A four-year bachelor’s degree has long been the first rung to climbing America’s corporate ladder.
But the move to prioritize skills over a college education is sweeping through some of America’s largest companies, including Google, EY, Microsoft, and Apple. Strong proponents say the shift helps circumvent a needless barrier to workplace diversity.
“I really do believe an inclusive diverse workforce is better for your company, it’s good for the business,” Ginni Rometty, former IBM CEO, told Fortune Media CEO Alan Murray during a panel last month for Connect, Fortune’s executive education community. “That’s not just altruistic.”
Under Rometty’s leadership in 2016, tech giant IBM coined the term “new collar jobs” in reference to roles that require a specific set of skills rather than a four-year degree. It’s a personal commitment for Rometty, one that hits close to home for the 40-year IBM veteran.
When Rometty was 16, her father left the family, leaving her mother, who’d never worked outside the home, suddenly in the position to provide.
“She had four children and nothing past high school, and she had to get a job to…get us out of this downward spiral,” Rometty recalled to Murray. “What I saw in that was that my mother had aptitude; she wasn’t dumb, she just didn’t have access, and that forever stayed in my mind.”
When Rometty became CEO in 2012 following the Great Recession, the U.S. unemployment rate hovered around 8%. Despite the influx of applicants, she struggled to find employees who were trained in the particular cybersecurity area she was looking for.
“I realized I couldn’t hire them, so I had to start building them,” she said.
In 2011, IBM launched a corporate social responsibility effort called the Pathways in Technology Early College High School (P-TECH) in Brooklyn. It’s since expanded to 11 states in the U.S. and 28 countries.
Through P-TECH, Rometty visited “a very poor high school in a bad neighborhood” that received the company’s support, as well as a community college where IBM was offering help with a technology-based curriculum and internships.
“Voilà! These kids could do the work. I didn’t have [applicants with] college degrees, so I learned that propensity to learn is way more important than just having a degree,” Rometty said.
Realizing the students were fully capable of the tasks that IBM needed moved Rometty to return to the drawing board when it came to IBM’s own application process and whom it was reaching. She said that at the time, 95% of job openings at IBM required a four-year degree. As of January 2021, less than half do, and the company is continuously reevaluating its roles.
For the jobs that now no longer require degrees and instead rely on skills and willingness to learn, IBM had always hired Ph.D. holders from the very best Ivy League schools, Rometty told Murray. But data shows that the degree-less hires for the same jobs performed just as well. “They were more loyal, higher retention, and many went on to get college degrees,” she said.
Rometty has since become cochair of OneTen, a civic organization committed to hiring, promoting, and advancing 1 million Black individuals without four-year degrees within the next 10 years.
If college degrees no longer become compulsory for white-collar jobs, many other qualifications—skills that couldn’t be easily taught in a boot camp, apprenticeship program, or in the first month on the job—could die off, too, University of Virginia Darden School of Business professor Sean Martin told Fortune last year.
“The companies themselves miss out on people that research suggests…might be less entitled, more culturally savvy, more desirous of being there,” Martin said. Rather than pedigree, he added, hiring managers should look for motivation.
That’s certainly the case at IBM. Once the company widened its scope, Rometty said, the propensity to learn quickly became more of an important hiring factor than just a degree.
This story was originally featured on Fortune.com
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President Biden landed on Thursday in New York to highlight IBM's plan to invest $20 billion across the state's Hudson Valley region over the next 10 years.
Biden toured the corporation's Poughkeepsie site "to see firsthand where the future of computing is being innovated, designed and manufactured."
IBM said that the goal of the investments is to expand the technology ecosystem in New York — creating job opportunities — and to "unlock new discoveries and opportunities in semiconductors, computers, hybrid cloud, artificial intelligence and quantum computers."
"IBM is deeply honored to host President Biden at our Poughkeepsie site today and we look forward to highlighting our commitments to the innovations that advance America's economy," CEO Arvind Krishna said in a statement. "As we tackle large-scale technological challenges in climate, energy, transportation and more, we must continue to invest in innovation and discovery — because advanced technologies are key to solving these problems and driving economic prosperity, including better jobs, for millions of Americans."
MICRON PLANS $100B COMPUTER CHIP FACTORY IN NEW YORK
IBM's New York business supports more than 7,500 jobs across the region.
IBM said its Poughkeepsie site builds state-of-the-art mainframe computers and is home to the corporation's first Quantum Computation Center.
The company said that the president's visit to the site highlights the bipartisan CHIPS and Science Act, which Biden signed in August.
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"The technology that IBM delivers today from Poughkeepsie will directly benefit from the CHIPS and Science Act that the president recently signed into law. It will ensure a reliable and secure supply of next-generation chips for today's computers and artificial intelligence platforms as well as fuel the future of quantum computing by accelerating research, expanding the quantum supply chain and providing more opportunities for researchers to explore business and science applications of quantum systems," IBM said.
IBM said that the expansion of an innovation model at its Albany location could be a foundation for the National Semiconductor Technology Center (NSTC) that will be implemented as part of the CHIPS and Science Act.
Biden was joined by Reps. Sean Patrick Maloney and Pat Ryan.
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The IBM investment comes on the heels of chipmaker Micron announcing earlier this week an investment of up to $100 billion over the next 20-plus years to build a plant in upstate New York that could create 9,000 factory jobs.
The Associated Press contributed to this report.
IBM, which three years ago acquired Red Hat, is now moving Red Hat OpenShift Data Foundation and Red Hat Ceph, along with their development teams, into IBM Storage as part of a move to make a bigger play in the software-defined and open-source storage worlds.
IBM Tuesday said it has absorbed storage technology and teams from its Red Hat business to combine them with IBM’s own storage business unit as a way to help clients take advantage of the two without requiring extra integration or having to deal with multiple sales teams.
IBM is integrating Red Hat OpenShift Data Foundation with its IBM Spectrum Fusion and will offer Red Hat Ceph-based storage technologies to its clients in a move to continue Big Blue’s software-defined storage leadership, said Brent Compton, senior director of Data Foundation for Red Hat’s hybrid cloud business.
For IBM, which in mid-2019 acquired Red Hat in a $34-billion deal, the move ensures maximum support for Red Hat OpenShift Data Foundation and Ceph, Compton told CRN.
[Related: 2022 Storage 100: Who’s Got Your Backup?]
“OpenShift Data Foundation and Ceph will become a big part of IBM Storage,” he said. “IBM has been looking for a way to take advantage of Ceph and ODF, and now it can.”
Ceph is an open-source software-defined object storage technology with interfaces for object, block and file storage. Red Hat OpenShift Data Foundation is a software-defined container-native storage that provides cluster data management capabilities as part of the OpenShift container platform.
Scott Baker, chief marketing officer and vice president of IBM hybrid cloud portfolio and product marketing, told CRN the move to combine Red Hat and IBM storage technologies sets the stage for growth in the combined software-defined storage portfolio.
“Customers not only get a choice of where storage runs—at the edge, in the cloud, or on-prem—but will find storage software releases will no longer be tied to the timing of storage hardware releases,” Baker said. “For instance, IBM normally enhances its Spectrum Virtualize or Spectrum Scale with new versions of the IBM FlashSystem. But with software-defined storage, we can drive changes quicker if they’re not tied to hardware releases.”
By bringing Red Hat OpenShift Data Foundation and Ceph into IBM, customers get the opportunity to access unified block, file, and object storage without regard to the real underlying hardware, Baker said.
“They can use Ceph to add the right type of storage depending on the protocol they need,” he said. “Ceph and ODF also simplifies how IBM provides data storage and protection. To do all that with IBM’s storage portfolio takes time. With CEF and ODF as part of IBM Storage, this can get done immediately.”
It really is the best of both worlds, as Red Hat customers will also see strong benefits from IBM Storage, Compton said.
“It’s important to note that IBM will continue to offer OpenShift Data Foundation inside the Red Hat OpenShift Platform Plus hybrid cloud platform,” he said. “So if a customer gets pre-integrated OpenShift Data Foundation inside Red Hat OpenShift Platform Plus, it accelerates their time to market. There’s no need to integrate the storage. This will not change.”
Also, Red Hat OpenShift customers have used Ceph to accelerate their time to scale for years, and Red Hat will continue to sell Ceph, Compton said.
“But by moving Ceph to IBM Storage, IBM will accelerate development of the storage-specific features,” he said. “Red Hat is not a storage company. So this will accelerate development of unified capabilities.”
IBM’s storage move makes good on the potential many saw with the company’s acquisition of Red Hat, said John Teltsch, chief revenue officer at Converge Technology Solutions, a Gatineau, Quebec-based solution provider and channel partner to both IBM and Red Hat that ranked No. 36 on CRN’s 2022 Solution Provider 500.
“This is something the channel has been waiting for ever since IBM acquired Red Hat,” Teltsch told CRN. “IBM has been doing a lot around software-defined storage. And when you add in Red Hat, it gives us an integrated solutions play. It lets us build an integrated sales team. We don’t have to first talk about IBM storage capabilities, and then bring in our Red Hat team to talk about Red Hat.”
Converge Technology Partners’ IBM and Red Hat sales teams are currently two separate teams, said Teltsch, who joined the company in March from IBM, where he held numerous sales leadership roles, including two years as Big Blue’s channel chief.
“Once IBM and Red Hat storage are together, it gets more simple to sell,” he said. “And it simplifies our training while IBM will have one integrated set of offerings for its clients. This lets us bring the best of Red Hat open-source capabilities with IBM storage. We’re living in a data-driven world. This move simplifies our go-to-market, as well as simplifies the client experience, client engagement, and client adoption.”
“We can‘t be essential unless our partners are skilled in our products and confident in going to their clients with our products and selling them with us and for IBM,” IBM channel chief Kate Woolley said.
IBM has started giving registered members of its PartnerWorld program access to the training, badges and enablement IBM sales employees get along with a new learning hub for accessing materials.
The expansion is part of the Armonk, N.Y.-based tech giant’s investment in its partner program, IBM channel chief Kate Woolley told CRN in an interview.
“We can‘t be essential unless our partners are skilled in our products and confident in going to their clients with our products and selling them with us and for IBM,” said Woolley (pictured), general manager of the IBM ecosystem.
[RELATED: Channel Chief Kate Woolley: ‘No Better Time To Be An IBM Partner’]
Partners now have access to sales and technical badges showing industry expertise, according to a blog post Tuesday. Badges are shareable on LinkedIn and other professional social platforms. IBM sales representatives and partners will receive new content at the same time as it becomes available.
“This is the next step in that journey in terms of making sure that all of our registered partners have access to all of the same training, all of the same enablement materials as IBMers,” Woolley told CRN. “That’s the big message that we want people to hear. And then also in line with continuing to make it easier to do business with IBM, this has all been done through a much improved digital experience in terms of how our partners are able to access and consume.”
Among the materials available to IBM partners are scripts for sales demonstrations, templates for sales presentations and positioning offerings compared to competitors, white papers, analyst reports and solution briefs. Skilling and enablement materials are available through a new learning hub IBM has launched.
“The partners are telling us they want more expertise on their teams in terms of the IBM products that they‘re able to sell and how equipped they are to sell them,” Woolley said. “And as we look at what we’re hearing from clients as well, clients want that. … Our clients are saying, ‘We want more technical expertise. We want more experiential selling. We want IBM’ – and that means the IBM ecosystem as well – ‘to have all of that expertise and to have access to all the right enablement material to be able to engage with us as clients.’”
The company has doubled the number of brand-specialized partner sellers in the ecosystem and increased the number of technical partner sellers by more than 35 percent, according to IBM.
The company’s exact program changes have led to improved deal registration and introduced to partners more than 7,000 potential deals valued at more than $500 million globally, according to IBM. Those numbers are based on IBM sales data from January 2022 to August.
Along with the expanded access to training and enablement resources, Woolley told CRN that another example of aligning the IBM sales force and partners was a single sales kickoff event for employees and partners. A year ago, two separate events were held.
“I want our partners to continue to feel and see this as a big investment in them and representative of how focused we are on the ecosystem and how invested we are,” she said.
Investors this year increasingly turned away from dividend stocks in favor of the rising yields being offered on bonds. Given that investors can now earn a 4.3% return on a 2-year Treasury note, many prefer that guaranteed return to the risks of putting money into the stock market.
International Business Machines (IBM -1.44%) offers a dividend yield that exceeds that bond return. But with a bear market in progress, are investors better served to take a chance on the cloud stock or to take the 4.3% return at virtually zero risk?
IBM didn't participate in the bull market of the 2010s. The stock dropped as its tech businesses suffered a considerable growth slowdown. In an effort to change that, IBM pivoted into the cloud computing sector aggressively, in part via its $34 billion purchase of Red Hat in 2019. Grand View Research forecasts a compound annual growth rate of 16% through 2030 for the cloud industry. Growth like that could certainly help both IBM and its stock.
Also, IBM spun off its managed infrastructure business into a new public company, Kyndryl. This business was less of a fit with the parent company amid its pivot to the cloud. Separating it off should make it easier for IBM to grow its revenue.
Time will tell if these moves can help the stock price recover. Nonetheless, IBM currently pays its shareholders $1.65 per share every quarter, or $6.60 per share annually. At the current stock price, that adds up to a yield of 5.6% per year. Moreover, depending on your financial situation, the IRS may tax your dividends at a lower capital gains rate, which can offer an added advantage.
Additionally, IBM hiked its payout annually for 27 consecutive years, making it a Dividend Aristocrat. That status carries some importance as many income investors will be more inclined to buy and hold IBM stock because of this status. Also, since abandoning Dividend Aristocrat status tends to hurt a stock, management will probably prioritize maintaining it by continuing to raise those payouts.
Investors also can also reinvest their dividend payments into more IBM stock. However, such newly purchased shares will pay you the dividend yield at that time. The return will rise if the stock falls since investors can buy the exact cash return at a lower price. Conversely, cash yields will drop if the stock rises, but those investors still benefit since the stock has increased in value.
U.S. Treasury notes offer more stability than stocks such as IBM. Investors who purchase the 2-year Treasury note receive semiannual interest payments. At the current interest rate of 4.3%, investors will receive a 2.15% cash return on their invested amount in each of the subsequent three six-month periods. In the fourth period, when the note matures, investors receive the final 2.15% payment along with the return of their principal.
Investors should also be aware that bond values can fluctuate. If interest rates drop, the value of the bond will fall; the opposite will happen if rates rise. This affects investors if they decide to sell the bond early. Upon maturity, the note will return to its par (or nominal) value.
Additionally, bond interest payments are subject to federal income tax but exempt from state and local taxes. In some cases, this is higher than taxes on dividends. Still, bond issuers are obligated to make such payments. In contrast, IBM faces no legal obligation to continue its dividend.
Also, like with a stock, investors can reinvest their interest payments into more notes or other forms of Treasury bonds. However, those purchases will be subject to the prevailing interest rates at that time.
Investors who lack much risk tolerance should choose the Treasury note. Given its guaranteed return, they will not have to worry about volatility.
Nonetheless, for investors comfortable with buying stocks, IBM is a surprisingly strong buy. The cloud industry is in growth mode, which should propel IBM stock to a long-awaited turnaround. Moreover, IBM has repeatedly shown it wants to hold on to its Dividend Aristocrat status. This should deliver its income investors returns that are not only larger than the bonds offer, but also likely to increase in size.
President Biden will a fast-growing IBM facility in Poughkeepsie on Thursday to highlight tech investment in the Hudson Valley.
Biden will “deliver remarks on creating jobs, lowering costs, and ensuring the future is made in America” at the IBM facility, the White House said in a statement.
IBM is expected to use the presidential visit to unveil a $20 billion investment plan in the plant over the next decade, including expanding research and development, semiconductor manufacturing, mainframe technology, artificial intelligence and quantum computing.
About 3,000 people work at IBM’s Poughkeepsie plant, making it one of the largest employers in the region.
Biden is also expected to trumpet passage of the bipartisan CHIPS and Science Act, which is designed to boost domestic manufacturing of computer chips and tech investment in the U.S.
The IBM announcement is the second big job-creating coup in upstate New York in exact days after Micron announced it would build a sprawling new factory near Syracuse.
Biden’s visit is also designed to boost Democrats in the Hudson Valley, traditionally a swing region of deep blue New York state.
Gov. Hochul will join him along with Rep. Sean Patrick Maloney (D-N.Y.) and newly minted Rep. Pat Ryan (D-N.Y.), who is running for a full term in a redrawn district that includes Poughkeepsie.
Both lawmakers are locked in tight congressional races that are considered critical to Democratic hopes of holding the House of Representatives in the midterm elections.
After IBM, Biden will attend fundraisers for Democrats in Red Bank, N.J., and in Manhattan before heading back to Washington, D.C.