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Here's Looking at You, Big Blue

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Carol Kovac, who went to IBM’s computational biology department out of a research background, now heads up the company’s life sciences business unit, launched in August 2000. With a budget of $100 million to invest in partnerships, Big Blue has the resources to be a major player in the bioinformatics arena — and is out to prove that it is one. Kovac recently spoke with GT about her group’s progress, strategy, and outlook after this year’s reconfiguration of the unit.

 

When you originally set up the life sciences group, was the idea that it was going to be for three years?

KOVAC: When we first announced this, we announced how much we were going to invest over a three-year horizon. We were trying to quantify the investment we were going to make. You say you’re going to invest $100 million and the next question is, ‘Over what period of time?’ So the period of that investment was intended to be 2000, 2001, 2002.

But the business was always intended to be much more long-term. We’ve always seen this as probably a decade of growth and change, and with a lot of uncertainty in it, ups and downs.

We never formally announced it, but about six months after the original announcement we saw things moving faster than we had initially anticipated, so the investment that we’re making over approximately the same time frame is actually about twice as much as what we had originally said we were going to do.

We decided we were going to do more investments and partnerships and relationships, which included some equity investments. It also has included a lot more investment in co-development of solutions and exploratory projects with universities.

 

What’s the focus for you?

KOVAC: We have three strategic areas we’re working on right now. One is what we call high-performance information infrastructure — it’s a bit of an unwieldy term, but we want to use that to say that it’s not just about big computing. It’s an integrated compute/storage/ systems-management infrastructure.

Then there’s data management and integration, and that’s much more of a software thought and involves the framework and this whole issue of integration. Then the third area is what we would call e-clinical and regulatory — electronic data capture and building an end-to-end process to manage data for the clinical environment.

 

Now that life sciences is considered an industry at IBM instead of an emerging business, what’s the status of the unit?

KOVAC: The business unit is now over 200 people that are directly full-time working in life sciences around the world. We were primarily working in the US and Canada, but early last year we started up our European operations. We had always intended Asia-Pacific to be a slower market for us, but the fact is we started that up a couple of quarters earlier than we had originally thought we were going to.

 

How did recruitment go for your group?

KOVAC: People see life sciences as a hot growth area — maybe the hottest growth area right now. But they also see this kind of change-the-world capability over time, and that jazzes people — people who worked on e-business, who worked on Linux, people who get very jazzed to think there’s big change and we’re on the vanguard.

When we started we thought we’d have to hire all our folks from outside, and it’s been roughly 50/50, maybe closer to 60/40, heritage IBM versus people we’ve hired in.

 

When you talk to the pharma industry, you now have all the bits of pharmaceutical IT. What have you noticed about their response to IT?

KOVAC: We’re at a very critical point in the pharmaceutical industry. We talk to the CEOs and heads of research in big pharma — if you talked to them even three or four years ago, a lot more of their thinking about where they needed to use information technology to be competitive was around marketing, customer relationship management, managing after-market kinds of data, and so on. And you can actually see a shift over the last three years toward thinking about IT as the competitive advantage in solving this increasingly critical research productivity problem.

 

Do you see any evidence at this point that the pharmaceuticals are adjusting to this by reorganizing the way they approach IT internally?

KOVAC: The way the industry sees it is that you outsource something that is pre-competitive. No one is outsourcing a substantial amount of research yet.

People are seeing IT in the research environment increasingly as a competitive weapon. It’s not surprising. When we look across the industry, the growth of data and so on, all of that reinforces why that should be the case. It has accelerated, not just for big pharma, but for everybody, this whole IT/life sciences convergence that got us [to] make more business investments in this area.

It’s accelerating, but we have to be finding the proof points that say, yes, this can happen. And, quite frankly, it’s not just the IT that has to change, there are research processes that have to change: The silos that exist between biology and chemistry and pre-clinical — some of those walls have to come down. IT systems have to become more than just tracking; they have to facilitate collaborations. You have to put the meat behind the buzzword of “knowledge management.”

 

You’ve said that competing with partners is a broken strategy. What do you do differently?

KOVAC: Our direction in the business unit has been not to bring applications to market, [but] to partner with leading companies in the application space — companies like Lion and Spotfire and Accelrys. We had to make a decision about the computational biology work in research: were we going to commercialize some of the algorithms and things they were working on or not? Our decision was we won’t commercialize them, we make them available to partners.

We thought it was important to be very clear that we’re not going to compete with companies who know more and will always know more about how to deal with biological data.

 

Were there any market considerations that went into that decision as well? Was infrastructure perceived as a safer or more promising market than applications?

KOVAC: The tools have tremendous value, but right now pharma’s really wrestling with this whole problem of integration because they’ve heard it from many, many, many folks that this is the ‘golden key.’ This is the thing that everybody’s got to use to crack the code and solve the problem. And there’s probably not one single key.

Pharma is going to have to find new ways of working and business processes that they don’t understand yet. There are going to have to be tools and applications that are very powerful, but they’re going to have to work together. And they don’t.

[The] world could go in two directions. It could go that one company emerges that has all the powerful tools — we doubt that that will be the case. We see it more likely that there will be some consolidation, but there will be still multiple companies and because of the pace of change and the role of the universities and public laboratories, that there will be a best-of-breed environment. So scientists in the biotech and pharma companies are going to want to choose best-of-breed tools and if next year there’s a new tool out there and that’s best of breed, then they’re going to want that and migrate to it. That places a tremendous demand on their infrastructure.

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