by Charles Araujo

IBM bets big on the ‘incumbent disruptor’

Mar 26, 2018
Artificial IntelligenceBlockchainDigital Transformation

IBM's gambit will hinge on whether or not enterprise leaders can reshape and reorient organizations built for one era to meet the needs of the next.

Since its inception, IBM has bet on the big enterprise. A stalwart of the industrial age, IBM provided much of the technology its industrial counterparts needed as they embraced the first computer era — and has maintained a significant presence within enterprise organizations ever since.

As technologies evolved, IBM went through its ups-and-downs as it adapted to changing enterprise needs and appetites, but its focus on meeting the big needs of the big enterprise never wavered.

Over the last decade, however, IBM’s enterprise customers have been under assault.  Nimble, disruptive start-ups have used their willingness to experiment with new technologies and business models to unsettle and unseat their slower-moving and risk-averse enterprise competitors.

While their initial response was slow and awkward, enterprise organizations are now emulating the cloud-native and agile approaches of their much smaller competitors — and adopting the technologies that go with these approaches. Over the last several years, this has left IBM — and many of its legacy tech industry peers such as Oracle and SAP — scrambling to maintain relevance in a post-industrial world.

Last week, IBM made its bid for continued relevance by putting forth its vision for the future at its new annual conference, dubbed Think. Its bet, which in light of its history may be unsurprising, is on the continued relevance of the large enterprise — but only if they become what it calls “incumbent disruptors.”

The incumbent disruptor

In her keynote to open the conference, IBM CEO Ginni Rometty declared that we are in the midst of what she calls an “exponential moment” — something that she says happens only once every 25 years when both business and technology architectures change at the same time.

The source of this exponential moment? The combination of massive amounts of data and artificial intelligence (AI) technologies.

In her view, merging the vast amount of data lying dormant within enterprise organizations — as much as 80% of which is currently unsearchable, according to Rometty — with AI creates the opportunity for what she calls exponential learning.

This AI-powered and data-driven exponential learning, she says, will create the ultimate competitive advantage. And, the company’s logic goes, it is the large enterprise organizations that are best positioned to seize this exponential moment because it is they that have the treasure troves of information about customers, industry trends and past transactions that AI systems will need to create advantage and enable organizations to become the disruptors of this new era.

To do so, however, Rometty called on incumbent enterprises to go on the offense and do three things:

  • Leverage digital platforms — both those that they and others create
  • Embed learning (e.g., AI) into every business process
  • Empower people with digital intelligence

She completed her call to action by explaining that while these intelligent machines are the key to the future, it is a time to be hopeful, not concerned. “This will be an era of man plus machine, not an era of man versus machine,” she asserted.

The big takeaway of IBM’s vision for the future is this: Large enterprises have an opportunity to stave off the waves of digital disruption that have been pounding away at their industrial age fortifications, but only if they realize that their greatest asset is now their data, that their greatest strength will be their ability to use AI to turn that data into competitive advantage and that their greatest need is to immediately reorient their organizations around this new model.

A coherent message, but is it enough?

For the first time in several years, I can say that IBM put forth a coherent, unified message for the enterprise. The big technology themes at Think were AI, blockchain, cloud and a new generation of infrastructure optimized for these new resource-intensive workloads.

Each of these technology domains come together under the umbrella of helping large enterprises corral and leverage their data to seize this exponential moment. But will it be enough?

On the one hand, there were some positive signs. IBM executives I spoke with from across the organization were all singing from the same hymn book. It is clear that the executive ranks, at least, have received the message loud and clear and are executing both their product and go-to-market strategies in sync with this new vision.

The vision and message themselves are also well-grounded. It is hard to argue against the importance, relevance or impact that AI technologies will have on the nature of work and how it gets done in the enterprise — or that those who have the most of the right kind of data will be best positioned to take advantage of the opportunities that this will create.

The big bet

The big question, however, is whether or not enterprise organizations are prepared to do what it takes to make this transition and become this incumbent disruptor.

While Rometty’s prescription for enterprise action is right-minded, it’s not clear that enterprises have the wherewithal, courage or even desire — or whether IBM and its partners can sufficiently help them to overcome their own inertia — to do so.

At least at some level, IBM’s message to its large enterprise customers could be dangerous. It will be very easy for enterprise executives, exhausted by the continuous barrage of disruption, to take this as a false assurance that all is going to be alright — that the tide has finally turned back in their favor.

The reality is that whether or not we are on the cusp of another exponential moment, the situation for enterprise organizations is as precarious and dire as ever. While their repositories of data and their ability to invest significant resources in AI, blockchain and other new technologies present enterprises a tremendous opportunity in this pivotal moment, the truth is that the odds have always been stacked in favor of the large enterprise.

It has been their inability to see both the threats and opportunities, and take decisive action in response, that has been their Achilles heel. IBM is betting that this time, and with their help, the great enterprises of the industrial age will finally get it right and seize their moment.

It’s a big bet that will hinge on whether or not enterprise leaders can reshape and reorient organizations built for one era to meet the needs of the next.

[Disclosure: IBM is a past client of Intellyx.]