One Big MOOC

Our CEO, Ginny Rometty, has taken to updating the IBM workforce via some nifty video blogs since she took the helm last year.

In her most recent update, she encouraged the IBM workforce to recommit to continuing to build our skills, and so asked each of us to pursue 40 hours of continuing education in 2013, and that IBM would foot the bill for the additional costs (travel, books, etc.)

Back in 2001-2003, I pursued and completed my MBA in technology management from one of the world’s first for-profit continuing education institution’s, the Apollo Group’s University of Phoenix Online.

This was still the way early days for online learning. Most of the learning was done through traditional books and Phoenix’s proprietary equivalent newsgroup software, where I would exchange asynchronous messages with my professors and fellow students. We also participated in a few self-directed teleconference calls and lots of instant messaging meetings, as there were loads of team projects that required coordination with other students.

One course in particular that I remember wishing I had had a longer course schedule beyond the traditional six weeks (which is how long Phoenix’s courses lasted at the time) was corporate finance. Half the reason I had pursued the MBA was to expand beyond my right brain-oriented BA and MA in English and Radio/TV/Film respectively, and take on more left brain pursuits.

The finance course was exactly the kind of stuff I’d been wanting to learn, but again, in six weeks, it just moved too quickly to completely grok such a vast expanse of information.

So, flash forward to 2013 and my new learning mandate from our CEO. It just so happened last fall I had stumbled onto massive online open course (MOOC) provider Coursera, which has been offering a wealth of classes from a variety of higher learning institutions, and it just so happened they were also going to be offering a corporate finance class through the University of Michigan.

Voila, problem solved. I could now return to revisiting my finance love and spend a little more deliberate time learning it from the ground up, this time over the course of 16 weeks and at no cost to myself or to IBM (other than by taking a little of my time).

This time around, however, I have a professor explaining many of the concepts through online video, snippets of which I can watch in my spare moments or in binge viewing on the weekends. I also have access to more sophisticated online messaging collaboration tools to learn from my fellow students.

And, I do believe, I’m starting to see some technological foundations laid that could completely disrupt the traditional bastions of higher learning, much the way Napster disrupted the recorded music industry.

Good education requires some basic Sophoclean give and take, to be sure, but who says such give and take has to be in a physical classroom with way too many students and not enough personal attention?

I remember courses from my own baccalaureate matriculation at the University of North Texas that filled entire stadium classrooms, and I probably said nary a word to many of those professors, other than answering a few questions over the course of the semester.

What if I could have an even more personalized learning experience, at my own pace, through a MOOC?

Who’s to say a MOOC, in partnership with some of the best professors in the world, couldn’t create their own virtual university, one that isn’t undermined by the increasingly failing economics of brick and mortar learning institutions?

One that, if put together with the right forethought and technology could charge far less than most state and private universities today, and yet still hire the best-of-the-best when it comes to instructors.

If you haven’t heard about MOOCs, you’re definitely not keeping up with the learning Joneses.

Many MOOC courses these days are attracting multiple tens of thousands of students. In fact, Coursera was developed by Andrew Ng and Daphne Koller after Stanford University offered three MOOC courses in the fall of 2012 and each averaged an enrollment of around 100,000 students.

Yes, 100,000 each!

Will MOOCs scale to the needs of higher education aspirants everywhere?  Possibly.

But what if it were able to address just a quarter of the higher education needs?  Last fall, an estimated 21 million new college students were headed to universities, many incurring absurd amounts of debt and often experiencing an overhang from the mortgage debt crisis.

In fact, a Wall Street Journal article from January 30 found that credit bureau TransUnion had discovered that 33 percent of the almost $900 billion in outstanding student loans was held by subprime, or the “riskiest,” borrowers as of March of last year.

I suspect that new MOOC-oriented firms like Coursera, Udacity, edX — and probably more to come — are just one avenue that future college students may well want to pursue for a higher level of education at a fraction of today’s traditional university price, and of course they are no silver bullet.

On the other hand, the avaricious appetite for the early MOOC courses from students around the globe would suggest the higher education market is not even close to meeting the inherent demand, and it was that great learned scholar, Aristotle, who taught us that “nature abhors a vacuum.”

 

IBM Announces 3Q 2012 Earnings

IBM’s 3Q 2012 earnings were just announced, with diluted earnings of $3.33 per share, a year-to-year increase of 4 percent, or $3.44 per share, up 8 percent excluding the impact of UK pension-related charges.

Operating (non-GAAP) diluted earnings were $3.62 per share, compared with operating diluted earnings of $3.28 per share in the third quarter of 2011, an increase of 10 percent.

Total revenues for the third quarter of 2012 of $24.7 billion were down 5 percent (down 2 percent, adjusting for currency) from the third quarter of 2011. Currency negatively impacted revenue growth by nearly $1 billion.

IBM chairman, president, and CEO Ginny Rometty had this to say about the quarter’s financial performance: “In the third quarter, we continued to drive margin, profit, and earnings growth through our focus on higher-value businesses, strategic growth initiatives, and productivity.

“Looking ahead, we see good opportunity with a strong product lineup heading into this quarter and annuity businesses that provide a solid base of revenue, profit, and cash. We are reiterating our full-year 2012 operating earnings per share expectation of at least $15.10.”

Following are further highlights from the quarter:

Diluted EPS:

• GAAP: $3.33, up 4 percent; $3.44, up 8 percent excluding UK pension-related charges;
• Operating (non-GAAP): $3.62, up 10 percent;

Net income:

• GAAP: $3.8 billion, flat; $3.9 billion, up 3 percent excluding UK pension-related charges;
• Operating (non-GAAP): $4.2 billion, up 5 percent;

Gross profit margin:

• GAAP: 47.4 percent, up 0.9 points;
• Operating (non-GAAP): 48.1 percent, up 1.2 points;

Revenue: $24.7 billion, down 5 percent, down 2 percent adjusting for currency;

• Negative currency impact of nearly $1 billion;
• Divestiture of Retail Store Solutions (RSS) reduced revenue by 1 percent;

Software revenue down 1 percent, up 3 percent adjusting for currency;

Services revenue down 5 percent, flat adjusting for currency;

Services backlog of $138 billion, up 1 percent;

Systems and Technology revenue down 13 percent, down 12 percent adjusting for currency;

Growth markets revenue down 1 percent, up 4 percent adjusting for currency;

• BRIC countries up 4 percent, up 11 percent adjusting for currency;

Business analytics revenue up 14 percent year to date;

Smarter Planet revenue up more than 20 percent year to date

Cloud revenue year to date has exceeded full-year 2011 revenue;

Reiterating full-year 2012 operating (non-GAAP) EPS expectation of at least $15.10.

IBM Q1 2012 Earnings Out, Full Year Earnings Guidance Raised

IBM just released its first quarter earnings announcement, which came in with diluted earnings of $2.61 per share, compared to $2.31 per share in the first quarter of last year, a 13% year-over-year increase.

First quarter income was $3.1 billion compared with $2.9 billion in the first quarter of 2011, an increase of 7 percent.

Total revenues for the first quarter of 2012 $24.7 billion, flat year over year but up 1 percent when adjusting for currency.

Here’s the top line:

• Diluted EPS:
  • GAAP: $2.61, up 13 percent;
  • Operating (non-GAAP): $2.78, up 15 percent;
• Net income:
  • GAAP: $3.1 billion, up 7 percent;
  • Operating (non-GAAP): $3.3 billion, up 9 percent;
• Gross profit margin:
  • GAAP: 45.1 percent, up 0.9 points;
  • Operating (non-GAAP): 45.7 percent, up 1.2 points;
• Revenue: $24.7 billion, flat, up 1 percent adjusting for currency;
• Free cash flow of $1.9 billion, up $1.1 billion;
• Software revenue up 5 percent, 7 percent adjusting for currency;
• Services revenue up 1 percent:
  • Services pre-tax income up 11 percent;
• Services backlog of $139 billion, down 2 percent, up 1 percent adjusting for currency;
• Systems and Technology revenue down 7 percent, 6 percent adjusting for currency;
• Growth markets revenue up 9 percent;
• Business analytics revenue up 14 percent;
• Smarter Planet revenue up more than 25 percent;
• Cloud revenue doubled first-quarter 2011 revenue;
• Full-year 2012 operating (non-GAAP) EPS expectations raised to at least $15.00 from at least $14.85.

“In the first quarter, we drove strong profit and earnings per share growth. We delivered another excellent software performance, expanded services margins, and continued the momentum in our growth initiatives,” said Ginni Rometty, IBM president and chief executive officer. “Our investments in growth market countries continued to generate strong revenue growth across software, hardware and services while contributing to the company’s ongoing margin expansion.

“Based on this performance, we are raising our 2012 full-year operating earnings per share expectations to at least $15.00.”

IBM Board Names Ginny Rometty New IBM President & CEO

The IBM board of directors has elected Virginia M. Rometty president and chief executive officer of the company, effective January 1, 2012.

She was also elected a member of the board of directors, effective at that time. Ms. Rometty is currently IBM senior vice president and group executive for sales, marketing and strategy. She succeeds Samuel J. Palmisano, who currently is IBM chairman, president and chief executive officer. Mr. Palmisano will remain chairman of the board.

“Ginni Rometty has successfully led several of IBM’s most important businesses over the past decade – from the formation of IBM Global Business Services to the build-out of our Growth Markets.”

“Ginni Rometty has successfully led several of IBM’s most important businesses over the past decade – from the formation of IBM Global Business Services to the build-out of our Growth Markets Unit,” Mr. Palmisano said.

“But she is more than a superb operational executive. With every leadership role, she has strengthened our ability to integrate IBM’s capabilities for our clients. She has spurred us to keep pace with the needs and aspirations of our clients by deepening our expertise and industry knowledge. Ginni’s long-term strategic thinking and client focus are seen in our growth initiatives, from cloud computing and analytics to the commercialization of Watson. She brings to the role of CEO a unique combination of vision, client focus, unrelenting drive, and passion for IBMers and the company’s future. I know the board agrees with me that Ginni is the ideal CEO to lead IBM into its second century.”

IBM Board of Directors Elects Virginia M. “Ginni” Rometty President and CEO of IBM: Samuel J. Palmisano and Virginia M. “Ginni” Rometty at IBM’s corporate headquarters in Armonk, N.Y.  Rometty, an IBM senior vice president, was elected by the IBM board of directors to become the company’s president and ninth CEO on January 1, 2012.  Palmisano, currently IBM chairman, president and CEO, has significantly transformed IBM.  During his tenure as CEO, the company has delivered record financial performance and breakthrough innovations, such as Watson. Mr. Palmisano will remain IBM’s chairman. [Photo: Jon Iwata/IBM]

Ms. Rometty said: “There is no greater privilege in business than to be asked to lead IBM, especially at this moment. Sam had the courage to transform the company based on his belief that computing technology, our industry, even world economies would shift in historic ways. All of that has come to pass. Today, IBM’s strategies and business model are correct. Our ability to execute and deliver consistent results for clients and shareholders is strong. This is due to Sam’s leadership, his discipline, and his unshakable belief in the ability of IBM and IBMers to lead into the future. Sam taught us, above all, that we must never stop reinventing IBM.”

Mr. Palmisano, 60, became IBM chief executive officer in 2002 and chairman of the board in 2003. During his tenure, IBM exited commoditizing businesses, including PCs, printers and hard disk drives, and greatly increased investments in high-value businesses and technologies. He has overseen the significant expansion of IBM in the emerging markets of China, India, Brazil, Russia and dozens of other developing countries, transforming IBM from a multinational into a globally integrated enterprise. In 2008, he launched IBM’s Smarter Planet strategy, which describes the company’s view of the next era of information technology and its impact on business and society.

Since Mr. Palmisano became CEO, IBM has set records in pre-tax earnings, earnings per share, and free cash flow. During Mr. Palmisano’s tenure, IBM increased EPS by almost five times, generated over $100 billion in free cash flow, and invested more than $50 billion in research and development – creating over $100 billion of shareholder value since 2002 through an increase in market capitalization and dividends paid.

As global sales leader for IBM, Ms. Rometty, 54, is accountable for revenue, profit, and client satisfaction in the 170 global markets in which IBM does business. She is responsible for IBM’s worldwide results, which exceeded $99 billion in 2010. She also is responsible for leading IBM’s global strategy, marketing and communications functions. Previously, Ms. Rometty was senior vice president of IBM Global Business Services. In that role, she led the successful integration of PricewaterhouseCoopers Consulting — the largest acquisition in professional services history, building a global team of more than 100,000 business consultants and services experts. She has also served as general manager of IBM Global Services, Americas, and of IBM’s Global Insurance and Financial Services Sector.

Ms. Rometty joined IBM in 1981 as a systems engineer. She holds a Bachelor of Science degree with high honors in computer science and electrical engineering from Northwestern University.

IBM Industry Summit: Ginny Rometty On The Business Evolution Towards A Smarter Planet Agenda

At the kickoff sesion of this morning’s IBM Industry Summit, IBM senior vice president of sales, marketing and strategy, Ginny Rometty, articulated a vision for organizations around the globe on how they could practically execute against the smarter planet agenda.

IBM Senior Vice President Ginny Rometty guides the IBM Industry Summit audience as to how companies can navigate their way to smarter business in the "new normal."

But first, she helped to rearticulate the problem statement through an example many may have already forgotten, the rice shortage crisis from early 2008.

Rometty explained she was traveling in Asia, and befuddled that in this day and age there would be a run on rice.

Once back at her office, she polled several colleagues from IBM Asia, and asked them what they thought was the cause of the shortage: Market speculation, climate change, growing demographics, what? In truth, it was all these things, but the “system of systems” had been overrun by its own complexity.

And ironically, a report released over a year later from the U.S. Dept. of Agriculture stated that 2007-08 had been a record crop for rice!

Too much complexity, indeed.

There were huge inefficiencies in the vast distribution and supply chain system for rice, and not unlike the global financial crisis, it was those inefficiencies and interconnectedness that led to the rice riots to occur in the midst of the greatest rice crop in years.

With that as the backdrop, and the problem statement established, Rometty then began to explain what organizations around the globe must do if they wish to embrace the complexity of such “systems of systems,” and start to capitalize on the new opportunities they present.

Because this one example was emblematic of broader, but common challenges facing the world: All the systems that govern our businesses are really interconnected.

Also, companies everywhere have started to realize the increasing costs of their longstanding inefficiencies.

Which leads to the third understanding: We have to change. This is clearly not sustainable.

Rometty mentioned a study which revealed that since the global crisis hit, one-third of all CEOs have been replaced (Monster.com, anybody?)

To respond (and keep their jobs), CEOs must start to focus their energy on productivity and structural change, continued Rometty.

“You’re going to either take a market, or make a market.”

Therein lies the promise and the aspiration of a smarter planet. It really is a new way of thinking about your business and its opportunity in the world.

So how as a business do I get started on this concept of a smarter industry, Rometty asked?

Rometty answered the question by outlining the fact that IBM has done over 600 engagements around the globe, and half were done with partners like those in the room here in Barcelona.

Rometty then fully hit her stride and outlined for the CEOs and partners gathered in the room the three general phases people go through as they move towards a smarter business:

1. Instrument to Manage
2. Integrate to Innovate
3. Optimize to Transform

The first step is simple: Understand the performance of your business by instrumentation.

You can’t know how fast you’re driving if your car doesn’t have a speedometer.

That’s why IBM has related this idea of embedded technology (RFID, sensor data, etc.)  To bridge the digital and analog world, we have to instrument, measure, and then manage it.

As an example, Rometty mentioned a Vietnamese seafood company which uses RFID sensors to monitor, from trawler to market, its fish catches to ensure quality control, manage inventory, and prove the premium value of its catch.

Second, companies must integrate to innovate. Organizations must be willing to evolve and adapt horizontally, across all their systems and structures, so that they can then be prepared to apply business analytics more effectively.

Rometty mentioned Toyota, which built an industrial waste efficiency project that the company spun off as a separate business unit, Ecomanage Network Corporation, to help other manufacturers facing the same waste management challenges.

Rometty also mentioned how supercomputing capability has evolved during the past decade. We’ve gone from Deep Blue, a supercomputer playing a chess game (but one with ultimately finite moves) to “Watson” (named after IBM’s founder, Thomas Watson), the new supercomputer learning how to play against humans with infinite possibliities in the “Jeaopardy” TV game show.

The host provides the answers, Watson has to come up with the questions.  Watson’s currently in training against other humans, but Rometty indicated that “She’s learning quite fast.”

Much laughter in the audience before Rometty moved on to the third step: Optimize to transform.

Now that you’ve built a foundation using instrumentation and new analytics, you can now move on to the art of the possible: Optimizing your system towards a specific business goal.

Predictive analytics is very different from the “looking backwards” model businesses have historically depended on.

The next decade, argued Rometty, will be one of predicting the future before it happens.

Unless you think she was now on to soothsaying, Rometty mentioned the Singapore Land Transit Authority, where technology is helping Singapore predict bus arrival times at a 98% accuracy rate, and helping commuters understand bus seat inventory via their mobile devices.

So what’s required to pull off this transformation, Rometty asked?

Three things. Leadership featuring an analytics based-culture. Systems thinking. And new forms of collaboration.

With regards to analytics, it’s actually simple to say (harder to do): Get your company and its people to move from guessing about your business via HIPPO (Highest Paid Person in the Room) and gut judgment, to one based on facts and trusted data that yields action.

Two, don’t get caught in the rice shortage paddy! Develop a culture of systems thinking so your organization is more adept and able to respond to unexpected crises, no matter their orientation.

And three, build a culture of collaboration. Your partners, your suppliers, your customers, all are key constituents in a supply chain of new ideas and possibilities for your business, but only if you facilitate and tap into their expertise and insights.

Pioneering companies which rethink their business systems and models, reinvent their outdated processes, and leverage analytics effectively moving will be poised to move beyond the “new normal” and instead realize new growth and outcomes for their companies.