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Computing giant reiterates its 'data as a strategic asset' message as revenues dip 11%

Having survived the credit crunch so far relatively unscathed, computing giant IBM’s fortunes took a turn for the worse in March and April 2009.

First, software vendor Oracle shattered its hopes of acquiring Sun Microsystems by buying the company instead. While Oracle may yet offload Sun’s troubled hardware assets, the resulting creature is nevertheless a formidable competitor.

Then, the company reported a quarterly revenue plunge of 11% to $21.7 billion that was well below analysts’ expectations of $22.5 billion. The company’s net income fell by one percent to $2.3 billion in the process, from $2.32 billion in the same quarter last year.

All this might have explained the muted extravagance of IBM’s European Information on Demand (IOD) event, held in early June in Berlin.

IBM did reveal some new additions to its information management portfolio at the event, namely a series of industry specific analytic applications covering financial performance, human capital management and customer management.

One example was a clinical analytics software package for healthcare providers that draws data from clinical and operations records and financial systems to analyse queries such as the efficacy of a treatment across a large group of patients with similar symptoms.
But as for overarching themes, IOD contained few surprises. The key message is still that information is a strategic asset. In practical terms, this translates to the integration of business intelligence throughout the enterprise.

“The last 20 to 30 years have been about automating processes such as your inventory, ledger, accounts receivable, accounts payable, your call centre, supply chain, in order to make efficiencies,” says Ambuj Goyal, general manager of IBM’s information management division.

The IOD concept is instead about “getting the data ready to answer the next question, not to make someone smart at HQ, but in the field,” he explains. “It is about giving them just that little piece of information that optimises the business at every decision point.”

IBM’s CTO of information management, Anant Jhingran insists that this rather conceptual sales pitch has traction in a downturn.

“Some of our larger clients have been bitten so badly through a lack of information visibility,” he says. “We have no problems or issues telling them about our information agenda, it offers ‘sleeping at night capability’.”

But he acknowledges that few organisations have the appetite for enterprise-wide technology deployments. “Even larger clients say ‘don’t come in with intergalactic projects’,” he says.

There is, however, genuine appetite for cloud computing among customers, which has led IBM to take several slow steps into the field.

 “People might say IBM is stodgy and doesn’t move fast enough, but not really – we just try to avoid hype,” says Jhingran. “But with cloud computing we’ve crossed the chasm. IBM as a company is shifting because our clients are ready for it.”

IBM is still debating, though, what role it wants to play in cloud computing and, most importantly, where the money is.

“It would be foolish for us to reject any point of value capture, given the fact we are already one of the world’s largest hosters and the world’s second largest software company,” says Jhingran. “Our view is that value creation [in the cloud] can happen at any level, but we don’t quite know where it will happen. That’s why we’re pushing for IBM to be a cloud supplier, not an arms supplier to someone else. If you’re only the arms supplier then you’re not capturing the value that comes from operational excellence.”