The need for agility in the post-pandemic economy, not cost cutting, will drive IT investment this year, IBM CEO in the UK and Ireland Sreeram Visvanathan told Tech Monitor in his first interview since taking the role.
Economic forecasts for 2021 are sobering. The OECD predicts GDP growth for the UK of 4.2% this year, following a precipitous drop of 11.2% in 2020. But Visvanathan is confident IT spending will not suffer as a result of the global downturn caused by the pandemic.
However, the pandemic has changed the way businesses think about the value of technology, he says, and vendors such as IBM will need to adapt. “This is a transitional time in terms of what people are spending money on, and how you perceive and articulate value.”
This means less of a focus on cost reduction and more on equipping organisations with the agility to thrive in the post-pandemic economy. “The ‘I’ll take your mess and I’ll do it for less’ approach is not something that’s really striking [with clients] right now,” he explains. “You need to articulate how you can simplify architecture and provide a platform that gives customers agility when we come out of this crisis. That’s something which is really resonating.”
This is a transitional time in terms of what people are spending money on, and how you perceive and articulate value.
Sreeram Visvanathan, CEO, IBM UK
Visvanathan says that companies like IBM are having to work harder to convince clients to part with their cash, but that businesses still have money to spend on the right solutions. “The process may get a little longer because people are asking tougher questions but I haven’t seen a huge impact [on spending],” he says. “We think if you’re able to articulate the value idea, budget [will not be] a constraint.”
Is open hybrid cloud IBM’s route back to growth?
Like many of its competitors, IBM has taken a hit during the pandemic. The world’s largest IT services provider posted year-on-year revenue decreases of 3.4%, 5.4%, and 2.6% in its three reported financial quarters. But even before Covid-19, IBM’s revenues had been in decline for nine years.
In October, the company announced it would be spinning off the managed infrastructure component of its Global Technology Services business unit, into a new independent company, to leave IBM free to focus on its open hybrid cloud offering, which allows clients to operate and join up services across different clouds, and which the company believes represents a trillion-dollar opportunity.
As well as accelerating its internal digital transformation, Visvanathan has been tasked with selling that hybrid cloud vision to the company’s UK and Ireland customers. This means demonstrating the company’s relevance in the era of hybrid cloud and applied AI while retaining its traditional strengths.
“People recognise us as being good at the hairy, messy stuff of applications support, systems integration and modernisation work,” he says. “Now we have this shiny new journey to take our clients on too. This transition excites me, but’s it’s a delicate balance to strike. That’s what I’m here to do.”
As well as the hybrid cloud, IBM has been developing industry-specific cloud offerings for sectors such as telecoms and financial services, which usually steer clear of the public cloud for security and regulatory reasons.
Visvanathan says more vertical clouds could be in the works, but declined to say which industries are being targeted by his business, adding: “Companies can spend an inordinate amount of time on compliance in these sorts of highly regulated industries. If you can have that compliance straight out of the box, it allows clients to focus on their customers and business results rather than the ‘plumbing’.”
Chatbots and the CX opportunity
Another area of opportunity for IBM is helping clients transform their customer experience, Visvanathan says. Covid-19 accelerated the digitisation of customer interactions and set expectations that are likely to persist after the pandemic.
“AI chatbots were previously something a lot of people experimented with, but they really went mainstream during the pandemic,” says Visvanathan, “whether it be to find out the government’s latest Covid-19 advice for a particular age-group, as well as in industries like banking and aviation.”
IBM’s Watson Assistant service, which offers AI-powered customer interaction, faces stiff competition from rivals who are also targeting the burgeoning customer experience as a service (CXSaaS) market. In December, for example, Cisco paid $727m for British company IMIMobile, which helps businesses connect with customers across a range of messaging and social media platforms, in a deal which it hopes will help provide it with smarter customer interactions.
Visvanathan says offering the personalised service in the digital realm that customers are used to in physical environments will be key. “Context-sensitive, individual-sensitive tuning of data insights, with a service being provided based on that, is where the world is going,” he adds. “Chatbots are the tip of the arrow, and if you think about aligning the processes in the back office with the service in the front office, that’s where the opportunity is.”
IBM UK CEO on returning to the office
Visvanathan has returned to the UK having spent the past few years based in Dubai. He says settling into his new role has been a smooth process despite the limitations of remote working. “The social environment we crave isn’t there yet, but I’m really proud of how my team have stepped up to serve our clients in 2020,” he says.
“I’m not one of these people who believes we’re going to lock up our offices and work remotely all the time. I think it will be a mixture depending on people’s roles, so we will be getting people back into the office, hopefully, sometime in 2021, and I look forward to bringing the team together and getting that energy going that comes from face-to-face interactions.”
Matthew Gooding is a senior reporter on Tech Monitor.
Matthew Gooding is a senior reporter on Tech Monitor.