IBM software chief Steve Mills has retired after a 42-year career at Big Blue, during which he oversaw dozens of acquisitions and built out an organization of more than 110,000 employees. While not as high-profile a figure as other titans of software—such as his frequent foil Larry Ellison—Mills' departure will leave a lasting legacy and raise questions about where IBM's software strategy goes from here.
"Steve's strategy was a classic build, acquire or partner approach, but it was his skill and timing in execution of the three that was truly remarkable," says Constellation Research VP and principal analyst Andy Mulholland.
On the build front, Mills "grasped technology changes remarkably early in each cycle, but more remarkably succeeded in moving IBM quickly into a competitive position each time," Mulholland says.
When buying companies, "for someone who worked in IBM for more than 40 years he had a surprisingly strong external focus and used a wide mixture of acquisitions to fill portfolio gaps or extend capabilities," Mulholland adds.
Finally, in terms of partnering IBM's shift into open source "created a whole industry of smart people and startups building on IBM," he notes.
Filling the Leadership Void
Mills was a powerful figure at IBM, serving most recently as executive vice president of software and systems. He was the only executive vice president at IBM and it's not immediately clear who will succeed him, and whether a single individual will be granted the same responsibilities and title. IBM does have a deep leadership bench among the long-time IBM software executives who reported to Mills, such as Bob Picciano, SVP of analytics, and Mike Rhodin, SVP of IBM Watson.
It's uncommon for a company to suffer greatly from the departure of a single executive, but that doesn't mean Mills won't be missed at IBM.
"Internally when a player like Steve goes, there is always a loss of continuity, not necessarily in strategy but in relationships around decision-making," Mulholland says. "When a respected senior person goes then the power play around a table is changed, and it will take a little while to get back the rhythm for making decisions."
"Externally, Steve has a magnificent network all around the industry, and the value of this in terms of intelligence, informal agreements and interchanges should never be underestimated," Mulholland adds. "It takes years to build up around trust and shared experiences, so I believe IBM will be poorer for this."
Big Blue's Software Strategy Going Forward
"[Mills is] leaving with IBM in a really good place," says Constellation Research founder and CEO R "Ray" Wang. "For end-to-end software and development, it's heads-on IBM and Oracle for the big enterprise play. There are still a lot of IBM shops and folks betting on Big Blue."
The group Mills led includes a vast array of products spanning database, application development and delivery, BI and analytics, collaboration, mobile, security, cognitive computing with Watson, and systems management.
"The challenge is there's still a lot of legacy software at IBM," Wang says. "How do you move it to the next level?"
Also, although it's a noticeably large hole in its software portfolio, one thing IBM likely won't do going forward is a belated push into ERP.
"There was a point in time they were going to buy Peoplesoft and Siebel," Wang says. "What they learned is a way to leapfrog that by going into analytics and insight, to extract that data from transactional systems and build a global services business around ERP. That made a lot more sense for IBM in the long run."
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