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IBM CIO uses his seat at the table to drive IBM to the clouds

IBM CIO Pat Toole uses his seat at the table to launch Blue Insight, one of the world's largest private clouds, and to drive consolidation of the company's mammoth IT operations.

IBM CIO Pat Toole has been at the center of a couple of mission-critical initiatives designed to bolster the company's competitiveness over the next decade. One of his tasks was to oversee the development and launch of Blue Insight, one of the world's largest private clouds, which 140,000 users can access. The other is overseeing the ongoing consolidation of IBM's once-sprawling IT operations, making sure Big Blue's technology investments are properly aligned with its wide-ranging business strategies.

Pat Toole
Pat Toole

In the first of a two-part interview, Toole sat down with to talk about the impact of Blue Insight on IBM's business, the influence he has had on improving the company's business strategies, and why it's important for more CIOs to get a seat at the table in the C-level suite.

You have talked about the importance of CIOs getting a seat at the table with other C-level executives who drive the direction of their businesses. Do you find that most CIOs have that seat?
I think it is mixed. Our research shows that about 55% [of CIOs] are viewed as collaborative leaders at the top of the business, and about 45% are not there yet. It's important CIOs get that seat, because at the end of the day, we are all trying to drive value back to the shareholders. That is hard to do if you don't intimately understand the overall business strategy and can translate that strategy for your team. It's the best way to ensure your team's projects are directly linked to shareholder value.

How hard did you have to fight to get your seat at the IBM's C-level table?
It was probably easier to do than for most. Being a high-technology company, we innately understand the value of this. Also, there are enormous pressures today on companies to be outcome driven. We think the best way to deliver those outcomes is to understand the processes of your company end-to-end.

Specifically, what have you been able to influence in terms of the company's business direction?
I think I have helped prioritize our investments and what projects to pursue. At the end of the day, we maniacally measure the value we are delivering -- I am talking about hard benefits to the bottom line of IBM, as well as to the things we are doing to drive top-line revenue.

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What are the top two or three things you have helped IBM prioritize?
What I feel really good about is the progress we have made with business analytics, where we help deliver strong insights to people whose jobs most require those skills. We put up a platform called Blue Insight, where we have roughly a petabyte of data with about 100 applications.

Projects associated with these applications are aimed directly at revenue growth, such as helping salespeople get more insight into their jobs, or helping us find where the market opportunities lie or even what the market opportunity is. We are extending this into marketing with real-time mashups and publicly available data.

Is Blue Insight made up of just IBM technologies, or have you integrated technologies from other vendors?
It is a Cognos-based cloud on z-Linux that about 140,000 people have access to right now. We are now just adding SPSS [a statistical software company acquired by IBM] to it so we can do more things with predictive analytics. Today it is handling traditional things, such as alerts, dashboards and reports. But obviously, what we want to do is to be able to look at all of the trend data we have so we can go deeper on forecasting and predictive analysis.

How tough was it to get Blue Insight approved and to pull it together?
When I first came, I put a real emphasis on cloud computing, and so I looked at establishing our six centers of excellence, one of which was dedicated to business analytics. With these groups driving it, we stood the entire platform up, literally in a few months, and started moving applications over to it.

The direct impact to the bottom line was significant. Working in a large environment, you have disparate tools, are paying software licenses to other companies, and have different hardware and associated maintenance and support costs. If you can move all of that to a consolidated environment with a single set of tools, the IT investment for Blue Insight is easy to justify.

What sort of numbers for productivity and ROI have you been able to realize?
One example is an application we did for our small-deals [involving customers] management systems. A small deal is under $100,000. Obviously a lot of those [deals] we can help identify, qualify and pass on to business partners. But by being able to quickly analyze and understand this information, we were able to take five days out of the qualification process and just hand it straight to the business partner. That is important because a lot of these smaller deals evaporate if you don't react quickly.

It's important CIOs get that seat [at the C-level table], because at the end of the day, we are all trying to drive value back to the shareholders.

Pat Toole, CIO, IBM

[We] were also able to measure both the quality of leads going to the partners, as well as the closure rates. At the end of the day, we were able to measure the increase in market share for that particular market segment faster and more accurately.

Most companies remain somewhat skeptical about the ROI in cloud computing. But you didn't seem to share this skepticism.
We tried to think through to where the real business value is in clouds. You can look at it in two ways. We looked at it as a series of tangible "business towers." We built a business analytics tower, but also ones for development testing, collaboration, desktop virtualization and storage. Then we looked at it from an IT perspective as a Software-as-a-Service platform and as an Infrastructure-as-a-Service platform.

For us, it turned out that collaboration, business analytics and development testing provided the best advantage. An increasing number of our clients have also moved into these areas to do projects. I think as an industry we are finding it harder to get the economics out of, let's say, virtual desktops.

So, it proved difficult to incorporate virtualization pieces into the cloud?
I think that is really one of the big things still ahead of us, in the sense that most companies like ourselves have had virtualization projects in place for years. Then you have to look at what the incremental benefit [is] of going to a cloud with things you have already virtualized. In some cases, the economics aren't there to do that. In other cases, it makes perfect sense. It's just not a straightforward thing to do, because not all apps were written to work well in cloud environments.

Do you have plans to tie Blue Insight into a public cloud or make it a hybrid cloud?
Yes, our production cloud will be a hybrid cloud. IBM is standing up a public cloud in Raleigh [N.C.]. We are working with IBM Global Services to build our private instance inside this public offering. It eventually will be a multi-tenant environment.

Will this be done by 2011?
We have identified the apps we want to move, and now we are going through the architecture, making sure we are comfortable with the security aspects of it. Storage is the other big piece because storage costs are increasing. Most people don't have a virtualized storage environment.

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