25% of the budget is the actual cost of the things you buy for your system, while 75% is devoted to what you have to do after you buy the system to keep it working. So when you look at it from a client's perspective, they are asking very different questions in today's environment. It's not about the next ten dollars, or twenty dollars, or even a hundred dollars on the price of the box. It's about the 75% of the money that they have to spend to take care of the thing once they have purchased it.
The Success Story of the i5 in 2005
TMS: What happened to sales in the last quarter of 2005? iSeries i5—now called System i5—had really strong sales performance in the beginning of the year based upon the new marketing messages and the extra added push of marketing investment that IBM made. But then in the last quarter of the year, the energy from customers seemed to dissipate. Do you have any insight into what happened structurally to sales in the fourth quarter of 2005?
EL: I don't think there was anything structurally that happened in the business. We knew we had a product announcement coming in the first quarter of 2006, and there's always a management issue about how to go about managing customer and client expectations in the quarter preceding a launch. And sales force expectations as well.
But if you look at the whole year, we're really quite pleased with the results. We had just a phenomenally strong year, and you know we did a lot of things to re-energize our ecosystem and to get new ISVs onto the platform.
So when I look back on last year, I see it as the pivotal year that we started to turn around the perception of this platform in the market. We went back to growth: We grew the whole year. And one really nice thing has been the opportunity to take this job because a lot of the foundation had been set last year. We're not starting with a blank slate. We've got hundreds of new ISVs on the platform. We've made progress in the area of platform awareness. We've got to keep going, sure. But we've made progress in that awareness. And we're starting to turn around within IBM! So I guess the way I see it is that the fourth quarter was not as ideal as we would have liked, but it was a function of the fact that we had a launch coming up. And, consequently, I'm feeling really good about the business going forward.
Awareness: Getting the Message to New Customers
TMS: There is a lot of interest within the customer base about the new V5R4 operating system and the Power+ hardware within the box. How is IBM going to translate this excitement to new customers who are less familiar with the technical advances and nomenclature of the i5? This is clearly a task in part to be delivered by IBM business partners, but doesn't it also need increased brand name support in the media? What can our readers expect to see in your ongoing campaigns aimed at garnering new customers?
EL: You are touching upon something that is very near and dear to my heart. And I think this is part of why I was chosen for this position. We are absolutely in the business of acquiring new customers. I think there may have been some level of confusion about that in the marketplace in the past, but we're not confused about that at all. In fact, we've gone as far as structuring our sales team this year to give them a specific dedicated set of people who are just focused on acquiring new customers on the platform. So we've got salespeople who are focused on installed base, our very loyal customers, to make sure they get the right upgrades, etc. But we also have a set of people who do nothing every day but talk to new clients that don't have the platform. So it's definitely a focus for us, and as you say, you know you have to have that awareness. You don't want that salesperson turning up at the customer's site and hearing "i-what system? I've never heard of you guys!" Instead, you want them to turn up and hear "Oh yeah! I think I heard about that! I don't totally understand it, but tell me more!"
You can't actually sell someone in an advertisement. All you can do is make them aware that you've got a unique value proposition. And so if you look at what we're going to do in 2006, I can say with confidence that we will be continuing the advertising around our unique value proposition. And one of our focuses will be to become even more differentiated from our other systems, and we explain even more compellingly how you don't need as many people running the system and that your life will be even more simple if you choose this platform versus other options.
Reaching the Intel Generation
EL: I've already got my marketing team working on that: How do we get that level of differentiation, or how do we show how the System i5 is special in the advertising? How do we appeal to what I call the "Intel generation?" I think there's a whole generation—my generation—that grew up in the distributed client-server era that believe that's the de facto way you think about computing.
And so we need to help that generation see that there is a choice here: to choose a simpler life! That you can put these things on one platform, that you can run multiple operating systems, that you could have a lot fewer people looking after stuff—babysitting it—and have your IT people instead focusing on all that new functionality that they could never get around to implementing because your IT people are too busy looking after the old stuff.
So I know that value proposition is very compelling, and we need to keep getting the message out about it.
Reinvigorating i5 Educational Awareness
TMS: This leads us to the next question about education. One of the problems that we see within academic institutions—where students obtain their first real exposure to larger information systems—is a paring down of educational opportunities to learn about different computing systems—that is, computing systems that are not UNIX or Windows. At the same time, IBM does have programs, such as Partners in Education [PIE] to foster the educational exposure to IBM systems. My question is, will System i5 marketing be developing campaigns to better increase the awareness of the i5 within universities and colleges in this country?
EL: I actually have someone on my team—actually a team of people—and in my budget who are focused on supporting these kinds of initiatives. It's what we call the i5 Academic Initiative. So we have within my market budget a specific set of funding against updating the curriculum within the universities that have chosen to partner with us.
We have several hundred universities around the world that have signed up to be a part of the Academic Initiative with us. And what we do for them is that we actually provide them with equipment: They get virtual access to the System i5 machines so they can program directly on the machine, and we provide them with a curriculum that goes through a whole range of functionality. It does teach RPG skills because we still have a big "custom base" of clients that have custom RPG applications and who are looking for skills to keep upgrading those applications. But we teach both RPG and newer stuff: We teach Java and WebSphere on the platform and how to use Lotus on collaboration applications. We're actually in the middle of rolling out another update of that curriculum this year to those colleges that will keep them up-to-date as we add new technologies.
For example, as we add SOA—which is one of the things we recently announced—it is getting added to the curriculum, which is distributed to these universities around the world. We're actually very excited about this. As I say, we have several hundred universities that have already signed up with us to participate in this initiative.
Reinforcing the Install Base
TMS: How are you planning to increase marketing to your current install base? What we often see is that when there is a big announcement for new features within an IBM software product, very little attention is paid to the System i5. It's as though IBM software marketing is out of sync with the marketing of i5 to the installed base. Are there plans to better synchronize IBM software marketing with System i5 marketing?
EL: This is a very good question. We do have a very good partnership with the Lotus brand and the WebSphere brand in particular. Both of them have integrated products which run on the platform, and of course there is DB2, which is integrated right in with the operating system itself.
It's an interesting question: What can we do to up the volume and increase the strength of marketing of the software with the hardware to the current install base?
The collaboration play around the Lotus products is definitely a key focus for us. You're going to see a number of new functionalities, new applications, and new versions coming from the Lotus group that you'll see us co-launch as that functionality is released.
In terms of the install base, I think it's a good point. I think we are blessed with such a passionate install base that actually cares about what we do with the system and the platform. Not every product line or every organization gets that benefit. And we do have specific marketing members who are focused on the existing install base. So we'd be interested in ways in which you and your readers feel we can better market to their existing needs.
[Editor's Note: If you'd like to share your thoughts, please do so in the associated forum, which you'll find at the end of this article.]
Wanted: System i5 Storytellers
EL: Also, one of the things we want to implement this year is some way to enable the existing install base to tell their story of the System i5 to the rest of the market. That install base is, for the most part, very happy and very passionate about what they have with the System i5.
But we haven't broken through the barrier yet on how to translate that satisfaction and passion to other people in the mainstream IT market who are not familiar with the product. How do you start this conversation in the industry at large about these issues of IT complexity or IT simplicity? Issues like "How many people does it take to manage a platform?" and "Is there a better way?" That's a conversation that ought to be going on in the mainstream, and not just in our install base.
Marketing Futures for BPs and ISVs
EL: They can expect to see the same focus on how they can be profitable selling this platform. That was a specific thing that we did last year, and it included incentives. And it included how you make certain that the partners can afford to sell this platform. They can expect us to focus increasingly on the System i5 marketing.
A lot of partners have reached out to me to say, "Please tell me you're going to keep on with the incentives! Please tell me you're going to keep going with the awareness message! Keep telling them about the why of this platform! Why System i5!" They can definitely expect us to continue that level of awareness and basic demand generation, which they have told us is extremely important for them.
Beyond that, it's a unique situation in which we're so codependent with the partners. These partners have industry expertise that they bring to the client.
New Innovative ISVs and BPs
EL: But you're also going to see us bring on new and innovative partners and innovative ISVs onto the platform, because that also increases our strength with current customers and current partners. Because it shows new potential workloads that the platform can perform and increase the value proposition of the system. So you'll see new synergistic relationships with new ISVs that we're coupling with the long-term committed partners who have the expertise within an industry and with the system.
TMS: Do you have specific areas or industries that you are going to be focusing on to attract new ISVs? How does IBM make those determinations?
EL: That's a good question. One way is that we look at the particular need within the industry for a particular application. Right now, we have great strengths in manufacturing and distribution, retailing, and banking, as examples. But we are looking for new ISVs that can bring net new functionality to those areas. So these ISVs may already have a core application or a solution, but we are asking, "Which ones are bringing net new thought leadership and innovation?" Innovation is the best word for it. We look for ISVs that are particularly innovative in the spaces where we are playing.
But you'll also see us increasing our work with tools vendors—something we began last year—that can help ISVs on the platform and can add functionality to existing applications. And you'll see us working on other areas, such as infrastructure areas. We're really looking at the areas where customers want to see innovation and new functionality, and then we drill down into those areas.
Excitement and Challenges of the Job
EL: What's exciting to me is that we have momentum!
We have new innovative ISVs on the platform, which means we have a value proposition which is unique and special. There are few places you'd rather start on a job than knowing that you have something unique and special and that your challenge is to tell the world about it. That's a lot better than having a challenge that says you have something that isn't so unique and special [laughs]. It's a nice place to start, knowing that your problem is really helping people understand what you can do, instead of telling them that what they're doing is the wrong thing.
For example, take the new Accelerator that was announced with V5R4. With this added functionality, we can tell people they can put new, innovative Java applications on this platform in an affordable manner. That's really interesting and exciting for me, because it opens up a whole new range of ISVs that we can bring onto the platform on the low end for the smaller customers. And these customers don't have to invest up front in everything they need; they can add that capability over time. So those kinds of things—things that I call the base innovation elements of the platform—are very exciting to me.
TMS: And the challenge?
EL: How you get the word out to the world about this platform! What's unique about it! What makes the System i5 the most innovative platform in the industry!
Thomas M. Stockwell is Editor in Chief of MC Press, LP.