Steve Mills, senior vice president of software giant IBM, is impressed by Ireland's technology scene, he tells John Collins.

Steve Mills, senior vice president of IBM's software group, is probably the most important software executive you've never heard of.

Mills, who joined IBM straight from college as a sales trainee in 1974, heads a software business that would be second only in size to Microsoft if it were spun out as a separate company. He is widely considered to be the second most powerful executive in IBM after chief executive Sam Palmisano.

Software has become an engine of growth for the technology giant but Mills has no ambitions to overtake Bill Gates and co.

"We're not trying to be as big or bigger than Microsoft. Ours is a very different kind of software business to what they do," says Mills.

Although probably best known for its high-end servers that power the IT departments of big business and governments around the globe, as well as its army of suited consultants, software has become a sweet spot for IBM in recent years.

In 2006 the century-old firm had revenues of $91.4 billion (€66.3 billion) of which software contributed almost $20 billion but an impressive 40 per cent of profits.

Investors have been briefed that the software business will have annual growth of 7-11 per cent for the next couple of years and will grow to account for 50 per cent of the company's profits.

Mills defines IBM's software business as developing infrastructure software for industry - a much more complex undertaking than the "shrink-wrapped" model adopted by Microsoft and others.

The business is organised into five areas with associated brands; Lotus for collaboration and user interaction, WebSphere for transaction processing and integration, DB2 for data management, Rational for application development and Tivoli for systems management.

"It's a big portfolio but the customers are doing all these things - it's not like we are adding functionality that's not needed by the market," says Mills.

Mills was in Dublin this week to attend an event for European venture capitalists and start-ups at the newly opened IBM Innovation Centre and also to rally the troops at the technology campus in Mulhuddart where the centre is located.

Mills is impressed with the technology scene here both in terms of indigenous firms and the environment for IBM to invest in software development.

"When you travel around the world these days virtually every country you visit would like to have a vibrant indigenous software industry," says Mills. "Ireland, especially being a relatively small country, has done a pretty good job of that."

While welcoming government supports, he believes being native English speakers and building a real affinity with the US are more important for the Republic's success in the global technology market. He sees only Israel as doing anything comparable.

IBM courted controversy in recent weeks when news broke that an outsourcing contract it had won from document management company Xerox would see Dublin staff move overseas or face redundancy. "Some of these reactions are natural," says Mills. "Elected officials have responsibility to represent the population and speak on their behalf. No one likes to see jobs move."

Although many firms, including IBM, now take advantage of the vast pools of cheap programmers available in India and China, Mills does not see that as a threat to development in the Republic.

"The benefits of being in a low-cost place are very minimal," says Mills.

"You get a short-term benefit from maybe spending less on labour but you have to make sure you build the right thing. It's that depth of skill and knowledge that's more important than the development costs."

Acquisitions have been a major driver of growth for IBM's software business. Since 2000 it has acquired about 45 other firms.

"The model that we follow is very much focused on how we drive incremental growth and profits for the company through acquisitions. We buy a company and then expect to more than double its rate of growth prior to the acquisition."

Despite the acquisition spree that Oracle has been on in the enterprise applications space, Mill is not overly focused on the database specialist as his main competitor.

"Oracle is clearly a major competitor particularly around data management," he concedes. "They are making a lot of noise about their middleware but its tied to their database technology, it's not independent. In systems management you get a different set of competitors."

The current technology trends he sees having most impact on IBM in the near future are service oriented architecture (which he sees as being primarily about automating horizontal business processes across a company) and analytics (providing real time data to make business decisions), which he believes are complementary trends.

He's also surprisingly enthusiastic about the innovations happening under the Web 2.0 banner, in particular social networking.

"The lasting benefit of these things really is how you connect people together more rapidly," says Mills.

"The whole phenomenon of things that have been popularised by teenagers does have a business application."

Such enthusiasm is impressive for a man who has spent his entire working career with a single employer.

The possibility that his next visit to the Republic could be as the chief executive of that organisation should not be discounted.