IBM eyes the new business future

Speaking from the American Museum of Natural History in New York last month, Big Blue’s current President and CEO Sam Palmisano talked up the future of computing as IBM knows it, and about its latest services strategy, business on demand.

Palmisano, who is slated to become the company’s chairman of the board on Jan. 1, 2003, reflected on such IT items as e-commerce, grid computing, the dot-com failure and the evolution of the industry itself. And when talking about the current state of the industry, he was optimistic.

“We’ve hit the bottom and things have flattened out,” he said. In what Palmisano described as the natural boom-bust cycle the IT industry has gone through, the next era has arrived. In moving from the origins of the centralized era to the days when client/server reigned, the network is now at the forefront. At the heart of the discussion is the aspect of integration as well as the new world of services.

As applications themselves become less and less proprietary, Palmisano pushed for both the continued use and adoption of Java and Linux. “You cannot operate in a proprietary world,” he said.

Yet, on this day, his emphasis was centred on the possibilities that business on demand could offer customers. Generally, on demand is classified as the integration of the existing applications and hardware organizations already have in-house in a way that generates revenues through a services model.

This model will require open standards such as XML, SOAP and WSDL to help with the integration of applications such as supply chain, ERP or CRM – applications that many enterprises already have.

“This (business on demand) is a US$10 billion dollar bet,” Palmisano said, explaining that the company is committing that amount in research and development, acquisitions and marketing funds.

There are relatively few companies that can rival IBM in its quest to offer hardware, software, services and consulting – it is still considered a one-stop shop. Currently, Accenture and Cap Gemini are but a few companies that also offer a full array of services.

While considered the leader in IT services, companies can still choose between a one-stop shop like an IBM or choose to partner with several organizations that could offer the same services. Under that type of arrangement, it would most probably be an outfit such as HP that would perhaps partner with a services company to offer the package. Many in the industry will recall that HP and PwC had announced a strategic-type relationship before IBM scooped it up.

One analyst, while confident that IBM “has hit the nail right on the head” in terms of what the sector needs in resolving complexity and integration issues, remained skeptical of whether Big Blue can actually make the business-on-demand concept fly.

“It’s very appealing but it remains to be seen how they’ll deliver it,” said Vito Mabrucco, group vice-president for products and services research at IDC in Toronto. The analyst firm’s numbers indicate that the idea of business on demand is a valuable proposition, Mabrucco added.