When it comes to big stonking change and the new meshing of business and IT disciplines, let’s talk to the ultimate wave-spotter: Mark Foster. I met Mark a few decades ago when I was wearing button-downs and he was one of the key Group Chief Executives at Accenture. I’ve been very curious to catch up and see for myself what enticed Mark out of (what he dubs) “blissful semi-retirement” to lead the 250,000-strong services business at IBM. So let’s dive in…
Phil Fersht, CEO and Chief Analyst, HFS Research: It’s great to get some time with you, Mark. You’ve been a well-known figure in strategy consulting for many, many years. I met you during your Accenture days, but not so much recently. I’d love to know a bit more about you, where you came from, and were you always intending on going into the services industry? Was this your goal when you were at university?
Mark Foster, Senior Vice President, IBM Services: Well, probably not. My background is rather strange, insofar as I have a degree in Ancient Greek, Latin, and Ancient History. So, I spent the best part of all my school and university career studying languages that are now largely dead, and only readable in ancient texts. (Laughs)
Very early on, though, I had a sense that there was something happening around technology; it was going to be a really important thing to get involved with. My first job was joining Accenture back in 1983, what was then Arthur Andersen management consulting, where the first thing that happened was to be sent off to St. Charles to learn to code in COBOL. That was really the start of an involvement with technology that’s carried me through for a very long period of time.
“I had a grounding in technology, a grounding in what it can do to transform industries and business, and then also a career that evolved away from core technology…”
When I came here to IBM, I remembered that I learned to code in RPG III on the AS/400 back in a dim, distant day as well. I had a grounding in technology, a grounding in what it can do to transform industries and business, and then also a career that evolved away from core technology and into areas of business strategy, management, industry transformation, digitalization, and over time, all the areas around the BPO marketplace that we got into, as well as all of the ERP worlds that the world got into. So, actually, I’ve had a very broad-based background across all these different areas of services over time.
Phil: So, you’ve had a very colorful career, Mark. IBM must have been a very interesting change for you… experiencing several years at the height of Ginni’s reign, and now Arvind, and some new blood in the company with a lot of change going on. I can’t help feeling that we’re going through a great big reset in the world of technology, and it might not be a bad thing for IBM considering the brand and the strength that you have. I’d love to hear a bit more from your perspective on what the experience has been like, and a bit about where you hope to take the GBS and the services business as things evolve.
“I could see another wave of change that was about to take place around digital technology. We were getting to a state, again, where technology was about to be transformative…”
Mark: First of all, Phil, I was actually lured… After 27 years of Accenture, I had five and a half years of what I like to call blissful semi-retirement, where I was working on various things and different boards, and I was really lured back by Ginni, to IBM, because I could see another wave of change that was about to take place around digital technology. We were getting to a state, again, where technology was about to be transformative, as opposed to living around the edges of companies.
I saw the coming together of the worlds of AI, automation, blockchain, etc., as being the big opportunity to be involved in something new again, and an opportunity to also refresh and transform GBS as a critical part of the IBM ecosystem. That was something that Ginni was very keen for me to do, and I think we’ve made some decent progress on that over the last four or five years.
“The strategy of IBM has evolved even more clearly around the whole world of hybrid multicloud, data, and AI. This has helped me to lean into the role that GBS can play in transformational journeys.”
The strategy of IBM has evolved even more clearly around the whole world of hybrid multi-cloud, data, and AI. This has helped me to lean into the role that GBS can play in transformational journeys that include those solutions as part of the business change that’s being driven and the thought processes around a cognitive enterprise, which is the new kind of enterprise we’re imagining where all of this comes together. It is very much in line with your OneOffice thinking, in terms of what an organization looks like when it has the power of these technologies applied at scale.
Phil: We had the days leading up to 2020, where we envisioned what the technology could potentially become, without really knowing what that burning platform would be to drive us rapidly down this channel of change that we’ve been through. It’s been an incredible shock to the system for some businesses.
What has it been like within IBM? How much has it changed you as a company?
Mark: Well, it’s changed all of us. I’ve got 240,000 people working for me around the world right now, 90% of whom are still working from home and have moved themselves seamlessly into that environment. They have had to deliver on projects, programs, and operations for clients, as well as doing other things to continue to sell and develop new work, all of that taking place in a virtual environment. We’ve had to leap to what that looks like. Fortunately, that was something in the background of how our global delivery was operating already, but it just accelerated even further and put it on steroids.
For many clients, there has been a massive acceleration of the digitalization of their businesses. It has also put technology at the forefront of people’s minds and the role it plays in enabling employees to do their jobs and connect to customers.
“CTOs and CIOs have had a good crisis in a way, because they have proven that the role that their technologies play is fundamental for enabling companies to keep going and to sustain operations. We’re going to see the shift… of these technologies moving into the mainstream and the replacement of legacy by new technology at scale.
It’s been highly accelerated.”
We did some research, just recently, in terms of talking to various C-suite executives about what digitalization had done, in terms of who is now playing a bigger role. Not surprisingly, the CTOs and CIOs have had a good crisis in a way, because they have proven that the role that their technologies play is fundamental for enabling companies to keep going and to sustain operations. I think we’re going to see the shift we have already seen, of these technologies moving into the mainstream and the replacement of legacy by new technology at scale. It’s been highly accelerated, and I think we’ll see a lot more of that coming along. And that’s the path we plan to play – helping clients take those new, faster journeys.
Phil: Yeah, when you think about it, you’ve got 90% of the Global 2000 with fairly expansive shared service organizations, and, of those, they all have varying levels of outsourcing relationships. Now we’re at this point where only a third actually want to go back to the model they had before, the physical model, the packing of people back into their service centres, etc.. A lot of them have declared that they’re work-from-anywhere organizations now. I get the feeling that not a lot of the traditional middle-to-back-office workers are going to be asked to return to a physical environment. At the same time, clients are figuring out how to do a lot of this work remotely, they’re judging more on outcomes. It’s getting a bit less personal. In a way, the work environment has gotten slightly harsher.
How do you see this playing out, Mark? If we’re going into a new model where things are much more disparate and much more remote, even when we’re fully vaccinated, is this the end of shared services as we know it, from a client perspective, and a whole new birth of a final phase of outsourcing? Is that how you see things playing out?
Mark: I don’t think it is, actually. The empowered, remote, anywhere workforce is something that people are obviously talking about. This also came up from the recent C-suite study that we did, the focus on [remote work] as being one of the most important things C-suite executives are worried about. Within that, there was an awful lot of focus about the ongoing humanity of those relationships, about empathy, and the way we’re actually going to make sure that we stay connected in this world.
“It’s been an interesting duality to show how virtual you can be, but it’s also made people a bit more aware of what they lack when they’re not connecting together. …All of that still has to find a place.”
It’s been an interesting duality, Phil, to show how virtual you can be, but it’s also made people a bit more aware of what they lack when they’re not connecting together. I think that we’re going to start seeing models where people will have to combine the ability to bring people together for creativity, for empathy, for connecting with each other, for networking, and spontaneity. All of that still has to find a place. It will make us think much more about the journey of talent being accessible from around the world.
The virtual garage model we have developed is very much a model for co-creation with our clients from anywhere around the world and for being able to bring expertise from ourselves and ecosystem partners to help transform a process with a client. That potential is very real, and I think it is quite exciting. It’s what we call our Dynamic Delivery model, powered by the Garage. We can see that becoming very powerful.
“We’ve seen a big focus from clients on this idea of uplifting skills, “Can you work with us in a way that actually means we also uplift our skills as well, and not simply take the skills off our hands?”
There has very much been a shift in that space going on.”
I think the clients will go on, reinventing their shared services and relationship with their strategic partners. We’ve seen an uplift in interest around aspects of core process outsourcing, or “co-sourcing.” We’ve seen a big focus from clients on this idea of uplifting skills, “Can you work with us in a way that actually means we also uplift our skills as well, and not simply take the skills off our hands?” There has very much been a shift in that space going on. I think we’re in for a very interesting period of more opportunity for disaggregation of processes, the power of extreme automation, and higher levels of AI coming into the mix as part of the transformation. But I also believe we need to be a bit more thoughtful on the role of the human in that machine.
Phil: I love that answer, Mark! You know, everything starts with data. Data is the strategy of the business. What data do we need to be more effective than our competitors, fix our supply chains, get products on the market faster? Everything starts with data.
Then you have to design your processes in a way to get to that data, to get to the outcomes you need. Right? You’ve got to realize as a work-from-anywhere organization, you have to move those processes into the cloud, so then you have to automate in the cloud. That’s something that we haven’t been educating people enough on, which is the next phase.
Automation is not the strategy; it’s the native DNA. Automation is the essence of making it happen; it’s the attitude, right? Data is the strategy, automation is the attitude and then we can run AI off automated processes in the cloud to get different types of data views, different types of ways of predicting things. We’ve got this cycle that we’re talking about, and so much of this is about redesigning process.
“We need people to actually help design businesses in the way they should have always been designed. Too many companies today hadn’t touched a process until they were forced to go into a remote environment.”
Isn’t this where the human element comes in? We’re a decade away from the singularity, apparently, so we need people to actually help design businesses in the way they should have always been designed. Too many companies today hadn’t touched a process until they were forced to go into a remote environment. And now…
Mark: I totally, agree, Phil. I totally agree. You need to have people who are really looking for pain points, looking for value pools, and working out where the opportunities are to make it better, but you also now have so many different tools to go after those value pools and drive out that value. That’s where we see the power of AI at scale, the power of automation, using IoT for massive sensing, the 5G enablement of some of these processes as well – we see all of that coming together.
We then find that, yes, we can do all of that, but we do need to make sure that the robustness of the data that is going to be used in this automation has a good base and is trusted. I need to understand and be transparent about how it is actually applying itself into these new workflows. It’s a bringing of all that together as part of an execution journey for a client that will take them from where they are now to where they’re going to be. That is the complexity.
“We’re talking about very big companies trying to do very big change, …the change management and reskilling agendas for people who sit along these new workflows becomes critically important.”
We’re talking about very big companies trying to do very big change, which, to me, harks back to past eras where thinking about the change management and reskilling agendas for people who sit along these new workflows becomes critically important.
Phil: Yeah, it’s interesting. In all your years in this industry, you’ve had to keep your own staff motivated, ahead of your clients, ahead of the curve, and now in a remote setting. What has that been like? Has this been like anything you’ve seen before?
Mark: Well, I think this is certainly up there, Phil, in terms of something I haven’t seen before. Let’s be clear, I’ve been managing large, global teams for a very long time, and I’ve always believed that you manage, engage, and lead by being with your teams, being with your clients, and spending time together. I literally like to get around the world many times a year to see as many people as I can and lead that way. The lack of that has been something that I have certainly personally felt.
We try to replace it. Every day, I’m sending a video somewhere; every day, I’m doing a virtual townhall with some slice or cut of my teams. I’m trying to spend time with as many of my leaders as I possibly can, reaching out to speak to people, but not in a planned way because one of the problems of Webex-land is that we’re all scheduled into our interactions with each other as opposed to bumping into each other. Trying to find ways to connect with people in a way that’s not so programmed is important.
These are things that I think are pretty fundamental to trying to work through this time, while also recognizing that many people are doing their day-to-day work in very difficult circumstances, with home circumstances, or children, etc. We’re trying to be empathetic leaders right now, but also trying to provide people with a vision of where we’re trying to go.
“Can you see where you fit in? Can you see where you could fit in if you built up a new skillset?”
Arvind has set a very clear strategy around hybrid cloud, data, and AI. We’re lining up our GBS business very strongly in support of that. That sets a North Star for us, which we can lay out into the marketplace, and a lot of my energy right now is making sure the teams understand what that new North Star is, and that we’re moving ourselves towards these two big value pools of intelligent workflows enabled by the hybrid multi-cloud.
And that’s our fundamental vision.
Therefore, if you are any one of those thousands of people out there in the world, the question is, can you see where you fit in? Can you see where you could fit in if you built up a new skillset? It is a very dynamic skills environment right now for our people, and you can do a lot more skills training, but you really need to make sure that you create the space in their time to do that.
Phil: Interesting. Do you feel you’ve spent a lot more time internally than externally for the last 12 months?
Mark: I’ve spent a lot more time internally in my kitchen.
Mark: [Laughs]. In fact, today is one of the first days I’ve been out of my kitchen in a long while. I spend a lot more time internally. But, actually, I am also spending a lot of time with clients. One of the good things about this world is that clients are in their kitchens somewhere in the world as well, and I can get to clients in Australia, in India, in Latin America in a moment, as opposed to having to get on a plane and fly to see them.
Half my day, at least, is still spent interacting with clients, and then the other part of the day is a balance between the management of a very large, complex enterprise. You’re trying to make sure you’re keeping busy and economically successful, and then the rest of the time is with the people – the people and the teams – trying to make sure that they are motivated, and inspired, and know where they fit in.
Phil: Very good. We have a final question, Mark. When you look at the next 12 months, we’re not quite through a pandemic yet; we’re hoping a vaccine is going to bail us out of that; we have a booming stock market; we have booming unemployment; and we have a very, very confused and volatile outlook as to the economy and how things are going to shake out. Beyond answering me with the word “chaos” [Laughs]…
Phil: …what do you think the world’s going to be like in a year’s time?
Mark: Well, Phil, I’m actually more optimistic than pessimistic about that picture, Phil. I mean, I think that the world will actually be in a better place than it was at the end of last year. There’ll be a little bit more certainty, I hope. Clearly, we are still in an environment of stop-start in many parts of the world, but I think each time we’re doing it, we are gaining a bit more muscle memory about how to deal with it.
At the same time, we shouldn’t walk past the fact that there’ll be a degree of fatigue of this world as well, which starts to have other implications for how people feel about how they can cope with it. Overall, my feeling is that we’ll have a choppiness in the first half of the year. We are going to be in a world where we’re likely going to have a lot of remote working still going on, for a very big part of that, but then I think we’re going to start to see some version of a new normal emerging in the second half of the year. We’re seeing clients who are using this moment to reset their business strategies; they are accelerating their digital journeys. All of that is goodness for us, if we can help them with that transformation.
The critical thing for us is to make sure that we’re well positioned in our relationships with our clients with the right skills in the right place, and that we can then help with that co-creation, which I think will be in a more benign environment towards the back end of the year.
Phil: What do you think services are going to look like in two years’ time? When you look out, we get beyond the pandemic and to some type of economic rebound; it’s going to be very different…
Mark: There are lots of what-ifs in there, aren’t there, in terms of what the world’s going to be like. I would say that if you just look at the amount of change that’s going to be spooled up – pent up demand, and, more importantly, thought up demand – I believe people have been thinking about new things in different ways. As they start to now execute on that, we’ll see big enterprises executing quite substantive change. A well-positioned services capability that can help with those journeys has an opportunity to thrive, so I’m optimistic about that.
“There is a changed relationship between the world of services and clients; it is very much more a co-creational world and very much more a co-skilling world.”
There is a changed relationship between the world of services and clients; it is very much more a co-creational world and very much more a co-skilling world. There’s going to be much more desire for an ability to have self-reliance and adaptability built into the client organisations through their experiences of this transformation, so that, to me, is exciting. I think there will be a lot of opportunity. We have to make sure we’re well positioned for it; that’s something I’m very much looking forward to.
Phil: Excellent. Well, thank you very much, Mark. That was a wonderful discussion which I know our avid readers will appreciate.