Why did IBM buy Lombardi?

Just as I was about to start figuring out my next six predictions for 2010 I had to stop the presses and focus on IBM’s latest acquisition. IBM just announced this morning that it has purchased Lombardi which focuses on Business Process Management software. Lombardi is one of the independent leaders in the market as well as a strong IBM business partner. The obvious question is why would IBM need yet another business process management platform? After all, IBM has a large portfolio of business process management software — some homegrown and some from various acquisitions such as Filenet, ILOG, and Webify. I think that the answer is actually quite straight forward. Lombardi’s offerings are used extensively in business units, by business management to codify complex processes that are at the heart of streamlining how businesses are able to differentiate themselves. Clearly, IBM has recognized the importance of Lombardi to its customers since it has had a long standing partnership with the company.  I think there are two reasons that this acquisition are significant beyond the need to provide direct support for business management. The ability to use Lombardi’s technology to sell more WebSphere offerings and the connection of business process to IBM’s Smarter Planet initiative are the two issues that stand out in my mind.

Selling more WebSphere products. There is no question that the WebSphere brand within IBM’s Software business unit includes a lot of products such as its registry/repository, applications integration, security, and various middleware offerings. IBM likes to sell its products by focusing on entry points — the immediate problem that the customer is trying to solve. The opportunity to gain direct access to business buyers who start with business process management and then may be see the value of adding new capabilities to that platform.

Supporting the Smarter Planet strategy. Business transformaton often starts by reconstructing process. IBM’s smarter planet strategy is based on the premise that customers want to be able to transform their businesses utilizing sophisticated technology. Therefore, it is important to look at how business innovation can be supported by IBM’s huge hardware, software, and services portfolio. The fact that Lombardi’s technology is the starting point for business units looking at transformational process changes is an important marker in IBM’s evolution as a company.

Predictions for 2010: clouds, mergers, social networks and analytics

Yes, it is predictions time. Let me start by saying that no market change happens in a single year. Therefore, what is important is to look at the nuance of a market or a technology change in the context of its evolution. So, it is in this spirit that I will make a few predictions. I’ve decided to just list my top six predictions (I don’t like odd numbers). Next week I will add another five or six predictions.

1. Cloud computing will move out of the fear, uncertainty and doubt phase to the reality phase for many customers. This means that large corporations will begin to move segments of their infrastructure and applications to the cloud. It will be a slow but steady movement. The biggest impact on the market is that customers will begin putting pressure on vendors to guarantee predictability and reliability and portability.
2. Service Management will become mainstream. Over the past five years the focus of service management has been around ITIL (Information Technology Infrastructure Library) processes and certification. There is a subtle change happening as corporations are starting to take a more holistic view of how they can effectively manage how everything that has a sensor, an actuator, or a computer interface is managed. Cloud computing will have a major impact on the growing importance of service management.
3. Cloud service providers will begin to drop their prices dramatically as competition intensifies. This will be one of the primary drivers of growth of the use of cloud services. It will put a lot of pressure on smaller niche cloud providers as the larger companies try to gain control of this emerging market.
4. It is not a stretch to state that the pace of technology acquisitions will accelerate in 2010.  I expect that HP, IBM, Cisco, Oracle, Microsoft, Google, and CA will be extremely active. While it would be foolhardy to pick a single area, I’ll go out on a limb and suggest that security, data center management, service management, and information management will be the focus of many of the acquisitions.
5. Social Networking will become much more mainstream than it was in 2009. Marketers will finally realize that blatant sales pitches on Twitter or Facebook just won’t cut it.  We will begin to see markets learn how to integrate social networking into the fabric of marketing programs. As this happens there will be hundreds of new start ups focused on analyzing the effectiveness of these marketing efforts.
6. Information management is at the cusp of a major change. While the individual database remains important, the issue for customers is focus on the need to manage information holistically so that they can anticipate change. As markets grow increasingly complex and competitive, the hottest products in 2010 will those that help companies anticipate what will happen next.  So expect that anything with the term predictive analytics to be hot, hot, hot.

Predicting the future of computing by understanding the past

Now that Thanksgiving is over I am ready to prepare to come up with predictions for 2010. This year, I decided to start by looking backwards. I first entered the computer industry in the late 1970s when mainframes roamed the earth and timesharing was king. Clearly, a lot has changed. But what I was thinking about was the assumptions that people had about the future of computing at that time and over the next several decades. So, I thought it would be instructive to mention a few interesting assumptions that I heard over the years. So, in preparation for my predictions in a couple of week, here are a few noteworthy predictions from past eras:

1. Late 1970s – The mainframe will always be the prevalent computing platform. The minicomputer is a toy.

2. Early 1980s – The PC will never be successful. It is for hobbyists. Who would ever want a personal computer in their home? And if they got one, what would they ever do with it — keep track of recipes?

3. Mid-1980s – The minicomputer will prevail. The personal computer and the networked based servers are just toys.

4. Mid-1980s – The leaders of the computer industry — IBM, Digital Equipment Corporation, and Wang Laboratories will prevail.

5. Early 1990s – The Internet has no real future as a computing platform. It is unreliable and too hard to use. How could it possibly scale enough to support millions of customers?

6. Early 1990s – Electronic Commerce is a pipe dream. It is too complicated to work in the real world.

7. Mid-1990s – If you give away software to gain “eyeballs” (the popular term in the era) and market share you will fail.

I could mention hundreds of other assumptions that I have come across that defied the conventional wisdom of the day. The reality is that these type of proof points are not without nuance.  For example, the mainframe remains an important platform today because of its ability to process high volume transactions and for its reliability and predictability. However, it is no longer the primary platform for computing. The minicomputer still exists but has morphed into more flexible server-based appliances. The PC would never have gotten off the ground without the pioneering work of done by Dan Bricklin and Bob Frankston who created the first PC-based spreadsheet. Also, if the mainframe and minicomputers had adopted a flexible computing model, corporations would never have brought millions of unmanageable PCs into their departments. Of the three computing giants of the late 80s, only IBM is still standing. Digital Equipment was swallowed by HP and Wang was bought by Getronics.  The lesson? Leaders come and go. Only the humble or paranoid survive. Who could have predicted the emergence of Google or Amazon.com? In the early days of online commerce it was unclear if it would really work. How could a vendor possible construct a system that could transmit transactions between partners and customers across the globe? It took time and lots of failures before it became the norm.

My final observation is actually the most complicated. In the mid-1990s during the dotcom era I worked with many companies that thought they could give away their software for a few dollars, gain a huge installed base and make money by monetizing those customers. I admit that I was skeptical. I would tell these companies, how can you make money and sustain your company? If you sell a few million copies of your software revenue will still be under $20 million — before expenses which would be huge. The reality is that none of these companies are around today. They simply couldn’t survive because there was no viable revenue model for the future. Fast forward almost 20 years. Google was built on top of the failures of these pioneers who understood that you could use an installed base to build something significant.

So, as I start to plan to predict 2010 I will try to keep in mind the assumptions, conventional wisdom, successes and failures of earlier times.

Can IBM become a business leader and a software leader?

When I first started as an industry analyst in the 1980s IBM software was in dire straits. It was the era where IBM was making the transition from the mainframe to a new generation of distributed computing. It didn’t go really well. Even with thousands of smart developers working their hearts out the first three foresees into a new generation of software were an abysmal failure. IBM’s new architectural framework called SAA(Systems Application Architecture) didn’t work; neither did the first application built on top of that called OfficeVision. It’s first development framework called Application Development  Cycle (AD/Cycle) also ended up on the cutting room floor.  Now fast forward 20 years and a lot has changed for IBM and its software strategy.  While it is easy to sit back and laugh at these failures, it was also a signal to the market that things were changing faster than anyone could have expected. In the 1980s, the world looked very different — programming was procedural, architectures were rigid, and there were no standards except in basic networking.

My perspective on business is that embracing failure and learning from them is the only way to really have success for the future. Plenty of companies that I have worked with over my decades in the industry have made incredible mistakes in trying to lead the world. Most of them make those mistakes and keep making them until they crawl into a hole and die quietly.  The companies I admire of the ones that make the mistakes, learn from them and keep pushing. I’d put both IBM, Microsoft, and Oracle in that space.

But I promised that this piece would be about IBM. I won’t bore you with more IBM history. Let’s just say that over the next 20 years IBM did not give up on distributed computing. So, where is IBM Software today? Since it isn’t time to write the book yet, I will tease you with the five most important observations that I have on where IBM is in its software journey:

1. Common components. If you look under the covers of the technology that is embedded in everything from Tivoli to Information Management and software development you will see common software components. There is one database engine; there is a single development framework, and a single analytics backbone.  There are common interfaces between elements across a very big software portfolio. So, any management capabilities needed to manage an analytics engine will use Tivoli components, etc.

2. Analytics rules. No matter what you are doing, being able to analyze the information inside a management environment or a packaged application can make the difference between success and failure.  IBM has pushed information management to the top of stack across its software portfolio. Since we are seeing increasing levels of automation in everything from cars to factory floors to healthcare equipment, collecting and analyzing this data is becoming the norm. This is where Information Management and Service Management come together.

3. Solutions don’t have to be packaged software. More than 10 years ago IBM made the decision that it would not be in the packaged software business. Even as SAP and Oracle continued to build their empires, IBM took a different path. IBM (like HP) is building solution frameworks that over time incorporate more and more best practices and software patterns. These frameworks are intended to work in partnership with packaged software. What’s the difference? Treat the packages like ERP as the underlying commodity engine and focus on the business value add.

4. Going cloud. Over the past few years, IBM has been making a major investment in cloud computing and has begun to release some public cloud offerings for software testing and development as a starting point. IBM is investing a lot in security and overall cloud management.  It’s Cloud Burst appliance and packaged offerings are intended to be the opening salvo.   In addition, and probably even more important are the private clouds that IBM is building for its largest customers. Ironically, the growing importance of the cloud may actually be the salvation of the Lotus brand.

5. The appliance lives. Even as we look towards the cloud to wean us off of hardware, IBM is putting big bets on hardware appliances. It is actually a good strategy. Packaging all the piece parts onto an appliance that can be remotely upgraded and managed is a good sales strategy for companies cutting back on staff but still requiring capabilities.

There is a lot more that is important about this stage in IBM’s evolution as a company. If I had to sum up what I took away from this annual analyst software event is that IBM is focused at winning the hearts, minds, and dollars of the business leader looking for ways to innovate. That’s what Smarter Planet is about. Will IBM be able to juggle its place as a software leader with its push into business leadership? It is a complicated task that will take years to accomplish and even longer to assess its success.

Tectonic shifts: HP Plus 3Com versus Cisco Plus EMC

Just when it looked clear where the markets were lining up around data center automation and cloud computing, things change. I guess that is what makes this industry so very interesting.  The proposed acquisition by HP of 3Com is a direct challenge to Cisco’s network management franchise. However, the implications of this move go further than what meets the eye.  It also pits HP in a direct path against EMC with its Cisco partnership. And to make things even more interesting, it also puts these two companies in a competitive three way race against IBM and its cloud/data center automation strategy. And of course, it doesn’t stop there. A myriad of emerging companies like Google and Amazon want a larger share of the enterprise market for cloud services. Companies like Unisys and CSC that has focused on the outsourced secure data centers are getting into the act.

I don’t think that we will see a single winner — no matter what any one of these companies will tell you.  The winners in this market shift will be those companies can build a compelling platform and a compelling value proposition for a partner ecosystem.  The truth about the cloud is that it is not simply a network or a data center. It is a new way of providing services of all sorts that can support changing customer workloads in a secure and predictable manner.

In light of this, what does this say for HP’s plans to acquire 3Com? If we assume that the network infrastructure is a key component of an emerging cloud and data center strategy, HP is making a calculated risk in acquiring more assets in this market.  The company that has found that its ProCurve networking division has begun gaining traction. HP ProCurve Networking is the networking division of HP.  The division includes network switches, wireless access points, WAN routers, and Access Control servers and software.   ProCurve competes directly with Cisco in the networking switch market. When HP had a tight partnership with Cisco, the company de-emphasized the networking. However, once Cisco started to move into the server market, the handcuffs came off. The 3Com acquisition takes the competitive play to a new level. 3Com has a variety of good pieces of technology that HP could leverage within ProCurve. Even more significantly, it picks up a strong security product called TippingPoint, a 3Com acquisition. TippingPoint fills a critical hole in HP’s security offering. TippingPoint, offers network security offerings including intrusion prevention and a product that inspects network packets.  The former 3Com subsidiary has also established a database of security threats based a network of external researchers.

But I think that one of the most important reasons that HP bought 3Com is its strong relationships in the Chinese market. In fiscal year 2008 half of 3Com’s revenue came from its H3C joint venture with Chinese vendor, Huawei Technology. Therefore, it is not surprising that HP would have paid a premium to gain a foothold in this lucrative market. If HP is smart, it will do a good job leveraging the many software assets to build out both its networking assets as well as beefing up its software organization. In reality, HP is much more comfortable in the hardware market. Therefore, adding networking as a core competency makes sense. It will also bolster its position as a player in the high end data center market and in the private cloud space.

Cisco, on the other hand, is coming from the network and moving agressively into the cloud and the data center market.  The company has purchased a position with VMWare and has established a tight partnership with EMC as a go to market strategy.  For Cisco, it gives the company credibility and access to customers outside of its traditional markets. For EMC, the Cisco relationship strengthens its networking play.  But an even bigger value for the relationship is to present a bigger footprint to customers as they move to take on HP, IBM, and the assortment of other players who all want to win.  The Cisco/EMC/VMware play is to focus on the private cloud.  In their view a private cloud is very similar to a private, preconfigured data center.  It can be a compelling value proposition to a customer that needs a data center fast without having to deal with a lot of moving parts.  The real question from a cloud computing perspective is the key question: is this really a cloud?

It was inevitable that this quiet market dominated by Google and Amazon would heat up as the cloud becomes a real market force.  But I don’t expect that HP or Cisco/EMC will have a free run. They are being joined by IBM and Microsoft — among others. The impact could be better options for customers and prices that invariably will fall. The key to success for all of these players will be how well they manage what will be an increasingly heterogeneous, federated, and highly distributed hardware and software world. Management comes in many flavors: management of these highly distributed services and management of the workloads.

Can IBM turn information management upside down?

I am here at IBM’s IOD (Information on Demand) conference. The keynote is interesting because of the focus on outcomes. IBM has invested more than $12 billion over the past five years in the information management market. More than $8 billion has come through acquisitions (Cognos, SPSS, etc.) and the rest from organic growth.

The biggest changes that I have seen over the past 20 years or so of watching IBM in the information technology market is the change in focus from the database engine and tools to a focus on a process centric approach to information management. In essence, this means that IBM is building a foundation based on outcomes through the lifecycle of information. Last year IBM called this movement to using information holistically to help companies anticipate the future the Information Agenda. Now, there is an interesting and subtle shift to what IBM is calling information-led transformation.  What’s the difference? I think that IBM is actually attempting to turn the information management market upside down.  There is no doubt that data and information management is a technical discipline. What IBM is saying is that the focus is on business transformation that is supported by information management technology. It is a subtle difference but really important. It is very easy to get caught up in the details about schemas, data cleansing, etc. But if information doesn’t support key business processes and business strategy needs, it is just a pile of technology.

With the growth of social networks, an ever expanding world of information sources – structured, unstructured, images, video, data feeds, and more, it is more important than ever that these sources of data be managed in context with the business goals.  The movement to cloud computing will add a lot more information to the mix.  It is going to be a complex journey. One only has to look at complexities of managing information in the healthcare industry to start to understand what the implications for managing costs and lives. Today we cannot easily look across information across individual doctors, hospitals, pharmaceutical companies, pharmacies, patients, medical equipment, digital images, and more. We don’t have consistent definitions of data; nor can we keep track of how effective a treatment might impact individuals with a symptom. Nor do we have the ability today to use information to determine what solutions could be used to reduce medical errors by 5% a year. If healthcare information management were focused on predicting outcomes rather than creating the next report, image what we could accomplish.

Five things I learned at IBM’s Rational Conference

I haven’t been to IBM’s Rational Conference in a couple of years so I was very interested not just to see what IBM had to say about the changing landscape of software development but how the customers attending the conference had changed. I was not disappointed.  While I could write a whole book on the changes happening in software development (but I have enough problems) I thought I would mention some of the aspects of the conference that I found noteworthy.

One. Rational is moving from tools company to a software development platform. Rational has always been a complex organization to understand since it has evolved and changed so much over the years. The organization now seems to have found its focus.

Two. More management, fewer low level developers. In the old day, conferences like this would be dominated by programmers. While there were many developers  in attendance, I found that there were a lot of upper level managers. For example, I sat at lunch with one CIO who was in the process of moving to a sophisticated service oriented architecture. Another person at my table was a manager looking to update his company’s current development platforms. Still another individual was a customer of one of the company’s that IBM had purchased who was looking to understand how to implement new capabilities added since the acquisition.

Three. Rational has changed dramatically through acquisitions. Rational is a tale of acquisitions. Rational Software, the lynch pin of IBM’s software development division, itself was a combination of many acquisitions. Rational, before being bought by IBM in 2002 for $2.1 billion, had acquired an impressive array of companies including Requiste, SQA, Performance Aware, Pure-Atria, and Object Time Ltd.  After a period of absorbtion, IBM started acquiring more assets. BuildForge (build and release management) was purchased in 2006; Watchfire (Web application security vulnerability and compliance testing software) was bought in 2007; and Telelogic (requirements management) was purchased in 2008.

It has taken IBM a while to both absorb all of the acquisitions and then to create a unified architecture so that these software products could share components and interoperate. While IBM is not done, under Danny Sabbah’s leadership (General Manager), Rational made the transition from being a tools company to becoming platform for managing software complexity. It is work in progress.

Four. It’s all about Jazz. Jazz, IBM’s collaboration platform was a major focus of the conference.  Jazz is an architecture intended to integrate data and function.  Jazz’s foundation is the REST architecture and therefore it is well positioned for use in Web 2.0 applications. What is most important is that IBM is bringing all of its Rational technology under this model. Over the next few years, we can expect to see this framework under all of the Rational’s products.

Five. Rational doesn’t stand alone. It is easy to focus on all of the Rational portfolio (which could take a while). But what I found quite interesting was the emphasis on the intersection between the Rational platform and Tivoli’s management services as well as Websphere’s Service Oriented Architecture offerings. Rational also made a point of focusing on the use of collaboration elements provided by the Lotus division.  Cloud computing was also a major focus of discussion at the event. While many customers at the event are evaluating the potential of using various Rational products in the cloud it is early.  The one area that IBM seem to have hit a home run is its Cloud Burst appliance which is intended create and manage virtual images. Rational is also beginning to deliver its testing offerings as cloud based services. One of the most interesting elements of its approach is to use tokens as a licensing model. In other words, customers purchase a set number of tokens or virtual licenses that can be used to purchase services that are not tied to a specific project or product.

Oracle Plus Sun: What does it mean?

I guess this is one way to start a Monday morning. After IBM decided to pass on Sun, Oracle decided that it would be a great idea. While I have as many questions as answers, here are my top ten thoughts about what this combination will mean to the market:

1. Oracle’s acquisition of Sun definitely shakes up the technology market. Now, Oracle will become a hardware vendor, an operating system supplier, and will own Java.

2. Oracle gets a bigger share of the database market with MySQL. Had IBM purchased Sun, it would have been able to claim market leadership.

3. This move changes the competitive dynamics of the market. There are basically three technology giants: IBM, HP, and Oracle. This acquisition will put a lot of pressure on HP since it partners so closely with Oracle on the database and hardware fronts. It should also lead to more acquisitions by both IBM and HP.

4. The solutions market reigns! Oracle stated in its conference call this morning that the company will now be able to deliver top to bottom integrated solutions to its customers including hardware, packaged applications, operating systems, middleware, storage, database, etc. I feel a mainframe coming on…

5. Oracle could emerge as a cloud computing leader. Sun had accumulated some very good cloud computing/virtualization technologies over the last few years. Sun’s big cloud announcement got lost in the frenzy over the acquisition talks but there were some good ideas there.

6. Java gets  a new owner. It will be interesting to see how Oracle is able to monetize Java. Will Oracle turn Java over to a standards organization? Will it treat it as a business driver? That answer will tell the industry a lot about the future of both Oracle and Java.

7. What happens to all of Sun’s open source software? Back a few years ago, Sun decided that it would open source its entire software stack. What will Oracle do with that business model? What will happen to its biggest open source platform, MySQL? MySQL has a huge following in the open source world. I suspect that Oracle will not make dramatic changes, at least in the short run. Oracle does have open source offerings although they are not the central focus of the company by a long shot. I assume that Oracle will deemphasize MySQL.

8. Solaris is back. Lately, there has been more action around Solaris. IBM annouced support earlier in the year and HP recently announced support services. Now that Solaris has a strong owner it could shake up the dynamics of the operating system world. It could have an impact on the other gorilla not in the room — Microsoft.

9. What are the implications for Microsoft? Oracle and Microsoft have been bitter rivals for decades. This acquisition will only intensify the situation. Will Microsoft look at some big acquisitions in the enterprise market? Will new partnerships emerge? Competition does create strange bedfellows. What will this mean for Cisco, VMWare, and EMC? That is indeed something interesting to ponder.

10. Oracle could look for a services acquisition next. One of the key differences between Oracle and its two key rivals IBM and HP is in the services space. If Oracle is going to be focused on solutions, we might expect to see Oracle look to acquire a services company. Could Oracle be eyeing something like CSC?

I think I probably posed more questions than answers. But, indeed, these are early days. There is no doubt that this will shake up the technology market and will lead to increasing consolidation. In the long run, I think this will be good for customers. Customers do want to stop buying piece parts. Customers do want to buy a more integrated set of offerings. However, I don’t think that any customer wants to go back to the days where a solution approach meant lock-in. It will be important for customers to make sure that what these big players provide is the type of flexibility they have gotten used to in the last decade without so much pain.

Why Sun Microsystems can’t go it alone

Like everyone else, I have been looking what would happen if IBM were to buy Sun Microsystems. I actually thought it sounded pretty good. IBM would get hardware, some database, virtualization, cloud, and operating system software. Oh, and did I mention that they would control Java. But it sounds (at least as I am writing this) the negociations have broken down. Greed is an interesting phenomenon. Prior to overtures by IBM, Sun’s stock price was around $3.00 a share. IBM was offering as much as $9.50 a share.  I actually thought that price was a bit high — but what do I know.

So, what happens now? I suspect this little drama is far from over. It is possible, if rumors are to be believed that Sun’s Chairman Scott McNealy will take over the reigns of the company once again to try to restore the company to its former glory. It has happened before. Steve Jobs returned to put Apple back on the right path. Michael Dell is trying to turn Dell into the innovator that it had been a decade ago.  Will it happen this time? I think that there are some difficulties with this plan, if it is indeed true. A lot has changed since Sun declared in the 1980s that the network was the computer. Clearly, the company leadership was right. I was an observer of the pragmatic and brilliant marketing company that Sun became in the 1980s, when I worked for its competitor Apollo Computer that was later purchased by HP.

Today, the market is quite different than the market Sun and McNealy had successfully finessed.  Today, the market is consolidating around either very strong global leaders such as IBM, HP, Microsoft, Oracle, Cisco, etc. There is a new generation of leaders emerging that had their start in the Internet era such as Google, Amazon, and Facebook and even Twitter. So, is there room for Sun to remake itself in this new world?

I guess that my take is that it will be very hard for Sun to resurface and remake itself. Here are the three main reasons that I have doubts and why I think that shareholders and board members should sell the company to IBM.

1. Sun Microsystems will have trouble regaining hardware leadership.  While it has some reasonable hardware assets, it is not big enough to take on HP or the emergence of Cisco as a hardware players.  Even companies like Google and Amazon play an important role in hardware — in the commodity relm.

2. While it owns some impressive software assets that it has bought over the past decade, Sun has never learned to leverage these assets to propel it into a leadership role.  It has further confused the market by opening sourcing its software. While this might be popular in a down market, it is not enough to create a repeatable revenue stream. I was watching a funny video of Steve Gilmore interviewing current CEO Jonathan Swartz (as a puppet) that I think captures part of Sun’s problems.

3. Is there a single area of technology where Sun can innovate and out shine its competitors? I imagine there might be some hidden jewels that are transformational and will turn the market upside down inside Sun — but I doubt it. I think that as Cloud Computing moves to center stage, Sun could be a player but not a leader. To be successful, Sun will have to find a way to lead in some area.

The bottom line is that I do not see a good future for Sun as an independent company.  I think that the damage has been done. Not only does the company have to regain shaky customer confidence but it quickly has to start making a profit. It is not an easy climate even for the strongest companies.  While it is possible that McNealy will surprise us all and turn Sun from a struggling player in a consolidating market to a leader but it is probably too late.  Customers who are watching this drama unfold will have to be convinced that Sun has staying power — not just for this year for future decades. If Sun tries to maintain independent, I predict a long and difficult path that will not necessarily end in success.

What’s a Smarter Planet (and what does that have to do with technology?)

So, who could argue that we need a smarter planet. I certainly couldn’t. I am at an IBM software analyst meeting. I have been attending this meeting for many years. The focus, as you might imagine is on the software strategy. But  there was something this time that I think is worth talking about.  Rather than providing us analysts with a laundry list of products and go to market strategies (yes, they did some of that too), the focus this year is around vertical solutions and markets.  But more than that, there is an overarching theme that is about to become the major theme that will envelope IBM over the coming years – Smarter Planet.  This initiative is driven by Sam Palmisano not just with his operational good sense, but his ability to provide vision for the company.
In his address to the Council of Foreign Relations in New York City on November 6, 2008, Palmisano proclaimed that the next challenge as our world gets more interconnected, hotter, and challenged for growth we need to leverage a new approach to innovation that is smarter.
This approach according to Palmisano, “This isn’t just a metaphor. I mean infusing intelligence into the way the world literally works – the systems and processes that enable physical goods to be developed, manufactured, bought and sold…services to be delivered…everything from people and money to oil, water, and electronics to move…and billions of people to work and live.”
Good thinking but what does this mean from a technology lens? It is clear that we have an overabundance of technology. What we lack right now is the right way to leverage technology to truly focus on customer benefit from both an agility perspective (being able to change quickly and without too much pain) and the ability to support an increasingly connected world.  It is interesting to think about looking at the world this way.

If you think about it, the world is, in fact, a system. To make the concept even further, the world can be viewed as a biological system. The human body itself is an interconnected set of sensors, actions that trigger other actions. The body interacts with other humans, with the physical world as well as the virtual world. We take actions based on the information we are given or intuit from our experiences.
IBM is trying to tap into one of the most important transitions in our world today. And they are not shy about focusing these transformations to their products and services (it is a commercial world, after all).
Here’s a quick view of this idea of the Smarter Planet.  If we look at the idea of a Smarter Planet, it starts with the idea that everything is an asset that takes inputs processes them and produces outcomes.  Therefore, we can look at this from Smarter Planet from five different perspectives:
•    Innovation can transform companies, countries, and governments to lower costs and increase revenue
•    Intelligence that provides an ability to learn from the vast amounts of information in the world (I call this anticipation management). In essence, this means managing information, predicting outcomes, leveraging information across partners, suppliers, and customers
•    Optimizing, managing, and changing based on the customer experience. Organizations no matter how big or small are looking for ways to transform themselves so they are ready for whatever happens.  Companies that focused on this type of change are better able to weather very tough and complicated times.
•    Greening of business. You can’t talk about the planet without thinking about the impact of green on everything we do. This includes everything from saving cash by better usage of energy to protecting the climate.
•    Leveraging smart people.  I think that people makes or breaks this noble goal. Leveraging all these innovative approaches to doing things smarter and more responsibly typically fail if people don’t work together as effective teams.  Politics can kill innovation more quickly than anything else.

Now begin to take this concept out of the general view and apply it to specific industries, their problems, and opportunities. That is precisely what makes the idea of the Smarter Planet intriguing.  For example, manufacturing itself is being transformed as we speak.  Manufacturing has been transformed by technology with sensors and actuators so that the information produced is helping smart companies better control the manufacturing process both in terms of innovation, efficiency, and energy conservation.  In retail, companies are leveraging new processes and technology to leapfrog the competition. If a retailer can optimize the way they change inventory based on an early understanding of changing buying habits of customers they can become a leader.

I think it is important that IBM is talking about this idea now.  This idea of a Smarter Planet is really tailor made for a time when the natural inclination is to hide until things get better.  There is no question that we are in very challenging time.  It isn’t the first time that we have found ourselves in this position and it certainly won’t be the last.  But in my experience, the companies that take action when everyone else is hiding under the bed to innovate, change, and learn will win.  When the world comes back, these companies will be way ahead and everyone else will be playing catchup.