Taiwo Otiti and his twin brother had plans of settling and pursuing their careers in Canada, after completing their studies. Their father, a former deputy governor of the Central Bank of Nigeria, had other plans in mind—that his sons would return to Nigeria. Otiti embraced the advice and left his brother behind: a decision he does not regret.
Otiti is now the country general manager of International Business Machines (IBM), in West Africa. He joined the technology and solutions provider in August 2010, four months before the firm’s centennial celebration. It was also the time when the firm was experiencing a decade of slow growth. The firm traces its roots to the 1880s, when a group of inventors who designed and patented breakthrough tabulating machines and punch clocks came together to form IBM. The firm’s success was accelerated by the construction of the legendary Watson Research Center. This marked the start of research labs throughout the globe that churned world-changing products in the technology space. For years IBM became synonymous with innovation. However, the emergence of venture capital backed entrepreneurs, such Bill Gates, Larry Page, Sergey Brin and Mark Zuckerberg, in the past two decades, overshadowed the post-World War Two success of IBM.
However, there is a dramatic shift today. Evidence is increasingly showing the dwindling growth of the venture capital-backed start-ups and the comeback of former technology giants. Scott Anthony, contributor to the Harvard Business Review, wrote, “…Apple’s inventiveness is no anomaly; it indicates a dramatic shift in the world of innovation. The revolution spurred by venture capitalists decades ago has created the conditions in which scale enables big companies to stop shackling innovation and start unleashing it.”
Because of its resources, IBM is able to embark on projects that many venture capital-backed startups cannot afford. Leveraging on past innovations, IBM strategists (or catalysts) are taking over were the blue chip start-ups have left off. IBM’s master inventor, Colin Harrison, is a pioneer strategist who recalibrated the company’s philosophy. He and fellow catalysts in the company conceptualized ‘Smarter Cities’ which is part of IBM’s ‘Smarter Planet’ initiative. The ‘Smarter Cities’ initiative saw IBM providing solutions in Rio de Janeiro, Berlin, Beijing, Dublin, Singapore and New York.
“…the company would offer infrastructure and services that will help cities save money and improve lives by managing energy, water, traffic, parking, public transit and other resources,” wrote Scott Anthony.
The Smarter Cities concept has become the hallmark of IBM. In 2011, the company invested $50 million in the three-year Smarter City Challenge, as part of its commitment to its expansion strategy in growth markets. In July, the technology and solutions provider dispatched a team of top employees from around the world to Accra, under its Corporate Citizen Corps program. The team spent a month with the Accra municipality officials consulting on making Accra a smarter city. A white paper report, based on the recommendations of the service core team for a smarter city, will be released in the first quarter of this year. Lagos and Cape Town were the only cities in Africa selected for the 2013 Smarter Cities Challenge grant.
Beyond these initiatives the firm is continuing to invest significantly in growth markets to expand capacity, develop talent and deepen its research and development.
“IBM spends just over $6 billion in R&D every year [excluding other expenditures such as marketing] and there is nobody that spends that kind of money,” says Otiti.
This investment is driven by a strong cash flow, which stood at $16.6 billion in 2011. Part of the research and development expenditure was allocated to Africa and the first IBM research lab was built in Kenya. It is expected that this lab will support the science and technology skills base in Sub-Saharan Africa. This investment is justified by the constant revenue increase from growth markets. Cumulatively, these markets have contributed 22% of IBM’s geographic revenue in 2011, up from 11% in 2000 and company is expecting a further 30% growth by 2015.
In Nigeria, Otiti has expanded IBM’s market share through the diversification of company’s brands, which include services, software, information technology system, and research except finance services.
“Today, we control 70% of the high-end servers that run all the banking hosts in Nigeria, which gives us control of 80% of the transaction volume in banks. We have basically taken out SUN. There is only one bank remaining on SUN and four are running on HP,” says the optimistic IT expert.
The firm also partnered with Bharti Airtel to provide mobile services across 18 Sub-Saharan countries. In this partnership IBM runs the IT system of which Nigeria accounts close to a third.
IBM’s success is being buttressed by the decentralized structure that embodies creative leadership.
“IBM is a matrix organization. Under me, I have the four main brands, which is hardware, system and technology group (STG), software group, global technology services (GTS), which run things like strategic outsourcing and managing services and lastly the consulting group GBS (global business services). They report to me and they also report to verticals. The strength of IBM is the cross brand placement. We can actually provide solutions across board from consultancy down to delivery,” says Otiti.
Otiti is not a newcomer to the IT industry, having plied his trade with many banks in Nigeria. When he returned to Nigeria in the mid ’80s, the banking sector was going through major transformation. Over three decades, he moved from bank to bank. He first worked in the IT department for Citi Group. During his four-year stay, he started the software development work as part of the group’s localization program. He joined Fidelity Bank for three years and later Society General for a brief period.
The highlight of his career came with his appointment at First Bank: the oldest and one of the largest banks in Nigeria. His first task was to put in place a real-time online plan to centralize the bank’s 300 branches operations.
“One of the reasons they recruited me was because I was the first to do the first online ATMs at Society General. I was thus requested to give direction on how to do their channels infrastructure, which included things such as ATMs, Point of Sales (POS) and bankcards,” says Otiti who spent almost a decade at First Bank working on various projects that forever changed the Nigerian banking sector.
The efforts of his team led to the birth of Interswitch, which has enabled organizations and individuals to access their funds across 20 banks in Nigeria and across a variety of payment channels.
In his eight-year stay at First Bank he established an ATM consortium, which licensed Master Card to use its switch, and was also part of the team that negotiated Visa’s 20% acquisition of Valucard (now Unified Payment Services Ltd) and worked with the Central Bank of Nigeria on the vision 2012 payment system. He joined Afribank in 2009 for a short period before the bank’s closure.
Otiti wants the West African region to develop into an independent region like South Africa or Egypt.
“For West Africa to be an independent region, we should be able to generate over $200 million in revenues in the next five year,” says Otiti.