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(Bell rings) Ladies and

gentlemen, welcome to the

National Press Club and today's

national bank address. It is a

a pleasure to welcome ber

Boreham who is director of IBM

Australia and New Zealand.

That's quite a considerable

business these days with $4.1

billion of business a year and

more than $

10,000 employees. This is at

the centre of our developmental

processes these days and it's

an appropriate time to have him

here. Mr Boreham is Australian

and lives in Sydney but he's

spent half of his time in other

countries so he is well versed

with what the implications for

the industry are for public

policy. I invite you to welcome

APPLAUSE him today, Glen Boreham.

Thank you, Ken. To the board

of the National Press Club and our sponsor the National Australia Bank for the

opportunity to speak to you

today and good afternoon,

ladies and gentlemen. As Ken

said in his introduction, I'm

here today as a CEO of a large

company, but I'm also here as

an Australian and as the father

of 10-year-old twins. In the

decade since my twins were

born, Australia's workplace has

changed dramatically. Back in

1996 work in Australia had much

clearer boundaries. There was a

time to do it, maybe 9 -5, a

place to do it, almost always

in the office and a way to do

it, typically the way it had

always been done. Today, it is

very different. Today our work

travels with us. We take it

home. It goes with us on the

plane. It can find us on

weekends when we are watching

our kids play soccer. But there

are great things about this

new, flexible, mobile way of

working. We don't have to go

to the office. We can often

work hours that suit us. It's

exit ing - exciting because we

can work with people from

anywhere in the world and when

we go home, the work doesn't

have to stop. It can be picked

up by colleagues in Delhi or in

New York. Big changes - a

different world - and I wonder

what will be next for my kids.

What will the workforce look

like in another 10 years' time

when my children join it? Given

how fast things are changing, I

can't imagine what work will

look like for my kids, how or

where they might work or even

what sort of jobs they might

do. But I do know some of the

forces that will shake their

world. I'll touch on three of

them today. Firstly, the

globally integrated enterprise.

Secondly, an open business

environment. And the third, the

glue that brings it all

together - Australian

enterprise. The thoughts I'm

going to share with you today

are not just mine, but they

have real meaning for

Australia. They come from an

international conversation, a

conversation about innovation

that IBM conducts with some of

the world's most interesting

thinkers. This innovation

outlook goes beyond technology.

Importantly, it comes from

outside IBM. And not just from

other large companies. But from

the public sector, academia and

community groups. These people

have very different and wide

raining interests so the

conversation uncovers ideas

that transcend business and go

beyond borders and cultures.

These ideas have far-reaching

enterprises and for imply cases for government, for

individuals. Today I want to

share with you one of their

most provocative ideas. The

idea that the 20th century

organisation may literally be

history. I want to look at both

the threat and the opportunity

that that presents for our

Australian economy. When I

joined IBM in 1986 it was the

class ic 20th century

organisation - a multi-nationalment multi-nationals emerge to gain

access to local markets and

resources, setting up mini

versions of themselves in literally hundreds of countries

and for decades that was a very

successful model. But in the

years after I joined IBM what's

once looked like a efficiency

started to look re down dant.

Why? Because multi-nationals

simply replicated. They

duplicated themselves in every

country. So, for example, in

time, there were over 150 mini

IBMs all around the world.

Every country operation not

only had it own sales force,

but its own often different

supply chain and procurement,

finance and human resources and

everywhere I worked, in Japan,

in the UK and of course here in

Australia each country

organisation built its own

processes with often unique

manufacturing, research and

development capabilities. Now,

it didn't take a rocket

scientist to figure out all

that duplication was

inefficient. We were getting

the message loud and clear. We

were on the wrong path. And so

many companies, including IBM,

started to do things

differently. If functions

didn't have to be duplicated,

we started grouping them

together. If there was

something we weren't

particularly good at, we

partnered with another company

that was good at it. And so we

created new models for our

organisations, models that

didn't cost as much to run and

allowed us to focus on those

things we were good at. Our

core confidencies and these

models worked. IBM replacing

multiple supply chains with

just one saves us an

extraordinary $7.5 billion.

That's a year. And for a while

we thought this was the end

game - a stream-lined

organisation that focused on

its strengths and outsourced

the rest to other people. But,

the startle ing incite from our

innovation discussion is that

this not the end go, it is

simply the end of trying to

duplicate new versions of the

same institution. In fact, our

innovation dialogue suggests

what we are seeing is just the

beginning. The beginning of a

new type of organisation, a

highly responsive and globally

resourced enterprise. But, this

is an enterprise that doesn't

even think of itself as an

organisation. Instead, as a

network. Not a network of

technology, but a network of

people. Of course, people are

connected by technology, but

that's not the point. The point

is a community of people can

now work together in a very

powerful way without the command and control

organisation of a traditional

enterprise. Now, what am I

talking about? I'm talking

about eBay. Millions of people

who are not eBay employees

coming together and working

together to provide an

extremely successful service. Last year, ladies and

gentlemen, eBay was the primary

sales channel for 17,000

Australian businesses. And a

source of income for over

50,000 Australians. Another

example of this new type of

collaboration is the

open-source community that come

together to develop line next.

Line x was developed by a

global demun, a community of

companies and individuals.

There was a time when IBM would

never have clab Britted

externally on software

development like this. With us

contributing only a fraction of

its full cost, global

collaboration has given us an

extraordinary product. To be

frank about this, the network

came up with innovations that IBM alone wouldn't have

considered. These are just two

examples of the way that

networks are re-writing how

business happens, how people

make a living and how

industries and economies are

changing. This brings us back

to our kids because it's being

accelerated by generational

change. I don't know if you've

tried to hire or work with

Generation Y, but they see

things differently to our

generation. This new generation

of worker s technically enable

ed, Mobil, flexible, they no

longer identify with their

employer in traditional ways.

For many of these people, their primary identification is with

their network of peers. They

are engineers or scientists or journalists first and employees

second. Many of them are

beginning to figure out, like

the open software community,

they might not need to be part

of a traditional company. Of

course, this is the way our

journalists friends have been

operating for years. You are

often Mobil, able to work from

anywhere, your value is derived

from a network, a network of

sources and contacts. And

having a very close friend, as

I mentioned to Ken earlier as a

journal US, I know that he

never let respect for authority

get in the way of a good story.

(Laughter) Now with bloggs,

anyone can try to be a

journalist, some with more

success than others. When

bloggers come together, you get

new communities, like My Space

and U tube. Networks of

individuals create ing

extraordinary value. So the

barriers do individuals working

together are really starting to

come down and I believe this

will lead to massive change. That's in both business and in

society. Because this isn't

just about the Internet

knocking down geographic

barriers. That's old news.

This is about the next

generation of technology that

works with the Internet.

Technology like real-time translation. Already

translation software is allowing, for example,

emergency doctors to talk to

patients in their own language.

You talk and your conversation

is instantly translated. It is

saving lives. You can imagine

how useful that is in a

disaster situation. Or in an

emergency room. And you can

build a translation service

into any device which has some

potentially cool applications.

For example, in Japan you can

use your PDA to translate a

menu into English. These real-time translation

technologies will soon be embed

in your mobile phone, your

laptop computer and your car.

They will be in every part of

business and society truly

removing language barriers in

he the global economy. Now, as

a business leader, I fine the

implications of this astounding

because what we talk about -

while we talk about the world

being flat, the reality is that

language and cultural

differences have kept some

unnecessary boundaries alive.

Technologies like this, which

lower the barrier s to

communication, will further the

rise of clab collaborative

communities. This is

coordinated by a network. Not

by a single organisation. You

can see this sort of power at

work at IBM on our global grid,

which allows people to donate,

to donate their idle personal

computer time for scientific

research. If you join the grid,

your PC becomes part of a

global supercomputer, a

computer that is currently

today working on finding cures

for AIDS and cancer. Notice how

in these clab bore rattive

networks, the motivating force

doesn't have to be money.

People participate for many

reasons. Some very worthy. Like

finding a cure for cancer. And

some simply for fun, like in My

Space. Notice also that unlike

a traditional corporate

hierarchy where central

management decides what to do,

instead there is a distributed

intelligence. In fact, in a

network leadership is derive ed

from a common youngifying set

of ideas or rules. Sometimes

those rules are the rules of an

online game. Last year 100,000

people in China earned their

living play ing online games

and selling their characters

for hundreds of dollars. In an

online game, tens of thousands

of people who have had no previous relationship come

together for a current purpose,

play by the same rules and then

they dis band. That's exactly

what happens when a globally

integrated company pulls

together a projet team. People

from all over the world come

together and work together

effectively to achieve a

business goal. When the project

is over they disband and form

different teams. The very

nature of work is changing.

Talented people can work on

global projects from anywhere

and are therefore becoming less

dependent on the bricks and

more - mortar of an

organisation. In the future,

they'll work from home or drop

no a local hot-desk office and

as a result traditional

organisations are becoming more

and more virtual. Now, it's

already happen ing. At IBM in

Australia we have over 10,000

employees and almost all of

them, including me, work from

home at least one day a week.

So individuals will have more

flexibility over how and where

they work. But what will this

mean for business? What happens

when a business turns into a

network? When it doesn't matter

where work gets done or who

carries it out? What happens is

a company like Barti Airtel. An

Indian Telco that actually does

n't own any of its

infrastructure, giving it

extraordinary flexibility and

cost advantage. This type of

opportunity and pressure will

force companies to focus on the

way they can be truly

different. We've already seen

that our local industries will

not win by depending on low

labour costs. Instead, they

will win by clearly

understanding how they add

customer value, how they

assemble a network of suppliers

from around the world to help

them deliver that value.

Sometimes this will be about

lower ing cost, but Australia's

opportunity is about value

underpinned by innovation,

creativity, thought leadership

and integrity. Now, I mention

integrity because in an open

global ecomony trust is

incredibly important. The global economy won't work without the knowledge that

partners and suppliers will

deliver on their promises. I

also believe global integration

will not just make the world

flatter and small er.

Importantly, it will also make

it more equal. Because although

large global companies like IBM

are benefiting, we're also

witnessing the rise, the rise

of a new breed of small,

dynamic and highly specialised

businesses that are using

global integration to compete

against corporate giants.

Already there are firms with

just a few dozen employees, but

they're generating hundreds of

millions of dollars in

business. There's a consumer

electronics company in

California, apex Digital, that

generates $1 billion in revenue

with less than 100 employees.

In fact, the innovation

discussion actually suggest ed

that in addition to companies

like IBM the future might

conservice of 1 billion

one-person ent prices operating

globally. Now, you can see this

shift as a threat, which it

absolutely is to traditional,

inflexible organisations or you

can see it as an opportunity

because you don't have to be

based in California to be

globally integrated. You can

based in Canberra, cal ghouly

or cool get ta. There is

nothing to stop Australian

companies resourcing their

operations from anywhere in the

world and adopting more

flexible business models, but

to do that they need to do more

than just outsource.

Outsourcing is about cost.

Global integration is about

creating greater value. So this

goes beyond core and non-core

functions and it requires a

completely different approach

to management. Because all of a

sudden, you are trying to

manage a complex and ever

changing network, a network of

individuals, many of them not

your direct reports or even

necessarily employees of your

company. In that situation,

traditional command and control

doesn't work. You need

individuals to self-regulate,

to be responsive and to be

efficient. How do you get a

network of individuals to act

together as one? Just like a

collaborative community, you

give them a common purpose.

This was another insight from

our innovation discussion. The

idea that if an organisation

has to flex with the global

market, the only thing that

will remain constant are a

vision and a common set of

values. This vision is what we believe will provide the

necessary glue between

individuals and organisations

and these values will regulate

their actions. Now, how do you

find that vision and those

values? You ask the network. At

IBM in 2003 over 300,000 of my

colleagues participated in a

72-hour values jam to establish

what we stood for. Value is not

invented in the bird room or by

consultants, but by the whole

network of employees. We use

the three values that come out

of this process to do what we

call "lowering the centre of

gravity" , pushing decision

making out to the edges of the company, relying on our people

to make the right decision for

the organisation. All of what

I've outlined today represents

huge change. But it has

substantial veins - becoming

globally integrated makes

companies more competitive by

giving them access to skills,

knowledge, insight and

innovation from around the

world. And of course when

companies benefit, so do

economies. Because these

companies will have the

flexibility and responsiveness

to capture value within the

globally integrated economy,

not just their local market.

Today, for the first time in

human history, everything is

connected. There are over a

trillion devices connected to

the Web. Hundreds of millions

of businesses. Also a billion

people. But we are just at the

beginning. Imagine the impact

and the potential when the next

5 billion people also connect?

Because when everything is

connected, work moves. It flows

to places where it will be best

done. That is, most efficiently

and with the highest quality.

Like water naturally finding

its own level. Our challenge is

how are we going to respond?

The question business and

government must consider is how

do we get work to flow to

Australia? Australia has

already made great strides in

opening up its economy, but we

have to do more. We need also

to invest in infrastructure,

infrastructure that enables a

fluid and Mobil workforce. I

welcome the Government's

announcement earlier today of a

further investment in broadband

access across Australia. But

understandably, water and

transport continue to dominate

our infrastructure debate. But

information and communications

technology is vital

infrastructure, too. It's our

knowledge infrastructure. The

trouble is it's very hard to

see when it is not there. You

know there is a water shortage

when restrictions mean you

can't water your garden. You

know there is a problem with

transport when you it is in a

traffic jam. But the fact that

Australia's ICT infrastructure

is not as competitive as we

need it to be, doesn't exactly

hit you in the face. So we

haven't had the same sense of

urgency, but we should because

it's ICT infrastructure that

allows tbloebal work to blow to

people in our cities and in

regional and rural Australia. #

for example, it allows the 600

people employed by IBM software

centre in Ballarat to be part

of our global delivery network

and this isn't just about

allowing rural Australia, regional Australia to

participate in the global

economy. If an increasingly

Mobil workforce doesn't have to

commute, if they can work from

home or from the local office,

imagine the cut to our fuel

emissions, how it might improve

our local communities and the

impact it could have on

families. But what else can we

do to get work to flow here?

Well, let's look at the forces

driving the flow of work. Their

cost, an open-business

environment and expertise. We

don't want cost to be what

drive works here, lowest common

denominator. It is work no-one

wants. Low wages for low-value

work. No thank you. Of course,

Australia wants to attract the

work everybody else wants. We

want to move further up the

value chain and not down it. So

that leaves us with two areas

to compete - an open-business

environment, an Australian

expertise. We already have an

open and trant parent -

transparent environment, we

have a strong rule of law, but

we are not the only country

with those advantages. Which

leaves us with Australian

expertise and perhaps my most

important point, which is this:

The country that produces the

best equipped talent pool to

work in the global economy will

receive the cream of the

world's work. Australia is not

there yet. But we shouldn't be

overly critical of ourselves

because no-one else is either.

However, the window of

opportunity to be that country

is closing fast. Around the

world, IBM is working with

governments to create graduates

with skills of the future. Last

year IBM signed an agreement

with the Chinese Ministry of

Education to identify and

develop the skills China needs

to compete in he the global

economy. We have similar

agreements with other

governments around the world.

These governments understand

that the skills of the future

will come at the intersection.

The intersection of IT,

science, engineering,

mathematics and business. You

see, flexible organisations

will require flexible people.

People who don't just have

technical skills, but have

business understanding, the

ability to adapt and the

ability to operate in different

cultures. And although our

education system has

historically served Australia

very well, I'm deeply concerned

that it's not going to meet the

rapidly changing needs of our

future. Because Australia's

education system doesn't always

support that fusion of skills.

Our education disciplines,

while very high quality, still

too often exist in silos. So we

produce terrific engineers, but

we don't produce engineers who

understand how to manage

projects in India. And that's

what I don't understand.

Because Australians should have

the edge in this. Australians

are a global people. There are

more nationalities here in

Australia than in the US. We're

a my grant nation with open,

flexible, questioning, creative

and highly mobile people. You

know, I worked outside of this

country for almost a decade and

wherever I went I invariably

ended up working beside other

Australians. We already have a

first-hand knowledge of other

cultures and other Lang wanes

and yet I fear our education

system isn't designed to

leverage that. Why don more

schools have mandarin or Hindu

on their curriculum? Son is

learning German in Year 5 and

that is fine, but shouldn't he

also be learning a language

relevant to the region in which

we live? That's just the tip of

the iceberg. If we are still

favouring European languages,

we're a long way from teaching

the modern skills Australia is

going to need in a globally

integrated economy. We need our

entire education system, from

kindergarten through to

post-graduate to prepare our

workforce with qualifications

that fuz technical skills with

industry knowledge and cultural

awareness. That means

transforming how we build our

pipeline of future talent. It

means having more universities

working with thought leaders in

the business world. For

example, IBM has an

undergraduate program with the

University of Ballarat where

students work at IBM and IBM experts teach at the

university. Now, you can look

at that and say, "Yeah, but

what difference does it make?"

The difference it makes is that

that centre in Ballarat employs

over 600 people in regional

Australia and it could have

been located anywhere in

Asia-Pacific. It was located in

Ballarat because we had a

partnership with the university

and that partnership ensured a

pipeline of talent to staff

that centre. Over the last few

years, skills and university

partnerships have been the

mayor factors in all the global

centres that IBM has chosen to

locate in Australia. For

example, Queensland was chosen

as the best location for our

business transformation

outsourcing centre because it

had a unique blend of Asian

languages and technical skills.

That centre is creating a

thousand new jobs and these are

high-value, high-paying jobs.

There is, ladies and gentlemen,

nothing we can do to stop

low-value work moving out of

Australia. However, it is our

job in business and in

government to make sure

high-value work fleas in to

replace it. In conclusion, it

is my opinion that Australia is

in a terrific position to do

this. However, we have a

responsibility to seize the

opportunity. Because in our

lifetime, economic power and

prosperity in the world is

moving south. It's moving

towards us in the Asia-Pacific region and also because we have

an amaze ing high-quality

workforce. We excel at problem solving, working

cross-culturally and

creatively. In every quarter of

the world, there are

Australians using these skills

in very senior positions. As a

nation, we punch above our

weight and when we pick our

mark, we know that we can excel

in the global arena. In win, we

are boating the French at their

own game. Cochlear and red med

are winning on the global stage

in medical equipment and

bio-tech. In digital special

effects just last week we had

'Happy Feet' win an Oscar, a

movie created by world-class

Australian organisations. We

need to leverage this sort of

talent. We need to give or

workforce the skills of the

future. We need to create

companies for them to work in.

Globally interdwrait ed -

integrated businesses that can

compete on the world stage.

Ladies and gentlemen, thank you

for this opportunity to talk to

APPLAUSE you today. Thank you.

Thank you very much, Glen

Boreham. We have a series of

questions starting with Roger

Houseman. Thank you for your

speech, Glen. I must say I

think I'm going to sleep much

better tonight. You have a very

good understanding of what some

of the issues are. Thank

you. However, I would like to

know how many patents have

actually come out of your

relationship with Ballarat? I

know that IBM worldwide is one

of the more prolific patent

lodgers and owners, so I would

like to know what are we really

achieving? Sure. That's a good

question. I mean, first of all,

IBM has led the world in the

number of patents registered

for over a decade. We do have

wonderful things coming out of

Australia. One of the things

that I did last year when I

took the job is we coordinated

all of our research facilities

in Australia where we are

investing in excess of ?50

million a year in local

research and development. We

co-ordinated those under one

leader. We have multiple - I

don't have the exact number

committed to memory - but we

actually give awards for IBM

Australians who register pay

tens and I see a lot of those

coming over my desk. This is

not just about research and

development, though. That is an

important factor. We spend as a

company US $6 billion a year on

research and development, but

there is shift here. Research

and development is not enough.

This is about innovation, it is

about opening the opportunity

beyond just research and

development that's crucial, but

to a broader view - innovation

of client relationships,

innovation of business models,

innovation of our own skills.

And as the agenda opens to

innovation, not just research

and development, Australia for

the reasons I suggested, our

open, creative people is

wonderfully well placed. Next

question is from Simon Gross.

From the Canberra-times and

Science Media. I've a question about the "access card"

project. IBM is leading one of

the bids for the systems

integration contract. It's

about a $300 million roughly

job. But it probably has cost

you and your partners a few mil

to put the bid together but you

don't know there is a job yet

because the legislation hasn't

been passed to enact the

"access card". I would like you

to imagine in a room with five

key decision makers. Labor

Shadow Minister Tanya Pilbsec,

Natasha Stott Despoja, the

Greens senator, Kerry Nettle,

family first senator Steven

Fielding and Barnaby Joyce. Now

it's a pretty funky group. I

would start by asking for a

glass of wine. APPLAUSE

You would put yourself

off-side with Steven fielding,

I'm not too sure. I'm not sure

about Kerry Nettle. So it's a

funky group. It is rare to get

them together but they are the

ones that are driving the

concerns about the "access

card" or have crucial votes in

the Senate. Now even rarer to

get them together they've grade

for 2 minutes they won't say

anything while you have 2

minutes to give a pitch about

how the technology is available

to solve their concerns. What

would you tell them. I would

preface this by saying we have

an active proposal in with the

Government so I am limited to

some extent on what I can say.

Really the "access card" is

simple. It is about two things:

it's about incretioning the

quality of services that the

Government can provide to its

citizen ry, to Australians. So that government services that

may have taken hours or days

can take minutes. So I think

that's the reason able

objective. On the other side,

it's about government

efficiency. It is about

government being able to do

things with less of our money.

So either be able to redirect

or expenditure to social

security or redirect money to

tax cuts. I think both of those

are noble objectives and I

think the "access card" can

achieve that. I spoke today

about the globally integrated

enterprise. I think the "access

card" is an instalment on a

nationally integrated

government. Can I just ask you

something related to. That was

it clear to you as a

participant in this process

that the database created by

the "access card" was going to

be available to police and

security agencies? I'm not

aware of that, no. It was

uncovered at a Senate committee

hearing yesterday. The next

question is from David Crow.

David Crow, from the Financial

Review. Earlier in your speech

you spoke about the importance

of business networks and I

thought that fit in very neatly

with one of the issues in

federal politics this week,

especially the politics in

Western Australia.

(Laughter) In your position you

are coming into contact with

lobbyists all the time and

government figures all the

time. So a couple of questions

on the issue of the WA

networks. Do you think a

business leader is Morley

compromised if he or she comes

into contact with a pen such as

Brian Burke? Have you ever had

lunch with Brian Burke?

(Laughter) And if you had,

would you feel morally

compromise bieds that? Uhm,

thank you for that question.

(Laughter) I have been in the

job 13 months. I took the job

in January last year and I

don't know whether it is by

means of planning or luck in

the year I've been in the job

I've actually not met with any

member of the WA Parliament

either sides of politics

current or past, so I can stand

here not worried that Im about

to lose my job like a whole

bunch of other people. Look,

you mention ed government and

companies trying to influence

government policy. We don't

employ lobbyists globally, but

we wish to take a role, which

is why I've taken so much of my

time preparing for today and addressing an audience like

this. We want to take a role, a

leadership role, in influencing

policy and across these agendas

that I've spoken about -

creating and providing an

environment to create a

enterprise in our country.

Creating and promoting an open-business environment and

most importantly of all, I

think because IBM has, we've

got $10,000 people - 10,000

people here and 10 people with

international views and

connections, we can assist

Australia in shape ing our

agenda to create the expertise

we need for the future. Mr

Boreham, thank you very much

for your speech. An economist

said to me the other day that

he thinks the biggest mistakes

that governments make are often

in the boom times when the

money is rolling in and it

doesn't seem like there is much

urgency to change things. So

you've identified a key problem

that perhaps we're independent

investing enough in education

now when the cash is rolling

in. So, do you think that Kevin

Rudd has get it right when he

says we need an education

revolution and how do we need

to implement that? Is it a

matter of bringing the states

together and working out a new

way forward? What is your view

there? First of all, yeah, I

don't wish to buy into party

politics, but I am really

encouraged with the dialogue

that's happened in the last

couple of months because I

think education and skills have

been too far down the policy

stack, the poll u cy - policy

agenda. So I applaud both sides

of Parliament for bringing

these up and we saw, as I

mentioned, we've seen an announcement this morning, that

we are still trying to

familiarise ourselves with from

the Government investment. In

terms of education, I do think

we need to spend more. There

are some alarming statistics

about the percentage of GDP

that Australia invests

iniblecation relative to our

trading partners and our

competitor s. And personally, I

am supportive of the concept of

a national curriculum. There

seems to be now consensus on

both sides to this, but to me,

as an employer who is hiring

nationally, we hired 17,000 -

1,700 people last year. So as

somebody who is hiring to know

that the students coming

through and entering university

are coming through with a

consistent nationally based

curriculum seems to make sense

to me, personally. Lawrie

Wilson. Free Lance journalist

and director of the National

Press Club. Mr Boreham, just as

the promise of technology got

so far a head of the reality

and led to crash some

years ago, so it seems that

reasonably regularly in the

town and I would imagine right

around the country and the

globe, the promise of IT

projects seems to be greater

than the reality and I think a

large percentage of IT projects

fall short of what they are

actually setting out to achieve

and relatively small percentage

actually achieve everything

they are supposed to achieve. I

mean, I mentioned the words

like "edge" and "car go

management" around this town

and it will induce a nervous

twitch in some quarters when

they recall past history, shall

we say. I'm wondering what is

it going to take to actually

bridge that gap? I mean, is it an inevitability that there

will always be some gap that

exists there? Uhm, I don't

think there's an inevitability,

Lawrie. I do think that part of

the excitement of being in this

industry is that clients,

organisations bring companies

like IBM their problems. They

bring us their biggest

challenges to try and solve and

there have been times when we

have disappoint ed ourselves in

delivery, but in the vast

majority of cases I think that

we have delivered well and

that's reflected in the breathe of both my company and the

industry. Tony Melville.

Director of the National Press

Club. I was interested to hear

your vows about globally

integrated enterprises and how

IBM has approached that. I am

wondering what advice you might have for Australian

manufacturers, whether in IT or

heavier industries that are now

reacting to the globalisation

pressures that are on them and

that are thinking about

branching out? What sort of

advice would you give to

companies that are at that cusp

of manufacturing in Australian

and - Australia and thinking

about going to Thailand or

Vietnam? I think the simplest

way I can put it is they need

to look at this as an

opportunity. We have a simple

choice. We can say we can never

compoet. We are 20.7 million

people down here at this end of

the Earth, we can't compete. We

can't compete with China and

India. We give up. All we can

look at it as an opportunity

and I see lots of organisations

in Australia and some are in

manufacturing and some are in agriculture like the wine

industry that I mentioned, but

across the whole rain of

industry companies that are

open minded t throw pillars

that I talked about today -

open mined to be globally

integrated, promoting an open-business environment and

then identifying developing and

capitalising on expertise. If

the company use mention are

doing that, they will prosper.

You lock at - we are creating

jobs. We believe that in ICT in

the last two years the number

of jobs increased by 50%. So by

looking beyond our borders, we

are actually making our

industry very vibrant. Next question from Cheryl

Moon. Thank you very much. CE

of of the AW AWB. Thank you for

your speech. I think you

touched nicely on the

contribution that ICT makes to

economic growth and prosperity

in Australia and there is no

doubt that the inknowvation you

talked about is growing. Jobs

in the ICT industry. I wondered

if you have had some views on

ICT as an enabler for other

industries because, as we mow,

productivity growth happens or

productivity changes happen in

other industries. Now that can

be disruptive to an industry at

the time. Have you get some

clues for what's the invention,

rather than the innovation that

might happen in those new

spaces? Look, if you look at

the statistics coming out of

Treasury, the vast majority of

productivity that's occurred

across Australian industry of

all type has been enabled and

has been fuelled by information

technology. I think the way I

would answer that is to

personalise it. Think of the

impact that IT has had in

improving the quality of all

our lives? I mean, the Internet has only been around probably

8-10 years for most of us. The

Internet came to life for me

when I moved to London in 1998

and started maining my affairs

in Australia remotely. We take

this for granted. I mean, think of the pract kalg applications

in our daily lives. Able to do

your banking, able to pay your

bills, able to communicate,

able to keep in touch with

family and friends. That's the

personal benefit. Then you

translate that to what this is

doing to industry. You

translate that to small

businesses in regional

Australia that are able to use

the Internet and the

technologies supporting that to

suddenly open up new markets.

You think of what we can do

across. We've talked about

"access card", but across

government to improve quality

of service. You think of the

way we travel today and the

benefits of online capability

and being able to do things

much easier than we could. We

often - and it is one of the challenges that we have in the

industry - this is all

happening so fast to us all, we

often don't stop and take a

breath and realise the impact

that ICT is having on our

lives. Roger Houseman

again. Are you allowed two,

Roger? Indeed, today I am. Very

good. And you will find out

just why this is. (Laughter) I

am going to put a slightly hard

question to you and you are

free to decline to answer it

because I know that Telstra is

one of your customer s. I'm

going to actually try and put

you on the spot. As you know,

Telstra has been advocating

they could do much better in

delivering broadband and making

the whole Australian economy

more competitive if they were

given more protection by less raeglation. (Regulation)

however, there is a case to be

argued from all of their

competitors who actually have

improved services wonder beyond

what people used to be used to

from Telstra. Where does IBM

stand on that issue? Look,

where we stand is this: we are

keen to see increased

investment in knowledge

infrastructure in broadband.

However, that happens to come

act we're supportive of that.

You just - and part of my

comment in the speech is my

fear about broadband is it is

really hard to understand the

impact it has if it's not

there. Right? In other

infrastructure, it's right in

our face. Now, you can't water

your garden, you are sitting in

traffic in your car, but what

are we missing out on? The

opportunity cost, the

opportunities we are

potentially losing today

because of the lack of

investment in broadband in our

cities, in rural and regional

Australia. You know, you just

think about - and fortunately I

work for a technically capable

company. We are delivering

education to our people. Really

high quality, video, rich

content media. We are

delivering that to our people.

The lack of investment in

broadband is potentially

restricting us doing that, it

is potentially restricting our

economy to do that to people in

outlying parts of Australia.

Small to medium business,

government, health care. You

know, I know today there are

doctors who are using

information technology to make

diagnosis on remote patients,

but more and more we need the

fingerprint, the coverage, the

speeds to increase. So however

that comes about, I'm

supportive of it. Simon Gross.

I've done a virtual poll of the five people in the

room. Oh, very good. Have we

changed five? I'm afraid you

blew it. OK. Especially about

the last bit about the

nationally integrated. These

are Big Brother. I've convinced

them to come back into the rom

and give you another shot and

for our audience around

Australia today for the people

in their homes who may have

concerns about privacy, what

can the technology industry

tell them about how the latest

technologies and the technologies fleeing through

can actually protect their

privacy and give them a

consumer benefit at the same

time. Yeah, sure. We need to

insure that - ensure that

technology is used appropriately and it is set up

in a way that it can't be

abused. I only learnt this week

- and this is different to

"access card" - but there's an

analogy here. There's currently

an issue between the European

union and the United States of

America regarding air travel

because post 9/11, the US are

demanding that manifest and passenger information be sent

in advance of a plane landing

in their country. The European

union have very tight privacy

laws and have said we are not

prepared to do that. It was

actually technology that's been

able to fix the problem. We

work ed - and this will require

a change of law in the US

Congress, it will happen - but

we worked with both parties and

have developed a piece of

software that allows the

Europeans to send the

information that the US

requires, it is encrypted so

there is guaranteed protection

and on arrival the technology automatically destroys the

data. So it can't be kept, it

can't be stored and so the

Europeans are happy that the

data is safe, the Americans are

happy that they have got what

they require to keep them safe

and so technology can be used

to achieve this. David Crow.

Mr Boreham, earlier in your

speech - sorry towards the end

of the speech you said, "There

is nothing we can do now to

stop low-value work moving out

of Australia" , and I guess

given the concerns about

offshoring to places like

India, that should perhaps

frighten some computer

programmers or other people in

Australia. Now, you've got

about I believe about 12,000

staff in Australia. Can you

look, say, five years out from

now - do you believe that you

will have increased that 12,000

to a higher number? Do you

believe you may actually reduce

it because some of those jobs

will be moved offshore? What's

your outlook for employment in

Australia? Look, I'm convince

ed we are growing. As I may

have mentioned, we hired over

1700 people in Australia last

year. Just to put this in

context - in the 1990s, IBM

employed 2,000 people in

Australia. Today, it's well

over 10,000 and we are growing.

This, in answer to your first

comment about fears, I

understand the fears, but we

need to look at the facts. You

know, we've got 4.5%

unemployment in this country.

It's at a 33-year low.

Underneath the top line , there

are particularly hot sectors.

Engineering, health care and

ICT is one. ICT create ed 50%

more jobs in the last couple of

years. So, if I was a program

er and I was sitting there

worried, I think the only thing

you need to be conscious of is

constantly sharpening and re

inventing your skills. The

requirement for the people is

there. It's just a changing

industry that you need to be

thinking about - where do I

need to be in a year's time?

What do I need to have studied

in two years' time? You'll have

a life time of employment in

this country. >>En, we usually

have a student group, usually a

visiting group from somewhere outside Canberra. Today it is

not. It's from inside Canberra.

It's our own Radford College

and they've nominated Josh

Baker to ask you a

question. OK, Josh.

Fantastic. Hello. I'm Josh from

Radford. I bet you ask me the

hardesty I've had today. As you

well know, all of the seven

generation gaming consoles have

been - well, the process has

been developed in conjunction

with IBM or by IBM. Yeah. How

has that dove equation from

personal computers systems, how

is that affected IBM? How has

that affected IBM's focus or

their growth? That is an

excellent question, thank you.

Because of your obvious age and

profile, many of you here may

not be aware of the gaming

industry, right. But across all

of the manufacturers, Sony,

Playstation, the whole lot, it

is actually IBM technology in

all of them and we have built a

terrific business focusing in

on - it's a child's,

teenager's, young adult's game,

but the technology at the heart

of these games is world-class

and fascinating. We've built a

business that is really

successful in supplying

technology to those

organisations, but one of the

things that we are finding is

it is where your generation is

taking us with gaming, where

your generation is taking us

with just natural use of

technology and when I was your

age it was not instinctive. The

Internet wasn't around and your

driving us in new areas. A

technology that comes out of

games is being used in xer

shall applications. There's an

emerging technology that many

of you will be aware of, I

expect. Some of you might know

called Second Life. Second Life

is the easier way to drib it is

the development of 3D Internet.

This started with kids. It

started with games. We're just

on the cusp of it being

commercialised. We used it this

year at the Australian Open so

you could walk around the

tennis facilities and in Second

Life and you could bow things,

you could buy shirts and

players' and actually but

online players to come in and

download them on the computer.

But the point is Second Life

that started as a game ing

concept, as a younger

generation concept, has

generated interest from a whole

lot of heavy-duty industries.

Retailers are interested in it

for online shopping. One of the

phenomenons of online shopping

is retailers miss out on the

secondary purchases. If you

goon line and you want to buy

meat and vegetables, you but

meat and vegetables. You don't

buy the chocolates and the