By James Blackman
Another late entry from the MWC files, this time from a discussion with IBM; but another one, again, where the talk is somehow timeless, at least in a 2022/3 timeframe, and also sometimes abstract. “Sure, it is a ramble; but, then, nothing is certain,” responds Steve Goetz, in charge of telecoms and media consulting for the firm (and also, variously, vice president, senior partner, global leader), to an apology about a winding starter-question concerning roles and responsibilities in the Industry 4.0 supply chain. “But let me pontificate,” he goes on.
Let that be the mood, then, in a back-room behind a big IBM stand in Barcelona some weeks back; the discussion is hard to pin down just because… well, the market is hard to pin down. Which, of course, is what makes it enthralling; the popcorn burst of new digital pyrotechnics, plus the demand-side trials and supply-side dramas – against a terrible backdrop that says the world will either be remade or ruined. (Zoom out a little and everything is at stake.) But our focus, here, is fixed on this narrow Industry 4.0 vignette, about who supplies what, and who takes charge.
Goezte – ‘co-opetition’ is second nature, for GSIs, anyway
And IBM is one of the companies to ask about this, of course – especially at a telecoms show, where the big talk in-front makes out telecoms is a panacea for industrial reinvention, both sides of the line, and the small talk out-back makes clear it is the only layer in the change-stack that is actually up for grabs. Spectrum liberalisation and network disaggregation have emasculated the old telco crowd; 15 million enterprise venues could deploy private 5G, and none of them, on paper, need a third-party carrier for spectrum access or network management.
This is simplistic, of course – and also wrong, on the grounds many regulatory geographies have not, as yet, set down spectrum provisions for local enterprise licences, and because many industrial environments, whether critical-grade or just downright difficult, will require carefully-designed and managed radio systems. Plus private networks will increasingly dovetail, anyway, with publicly-available and privately-sliced national networks – whatever the doubters say. So 5G remains complicated, and is complicated further by the fact it is only a piece of the puzzle.
But the stock of system integrators – global mega-outfits such as IBM, but also many local specialist SIs – has risen as leading enterprises have started to jigsaw 5G, IoT, and AI into a coherent picture, and forced the tech ecosystem into a new game of ‘co-creation’ and a new era of ‘co-opetition’. But these collaborative works are only really novel for the telecoms sector, suggests Goetze; global system integrators, positioned as master puzzlers, know the scene very well, through decades of corporate IT systems integration.
Of course, the intrigue is also around how the likes of IBM play between the lines, selling digital change to telcos and also to every sector that telcos are trying to change. Which is a leaping-off point for a whole bunch of questions about roles and responsibilities on the way to Industry 4.0, about kings of the road and keys to the highway, and IBM’s own ambitions with private 5G. But we should handover to Goetze, who looks at the Industry 4.0 picture as if it is both perfectly familiar and utterly new – which makes a great point of view. It is all printed below; all the answers are his.
For more on this topic, look out for the new editorial report and webinar session on industrial 5G (from setting standard to becoming standard) on April 28, featuring Head of IoT Business Development at Vodafone Business Phil Skipper, Chair of the Technical Specification Group at MFA (MUlteFire Alliance) , and Head of Technology Ecosystems at Nokia Asimakis Kokkos, and Senior Analyst at ABI Research, Leo Gergs among others. Sign up here for the session and report.
Talk about IBM’s position on 5G, and how it is helping to drive the 5G narrative as part of the wider digital change story.
“We decided about three years ago that it was our obligation to support operators with 5G. Because we have a set of very important telco clients, and that’s where all the action is. So to remain relevant with these accounts, we had to move into the 5G domain. But as networks have become more complex – requiring more integration, becoming more software defined, requiring more hybrid and multi-cloud – it was also clear the market was moving toward us; that we had the capabilities to serve the market, and do so in an interesting way.
“Because we are quite independent in our view of the proper platforms of the future. And so we invested heavily in building skills and capabilities within our consulting business for network delivery and execution. We have certified many people on all of the various hyperscale platforms. And we have opened up our SDN networking business, and we are deploying Watson AI apps in the network domain as well. What we stand for is assurance, orchestration, RAN, and edge computing to support private 5G networks.”
How does IBM play between the lines on 5G – between helping telecoms clients to optimise 5G to sell to enterprises, and helping enterprises deploy 5G as part of bigger Industry 4.0 schemes.
“There are two dimensions to this. Let’s start with the architecture, and move down the value stack. We believe the best option for our clients is a horizontal platform which is open, secure, and which supports hybrid and multi-cloud, enabled through AI and automation – a platform into which best-of-breed tech can be integrated in a very agile manner. As opposed to a vertical-stack solution that is closed and locked-in. That is our value proposition. We think that gives our telecoms clients control of their own destinies.
“But if this journey was a marathon, we are only at the 5K mark. The network architecture is really the baseline. A year ago, it was all they wanted to talk about. Today, not so; today, it is part of the conversation, of course, but really the talk is about how to monetize this? What are the use cases? How do we close the loop on this investment? What’s in it for us? And there are two components to that. One is the obvious, right; just throw out the use cases and make money off them. But carriers are also thinking of coverage [and social responsibility].
“The classic example is learning. We’re coming out of a pandemic, and it’s quite evident – the statistics are mind boggling, that like a third of students haven’t had access to the internet in this period – kids in New York, say. It gives you chills, really. The point is we can use these technologies to lift the un-served and under-served, right, to get to the inner city and to those rural areas. So [telecoms] clients really want to have those discussions. My role in IBM is to enable them to be agents of business transformation for their clients.
“But that being said, as a global systems integrator, we can do both. Because on the left side we can help with the 5G network architecture, and on the right hand side we have long experience with enterprises – because it is what we do. So there will be a complementary relationship between the sides. Our ability to establish their technical architecture to be successful and, in addition to that, to realise their vision to be agents of business transformation, as well.”
The Industry 4.0 supplier market is very blurred. Will the telcos also play the SI role on Industry 4.0, and will you play the SI role on 5G? Who is the point of contact with the customer? Who holds the customer relationship and who manages the infrastructure? Is the idea that, through your transformation of telcos, you equip them with all the tools so they can manage these networks?
“The jury is still out. But we are entering into an ecosystem of players, all of which are credible, and all of which have relationships with those end-customers. Those customers are going to demand of us, just like they do today in an IT ecosystem, that we are able to provide the value required. And we are going to have to figure that out. In some cases, a GSI may be ‘prime’; in other cases, a telecoms provider may be ‘prime’. Just like today.
“It will come down to who the enterprise has established relationships with already, who they trust to do business with, who has the biggest throat-to-choke? There are a lot of things that go on in clients’ minds when we put these deals together. I mean, I can’t tell you how many times I’m directed [about suppliers in the mix], and in some cases they are competitors.”
It seems like it’s an interesting question because the pieces are in flux, but also a silly one because the market will shake out as an ecosystem pursuit, as it already has in other enterprise services. The response seems to be that all the players will find a niche. And probably you can map those niches now, to an extent, because IBM serves global industrial types that want it to be in charge, and national operators are not in the same position. Is that a fair?
“That is a fair assessment. But IBM has no desire to compete against Deutsche Telekom or Verizon in any domain. It would be unusual to think we want to play in that domain. And it would be equally as lofty for them to think they could be a global SI. Industry 4.0 needs complimentary arrangements, maybe even preferential ones, on the supplier side. It will take collaboration; you would be hard pressed to find anyone, in any endeavour, that has delivered a complete Industry 4.0 transformation alone.”
So in those scenarios where IBM is working with an enterprise of the kind of profile it would expect to work with, and the enterprise requests a private 5G network in 250 plants, would IBM automatically rope-in a carrier Or would it – in some instances, maybe not all – go with other providers? Is the position, as it stands, that an operator is required?
“I don’t think the answer is about whether an operator is required. We don’t have any aspiration to compete against the carriers. I mean, they do great; they do what they do, and we do what we do. If we have a client that directs us to integrate certain capabilities with certain providers, then we are going to do that. We are a GSI; that is what we do. If we have a go-to-market arrangement with a particular carrier over a set of solutions that we have built together, then clearly we will do that.
“There are already proof points where these things have developed. That level of maturity and adulthood, frankly, is going to be required for us all to be successful. I mean, we have had meetings [at MWC] this morning with what you might call traditional SI rivals talking together with us… But we have been doing it for years; it is the way it has always worked. We have a lot of experience of ’co-opetition’ type models; any seasoned exec in this domain can compartmentalise – in the best interest of their company, whilst also being respectful of partners and rivals.
“There will always be points of friction. But this market is exploding. There is so much value that can be taken out of it; the technology is outstanding, and there are so many parties in the ecosystem. Companies will decide who they are going to be friends with and who they are going to be foes with, and it’s going to play out. But most of it is going to be directed by the client, just as it is today.”
So let’s talk about the Industry 4.0 ‘run’ phase, in this design/build/run model – and specifically management of a private 5G enterprise network. Is that something IBM expects to handle?
“We’re a consulting business… Our business is focused on systems integration… We have the SLAs in most of the deals we’re involved in as a systems integrator… A third party might do the infrastructure. But there is a lot more to the build than just the infrastructure piece…. [In the end,] the whole thing could be IBM. For example, in an O-RAN deployment, which is a fun thing to talk about, we own the full thing – up to and including, potentially, carrier integration. But it depends on the client, and who they want to purchase from.
“Do they see the benefit in a global systems integrator? Do they want one throat to choke? Do they want a company like IBM holding the SLA, so they don’t have to deal with it? There are some companies that are very comfortable with that model. There are other companies that are not. So it really depends how the client directs that. We have the capacity to do it all because we are a complex-systems integrator. Putting together points of integration is what we do for a living.”
Talk a little about the co-creation side; how is that working? Is co-creation a glorious thing in the industry right now?
“Oh, it absolutely is. I’m telling you, we have this IBM Garage concept, and most major deals are now fronted with an IBM Garage, where we get together with all the parties and co-create, based on the outcomes we are shooting for. I’ve been in sessions like that, where, sitting there, you can’t tell who is from which company. That’s how powerful it is. I tell you, I have been in this industry for a couple of decades, and I feel younger today than ever.
“Because it is mind-boggling how fast it moves, and how much is required to stay on top of the game. And because the end-state is so uncertain. Twenty years ago, you could look at an annual report from AT&T or BT, and they were identical – same strategy, same everything; nly the numbers changed. Today, everybody has to pick their spot and play to their strengths. Those reports look different today, with fundamentally different strategies – and five years from now, they will have made completely different bets and be going in completely different directions.”