On his last full business day as senior vice president and group executive of IBM Global Services, the largest and most powerful integrator in the world, Doug Elix sat down with VARBusiness to tell us what was on his mind. In an exclusive interview with this publication, the notoriously reclusive interviewee opened up about the changes he sees in the enterprise market, how to build margins, the changing consulting business and other topics. Soon enough, Elix will be immersed in sales and distribution, but on April 30 he was king of the solution-provider universe, with lessons learned and tales to tell about how to get to be No. 1 -- and stay there.
On the topic of making more money for IBM, Elix believes that trying to move margins too high can become problematic. "I think there's a reasonably normal operating margin, which can fluctuate up and down a bit," he told VARBusiness. "While I think there's always room for some improvement, there comes a point where if you try to drive margin too high, you're not leaving enough money to invest in your future nor satisfy the client."
Ultimately, he believes, growing earnings from services means growing the revenue base and growing business. Elix believes IBM has been able to do that through IBM's outsourcing business, even through what he believes have been difficult economic times. And one gets the sense that Elix is fiercely proud of, and believes strongly in, the future of IBM's outsourcing business.
"It's still growing, and I fully expect that the opportunity is there for it to continue to grow," he says, of outsourcing.
As for the consulting business, Elix acknowledges it has been a very difficult business in the past few years. In October 2002, IBM picked up PwC, a unit of PriceWaterhouseCoopers, for $3.5 billion and doubled its consulting pool to 60,000.
"The traditional consulting business has changed dramatically and probably changed forever. The idea of advice-based consulting has given way to accountability-based consulting," Elix believes. "That's fine by us. We like to do the transformations work...and we like to get involved in the technology projects that support it."
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