IBM Canada’s latest president isn’t afraid of taking on a tough economy, but he’s learned to do it with humility.
“We don’t mind it when it’s tough,” said Dan Fortin, who took over the top spot from
Ed Kilroy in January. “It’s harder to be good in tougher markets and I think we’re proving our own. . . . But I have to be careful how I say it, because we are not arrogant — we will never be arrogant again.”
Fortin has been at IBM for almost 30 years and noted that the high point of IBM’s “arrogance” was probably the 1980s, when the company’s margins swelled and the personal computing era was born. Twenty years later and terms like “on-demand computing” and “solutions focus” tend to dominate, but they’ve helped to reduce Big Blue’s ego and allowed the company to get closer to customers.
A Quebec native, Fortin has occupied a variety of roles at IBM, including channels, marketing, storage and, most recently, vice-president of small business for IBM Americas. He spoke with ITBusiness.ca recently about all of these roles and how they help him tackle his latest job.
ITBusiness.ca: What sort of SMB focus do you think you’ll bring to this job?
Dan Fortin: I’d like to ensure that I bring a focus to all of our customers. One of the things you may be well aware is (is that) we redid our values. Our No. 1 value is dedicated to every customer success. I think we’ve always had a lead on how we can be dedicated to every customer success in the large enterprise with the large banks, government agencies, etc. I think it’s (something) that can we continue to bring focus to SMB. My prior responsibility included Canada, so it’s not as if this is a foreign element for me. In my old position, Canada represented about eight per cent of the market opportunity. Now that I’m here in Canada, small and medium business represents a tremendous opportunity. It’s a tremendous part of our business today. It’s not as if we don’t have a measure of success. It’s our largest single entity, if you will, but we feel like we’ve just scratched it.
ITB: What strategy will you take this year in order to get deeper?
DF: I say, “just scratched it” but we have the market share lead in small and medium-sized business. But we are introducing a lot of new areas. First of all our channels. Prior to my SMB responsibility, I had responsibility for channels. I would say that we have by far the strongest channel in the market today. That statement holds true for North America and South America, but in Canada especially we have a very, very strong channel. So we continue to look at how we increase our abilities in the market. We’ve announced a lot of express products, so we’ve been packaging and bundling products around solutions. We started off in the software arena about 18 months ago and now we’re rolling them out. We have a portfolio of probably about 40 to 45 express offerings that are specifically bundled around a solution and pulled together with attractive total solution. But also it’s not just a pricing issue but also implementation for small and medium business. They’re channel-ready, they’re easy to implement.
ITB: How do you build services around that?
DF: The third topic that comes to mind is almost a combination of those two. Services is such a big component of our business, so everybody is on to how do you really drive services in small and medium business? We think that in large measure that’s through our business partners. We’re partnering much more with them as they take the services to the market as we work together with the customers. That’s working out to be a tremendous win-win for our partners and for us. Also, being such a large services entity, we’ve gotten much better about partnering at the services level. We don’t have conflict. We understand that in the small and medium space, they do want to work with business partners.
ITB: How do you tailor your approach to different-sized customers with different-sized needs?
DF: We’re seeing large corporate CEOs as well as 100-person firms all focused on: how do I grow my business? Any survey that we see today, CEOs of large and small businesses have come back to this idea of growth as a No. 1 priority, and they’re all looking for information technology to enable that growth. They’re looking for ways for IT to transform their businesses. They might use different words. A large corporation might have a chief transformation officer, who’s responsible for a two-year transformation of the business. The small guy doesn’t haven’t a transformation officer, but he’s on the very same agenda. In the end, the way you reach enterprise or SMB may have a few different characteristics, but what you bring to the clients is very similar.
ITB: How does your on-demand approach to computing reach those various market segments?
DF: On-demand is very much a computing era. When we announced it two years ago, I think some people wondered, “What’s IBM doing? Is this marketing hype?” Those who were not confused by it were the early adopters. But if you step back and look at what’s happening in the market today, CEOs are focused on growth. That’s their top line. We did a survey last year, and when asked what they had in mind around information technology, their No. 1 issue around growing was the agility of their company. The No. 2 issue was the interoperability of information technology systems. The third item was that they were looking for company-wide transformation.
When you think of on-demand, that’s the agenda that is there for CEOs. Frankly, information technology is a bit a dilemma. It’s basically cemented in processes so CEOs are saying, “Oh my goodness, I’m not agile enough to meet market demands. I need to be nimble.” You can come full circle and say, on-demand is the ability to release those processes.
ITB: IBM is undergoing its own transformation by selling off its PC division to Lenovo. How will this impact the way you approach the market?
DF: It’s not surprising that in any business, profit follows customer value. Allow me to describe it in three layers. There’s a component layer. The component layer, 15 years ago, was a significant portion of where the profit was in information chip technology – chip design, basic manufacturing of hard drives, all those componentized parts. You can put PCs there as well. To be successful there, you need to be a market changer. To us, our partnership with Lenovo is a very effective way of doing that and being a game changer. Here we are partnering with a firm that has No. 1 market share in Asia, is the fastest-growing out there and understands scaling, understands that marketplace. Combined with IBM that has a measure of lead with our innovation, so it really make sense in terms of our strategy.
The next layer is the infrastructure layer. That’s all about servers and middleware software and solutions. In the top is the business value layer. I think that’s certainly the fastest growing. Clearly with our investments – with Pricewaterhouse consulting when we added that to our business – our consulting business grows fast, and so does that of our competitors.
ITB: Interest in retail markets has grown recently, especially with the Oracle/SAP bidding war over Retek. IBM’s also sponsoring an RFID conference in Toronto this week. How important is that market to IBM?
DF: It’s very important. If you think of the infrastructure layer and the business value layer, it’s all about solutions. With Oracle and SAP – we consciously got out of the applications solutions business a number of years ago and said we’re going to partner with these guys. They are our largest consulting practices. But also you mentioned RFID. I think RFID is a very interesting new wave that companies will start to incorporate into how they go after their marketplace. But today they talk about digital media, they talk about wireless. We have practices around those because that’s what customers are looking for.
RFID I think is very, very hot because it really opens up a whole new avenue. All the information we have says that customers have now moved to buying solutions over 70 per cent of time as opposed to piece parts. In the 80s we got ourselves to the place where everybody thought they were experts about buying piece parts. Now, over 70 per cent of the time they’re saying, we need a quick return on our investment and we need a partner to do business with, be it wireless or RFID or SAP or Oracle, and we need implementation and services around that. It’s no surprise that these things go together.
ITB: You’ve worked at IBM for a number of years. What’s the best example of IBM’s leadership and where do think the company has made a misstep?
DF: It’ll be 27 years in May, so with a company of our size and all of the positions I’ve had, I’d be really hard-pressed, but I’ll give you an example. I think a misstep was we stopped listening through the 80s and the beginning of the 90s. We were like a $26-billion company in the 1976-78 era, then we doubled that. I think historians would say that we stopped listening to customers. We thought that we could dictate the marketplace and that was a false step. I think our greatest moment was realizing it and in 1993 putting in a tremendous effort to turn the company around and to shed bureaucracy and put our customers first. That’s why I said earlier we will never be arrogant again. I watch others in the market and I wish them well, but I know for us, our mantra will always be we will always listen to our customers first and that way we will never lose our way.