Whither IBM? No Telecom outsourcing deal — and not much left of INCIS. The red ink keeps dripping. The outsourcing loss to EDS of $1.5 billion over 10 years was the first major hit; now there’s quite a few million dollars potentially floating to the surface with INCIS — but on the wrong side of the ledger. Question: how long has it been since IBM felt it had a significant role to play in New Zealand? And how much of it can be put down to the company being run, to all intents and purposes, out of Australia? Four years back, then IBM managing director Gowan Pickering was given the role of redesigning IBM as an Australasian company. ANZ, he said, before he took off to run the ICMS telecommunications billing system, was the way it should be. Last year Australian Ken Symington was appointed managing director. At his first press briefing he was asked what he was going to do about the concerns both business partners and customers had about having to wait on Australia for service. There was no real answer. "I’m here to execute the ANZ strategy," was all he would say. The matrix management model is fine in theory but it doesn’t work for New Zealand. It probably has something to do with the size of the market here. Early in the decade, IBM Australia took control of the local subsidiary and immediately the company paid a hefty price. Two of the major banks — BNZ and National — immediately went to other mainframe vendors when it became time for upgrades. Both bank chief executives had said they would make IBM pay for moving to Australia, then Data General managing director Peter Thompson — now one of Telecom’s top executives — told Computerworld at the time. Hitachi and Amdahl were the beneficiaries. Symington has always maintained a low profile, and rapidly moved back to his origins in the services area. Earlier this year IBM’s former New Zealand PC manager, Mark Giles, rejoined the company from the US and, as far as most were concerned, was running the company on a day to day basis. It must have been a hard life. Giles, who has a strong marketing track record, chucked it recently to join Alcatel as its new boss. The word is he wasn’t allowed to do anything at IBM without approval from Australia. Ask any journalist who wants an answer from IBM about anything — it generally happens several days later, after the local PR people ask Australia what should be said. Which brings us to what many industry people regard as the worst bungling of IBM’s public face in New Zealand. The pull-out from INCIS was a story with far wider ramifications than just the IT industry. Where were the local spokesman: no Ken Symington, no Mark Giles — no one, full stop. Instead, an anonymous Yank out of Tokyo fronted for IBM. Fred McNeese is obviously competent at his job but the real message he gave was that IBM in New Zealand is a shell and not capable of publicly addressing its responsibilities. Historically, IBM New Zealand has had a succession of managing directors who have been able to get up in public and tell it how it is: Basil Logan, Graham Murray, Gowan Pickering in recent years. None was afraid to talk to the press. Symington is clearly not one of those; rather, it seems he was posted to New Zealand to get "CEO" on his CV. His timing was less than wonderful. It’s a good thing that INCIS has finally gone away, he said the other day to an old industry faithful. He didn’t mention the other small problem for IBM — the loss of the Telecom outsourcing deal to EDS. And, of course, all the jobs which will go. Old faithful found it a bit bizarre on both fronts. His real concern is the same that Computerworld and a lot of industry identities have. What is IBM’s role in New Zealand now? Clearly, it’s going to be a much smaller company than traditionally, and it’s got a hell of a job ahead of it to measure up against the likes of the Telecom-EDS-Microsoft consortium. The biggest worry is that even more control will devolve to Australia. New Zealand needs a strong IBM. Particularly given the power of the Telecom consortium. It’s about providing options to the market. If technology changes while New Zealand is locked into what an all-powerful consortium has delivered, Communications Minister Maurice Williamson’s Damascene conversion where the government may finally support IT as an export earner is going to be worth nothing. The Australian disease (or sometimes Singapore) is not confined to IBM. HP, for example, is not much more than a PC and printer company in New Zealand; all its systems sales are now made out of Australia. There are many other vendors which are not much more than local sales offices. The two large international vendor companies that have continued to maintain a New Zealand presence are Unisys, which has had a long-time base here, and CSC, which although small in New Zealand rivals EDS in the US as an outsourcer. If IBM isn’t going to play, they seem the only large systems integration and outsourcing alternatives for larger organisations. Wang may possibly figure in that equation, though no one knows at this stage what Wang is going to be turned into after Eric Watson’s buy-back. With only one really large contract at present — IRD’s call centre — IBM is going to spend the next few months sorting out how it can most gracefully shed several hundred staff. Hopefully, someone — preferably not Australian — is going to have the gumption and the backing to ensure Big (Baby?) Blue is going to be around to provide a genuine IT option for New Zealand business. The fiscal pain of INCIS notwithstanding, IBM in past decades has made a fair dollar out of New Zealand. It should continue to reinvest in a market which it could once call its own. Jackson is Computerworld’s Wellington bureau chief. Contact him at randal_jackson @idg.co.nz. Letters for publication can be emailed to email@example.com.
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