Thread regarding IBM layoffs

@8sdc - Financial Engineering 😏

It would be interesting to know what IBM considers its priority technologies.

Was this statement by Dario Gill an attempt to mask over the problem? “ The decline reflects a strategy shift begun in 2020 to focus the IP portfolio on IBM’s core businesses and free engineers from the time-consuming patent process, said Dario Gil, head of IBM Research, in an interview. “We decided to no longer pursue numeric patent leadership, but remain an intellectual property powerhouse and continue to have one of the strongest portfolios in the world in our priority technologies.”

The patent leadership loss was part of a number of failures. I've left (and my pay has doubled, go figure) but I was in a few IDTs and an MI. This was the situation.

1: the move to "global IDTs" resulted in the patent system being broken for over a year. Reviews were backlogged for ages. People stopped submitting; no reviews were being done, etc. A lot of the patents are driven by groups of developers. Break the pipeline and those groups fall apart. Even once you've fixed the pipeline, those groups won't just magically re-form.

2: periodically stating that plenty of areas are Search-1 only is fine. But when they're often your core business areas - and you're pushing folk to innovate in shiny areas that don't drive revenue - your priorities are a little skewed.

2b: Search-3 patents basically stopped being a thing with IDTs advised to mark them as publishes. The bar was raised significantly for budget reasons. It became harder, and less rewarding, to get less fancy ideas through which in turn reduced return on time investment.

3: the patent rewards haven't been updated in basically forever. $750 ain't what it used to be. (See also: salaries)

4: no one cares. The patent system isn't actually tied into development properly. Folks who engage are typically doing so because they need brownie points for STSM and DE requirements rather than wanting to do it to protect IP or develop it.

5: to a lesser degree, focusing patents on business value areas has been happening in the last year or so. I never really had any of the BS ones - but I know a few folks who just farmed it for income.

6: everyone's having to "do more with less" and that's cutting into time to develop IP, write disclosures or review them. Before I left, I basically stopped doing personal development education as there was no slack whatsoever in schedules. That /can/ work for a single code delivery - but having it more or less continual for a year fundamentally sabotages your workforce's career development.

When I left, the IP org was running around like headless chickens trying to figure out why our submission rate was way down. One problem is that the answers aren't very executive-friendly: they fundamentally broke the system.

Now they've lost the crown, I can only see the IP system being winded down and made less significant. It was one of the few measures IBM could say they were innovation leaders in.

It's a pity - IBM were cr-p with bonuses and it was one of the few ways you could get bright employees to put effort in and result in increased renumeration. Now, those employees will probably just put effort into finding jobs that pay well.

Anybody read this book?
https://mitpress.mit.edu/9780262039444/

How is it that Oracle Cloud surpassed IBM Cloud? I remember Larry Ellison refusing to get into the public cloud market and now they were able to pivot quickly

I was the poster of @4twu. Looking back on it all, I think it's safe to say that the IBM I came from would have never developed the cloud as it exists in its modern form. It was too married to the old ways of IT (lots of system administrators doing manual work on demand), and it was too encumbered with an existing IBM software and IBM personnel base that precluded the development of anything new. Virtualization and the ideas that came with it were well understood in the mainframe environment, but in what IBM called "the distributed world" it was still largely a lab experiment rather than something you could immediately use as a viable way of doing things. VMware was already a viable company and product family at the time, but only a few IBMers were aware of it at the levels that mattered (architects and management). Xen was in its infancy, and very few people in GTS had ever seen AIX-based LPARs. The IT concept of "server consolidation" was just getting underway in the world, but IBM revenue was based on hardware sales, software licenses, employees and staff hours. IBM and most of the world have gone their separate ways.

@4twu,

I would continue with your line of thought by adding that IBM’s nascent cloud/on-demand offering would have been viewed as creating a competing offer that would cannibalize the revenue from upfront hardware and software sales.

The Street, shareholders and executives would have hated that as it would have immediately meant less money in all of their pockets, despite the fact that it would have better positioned the company for the future.

On the other hand, Amazon had no such commercial “baggage” to worry about and built its future AWS business. While there was certainly risk in doing so, they had much more freedom to take the risk than IBM would have been allowed.

Not to excuse IBM though: the decision was shortsighted. But everyone wants their money now and not later. And that IBM is now selling through AWS Marketplace tells of their admission that they have lost the battle for the Cloud.

SaaS is an important component in the analysis. IBM only reluctantly joined the rest of the world by selling on a SaaS basis, although they had no choice: the industry had moved in that direction. But even if IBM today manages to land SW on AWS (or Azure or GCS), its SW is just not differentiated enough to justify its pricing: there are too many alternatives to IBM, including open source. If you control the cloud, you control SW. IBM doesn’t control either now. From now on, SW revenue will always now be under downward pressure.

To conclude, in failing to establish itself as a top cloud provider when it could have, IBM failed to position itself to lead in the IT future. It will never regain its former position in the industry.

I was in the organization (I won't say where) of GTS that came up with the "on demand computing" and "utility computing" concepts. It's rear view thinking at this point, but on a Gartner quadrant chart IBM would have ranked high in vision but mediocre to poor in execution. Believe it or not, IBM had a vision of utility computing that fits in really well with how the reality of cloud computing turned out to be. Had IBM played its cards right, IBM would have been miles ahead of everybody else in the market. However, as everyone now knows IBM didn't play its cards right.

It's only my opinion, but from my perspective IBM differed from the other players (Google, Microsoft and Amazon among others) in that IBM approached the whole utility computing thing as a big integration and marketing exercise rather than something to be built from the ground up. The big challenge facing management at the time was to monetize what IBM had...it's data centers, its hardware, its software catalog, and its legions of outsourcing staff around the world. The pressure was on to "use what you sell".

The result? Amazon was building AWS to automate the management and operation of virtual machines. IBM on the other hand was building websites to take customer orders and pass them on to teams of administrators around the world (lots of India, Brazil and Eastern Europe as I remember, along with various US delivery centers) for manual provisioning and deployment. Throw in lots of DB2, Websphere, and Tivoli products into the mix, because IBM has all that stuff and we should use them.

There were a lot of troubleshooting conference calls...lots of highly credentialed people from every major IBM division, including Research and Tivoli...lots of "lessons learned" and "root cause analysis" chartware passed around between architects, project managers and first and second lines. It would be interesting to see how much of that stuff still lives on today. I can't imagine that much of it survived.

Omg I remember on demand computing when I was there. If only we could have capitalized on the vision back then with a public cloud offering. Ugh I just kick myself thinking what we could have done.

IBM's problem is not so much "innovation" but "monetization through productization".

Back in 2001 or so, IBM was creating a "cloud". They called it "utility computing" or "on-demand computing". However, nothing came out of it until Amazon took over the world with their Cloud in late 2000s. Now IBM plays catch up.

Same thing with Tivoli products. IBM came out with its own upgraded/modernized IT management suite. They gave the components names like IBM SmartCloud Monitoring or IBM SmartCloud this, IBM SmartCloud that. It all fizzled until ServiceNow came out and took over the world. Now IBM re-sells ServiceNow!

Same thing happened with AI. IBM created Deep Blue chess playing AI. It created Jeopardy beating Watson. It boasted its expertise in Natural Language Processing. Yet, a few years later, the only thing people remember is Watson Health failure. The world has been taken over by ChatGPT and now IBM is again going to play catch up with WatsonX!

So, why does this happen? Three reasons:

1. IBM tries to be everything for everybody. When you are so diversified, senior leadership's focus and investment dollars get diffused across multiple brands. Products and services with overlapping features get created. Many times IBM brands even end up competing with each other! At the end of the day, IBM ends up being jack of all trades but king of none. And, customers only want to pay money to the king.

2. IBM is an elephant that just moves too slowly. There are meetings after meetings and reviews and approvals from all sorts of rent-seeking teams that increases time-to- market while the competitors are more agile. They swoop in, give out free stuff and lock in the client. IBM ends up trying to replace the incumbent competitor when the ship has already sailed.

3. IBM is run by bean counters. They are short-sighted and their job is to keep IBM in the black regardless of everything else. So, frequently, funding gets reduced or employees (including execs) get moved around or laid off altogether. This breeds fear, uncertainty and doubt. Employees get demotivated. Instead of creating and supporting great products, employees' first concern is to keep their jobs.

If IBM fixed some of the above problems, they could convert some of their innovation into revenue. As it stands now, IBM is just two kinds of people. Those who realize that they are on a train wreck but keep quiet as long as they can make a relatively comfortable paycheck as long as they can. And, those who have drunk the kool-aid and are too parochial or naive to realize where IBM really stands in the world outside their echo-chambers. Nothing good comes out of such an environment.

IBM is allergic to innovation. Patent IDTs regularly turn down great ideas but more critically the exec leadership manage through hubris and by being "the smartest people in the room" (think Enron). Yet, their technical expertise is paper thin -- about the level of a sales wonk, and they either completely sneer at anything truly innovative as too risky or think their banal, exec-groupthink ideas are better than what their creatives, proven innovators and architects are capable of coming up with.

It used to be you could get an exec to adopt a really good idea by planting it ahead of time, the exec forgetting where they heard it, and then taking full credit for it. That was how progress was made. Today under Arvind all possible "innovations" flow only from the top and the allowable solution space is extremely narrow. This means we are constantly copying the failed or stale ideas of other companies because top leadership lacks the core talent to think originally. Authoritarian to the core.

It is like a death spiral of genius, where all of the truly smart people are let go or chased away or left to rot while the same "smart people" at the top keep trying the same things and failing all of the way to their next bonus while the company and its employees slowly burn.

The sole focus on financial outcomes and shareholder is the crux of the problem for so many American businesses. And tying executive compensation to it only compounds the problem. IBM is no different.

Google this 2013 Forbes article for a good summary of the problem: The Origin Of 'The World's D-mbest Idea': Milton Friedman

Exactly OP! Hit the nail on the head!

When money is the only thing you value, then money is what you'll get. IBM management is like many other large companies in the US...they put a premium on "shareholder value", expressed in the only way they know how, namely money. IBM executives evaluated the state of the company across its many lines of business, and decided over the years to cash out of most of them and distribute the proceeds to executives and shareholders. They could have adopted a plan to retrain employees, take additional risks in those lines of business, and try to build them up somehow, but they decided not to do that.

Innovation starts from the head. Unfortunately, so does rot. IBM sold off both factories and intellectual property over the years. They canned employees with decades of service and experience in building and delivering goods and services, and handed everything off to whoever would work cheaply and leave more money for the executives and shareholders.

IBM's ultimate fate will be as a name you see on late-night informercials (I SH** YOU NOT!) You will see the IBM name on flashlights, pest repellers, light bulbs and desktop humidifiers. Many of the executives you see in the company today will still be there, but they will do nothing except arrange deals to put the IBM name and corporate logo on cheap and disposable consumer products made by others. They will do that because it will be the only way to score some cash without innovation and taking any risks for themselves. After all, it's what they have been doing for their entire careers.

https://www.proactiveinvestors.co.uk/companies/news/1019080/ibm-stock-slapped-with-sell-rating-on-view-big-blue-paid-too-much-for-apptio-1019080.html?rel=scroll

Yet they still have money to shell out $5 billion for Apttio.