There’s a lot of heavy lifting still to be done for large enterprises undergoing a digital transformation projects. And businesses will need to think differently about the way they operate and who they hire to manage the impending challenges.

That’s the assessment from IBM, which predicts 80 per cent of IT workloads still need to be modernised.

IBM CEO Ginni Rometty believes companies are now entering the second chapter of their digital transformation journeys, which requires modernising complex legacy systems and scaling AI across the enterprise. 

Delivering the keynote at IBM’s Cloud Innovation Exchange in Sydney yesterday, the IBM chief said businesses would need to embrace new platform technologies as well as new approaches to hiring and training.

The first chapter of digital transformation, which has played out over the last several years, was characterised by “random acts of digital” and “outside-in” approach, Rometty said, where new digital customer service channels (often based on the cloud) were added to improve customer experience. 

On the one hand, that period delivered “great new customer experiences” but also exposed the limitations of mission critical systems in the digital era. Rometty used the example of an insurance company which can generate an insurance quote in seconds but still makes filing a claim a painful process. 

“I hit against these backend systems that are pretty brutal, and they don’t operate at the same speed of change as the frontend,” she said. 

The IBM chief argued hybrid cloud and open source technology would be necessary to modernise those backend mission critical systems. 

“[In chapter one] Many of us moved workloads to the cloud, our estimate is 20 per cent of work has been moved to the cloud, often new work or kind of the low hanging fruit that could move,” Rometty said. 

The remaining 80 per cent of workloads are more complex, based in different locations with unique security and regulatory environments. 

“It’s all about moving it to the cloud, and I would assert, it’s about moving it to the hybrid cloud.”

Hybrid cloud is a platform for applications and infrastructure, built on components from public cloud, private cloud, and on-premises IT. Rometty said the standards for that open platform – Linux, containers, Kubernetes – have already been settled, which was one of the reasons behind the company’s US$34 billion acquisition of Red Hat

Scaling AI 

Rometty argued that successfully scaling AI across an enterprise requires “changing the way work is done” and embracing a “skills-based culture.” 

The two concepts are connected because IBM believes AI will inevitably change parts of everyone’s job as it is introduced to the workforce. 

“We have a strong point of view that 100 per cent of jobs will change in the future. I didn’t say be replaced — I’m really careful with my words. They will be changed, and they will be changed because of AI,” Rometty said. 

Preparing a workforce for this change requires radical transparency. Rometty said employees should know where they let fit on a skills matrix: are their skills scarce or abundant? Is demand for their skills growing or shrinking? 

The second aspect is to “personalise learning”. For example, IBM built a “Netflix for learning” which infers what skills employees have and helps build the next set. Rewards and incentives are then aligned with the training program.

Developing that culture will change hiring practices, Rometty said, with businesses no longer hiring for set skills but for propensity to learn. 

On hiring, Rometty urged businesses to “widen the aperture” to hire for skills, not just degrees. 

“I am worried that this digital era would not be inclusive, if we don’t make it inclusive, and it’s moving so fast that means widening who you can hire.” 

For example 15 per cent of IBM hires in the US last year came from its pathway to technology schools, which is a collaboration between industry and education to develop STEM skills. 

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