IBM CIO Mark Hennessy took on his current role in July, after 25 years of holding sales, marketing, and general management positions at Big Blue. In his "first pure-technology job," Hennessy is responsible for the technology needs of 372,000 employees worldwide, along with eight million square feet of data centers and thousands of servers and applications. Hennessy sat down with Network World's Jon Brodkin at IBM's Manhattan offices this week to discuss how IBM is using virtual worlds and Web 2.0, the company's progress with virtualization and consolidation of data centers, and Big Blue's obsession with the word "innovation."

What are the two or three biggest technology projects you're working on?

We have a number of projects around enterprise applications we're working on, trying to integrate across geographies and across business units. The virtualization< of some of our systems to reduce our power consumption and costs is another big project we've embarked on. And [we're working on] innovation tools and technologies to drive up the productivity of our teams.

IBM's done a lot of data center consolidation over the last decade. What's going on right now, and what are your goals for the next year, three years?

In August we announced we were going to take 3,900 servers down to 30 [mainframes]. And we're in the middle of that right now. We've modeled what we think the outcome is going to be, the savings in terms of administrative requirements, in terms of software, in terms of floor space, and in terms of power and cooling requirements reductions. We're working with the business units to identify the right applications and the right environments moving forward. We've gone through quite a few of the migrations already. We're working very closely with clients on it.

How long will the project last?

A couple years.

IBM has done a lot internally with Web 2.0 and collaboration technologies, with blogs, wikis, a virtual world, and massive collaboration exercises such as last year's InnovationJam, an online brainstorming session that involved 150,000 people. How well do you think you're doing with Web 2.0 so far?

I'm excited that we have such a large early-adopter community in IBM, that we have so many people interested in utilizing those tools, sharing whether the tools are effective or not, or how to make them more effective. That's terrific.

People talk about an age divide in technology adoption. Are the older members of your workforce on board with Web 2.0?

Absolutely. I mean if you look at the jams and the success we've had with those, if you look at ThinkPlace [a site where any IBM employee can suggest ideas and comment on them], and the success we've had with that, there's all generations of our workforce that are involved, all geographies are involved. These tools facilitate that collaboration, unlock the value, the skills, the passion, the energy, the capability, from people all over the world in all sorts of different environments.

I was just in Asia a couple weeks ago. I was in Shanghai, and it's growing very quickly. So, how do we make sure those folks have access to the ideas, skills and capabilities from the rest of the world, and vice versa? That is a very strong element of integrating the global enterprise.

IBM is in the early stages of developing a virtual world in which employees are starting to collaborate and hold meetings. How extensively will IBM use virtual worlds to do real work?

We had a lot of interest and activity around Second Life. I spent a fair amount of time with retail clients I had [before becoming CIO] trying to work through how to really leverage this virtual world, get access to those communities, and get the feedback, if not purchases, that those communities could provide. We got a lot of traction, a lot of good ideas, visibility through that. This internal world [we're developing for IBM employees], we'll learn from that as well. We'll use it for communications, we'll use it for education and a lot of different topics. But time will tell just how pervasive it'll get.