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.
Every year at about this time I attend IBM Software Group IT Industry Analyst meeting. This meeting is attended by about 90 industry analysts and about three times that number of IBM software group leaders, managers, and support staff. It is quite the event! While I can’t possibly talk about everything I am hearing, but I will give you an overview of the events and some of the highlights.
Since I have been traveling to a lot of analyst conferences lately, I can compare the approach of different market leaders. Next week, for example, I will be at EMC’s analyst meeting and in early December I will attend SAP’s analyst event.
But I digress. Here is what I came away thinking about IBM and its software strategy. One of my first thoughts is to compare Microsoft’s SOA/BPM event the other week to IBM’s. One of the big differences is that while Microsoft is announcing new long term initiatives (Oslo) for SOA, IBM is executing on a long term plan that has been in the works for more than five years. I think the best way to understand IBM’s software DNA is to look at the perspective of its leader.
I start with an observation that is actually not new for me. Steve Mills, Senior Vice President and General Manager of the Software Group has been the force behind herding the multiple business areas within the software group to have a common set of underlying services. While this may make perfect sense, it not an easy achievement for a company with thousands of software offerings across hundreds of different business units. As an example, when I first met Steve he was grappling with a few hundred different data stores under hundreds of different products. Somehow he managed to get all of these groups to use DB2 as their underlying database engine. But that was just the start. Steve’s next big leap was to move out of the packaged software market and into the middleware and horizontal software market.
I thought Steve’s remarks were quite insightful: In essence, Mills pointed out that IBM’s focus with its horizontal software approach is on what he calls industry frameworks. With this approach he believes that IBM is armed with the right stuff to focus on what he calls “customer business outcomes.”
Rather than packaged software these frameworks are a combination of best practices and business services. For example, in the financial services industry these services would include financial services for payments platforms, high performance event processing, and large scale data mining and analytics. Therefore, the overarching strategy for the software business is to provide the building blocks that apply to business requirements across business domains.
Mills contents that the real benefit that customers are looking for is to gaining operational efficient and innovative business performance from this horizontal. He contends that the greatest benefit from a growth and cost containment basis comes from a focus on harmonizing business practices across the organization. Simply automating and re-automating vertical slides such as customer relationship systems, booking keeping, inventory, and the like not where the opportunity is. Could this be a swipe at companies like Oracle and SAP?
Like Microsoft, IBM is moving its focus to process and models-based approaches but with a horizontal flavor. Mills believes that transactions, messaging, information integration, management of an increasingly virtualized enviornment, data management, and collaboration are at the heart of the requirements to make this vision a reality. This is where IBM software is putting its money and its bets.
So, here are the five things I learned from this meeting (I probably learned more but I know that people who read blogs have a short attention span…):
1. IBM is focused horizonally and will not get into the packaged software market. The exception will be software packages that focuses on more horizontal requirements.
2. IBM is reinventing Lotus into a collaboration platform. There are many exciting initiatives unfolding in Lotus that focus on a true distributed platform. I expect to see some important Software as a Service initiatives come out of the new Lotus. I would like to see IBM move faster into Software as a Service.
3. Information Management is an increasingly strong part of the IBM platform that transcends the database. IBM is doing a good job at integrating a large number of acquisitions into a substantial SOA based information platform.
4. IBM is doing SOA well. Clearly, the investment in SOA is paying off for IBM. It has more than 5700 SOA engagements under its belt. It is now able to leverage its expertise across key verticals to present a sound strategy to customers.
5. Now, I don’t want you to think that everything is perfect at IBM. There are still areas of concern. For example, the Tivoli organization has plenty of work to do to explain its portfolio to the market and give customers better techniques to get started without getting indigestion . Like other parts of IBM software, it is, in essence a software company in its own right with hundreds of products that don’t always work together as they should. Likewise, IBM Websphere is a huge set of technologies — some better integrated that others. Sometimes customers get overwhelmed with the portfolio.
Trying to reduce IBM software strategy to under 1,000 words is a task few humans should undertake (without a stiff drink of something). I have left out a lot — and there is plenty to say. For example, I haven’t talked at all about the herculean task that Danny Sabbah (I have added a link to Amy Wohl’s blog. She has a good interview with Danny from the same meeting) has taken on to reinvigorate Rational. (Yes, he is making progress. The direction is well conceived — it will just take some time). I also have not talked about the important Express software platforms that are probably IBM’s best kept secret. There are a series of impressive product offerings designed for ease of installation and ease of use required by the mid-market. I always wonder why it is o.k. for big companies to have to do things the hard way (but that’s just me…).
I guess this means that I have to write more about IBM’s software strategy in future entries…