In November, Wladawsky-Berger was named general manager of IBM's "e-business on demand" initiative and was given the task of organizing the outfit's next-generation Internet efforts. He's leading IBM's building of open-source programs and skills around the free Linux operating system as well as other open standards. He's also responsible for Big Blue's so-called grid and autonomic computing efforts, so one day self-managing technologies and services can be delivered to customers similar to the way in which utilities supply electricity.
Wladawsky-Berger, a 32-year IBM veteran and Fellow of the American Academy of Arts & Sciences, recently spoke with BusinessWeek Associate Editor Ira Sager about on-demand computing and what he calls the industry's "post-technology phase." Edited excerpts of their conversation follow:
Q: What were IBM's early Internet efforts about?
A: Frankly, none of us had any idea of how the Internet would move into the commercial world and how it would impact business. One of the major contributions we made was to develop the notion of e-business -- that companies could use the Internet to link all of their employees, all of their customers, and all of their business partners.
We kept saying...we didn't see a world where online replaces the physical world. When the telephone came, people didn't stop talking to each other in person. There's a balance, and sometimes you do things online, sometimes you do things physically.
Q: What differences do you see in the Internet from then and now?
A: First, companies are much more serious about the Internet. Second is the technology infrastructure. The original Internet of the mid-'90s was exciting -- but a little creaky. The technology and the Internet itself have become much more robust, which is enabling new capabilities.
The third level is that e-business on demand is opening up a lot more choices in how businesses get their applications done -- whether they do it themselves or they get technology from a service provider. A company can pay a fixed cost or pay variable costs.
Q: Are we moving into an era where customers will be able to pay for only as much technology as they need to run their business?
A: Precisely. If you look at every technology that has made it big -- transportation, telecommunications -- eventually it gets offered as a service, and the customers pay a variable cost. The technology gets totally integrated into all aspects of business, society, and government. And as it becomes ubiquitous, the providers look for more ways to sell it and make it easier for consumers to acquire. Look at cell phones. Nobody talks to you anymore about CDMA vs. GSM [competing wireless standards]. What they're talking about is: You get 1,000 minutes a month. They wrap all of the technology into a service.
In information technology, we're beginning to move into that world. We have a long way to go, but we see more and more that customers will have a choice. They can decide whether to run this application themselves, or if they are better off letting an expert do it for them. And then they can negotiate a variable price based on usage. We see the financial model as being one of the most interesting potentials in this world of on-demand computing.
Q: There's a lot of momentum building around open standards for technology. Will open standards usher in the next advance in information technology?
A: While there's an incredible amount of technology innovation, the one major thing that's driving the Internet and the information-technology infrastructure is the acceptance of open standards. I think that when all is said and done, the key benefit of the Internet has been the introduction of open standards.
We're now moving into the next level of open standards, which are truly turning the Internet and private intranets into computing platforms. With open standards, you're now linking all the different computing resources and essentially turning them into a gigantic virtual computer. If you look at where we were in 1995 with open standards and the activity that's going on now, that's one of the biggest changes.
Q: How do IBM's autonomic-computing efforts relate to e-business on demand?
A: Unless you automate, it's impossible to keep up with the management of technology. Human beings can't keep up with failures in the systems. The systems have to automatically detect if something is wrong. The reason we use the term "autonomic computing" is because of the analogy with the autonomic nervous system, which is constantly monitoring the organism to protect it and make sure it stays alive.
Q: In tough economic times, customers are always interested in products that help them use what they already have more effectively. When the economy turns around will customers continue to be as interested in efficiency, or will they be looking for the next big innovation?
A: We think there's a real change. One of the major things about on-demand is that it helps a business become not just more innovative, but also much more efficient and much more responsive to change.
For example, IBM is moving toward becoming an on-demand business. One of the major things it means is that we keep taking cost out of our infrastructure and all of our business processes. We estimate that this year, we've taken out $5 billion.... The only way to keep up with lower prices is to keep lowering your costs and expenses. I don't see that going away.
We may be going through tough times right now, but most businesses continue to be as efficient and competitive as possible. I see that as the way to keep doing business.
Q: How will on-demand computing change the way people view technology?
A: I think of e-business on demand as moving information technology into what I would call the post-technology phase. The phase we've been in has focused on "does the technology work at all, what's the frequency of your microprocessor, and what protocols are you using?"
As applications and services become ubiquitous, the vast majority of people don't want to talk about that. They want to talk about wonderful Web sites and great applications. We all know that the only reason we can contemplate these kinds of applications is because of the absolutely incredible advances in technology. Year after year, the damn stuff improves 50%, 60%, or 70%. It's no longer interesting to tell me what you're going to do with the technology. [Tell me] how my life is going to be better as a result of new applications.