Roger Pett hasn’t stuck around for the perks.
Although IBM’s Toronto Software Lab features a floor filled with themed restaurants (an Italian trattoria, a French bistro), comfortable lounge areas and all the Wi-Fi you could want, he spends most of his time in his personal workspace, where his name plate includes his nickname, Obi-Wan.
“I really don’t hang out here all that much,” he says during a photo shoot in a lounge resembling a Muskoka cottage. Instead, he says, IBM’s retention strategy has been to keep the challenges coming. “What it comes down to is smart people and interesting projects.”
That’s the same approach suggested by Martin Wildberger, the lab’s director, but he also thinks the facility’s setup has helped engineer a productive, healthy work environment.
He describes the construction of the building — whose opening on Sept. 11, 2001 was overshadowed by the terrorist attacks on the U.S. — as a two-year journey of focus groups and asking employees what they want. Their wish list included spaces (and schedules) that give them work/life balance and also a chance to work hands-on with customers.
“There are some people who will tell you they never want to bring the designers and the users together. I believe exactly the opposite of that,” says Wildberger, who says the company uses the motto “unleash the lab” to create the proper mindset. “If your whole job is making customers successful, you’ve got to interact with them.”
That’s why IBM regularly hosts clients to discuss requirements, update them on new releases and demonstrate early prototypes.
“It used to be the more successful you became, the bigger your building. We’re not about that,” Wildberger says. On the other hand, the current lab is nearly at capacity again — IBM says it now employs 2,500 developers there.
IBM ON OUTSOURCING
Don’t bet on IBM outsourcing any of its Toronto software development offshore anytime soon.
At the 40th anniversary of its lab in Toronto last month, the senior vice-president of IBM Software Group Steve Mills told the audience the company is convinced hiring and keeping the right level of programming talent is essential to helping IT managers transform business processes.
IBM originally opened its Toronto Software Lab, situated in Markham, Ont., with 55 employees and now includes a staff of more than 2,500 working on everything from its WebSphere application server to DB2 and other products.
“We are not centered on what a programmer costs us,” Mills said. “To achieve work of high value requires years of skill and expertise. The cost of doing it wrong is far greater than the savings we could achieve by moving labour to another corner of the world.”
When IBM first set up its lab in Toronto, Mills said the cost of Canadian labour was actually cheaper than the U.S., but that quickly changed. “The cost has actually gone up in every region we’ve moved to,” he said.
A great deal of the IBM Toronto Software Lab’s expansion has come through growth as well as hiring, Mills admitted. Since the early part of this decade alone IBM has bought scores of firms, including seven from Canada. The most recent was Toronto-based real-time data management firm Datamirror, which IBM acquired last month for US$162 million.
“We invariably have gaps (in the product line),” Mills said, pointing to its purchase two years ago of Toronto customer data hub maker DWL, which has given it products and expertise in the master data management space. “We don’t just want to acquire a company to add additional revenue, we want to grow the overall business.”
Although it is deeply rooted in infrastructure, systems management and other forms of back-end software, Mills said IBM has no plans to buy or to build internally its own applications business to go up against the likes of Microsoft or SAP. He said that for every five dollars at the time of a sale to a customer, one dollar goes towards applications and the rest goes to the supporting software, hardware and services.
“It’s not that we’re scared of applications,” he said. “No company can do everything . . . it’s a case of deciding where you want to compete and where you want to cooperate or build a community.”
Mills acknowledged that IBM remains strong partners with some competitors, including SAP, who have far different attitudes towards technology issues. While IBM has been a proponent of service oriented architectures, for example, SAP has chosen a model it calls enterprise service architecture, which Mills suggested would not go very far with IT managers handling mixed software environments.
“It doesn’t provide the heterogeneous, horizontal integration that customers are asking for,” he said. “SAP would like the customer to define what they do today solely around SAP applications. That’s fine if you’re an all-SAP shop. But not everyone is.”
Although it used the 40th anniversary of the Toronto Software Lab to promote recent launches in the Web 2.0 sphere, such as Innovation Factory and Websphere Commerce, Mills dismissed the idea that online-only firms would displace IBM in enterprises. Search engines, for example, may offer applications but those are primarily intended to drive advertising traffic, he said.
“We don’t feel a big threat coming from Google,” he said. “That’s not what concerns us.”
The Toronto Software Lab is among the four largest that IBM operates around the world, and in some cases projects are broken up into components among distributed global teams based on expertise, Mills said. Toronto, however, has “final assembly responsibility” for some products, including parts of WebSphere. The lab was originally started to create applications for a Canadian online banking system and the Maintenance device, a portable computer in an attaché case used by the firm’s customer service representatives.