Editor's note: This story was part of TheStreet's 10-part Top Business Leaders of Tomorrow series.
ARMONK, N.Y. (
) -- The New York Jets were kicking off their third NFL season when Steve Mills joined
as a 22-year old college grad in 1973. Some 37 years later, the Jets have yet to add to their sole Superbowl victory, and Mills, an avid fan of Gang Green since the 1960s, has emerged as one of the key players at IBM.
The 59-year old Long Islander was largely unknown to folks outside of tech until earlier this year, when he was touted as
Credited with formally creating IBM's software group in 1995, Mills has turned it into a $22.5 billion division with a 25,000-strong sales force and a 100,000-strong partner network. Earlier this year, IBM appointed Mills as head of its systems business, putting him charge of both hardware and software.
Steve Mills, Group Executive -- Software & Systems, IBM.
"He's right up there with the best technology and industry executives," said Ted Schadler, an analyst at Forrester Research. "Mills thinks very strategically about how the organization and how the market develops -- he knows how to create technology solutions that the market doesn't yet know that it needs and execute against that."
Take the rollout of IBM's WebSphere products, which Mills spear-headed. Back in the 1980s, IBM's middleware, or software that links separate software applications, was still synonymous with the company's large mainframe computers. In the mid-1990s, Mills anticipated the strains that the just-budding e-commerce revolution would place on customers' IT infrastructures. He realized that if IBM could pull the middleware off the mainframe computers, the company could package it and sell it as a way for firms to tie Web applications together, making online transactions and business functions -- like accounting -- easier.
Mills launched WebSphere in 1998, marking a major shift in IBM's strategy as a hardware maker to a seller of hardware and high-margin software.
IBM now describes itself as the world's second-largest software vendor by revenue. Software accounted for $5.4 billion of the firm's total third-quarter revenue; middleware products, including IBM's WebSphere, Tivoli, Lotus and Rational offerings, made up $3.1 billion of software sales, an increase of 7% on the prior year's quarter. WebSphere sales grew 14%. Both
cite IBM as the middleware market share leader.
Mills has also earned plaudits for his M&A strategy. IBM has bought more than 65 software companies in the last 10 years, in areas ranging from business analytics to workplace optimization.
"Recent acquisitions in the WebSphere group have brought a bevy of good-looking applications for reporting, analytics and retail," said Michael Coté, an analyst at RedMonk, pointing to recent purchases such as
Cast Iron Systems
, a $1.4 billion deal expected to
Rational, which IBM bought in 2003, is used by
to program the new
on-board control systems.
One of the few tech giants to successfully sidestep the worst of the recession, IBM has raised its guidance for almost every quarter over the last three years. For fiscal year 2010, the company raised its earnings forecast to at least $11.40 per share, up from the previously projected $11.25. IBM also expects to double its profit to at least $20 per share by 2015 and said it will spend around $20 billion in acquisitions over the same period.
There are, however, plenty of challenges ahead for IBM and Mills. Tech watchers have expressed worries that the software giant could see lower spending trends with enterprise customers -- a trend that hurt shares of fellow bellwether Cisco in its most recent quarter.
There's also IBM's massive size, which some analysts say could
Mills, however, sees plenty of opportunities. "We can still grow our business model as we move forward, it's a growth business model," he told
, pointing to business analytics software and cloud computing. "The rate of growth of the analytics products is double the growth rate of the overall industry -- it's in the 8% to 9% range."
IBM is also
; it launched a cloud initiative earlier this year that provides tools for app developers working on
Ultimately, Mills' standing within IBM and his techie knowledge base should help keep his star in the ascendancy. "I absolutely see him as a potential successor to
IBM CEO Sam Palmisano in terms of his stature and capabilities," said Forrester's Schadler, noting that IBM tends to look internally when appointing chief executives.
"He is well spoken, frank, and always willing to get down to a level of technology and market detail that I don't expect from all executives at his level," said RedMonk's Coté. "He
also seems well liked in the company compared to executives at other high-level companies -- there are few IBMers who'll bad-mouth him after a long night in the bar."
-- Written by James Rogers in New York.
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