Understanding IBM's On Demand Transformation Strategy, Part 1

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Almost a year ago, IBM launched a new initiative to communicate its business strategy to customers and Business Partners. Called e-Business On Demand, the strategy was widely perceived as an IT plan to virtualize IT, turning the availability of IT products and services into utility-like "pay-as-you-use" functions.

On the iSeries platform, the introduction and extension of "capacity on demand" models seemed an appropriate representative of this basic technology. Additionally, many customers misinterpreted IBM's message to mean that it was backing ASP-type services or that On Demand was a marketing push for IBM's Global Services offerings.

However, digging deeper into IBM's initiative--following the footprints of senior IBM executives as they make their rounds to larger corporations and government leaders--reveals something much more significant. The On Demand strategy is not only a model for hardware and software services, but a model for the complete transformation of business processes and corporate culture.

What is this business transformation process? How does it compare to the transformations businesses have experienced in the past? Where does the transformation touch IT? Should IT embrace this initiative or feel threatened by it?

These are the questions that this column will address over the next few weeks, starting with this potted history of IBM's past business planning initiatives.

Why are we taking the space to examine the On Demand strategy? If IT is to succeed in reinventing itself over the next five to ten years, it must understand IBM's On Demand computing strategy and be able to communicate the larger transformative vision to its senior management. Without such analysis, IT will fail to embrace its next big challenge and rise again as a strategic partner in the corporate ranks.

Automation and IBM's Strategic Planning Process

IBM business strategy initiatives are nothing new. In the 1970s and 1980s, IBM helped organizations automate their accounting and manufacturing processes by presenting the "vision" of computerized information systems as the "single strategic advantage" that would give a business a significant edge over its competition. In many respects, we're still operating our IT shops as an outcome of IBM's success with these business strategy initiatives.

Starting in the early 1970s, IBM began communicating its vision for information automation by creating special seminars for individual corporations to help them undergo a "strategic planning process." These strategy sessions had little to do with computer technology per se, but they had everything to do with opening the channels of communication within an organization so that internal business processes could be identified. At the time, the operating structures of companies were still fashioned along the lines of a post-WW II military hierarchy, but the new business demands companies experienced were creating significant pressures to grow more rapidly and compete more economically. Information automation was considered the key. But how do companies automate information? That was the challenge facing business leaders.

In response, IBM business planning initiatives brought together senior leaders within a single company to identify each organization's mission, goals, and obstacles. IBM provided a venue and a moderator. The executives spent days--sometimes weeks--hammering out their organizational information flow. As a group of meetings, IBM called these seminars "The Strategic Planning Process."

Simple But Effective Marketing

As simple and basic as such meetings might sound today, these sessions were often extremely challenging and transforming for the participating organizations: For the first time, every leader within the organization was empowered to contribute to a roadmap for a concerted company strategy. In the process, the organization's measurements for success were clearly identified, silos of authority were openly acknowledged, and internal and external obstacles were pinpointed. All the while, IBM's technical systems engineers were in the background, ready to answer feasibility questions about the prospects for automating particular processes.

Critics were quick to point out that Strategic Planning Process meetings rarely resolved the larger, nagging issues that businesses faced. However, the meetings did provide IBM and the client companies with opportunities to team together, spurring the investment in company information automation. The results were quite often company-wide commitments to information technology, with IBM leading the charge with the blessings of the senior management. As a marketing strategy, IBM's play was ingenious and very powerful: It gave the business executives a planning methodology for business success that was customized, realistic, and politically sensitive to the players involved. It also sold a lot of IBM boxes.

(By the way, it was in such a climate that the idea of a "strategic computing platform" was spawned--a centralized machine that could handle a wide variety of business computing demands, which in turn would be isolated from technological obsolescence. This design point--certainly key to our love of the architecture we now call the iSeries--was really a response to corporate concerns about the rapid change in technology. The myth of the AS/400 as that strategic platform persisted within IBM until Lou Gerstner shot it down during IBM's reorganization.)

The Rise of IS

IBM pushed information systems (IS) management as the "strategic advantage" for a company's competitive and economic success well into the 1980s. And indeed, automation and information systems did in fact revolutionize business processes. Those companies that did not automate could not grow, could not economically compete, and eventually simply went out of business. IS became a strategic management partner in the viability and profitability of a company's future, and that future never looked brighter.

But by the 1990s, information automation alone could no longer be considered strategic to a company's success; instead, information automation had become the status quo for simply staying in business. Fortunately for computer jocks, however, two new technologies snuck in for corporate attention--technologies that were too economically powerful for companies to resist. The first was the client/server architecture model, and the second was the proliferation of the Internet protocol.

The Client/Server Sideshow

Companies began to hear that there was a strategic economic advantage in the client/server model of computing: Client/server broke down the silo of authority that had become known as IS. It brought in low-cost, high-function personal computers with powerful, inexpensive packaged software tools so that users no longer had to wait for the IS department to provide them with automation tools. Companies claimed that they gained significant departmental productivity advantages by buying inexpensive PCs and teaching employees how to do their jobs with the bundled software, all without bothering the IS department. As this productivity trend continued, IS personnel began linking the PCs together into file-serving networks that allowed workgroups of employees to become increasingly productive.

Meanwhile, mission-critical applications remained within the IS domain. But departmental productivity became more important as companies downsized, and the client/server model propelled the rise of newly defined "IT" departments. Soon, the importance of IT departmental productivity superceded the strategic advantage of IS. Over time, the moniker of "strategic importance" was piecemeal, transferred to the IT departments, until--by the late 1990s--the realm of IT embraced both departmental networks and legacy mission-critical IS functions.

The Internet Road Show

In a similar manner, the technology of the Internet spurred the focus on overall corporate productivity by enabling company-to-company transactions. Though the Internet--at its core--is no more than a standard communications protocol, at the height of its promotion by technology vendors, it represented a new productivity frontier. It offered many unexplored pathways to greater profits through things like standardized messaging protocols (e.g., email) and financial transactions (e.g., e-commerce.) And it opened the door for a truly global economic marketplace.

The Internet helped to maintain IT's moniker of "strategic importance," but by the late 1990s, executives began to see that Internet technology by itself could not significantly increase the company's bottom line. To do that required a significant investment in reengineering corporate processes to take advantage of automated supply chains and customer relationships. And, more importantly, in the new global economy--with so many new business challenges, partners, and customers--business reengineering could not be successfully implemented by IT on its own.

So, for the brief period of five years, client/server and Internet technologies were indeed strategic technologies for businesses and governments, helping IT (and IS before it) to sustain the mantle of strategic importance to the organization.

But that time has now passed, and the economic downturn within the IT industry during the last four years clearly indicates that companies no longer see IT as strategic to their mission success. Today, IT is considered to be an infrastructural "expense," like raw materials, labor, and basic plant utilities. This is, perhaps, the primary reason that companies today are so enamored with the concept of outsourcing IT: It's an expenditure that must be controlled, minimized, and--if at all possible--eliminated.

Strategic Death and Consolidation

This death of the "strategic IT department" within corporate America is where we are today. It has put programmers out of work, lowered wages, and sent many IT vendors into recession. At the same time, corporations have become focused upon the results of the automation effort: the global marketplace itself. The global marketplace is the single greatest challenge organizations are facing today. It impacts the supply chain, the customer relationship agreements, and the entire manufacturing and distribution tiers. It impacts IT by placing tremendous pressure on organizations to consolidate operations and services to the cheapest source--and that includes outsourcing IT services wherever possible. At the same time, IT is struggling to scale down, modularize, and make economically viable the large mission-critical legacy systems that IS once built. Every system IT and IS has built in the last 10 years is now up for reengineering, but the costs of doing so are staggering, and businesses and governments are unclear where to begin.

On Demand: IBM's Pathway to the Future

As technologists, we generally want to fix what's broken or build what needs to be built. We have a tendency to ignore the larger business challenges that the management of our organizations is facing.

If we grew up during the heady days of IS, we been taught to believe that building the best information system was the primary goal of the IS department. If we grew up during the beefy days of IT, we've been hounded to believe that corporate productivity is the goal by which we'll be measured. As a group, business-wise, we're in a state of denial.

Today, in our forums, in our periodicals, in our seminars, we hear the same lament again and again: "Why doesn't management just implement this one system or technology?" Maybe it's WebSphere. Maybe it's .NET. Regardless, we all chime in, "Don't they see the advantages it will bring to us? If only they would listen!"

But management seems deaf to our pleas. It's as though they've ascended into a corporate mist high up Mount Olympus and no longer understand the challenges that we in IS and IT are facing.

However, the truth may be much more frightening than we realize. The kinds of challenges facing businesses, corporations, and governments today are truly unprecedented. Small businesses are suddenly--by dint of technological advancement and geopolitical agreements--faced with unparalleled competition from invisible entities in distant countries where operating costs are lower and underlying business technologies are anonymous. Corporations are faced with new requirements for collaboration in their supply chains and in their customer relationship agreements, requirements that often challenge the very nature of the products and services that they have traditionally offered. Governments too are struggling with incredible requirements to provide mandated services while simultaneously battling staggering budget deficits.

Indeed, those organizations that have survived the wave of 20th century automation to arrive intact in the 21st century have truly ascended a mountain. But what their executives are seeing is a wholly changed vista of global competition and collaboration, most of which is shrouded with a mist of unknown requirements.

The Dyslexic Vision of e-Business

For its part, IBM bridged the millennium by touting the future as a world connected through e-business. However, as IBM began pushing its solutions into its customer base, it too began to see the significantly changed terrain of the global marketplace.

How could the organizations that represented IBM's customer base--in both the private sector and the public sector--function successfully in this new global computing environment? For instance, what does such an environment mean to legacy applications? Or more importantly, why do companies need to transform those legacy applications at all? What about the individual departments within an organization? Do companies really need a procurement department if everyone can find the lowest price online? And what about employee resources? How do you treat an employee who is virtually connected to the organization? What about that employee's requirements to collaborate? Or how about collaboration in general? Within government, how do you define collaboration between separate social service agencies in separate municipalities? What about the security of information?

In a world in which so many borders have been re-drawn by technology, how will individual organizations, departments within organizations, or employees within departments find the most economical means to productively interact? How does one even measure such productivity? What does this new global computing environment mean to the roles that individuals and organizations have played in the past? How do you define what these roles should be?

The Need for Business Transformation

The closer IBM looked, the more it realized that e-business was a great vision, but it was a vision that had a lot of dyslexic ramifications. More importantly, IBM found out that leaders in both industry and government were similarly challenged by the new nature of an interconnected world.

In its business study groups, in its customer research, and in its own experience as a global business, IBM came to believe that the traditional silos within most organizations could not successfully transition to the new global environment without significant business process reengineering. And, unlike the business reengineering that occurred in the late 1980s, the goal was not simple productivity. Instead, it was virtual collaboration.

To succeed, organizations would have to bridge the traditional islands of automation that supported departmental productivity in the past. Common processes and procedures would have to be standardized.

But the greatest challenge, from IBM's perspective, will be not the technical issues but the cultural issues within the organizations themselves. For example, how do you communicate a new vision of an interconnected world and translate that vision into a step-by-step process by which these public and private entities can transform themselves? Most importantly, how do organizations succeed in a transformation to this new environment in an economical fashion that makes good business sense?

These were the questions that IBM was asking last year at this time. And after significant wrangling and study, the On Demand business transformation plan was born. IBM touts On Demand as a "journey" that organizations have already begun, with measurable milestones, significant cost savings, and definable advantages. And, according to IBM, it's a journey that others have followed successfully in the past, and it points to its own corporate reinvention as a success story worth telling.

In the next installment of this story, I'll examine the On Demand road map, pinpointing where IT is today and what lies ahead in our consolidation efforts.

Thomas M. Stockwell is Editor in Chief of MC Press, LP

Thomas Stockwell

Thomas M. Stockwell is an independent IT analyst and writer. He is the former Editor in Chief of MC Press Online and Midrange Computing magazine and has over 20 years of experience as a programmer, systems engineer, IT director, industry analyst, author, speaker, consultant, and editor.  


Tom works from his home in the Napa Valley in California. He can be reached at





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    There’s no shortage of actions you could take, but what tactics will actually deliver the results you need? And how can you find a security strategy that fits your budget and time constraints?
    Join top IBM i security expert Robin Tatam as he outlines the five fastest and most impactful changes you can make to strengthen IBM i security this year.
    Your system didn’t become unsecure overnight and you won’t be able to turn it around overnight either. But quick wins are possible with IBM i security, and Robin Tatam will show you how to achieve them.

  • How to Meet the Newest Encryption Requirements on IBM i

    SB PowerTech WC GenericA growing number of compliance mandates require sensitive data to be encrypted. But what kind of encryption solution will satisfy an auditor and how can you implement encryption on IBM i? Watch this on-demand webinar to find out how to meet today’s most common encryption requirements on IBM i. You’ll also learn:

    • Why disk encryption isn’t enough
    • What sets strong encryption apart from other solutions
    • Important considerations before implementing encryption



  • Security Bulletin: Malware Infection Discovered on IBM i Server!

    SB PowerTech WC GenericMalicious programs can bring entire businesses to their knees—and IBM i shops are not immune. It’s critical to grasp the true impact malware can have on IBM i and the network that connects to it. Attend this webinar to gain a thorough understanding of the relationships between:

    • Viruses, native objects, and the integrated file system (IFS)
    • Power Systems and Windows-based viruses and malware
    • PC-based anti-virus scanning versus native IBM i scanning

    There are a number of ways you can minimize your exposure to viruses. IBM i security expert Sandi Moore explains the facts, including how to ensure you're fully protected and compliant with regulations such as PCI.



  • Fight Cyber Threats with IBM i Encryption

    SB PowerTech WC GenericCyber attacks often target mission-critical servers, and those attack strategies are constantly changing. To stay on top of these threats, your cybersecurity strategies must evolve, too. In this session, IBM i security expert Robin Tatam provides a quick recap of IBM i security basics and guides you through some advanced cybersecurity techniques that can help you take data protection to the next level. Robin will cover:

    • Reducing the risk posed by special authorities
    • Establishing object-level security
    • Overseeing user actions and data access




  • 10 Practical IBM i Security Tips for Surviving Covid-19 and Working From Home

    SB PowerTech WC GenericNow that many organizations have moved to a work from home model, security concerns have risen.

    During this session Carol Woodbury will discuss the issues that the world is currently seeing such as increased malware attacks and then provide practical actions you can take to both monitor and protect your IBM i during this challenging time.


  • How to Transfer IBM i Data to Microsoft Excel

    SB_HelpSystems_WC_Generic3 easy ways to get IBM i data into Excel every time
    There’s an easy, more reliable way to import your IBM i data to Excel? It’s called Sequel. During this webinar, our data access experts demonstrate how you can simplify the process of getting data from multiple sources—including Db2 for i—into Excel. Watch to learn how to:

    • Download your IBM i data to Excel in a single step
    • Deliver data to business users in Excel via email or a scheduled job
    • Access IBM i data directly using the Excel add-in in Sequel

    Make 2020 the year you finally see your data clearly, quickly, and securely. Start by giving business users the ability to access crucial business data from IBM i the way they want it—in Microsoft Excel.



  • HA Alternatives: MIMIX Is Not Your Only Option on IBM i

    SB_HelpSystems_WC_GenericIn this recorded webinar, our experts introduce you to the new HA transition technology available with our Robot HA software. You’ll learn how to:

    • Transition your rules from MIMIX (if you’re happy with them)
    • Simplify your day-to-day activities around high availability
    • Gain back time in your work week
    • Make your CEO happy about reducing IT costs

    Don’t stick with a legacy high availability solution that makes you uncomfortable when transitioning to something better can be simple, safe, and cost-effective.



  • Node Webinar Series Pt. 1: The World of Node.js on IBM i

    SB Profound WC GenericHave you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application.
    Part 1 will teach you what Node.js is, why it's a great option for IBM i shops, and how to take advantage of the ecosystem surrounding Node.
    In addition to background information, our Director of Product Development Scott Klement will demonstrate applications that take advantage of the Node Package Manager (npm).
    Watch Now.

  • The Biggest Mistakes in IBM i Security

    SB Profound WC Generic The Biggest Mistakes in IBM i Security
    Here’s the harsh reality: cybersecurity pros have to get their jobs right every single day, while an attacker only has to succeed once to do incredible damage.
    Whether that’s thousands of exposed records, millions of dollars in fines and legal fees, or diminished share value, it’s easy to judge organizations that fall victim. IBM i enjoys an enviable reputation for security, but no system is impervious to mistakes.
    Join this webinar to learn about the biggest errors made when securing a Power Systems server.
    This knowledge is critical for ensuring integrity of your application data and preventing you from becoming the next Equifax. It’s also essential for complying with all formal regulations, including SOX, PCI, GDPR, and HIPAA
    Watch Now.

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  • Backup and Recovery on IBM i: Your Strategy for the Unexpected

    SB HelpSystems SC 5413Robot automates the routine tasks of iSeries backup and recovery, saving you time and money and making the process safer and more reliable. Automate your backups with the Robot Backup and Recovery Solution. Key features include:
    - Simplified backup procedures
    - Easy data encryption
    - Save media management
    - Guided restoration
    - Seamless product integration
    Make sure your data survives when catastrophe hits. Try the Robot Backup and Recovery Solution FREE for 30 days.

  • Manage IBM i Messages by Exception with Robot

    SB HelpSystems SC 5413Managing messages on your IBM i can be more than a full-time job if you have to do it manually. How can you be sure you won’t miss important system events?
    Automate your message center with the Robot Message Management Solution. Key features include:
    - Automated message management
    - Tailored notifications and automatic escalation
    - System-wide control of your IBM i partitions
    - Two-way system notifications from your mobile device
    - Seamless product integration
    Try the Robot Message Management Solution FREE for 30 days.

  • Easiest Way to Save Money? Stop Printing IBM i Reports

    SB HelpSystems SC 5413Robot automates report bursting, distribution, bundling, and archiving, and offers secure, selective online report viewing.
    Manage your reports with the Robot Report Management Solution. Key features include:

    - Automated report distribution
    - View online without delay
    - Browser interface to make notes
    - Custom retention capabilities
    - Seamless product integration
    Rerun another report? Never again. Try the Robot Report Management Solution FREE for 30 days.

  • Hassle-Free IBM i Operations around the Clock

    SB HelpSystems SC 5413For over 30 years, Robot has been a leader in systems management for IBM i.
    Manage your job schedule with the Robot Job Scheduling Solution. Key features include:
    - Automated batch, interactive, and cross-platform scheduling
    - Event-driven dependency processing
    - Centralized monitoring and reporting
    - Audit log and ready-to-use reports
    - Seamless product integration
    Scale your software, not your staff. Try the Robot Job Scheduling Solution FREE for 30 days.

  • ACO MONITOR Manages your IBM i 24/7 and Notifies You When Your IBM i Needs Assistance!

    SB DDL Systems 5429More than a paging system - ACO MONITOR is a complete systems management solution for your Power Systems running IBM i. ACO MONITOR manages your Power System 24/7, uses advanced technology (like two-way messaging) to notify on-duty support personnel, and responds to complex problems before they reach critical status.

    ACO MONITOR is proven technology and is capable of processing thousands of mission-critical events daily. The software is pre-configured, easy to install, scalable, and greatly improves data center efficiency.