50 years of IBM New Zealand

50 years of IBM New Zealand

Like every great empire, IBM had to come down from the heady days of the 1970s when, for a brief while, it reached its pinnacle in New Zealand in a world of big iron and a ruling quartet under proconsul Basil Logan. Reporter Peter Isaac was on the scene at the time, piecing together an extensive library of clippings on the activities and personalities of the company and its leaders. We asked him to create this nostalgic impression of a great company at its peak. It’s still a great company, but a vastly different one from the days of yore.

When the modern age dawned in the 1970s, there was one permanence in all our lives -- IBM. It was like the British Empire at its height. It would go on and on and grow and grow. On IBM the sun would never set.
The centrepiece of this particular empire, as far as New Zealand was concerned, was the 12th Floor of IBM House on The Terrace in Wellington. The proconsul was Basil Logan. Barely in middle age at the time, he looked as if he too would rule on and on, and for a while he did.

The 12th floor was hushed and run under strict diplomatic protocols. Nobody hurried. Visitors announced themselves at one of the reception desks and awaited their moment.

Great emphasis was placed on these receptionists. They were usually selected after a period of temping to allow time for their abilities to be properly assessed. One such 12th floor figure was Valerie Percival, a leading socialite of that time.

As with all true empires, succession was expected to be orderly. So orderly, in fact, that the founding general manager, Jack Wills, retained an office gratis in IBM House.

Wills had been with the Treasury when IBM had first come on the scene seeking to automate the operation. IBM always knew that the best way of solving any problem was the most obvious one. So Wills joined IBM. At the top.

Bizarrely, Jack Wills provided one of the ruffles on the IBM of that era. He lived in a state house. When his residence became an issue, Wills simply responded that many New Zealanders of his generation lived in state houses because they were the only ones available at the time they put a roof over their heads. He liked his house – and intended to stay in it. The issue drifted quietly away in the sepulchral calm of the 12th floor.

As the 1970s picked up speed, IBM in New Zealand was run, in practical terms, by a quartet. At the top was Logan, whose ability had originally been spotted during his time with the Bunting Brush company. There was Doug Matheson, the staff man, a former typewriter salesman. There was Tony Tait, who held the prestigious title of director of DP marketing. And there was Stewart Rose.

On the surface, Rose was the odd man out. An avuncular son of the manse, his particular gift was to soothe the minds of enervated commission salesmen (they were all men in those days). Their fortunes, along with those of the ruling quad, would depend on the tiniest nuance of technology or personality in the matter of selling big systems.

Matheson, a tall, bird-like figure, was IBM’s chief conduit to the outside world and also joiner-in-chief of the organisations and societies IBM, then as now, believed should be supported. The main one was, and still is, the Institute of Management.

Tony Tait was known as the 1000% IBM man. He out-IBMed even IBM with his scrupulously neat desk and attire. He was IBM in a band box. On Tait, though, fell the task of impelling the sales drive in the area in which IBM everywhere racked up its serious profits, the world of big iron.

Tait, an accountant, was tall, lean, and square-jawed, with the perfect manners that characterised the IBM high command. The 370 Series was in full swing and IBM was about to cover its one weakness with a slew of minicomputers in order to rid itself of pesky interlopers such as Data General, Digital Equipment Corporation and, of course, Wang.

As New Zealand entered the 1970s, the spruce, white shirted, dark-tied, shiny-shoed controllers at their 12th floor command post were the aristocrats of the new realm of industrial rulership by technology. The way it looked, they and IBM would go on forever. And in a curious way, though not the way they expected, they have done so.

Nothing is ever perfect and the IBMers as they described themselves, were not unaware of the distant rumblings centred on the US federal government and its contention that IBM was a monopoly and should be broken up.

The 12th floor was ready. The new general systems department -- actually the small systems side -- was already being structured as a self-contained outfit with watertight doors.

Beneath the 12th floor, the deals were scoped and clinched. Participants worked in an area resembling something between a war room and a commonroom at a red brick university during exams.

One phrase that sent the red blood sizzling through the veins of IBM’s denizens was “competitive win-back”. This was when Burroughs, National Cash or DEC had stolen the business away – and the IBMers had got it back. In the 1970s business was fun at IBM.

Deals and tradeoffs were done. The famous pincer campaigns were devised and then operated.

The pincer worked this way: You had meeting after meeting during which all the people on the prospect’s side would be calibrated. Their technical guy loved golf. So your technical guy loved golf. Their project guy loved cars. So did yours. Their pleasures were your pleasures. Their worries were yours too. Who was going to make the decision at the upper management level? Get someone alongside him who shared his interests, his concerns.

The approach at every level had to be the perfect fit. IBM had the men for all seasons and occasions. Specialists were matched with specialists, generalists with generalists, big picture guys with other big picture guys. Oddballs were paired with other oddballs. Diversity was thus encouraged.

Another wheeze was the liberal use of the title engineer and the empowerment of those thus adorned. IBM always knew that clients, especially prospective ones, cut extra slack for engineers.

True, much was always made about IBM’s prohibition against on-premises booze. Elsewhere, though, IBM’s table was never frugal. In comparison, it wasn’t much fun for most people working in government departments. IBM understood this and filled the vacuum with lavish local entertaining and of course its famous glee or quota clubs which took this thrust offshore.

Many senior departmental officials now on the verge of retirement got their first experience of foreign fields courtesy of IBM.

Operatives anticipating long lunches with customers or potential ones were advised to clear the afternoon of subsequent appointments, and if there was any necessary over-indulging, on no account would they come back to the office that day.

As the 1970s wore on, the company sought to adapt to the delayed social changes coursing through New Zealand. One such adaptation was to the new era of gender ambivalence in which men were not necessarily men and women necessarily women. An upshot of this dilemma was that the word “wife” began to fade from official communiqués.

This attracted the attention of a well-known IBM prankster named Don Roberts. Wife-less at the time, Roberts, an industrial chemist by training, read the boilerplate of an invitation to a high-level reception for a visiting IBM top-sider. He deduced from all the waffle about companions and partners that while he was prohibited from bringing a female unless he was lawfully married to her, there was in fact a loophole.

This meant that any male of his choosing could accompany him to the bash, and indeed was welcome to do so. On the night a straight-faced Roberts escorted into the ballroom an IBM trade supplier whose disinterest in matters of haberdashery was an industry by-word, as was his preoccupation with the pleasures of the table.

With his companion creature’s pockets stuffed with cheese in order to prepare for the long nights ahead away from IBM hospitality, the duo cut a suitable swathe that night – and were unquestionably noticed by the 12th floor entourage. But nothing was said, then or later.

Roberts had brought home a spectacular sale with the Ministry of Works for several floors of big iron. It was a sale that was already being used by IBM as a key worldwide reference. The 12th floor knew that form should never impede substance.

Once you left IBM and broke the faith you never came back. But one did. He was John Bell, a man with depth on both sides of the IT cultural divide of science and sales.

High-level visitors were an intense preoccupation for IBM in those days. One practical problem was that the capital city only one suitable hotel, the James Cook, which was usually heavily booked. IBM always had several suites permanently reserved there just in case.

For the most part, visitors such as Daniel Cougar of Fortran fame went out of their way to be amenable. One or two, though, were problems. One who fell into the latter category was Jacques Maisonrouge, supremo for IBM’s operations outside the US. As head of IBM World Trade, he was the sun in IBM New Zealand’s constellation.

Bearing in mind the IBM credo of intense focus on local custom, an extended haka was laid on for Maisonrouge at the outset of his visit. It had the opposite effect to the one intended. Maisonrouge raged: Why had it taken him so long to get out of the airport and into the 12th floor? Why were these wild-looking men obstructing his progress?

Maisonrouge was soothed but more was to follow. Because of the serious shortage of premium conference-style accommodation throughout New Zealand at that time, the meeting with Masonrouge was held in a conference room under partial refurbishment. As Maisonrouge was getting into his stride, part of the scaffolding collapsed. Nobody was hurt but it was not exactly what the locals had in mind.

Ever since IBM installed its first serious bit of iron in the Treasury in 1961, many wonder and continue to wonder about the ingredients of an IBM big-ticket sale. Certainly the multi-layer matching of hierarchies is one clue but it is not the full story.

IBM did the obvious. Though its sales formulae were clouded in mystery, in practice they were straightforward enough. Salespeople were constantly reminded to ask for the order. Once they had the order they were advised to quit the scene of the sale as quickly as possible. They were warned to never accept any sales session to go the way they expected or wanted it to go.

These and other such advice were contained in a simple Xeroxed set of tip sheets that were widely circulated.

And yet... Even as IBM passed through the tranquil waters of its 1970s mid-passage there was a rumble of distant thunder.

Long before the US Federal government trustbusters got worried about IBM, the New Zealand government sought to curb the firm’s market dominance. It did so by dividing state mainframe acquisition between three companies. One was IBM. The other was Unisys nee Burroughs. Finally, there was Britain’s ICL. The government encased each of the three vendors in their own branded facilities fortress. Burroughs went into a building in Thorndon, well away from the IBM stockade in upper Willis Street, now a university hostel. ICL, overwhelmingly the weakest of this trio, was stationed even further away in Upper Hutt in a new concrete data centre that might have been designed by Hitler’s architect, Albert Speer

The arrangement did little to staunch the onward march of IBM. In spite of this government-enforced apartheid, IBM was considered to have up to 80% of the computer processing market by the mid-1970s.

In the IT sphere, this market share percentage was only replicated by the dominant recruiter of the era, IDPE, and by pioneer and for a longtime industry scorekeeper Arthur Hoby.

The three pillars of the IT market in the 1970s were the government, the airlines, and the banks. Actually, the banks should have gone to Burroughs, which should have bagged Databank, part of an international clearing operation known as SWIFTT -- run on Burroughs everywhere else. But IBM got in there – and stayed. (See “Requiem for abandoned implementation”, CIO September)

One that did get away was the Wanganui Law Enforcement Centre, won by Sperry Univac. The first problem encountered by this particular non-IBM installation was one of success. The firms involved had problems divvying up the contract benefits of having brought law enforcement in on time to budget and then having it run flawlessly.

This was typical of the BUNCH, as IBM’s collective opposition were called. They seemed like deer caught in IBM’s headlights. IBM’s game play was to keep the opposition locked onto you instead of onto their business. This increased the possibility of their business becoming IBM’s business, which is exactly what happened to law enforcement in later decades.

Otherwise IBM seemed to have a sixth sense for impending tactical trouble. It always knew how to take evasive action. It was well clear of the decade’s iconic cock-up, the Health Department’s premature and costly implementation of dispersed processing for hospitals. For many this early application of minis tended to confirm what IBM had told them: stick to big machines in big places doing big things.

IBM, though, was playing the mini hand skillfully In short order it fired into the market the System 32, the System 3, and the System 38.

The resulting incompatibilities were also extremely profitable. IBM also had the market confusing value by stirring up the mud around the ears of DG and DEC, which until then had owned the mini market.

DG, for example, in spite of its engineering brilliance and inspired staff, was relegated to cultivating the more unprofitable end of the systems market, the university business where demands are high and budgets low.

And so, for the 12th floor, the 70s slipped efficiently by. If anyone looked vulnerable at IBM, it could only have been the man with the film star good looks, David Eliasen. His bailiwick was office products, and only here was IBM feeling the pressure. The main reason: Xerox and other lesser contenders. Xeros, fuelled by its leasing revenues from copiers, was forcing its way onto the desktop.

IBM reasoned thus: if Xerox starts using its copier base as the lever for its small computers, it will start building bigger computers and then we are in trouble. To block the Xerox game plan, IBM rushed into the market with a series of copiers that didn’t work so well.

As it turned out, Xerox wasn’t the problem. Indeed it was in the same boat as IBM. Its vast research and development facilities, its patents and its pervasive sales force were no match for opportunistic insurgents and – in Xerox’s case -- people in Asia who could manufacture their products much more cheaply .

To divert for a moment, it is worth recalling that IBM’s headquarters at White Plains, New York, were run by a troika. The first among these equals was the urbane Frank Cary. Two characters of a rather tougher stripe flanked him. One was John Opel, the other was Gilbert Jones, an old time go-anywhere, do-anything salesman.

It is Opel who matters here because he was the IBM placeman for a charity on whose board also sat Mary Gates, Bill Gates’ mum.

It was IBM policy at this time not to reveal how worried the company was by the antitrust drive that was daily gathering force at a courthouse in Foley Square. But IBM believed it was in trouble. The founding Watson family still controlled the company with a tiny shareholding. In fact the Watsons ruled by a kind of moral suasion which entitled it to pick the likes of te Cary, Opel and Jones.

Amazingly the Watsons had never implemented the kind of voting and non-voting stock arrangement that allows the Ford family to control its corporate destiny. The Watsons believed that if they gave the impression of seeking to take full possession of the small computer market, as they had done the big computer one, there would be such an outcry that the Foley Square talkfest would stop. Then the trustbusters would instead actively start cutting them up.

Microsoft got a bigger piece of the desktop action as a ploy to soak up some the heat. Actually, it might not have happened had there not been a totally unrelated calamity -- one with repercussions on New Zealand that in their way were no less serious.

The one IBM figure of influence considered to have possessed the broader picture on the way personal computing was going was Roger Estridge. He had been driven to distraction by the failure of his colleagues to comprehend the way things were developing. He was on board a DC10 that crashed in Chicago.

So was Jean Claud de Verrier, they key man in the development of New Zealand’s Progeni computers. On de Verrier’s shoulders rested the company’s broader plan of basing an indigenous New Zealand upstream IT industry on this product.

Change was coming, along with a big button that said “I Love My IBM Personal Computer”. IBM’s mandarins were standing by with Charlie Chaplin models and makeup -- the master of mime has been chosen as the representative of the pending PC.

About the same time the characters on the 12th floor were awaiting a visit by their new supremo, John Akers, who was flying in from New York. Akers, looking a bit like Cary Grant, was hand-picked by the Watsons to replace the old troika. Akers, at a lunch at the James Cook, sat at the same table as luminaries such as Sir Ronald Trotter and Sir Rod Weir – but proved to be a rather bland character.

But where was the fire in the belly? Akers delivered a back pocket-speech with a lot of old standard IBM guff along the lines of a desktop holding as much processing capacity as something the size of a hotel 30 years ago. It was not an inspiring occasion, in spite of being specially photographed by Brian Brake of Magnum.

IBM liked and thrived on certitude but as it advanced into the ‘80s this began to evaporate. IBMers developed a habit of gathering around the water cooler to drink and talk about what the company was doing, and what they should be doing. Meanwhile, the 12th floor packed up and quietly slipped away as well. So much for the water cooler era.

Basil Logan went to numerous boards and then the helm of the new state super scheme, Tony Tait went to ITANZ and the wine district. Doug Matheson went to local bodies, Stewart Rose to Japan, and David Eliasen to real estate.

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