IBM 2000 Annual Report Download - page 26

making the call
Mills: You can’t study things to death. There
are development opportunities where you
don’t have a lot of time to do long, compli-
cated business cases. You have to incubate a
number of them, pilot them and see whether
they’re successful. The ones that aren’t, you’ve
got to be prepared to terminate quickly and
efficiently, and the ones that do take off, you
nurture them and grow them.
Kelly: A vendor in Japan built a
packaging plant to support our
growth, on a handshake. We shook
hands, and they literally started
digging the hole in August. By
the end of the year, the plant
was online.
Elix: In almost every one of our big growth
businesses, we’ve started based as much on
management judgment as on business cases.
I mean, conversion to the customer relation-
ship management services, to e-procurement,
to supply chain: we didn’t spend a lot of
time doing complicated business cases to
get those off the ground.
Having said that, we do still have to make
the case for capital investment. To build the
Web hosting business required a tremendous
commitment of capital
— $4 billion so far. And
we also have huge investments in bringing
people on board to meet the increasing
demand in the professional services business.
We’re hiring more than 19,000 people a year.
That’s a tremendous investment, as well, which
we now do almost as a matter of course.
Kelly: For me, well, there aren’t a lot of
companies in the semiconductor business
prepared to put $5 billion on the table for
big fabricators. We can. We did. Somebody
asked me what you feel like when the com-
pany says, “Okay, here’s $5 billion. Don’t
let us down!”
Mills: And I bet you said, “I didn’t blink
an eye!”
Kelly: Actually, I said I felt relieved, because
I’d already started the project. In fact, I had
Lou Gerstner up in Fishkill a few weeks after
I got the approvals. We’re driving in, and a
lot of progress is already visible. The cranes
were there, and there must have been several
hundred construction workers at the site.
And Lou
looked at me and he said, “John,
you started this before I approved it.” So,
back to the question: The day I got the
funding, I was relieved.
Mills: The thing I like about what you’ve
been doing in the OEM business is getting
more utilization, more customers, across
more industry segments, and that gives you
some cushion against the ups and downs.
It’s the single-customer phenomenon that
can kill you.
Kelly: Right. Customers and segments. But
we came from a background of doing too
many things. And we’ve finally focused on
the top segments and key customers. The
trick now is to keep the team focused,
because there’s always the temptation to
go for the high-volume opportunity in
lower-margin products. We’ve made the
decision that’s not our game.
Mills: I think this was a year that
taught many people that no tree is
going to grow straight to heaven.
In software, we’d had a number
of very good years, and a lot of
growth, and in retrospect, I don’t
think the reasons for that success
were as well understood as they
have become this year.