There’s a new guy working in IBM i land, and his name is Ari Kugler. I’m not sure if he’s the messenger or the guy who makes things happen—but he may be both. I just spent an hour with him on the phone, and I’ve never even seen him. Still, while it’s clear that he’s an executive leader within IBM, it’s just as clear that he comes from outside IBM, and not because he works in an office in Montreal, Canada. He’s surprisingly candid, too.
The Backstory
At the COMMON conference in May, a team of System iNEWS editors sat down with Tom Rosamilia, general manager of Power and z Systems, and Colin Parris, vice president and business line executive for IBM Power Systems. We only had about a half hour, which we managed to stretch into 40 minutes, and there’s only so much ground you can cover in a full room with limited time. One of the topic areas we wanted to learn about was IBM’s cloud plans, and more specifically, would IBM deliver an IBM i-focused cloud offering any time soon?
Both Rosamillia and Parris seemed to have a surprising grasp on the IBM i-focused ecosystem, despite also being executives responsible for multi-billion dollar lines of business. I say this half in jest, but it’s clear that Rosamillia has to focus on the very large, big picture efforts at IBM in order to run Power Systems and IBM’s mainframe business, while Parris has to take a more focused yet broader view of the entire Power Systems landscape. As we talked about IBM’s cloud offerings, they mentioned that Ari Kugler was recently tapped to work on figuring out the cloud with IBM i specifically, and that he was busy working with IBM Business Partners to help enable them to offer IBM i in a cloud deployment model.
Nice.
So I followed up, going through IBM media relations, who got on his calendar, scheduled a time, and gave me a number to call. Easy enough. (And it’s not always that easy.) Basically, going into this call, I had no idea who Ari Kugler really was or what he actually did—I just had two off-hand “cloud” references from Rosamilia and Parris to go on.
Who Is Ari Kugler?
Before Ari Kugler came to IBM, he was the CEO of a software company called Systemcorp ALG Ltd., which IBM acquired in 2004 to add to its IBM Rational suite of development tools. Following the acquisition, Kugler did some acquisitions work for IBM, including the Diligent Technologies storage acquisition, for example, in 2008. Late last year, he was asked to join the Power Systems group and started on the job in November. His title now? Director of Business Development and Business Unit Executive for IBM i. He lives in Montreal, and while he’s not in Rochester, Minnesota, which a good part of our industry still associates as the home of IBM i, he certainly works with more familiar Power Systems and IBM i leaders at IBM like Ian Jarman and Guy Paradise. Jarman, for example, has a more marketing-focused role that spans all of Power Systems software while Kugler focuses on IBM i. (Of course, I don’t pretend to understand all the branches of IBM’s executive reporting tree.)
Meanwhile, back to Kugler.
He said he was asked to join the Power group because, after a couple years of lackluster sales—my words, not his—2010 was a bit of a change. “We saw that revenues were starting to grow in certain markets, and this year, we’re really looking at i again as a growth play,” he noted.
Yes, you read that right. Growth play. And from here on out, our interview got even more interesting—I’ll share the good stuff, more or less in the same direction of our conversation.
“Coming at this from software, coming at this brand new, I don’t know about the old days and the history, I’m just looking at, ‘Here’s where we’re at today, and here’s the opportunity to grow for tomorrow,’” Kugler said.
“There’s been a change in direction with Tom [Rosamilia] and Colin [Parris] where we are taking a serious look at IBM i as a growth play. IBM i is still very very critical to the Power brand, from an install base perspective, as you know, and from a profitability perspective, it’s just a really important platform. And this year we decided we are going to refocus, reinvest, and regrow the i business. And that’s kind of my role. I’ve been working very closely with ISVs, and I come at it from an application perspective, so I was interested to learn that AS/400 meant application server,” he explained.
As he first came on board, he noted, “Our initial focus was to look at core applications and workloads that are being driven on the platform and how do we reengage and re-partner with those vendors so that they also take a new serious look at the market and growth opportunity and add more workloads around their footprints. So that was a big emphasis.”
About this time in our call I realized that a) I still didn’t know Kugler’s actual title, and b) that he was clearly responsible for a heckuva lot more than driving Business Partners to offer IBM i cloud-based services. So I asked him to describe his focus, which is one of my favorite questions because it tends to dive to the heart of a person’s role in a company.
“My focus is IBM i as a business. I own the P&L for Colin, you know, drive growth, drive sales, drive profitability, and in order to do that, the areas that we have to work on, number one is the application space, the ISVS, how do we reengage ISVs, get them to update their apps, create new apps, drive complementary apps around the footprint . . . so that’s one big big area. Another is cloud. How do we position the technology around IBM i so we service this install base?” he answered, adding, “And three, from a partner channel perspective, how do we position the roadmap and our business models going forward so it becomes valuable for partners to continue to invest in the platform and continue to engage with their customers and not just think about it as support and maintenance, but to grow IBM i and the Power platform in the customer environment?”
Then, offered as an off-hand summation, as if Kugler realizes he can cover a lot of ground in just a few sentences, he said, “Those are the three areas: applications, cloud, and channels around i. And all three still present tremendous opportunities for us, and I really see double-digit growth as kind of the target as far as how we grow the install base this year.”
Opportunity
“The first thing that really struck me, when I was new, and I’m coming at this completely new, I’m not long-term IBM, I’m not from hardware at all, so the first thing that struck me was the loyalty of the install base, you meet the COMMON folks, the large user group, the install base, and you see how attached to the platform they are, and for me that was striking, so that was a big opportunity,” Kugler said. “The other element is that this is largely a mid-market play even though we have some very large customers. But if you look at the numbers, the hundreds of thousands of installs out there, it’s primarily a small and medium sized play, medium general business.”
Kugler was also struck by how the market in general has suddenly seemed to have rediscovered the value of integration. “Our competitors have started to realize that, and IBM ourselves have even rediscovered integration, the value of integrating an operating system with storage, with a chassis, with a platform, with system software, so there’s a new renaissance around an integrated platform. And I think there’s a new focus internally in general, and this is IBM wide, around the importance of applications. So the continuing [integration] between software group and systems, STG, we’re realizing that these platforms truly have to be solution oriented, and that points back to the leadership of IBM i. It’s an application system, fully integrated, tested, performing. And another thing that blew my mind is how efficient this platform is. Frankly, you asked me about challenges? The challenge is, the thing works so darn well it can last for years and keeps going and going. People start to take it for granted and to some extent it just becomes part of the furniture and they forget about the opportunity and potential the platform has to offer. I think a big part of the job is to remind customers and application developers of its innate potential and how they can leverage the technology. And I look at it as how you can leverage the real estate. If there’s a 150,000 footprints out there that are running really well, and they are running core apps, well, why not take advantage of that and build on that location. It’s always location, location, location. So not only do we have a great product, we have tremendous location. So part of the stuff we do to remind partners and application developers is, you’ve got location, you might as well build on it,” he said.
“I really think to a large extent, customers, developers, and even to us, in IBM, we’ve forgotten just how tremendous the platform is and we have kind of reawakened and realized the potential, and we’ve come to the same strategic realization that customers want an integrated platform, that has the ¬performance, security, and some of the new market ¬realizations—these were discovered by IBM, and we have a 20-year lead and a proven platform we can build up on,” he added.
ISV Focused
“As a general strategy, we’re very developer [ISV] focused now. The organization has put in a large number of people specifically dedicated to STG developers, and we’ve also created a new organization called Business Development, which is a large group that will hit 60-to-80 people next year worldwide that are really focused on accelerating relationships with development [ISV] shops, integrators, and partners. So those are the big trends. So the realization that applications are really fundamental is being backed up by over a 100 people just in STG dedicated to that. It’s a lot of resources, so there’s a lot of people, head counts, and money around trying to work more closely with ISVs, and the fact of the matter is that IBM i is still a leader in the numbers of relationships we’ve had with developers and development shops,” Kugler said.
Sweeping the Floor
“If you look at the latest release of IBM i 7.1, if you look at the price/performance equation, it’s 10 times compared to where it was previously, if you look at our reductions in pricing. It’s tremendously powerful, it’s proven, it’s reliable, it’s got built-in security, capacity, and one of the approaches is we want to use that capacity and performance and sweep the floor and incorporate all the applications to one environment. So a new emphasis around that as well,” he said.
“There are certain advantages to being unique and proprietary, but there are also benefits to being part of a broader suite where you can leverage development resources, and eventually your development should be able to extend to other platforms. On the software side, there’s a recognition that the IBM i developer is a real market, and there’s opportunity, Rational and Power is looking at it as an opportunity to enhance and develop better and simpler tools. I’m looking at it as a growth play, and the people in Rational are looking at IBM i and RPG and the Rational development tools as a growth opportunity. There’s been a new vice president hired to sell Power software. There’s a fresh look and a healthy perspective that the IBM i community is a large and vibrant consumer group and it warrants investment,” he explained.
“If you look at the major trends we are caught up in, one is this ISV development recognition from a relationship and marketing perspective. Another thing, in STG, is really a reawakening and a real keen business interest around our system software. So IBM i, it’s a very important application, a very lucrative broadly used software, so there’s more resources and emphasis at IBM around building that. It’s good news when people recognize a market because it means you’re going to back it up with investment and marketing and development,” he noted.
Might the hot 2010 fourth quarter sales of IBM i-based Power Systems have had something to do with this new effort?
“IBM as a rule—I don’t know how politically correct this is—but my observation is IBM tends to back winners, and investment usually follows growth and achievement. So the fact that 2010 was already doing well and the fourth quarter was a particularly good quarter, I think it at least helped to start putting additional funding and resources around IBM i,” Kugler added.
Back to the Cloud
In a nutshell, the cloud presents some unique opportunities for the IBM i install base and IBM Business Partners.
“From a customer perspective, there are two big cloud opportunities I see in the short term: One, there is a tremendous interest in disaster recovery. And that seems to be ideally suited to a cloud model, so by its nature, it’s supposed to be off site. DR in the cloud is a very hot area, and frankly, managed services, there’s still a desire to streamline, and if possible, outsource some management requirements to a cloud where it can be more cost effective. So one of the things we’re doing with partners is helping them to build out their infrastructure and cloud capabilities to, in the short term, offer DR and managed services in the cloud. Those are doing well, and what I like about that is we are addressing a market need and we are helping a partner create an annuity, subscription service to help them be more profitable, and be able to invest more and build out more capabilities. So a lot of emphasis in helping them build those capabilities and skills,” he explained.
Kugler said it’s important for Business Partners to know how to set up cloud environments, and Kugler can see how cloud services can be enticing to customers that are interested in complementing their existing on-premise investments. There’s multiple avenues for all of this to reach IBM i customers. An ISV could set up its own cloud infrastructure to offer Software as a Service or a Value-Added Reseller could create a cloud that ISVs could utilize to enable IBM i cloud application delivery. And, of course, there’s entire IBM i infrastructure services that could be hosted from an IBM i cloud environment. Lots of clouds, lots of ways.
“In the latter half of the year,” Kugler said, “My biggest focus will be to help connect application providers with partners, and I think there are a number of benefits they can both realize by working more closely together. The partners become more valuable, and the developers extend their reach to new customers and places than they would have otherwise.”