IBM's software business contributes $20 billion of IBM's revenue and 40 percent of its profits. Suffice to say, it's an important part of Big Blue's market strategy to ensure that the software division performs at or above expectations every year.
Steve Mills, senior vice president and group executive, joined IBM in 1974 and has helped shape the software business as its grown to more than 50,000 employees, including 25,000 software developers and 15,000 sales and technical support personnel in more than 150 countries. That total includes the products and personnel from the more than 50 companies IBM has acquired since 2000.
Steve Mills, SVP IBM software.
In 2009 alone, IBM acquired no fewer than five companies: Lombardi, a privately held provider of business process management (BPM) software, data discovery software firm Exeros, database security firm Guardium, security provider Ounce Labs, and analytics provider SPSS.
The company also launched a number of cloud-oriented products and services in 2009, including a new lab in Hong Kong, a Cloud Academy program designed to help educators and students pursue cloud-computing initiatives and better take advantage of collaboration technology in their studies; and a number of additions to the LotusLive hosted collaboration service.
In an exclusive interview with CNET News, Mills shared how the company is looking at the technology landscape in 2010 and beyond.
Question: Software strategy is obviously an important part of IBM's business model. How long of a time-to-market horizon does IBM look for with new software products?
Mills: We tend to look at product groupings and product families--customers don't use a single product. Enterprises are looking for complete solutions even if they don't buy them all at one time. That means that we're looking for leverage in software we create or acquire--how do the products complement each other and how can plan ahead for what customers need.
As you probably know, IBM is big on process (laughs). The software business is no different, and we have a method to how we develop markets: customer, volume, revenue, and profit. You have to set the baseline to figure out how the product fits into the marketplace, you learn this from talking to customers. Time to market and rapid iteration are important aspects that come into play in relation to the other components but you always learn more in the market from customers than in the lab.
When we look at how well a piece of software is doing, as well as its potential, we look at volume of customers, industries, installed base, etc., and what's the trajectory of the installation. Growth objectives are unique to each product, and you rise on a series of plateaus. You have to fill the gaps that inhibit the growth. And it's not always obvious. We pay a lot of attention to our customers and also the trends in the market.
How does cloud computing play into your technology focus areas?
Mills: Cloud computing is a transformative part of the Darwinian IT phenomenon. Many companies are not interested in operating their own infrastructure as they don't see it as a competitive advantage. In which case they want to get the job done at a lower cost. Businesses realize they can grow because of IT and they want to continue to use IT to keep things growing, but that doesn't mean they need to own and manage every piece of their infrastructure.
Companies like American Express, Salesforce.com, and ADP are great examples. We see those types of system designs and customer interactivity as common models. IBM has long offered managed business process services and supported other big enterprise services.
These offerings make logical sense, but they don't always solve every problem. The hybrid public/private model is very appealing to our customers and not dramatically different than using a hosting provider.
Not everyone will be comfortable with the cloud model--it's all part of a continuum. There will be Salesforce.com on one hand, and on the other customers that run everything behind the firewall. Success doesn't mean that corporations will push everything into the cloud but the inherent cost-benefits are there and more companies are interested. That's part of the evolution.
How do you look at open-source projects/products/companies?
Mills: The hybrid companies like Red Hat have interesting models for open source. They take all the code and put it together for you, but we tend to look at open source as building blocks for larger solutions. IBM ingests a lot of open-source code and we provide a huge amount of development and engineering expertise to the various projects that we support--like Linux and the Apache server.
We focus a lot of our energy on open standards and platforms. And if there are open source projects that we believe in we'll invest resources to support them.
... Read More
IBM decided to close 2009 with a bang by acquiring Lombardi, a privately held provider of business process management (BPM) software. Big Blue racked up a number of acquisitions this year including: data discovery software firm Exeros, database security firm Guardium, security provider Ounce Labs, and analytics provider SPSS.
Lombardi marks IBM's 90th acquisition since 2003. That's a lot of companies to digest.
With Lombardi, IBM strengthens its presence in BPM by effectively capturing the customers it doesn't already have. IBM currently has more than 5,000 BPM customers in about 30 countries and growing.
According to Lombardi CEO Rod Favaron, the company has about 300 enterprise-level customers with a high percentage shared with IBM. Lombardi has a shockingly impressive customer list, including Allianz Group, Aflac, Barlays Global Investors, Dell, FETAC, Ford Motor, Hasbro, ING Direct, Intel, Maritz Travel, National, Bank of Canada, National Institute of Health, Safety-Kleen, T-Mobile, UCLH, and several governmental agencies.
It's generally been a quiet year for technology merger and acquisition deals with the 2009 value total for tech M&A activity reaching $142 billion, according to recent data from technology investment research firm The 451 Group. To provide context, the second quarter of 2008 alone saw $173 billion in tech M&A deals. The median deal size in 2009 was $40 million, contrasted with a median of $43 million in 2008 and $100 million in 2007.
From January to November 2009 there were only 31 technology transactions valued at $1 billion or more, and The 451 Group reports that all of the high-multiple deals took place in the second half of 2009, resulting in M&A spending running 50 percent higher than in the first two quarters. Notable deals include Dell's purchase of Perot Systems and Cisco Systems' pair of $3 billion acquisitions in October.
... Read More
(Credit:
IBM)
IBM is continuing its investment in cloud computing with a new lab in Hong Kong, expanding the presence of its IBM China Development Laboratory (CDL), the company's largest with more than 5,000 developers on staff.
The laboratory builds on the e-mail technology of Outblaze Limited, a Hong Kong-based company whose messaging assets were acquired by IBM earlier this year and incorporated into the Lotus brand. The new lab claims to be the first of its kind in Hong Kong and shows both the importance of global development teams and IBM's focus on growth in emerging markets, a user segment that is theoretically more adaptable to different methods of application consumption and likely well-acquainted with browser-based applications.
Overall, the fourth quarter of 2009 has seen several interesting cloud-related announcements from IBM, including the LotusLive service that launched in October and already claims more than 18 million active users. Big Blue also launched the Cloud Academy program designed to help educators and students pursue cloud-computing initiatives and better take advantage of collaboration technology in their studies.
IBM has taken a leading role in the development and adoption of cloud services while other large vendors such as SAP, HP, Oracle, Sun and Microsoft have all made cloud-oriented announcements with few proof points that their efforts will be successful. There is no certainty that IBM will be successful either, but the company has at least made consistent progress in both technology and user adoption.
IBM representatives told me that the company will continue to focus on delivering "the most reliable and secure cloud services" architected to meet the needs of consumers as well as their mainstay enterprise buying audience. Totally logical, and still surprising that the other big vendors haven't figured out how to attract their core user base to cloud platforms and services.
The cloud remains a bit of an anomaly in the tech world, dominated by Amazon, an e-commerce site, while stalwart IT vendors like Microsoft continue to take baby steps toward mainstreaming their efforts.
My blogging colleague, James Urquhart, wrote this week about Microsoft's new business unit that merges its cloud and on-premise server group into one development team, which makes sense, at least in theory.
Practically speaking, Microsoft is way behind the curve and has a lot of ground to make. I've written in the past that the opportunity is theirs to lose, and it's hard to see how they plan to win, even with this new structure.
(Credit:
IBM)
IBM on Wednesday announced a program designed to help educators and students pursue cloud-computing initiatives and better take advantage of collaboration technology in their studies.
The IBM Cloud Academy, announced at the Educause annual conference, includes a global roster of educational institutions as initial participants. Educause is a nonprofit association whose mission is to advance higher education by promoting the intelligent use of information technology.
IBM will provide the cloud-based infrastructure for the program, with some basic collaboration tools available at the outset. IBM's LotusLive service provides the basis for the new offering. Participants will immediately be able to do some very basic tactical functions on the new system:
- Create working groups on areas of interest to the education industry
- "Jam" on new innovations for clouds in education-related areas with IBM developers
- Work jointly on technical projects across institutions
- Share research findings and exchange new research ideas
Shared research across universities and other higher-learning institutions remains a vital part of technological innovation, but many programs don't have formal tool sets in place. Cloud services are a logical place to run these types of programs, especially as international groups need immediate access to data from their partners.
... Read MoreIBM and Canonical, the commercial entity behind Ubuntu Linux, on Tuesday are launching a combined cloud and Linux desktop package designed for Netbooks and low-end PCs.
For those of us still waiting for Linux to hit the desktop, this type of packaging may be exactly how the move from Windows starts to pick up steam.
The IBM Client for Smart Work was first launched in South Africa in September and was initially geared toward emerging markets. IBM found that there was strong interest in the U.S. and other markets that had aging PC infrastructure and little desire for continued Windows upgrades.
The U.S. version of the package contains a number of IBM products including word processing and spreadsheets via Lotus Symphony, e-mail via Lotus Notes or LotusLive iNotes, and collaboration tools from LotusLive.com. As with the previously launched initiative, the package runs on Ubuntu Linux.
Bob Sutor, IBM's vice president of Linux and open source, told me that the target is not a drop-in replacement scenario, but rather something for IT shops that don't want to be stuck in an endless cycle of upgrading desktop operating systems and applications.
This is an interesting development for multiple reasons:
- IBM and Canonical are teaming up to bring Linux to the desktop, offering what could be considered a next-generation thin-client that relies on cloud services but remains based on an actual operating system rather than just running in a Web browser.
- IBM is targeting Windows installations in the co-opetition model the company excels in--effectively insulating itself regardless of who wins the desktop.
- Canonical is building a channel to deliver solutions rather than depend on individuals and organizations to roll their own.
If recent research is any indication, Amazon.com and Google are winning the cloud game.
Evans Data on Tuesday released a report (registration required) on how developers perceive cloud service providers related to cloud services offerings, including their completeness and the companies' ability to execute on the vision.
Janel Garvin, the founder of Evans Data and the author of the report, provides excellent insight into the current state of the market and how quickly things could change, if certain large vendors (notably AT&T and Microsoft) got their acts together more quickly.
Given their robust services, it isn't surprising that Amazon and Google top the list. And although IBM, VMware, and Microsoft trail, each offers important components of cloud infrastructure.
... Read MoreIBM on Monday is expected to release a new enterprise collaboration service based on its LotusLive cloud-based platform. The service comes with 1GB of storage and will cost $3.75 per user per month.
The new IBM LotusLive iNotes service is IBM's first real foray into a mass-market cloud-based service, including e-mail, calendaring, and contact management all designed to work with existing on-premise e-mail or operate as a standalone solution. Per user pricing will start at just $3 per month.
Realistically, the new IBM service isn't much different than you see from the likes of Google Apps or Yahoo--the big change is that it's coming from IBM, an enterprise stalwart. Whether you like Lotus Notes or not, this is big news as an endorsement of cloud computing and hosted applications.
Sean Poulley, vice president of IBM Cloud Collaboration Services, said customers have been looking for strategic versions of hosted solutions for a long time. The cloud approach of multitenancy means that the real cost of IT--the cost of running the applications--is reduced, bringing economies of scale to the offerings. IBM has been working on making the service secure and "enterprise ready," he said.
IBM's decision to start offering more cloud-based services is predicated on the notion that fewer people in IT organizations are carrying more responsibility. They are also more dependent on people outside of their organizations that need access to shared documents and files. On-premise collaboration applications can likely be manipulated to work in a shared manner, but LotusLive has been designed to work that way from the ground up.
When I asked why IBM would brand the new service as part of the Lotus family, Poulley said that more than half of the Fortune 100 companies use IBM collaboration technology that includes Lotus Notes and are well aware of the brand.
IBM on Tuesday announced that Canada's Edmonton Police Service is using IBM business analytics technology to help reduce crime, improve force effectiveness, and increase public safety.
The goal of the software is to help law enforcement agencies "obtain the right information at the right time--even before a crime may have been committed--to inform police officers so they can stay on top of and prevent criminal activities, identify crime 'hot spots,' and ultimately reduce crime rates."
With business analytics technology, Edmonton police are able to see data in near-real time. They put crime information directly into the hands of front-line patrol officers so they can use it to quickly identify problems, associated trends, and locations of crimes to determine their response and problem-solving solutions.
The police service has also been able to look at the components of response times--such as dispatch delays and travel time--to identify the issues that play a role in overall response time. With this technology, police are able to monitor performance strategically over time and place, and tactically on a day-by-day and call-by-call basis.
Crime data analysis has been a challenge in the past, as law enforcement and government agencies are only recently making the transition from paper to computer-based records. The quick access to relevant information potentially helps officials work smarter and make more timely decisions about crime fighting.
The use of analytics to improve decision making is certainly nothing new in the enterprise. Other industries such as professional sports jumped on the analytics bandwagon several years ago in order to create specific game plans based on teams and players. It's good to see an industry modernize--especially one that's responsible for public safety.
In the year since the worst financial meltdown in modern history, many financial institutions are still seeking to identify the root causes of the crisis and develop new ways to re-invent their business processes to ensure that such an event can never occur again.
In addition to human error, over-reaching risk, and simple greed, there was a key technology component that has been overlooked by most reports. According to Bob Picciano, General Manager of IBM Lotus Software and IBM Collaboration, this technological fault was made up of two elements; the lack of corporate-wide computer program integration at most banks, and a complete lack of data transparency.
As a result of these shortcomings, not only were financial institutions unable to track or even to understand their overall risk position, but they lacked a single view of each trade or client in order to "triage" the crisis as it unfolded.
This is not an uncommon scenario and it's one that many pieces of software have tried to address via dashboard, portals, etc. But the systems need to have the right data in order to provide meaningful information.
Many banks are running applications that are older than the workers who use them--which is not necessarily wrong provided that these core systems can accommodate new ways to view and parse data.
Replacing a core banking system is akin to conducting a simultaneous heart and lung transplant on a patient that is still jogging. It's just not realistic. And, since banks can't afford to simply shut down their operations in order to transition to new applications, these vital upgrades were put on hold indefinitely.
Even as events were finally catching up to the banks across the globe, they still resisted replacing their aging core banking systems, despite the fact that the cost of maintaining these systems was becoming more and more prohibitive. For example, IBM research suggests that application and infrastructure maintenance can often account for as much as 85 percent of a bank's IT budget.
This is finally beginning to change. To help facilitate these global upgrades, as part of its Smarter Planet initiative, IBM is unveiling a new Banking Framework that will allow banks to effectively structure and integrate their applications and better manage their data.
The IBM Banking Industry Framework addresses four key areas that demand the majority of a banks attention and resources, providing a path to accelerate transformation, and system upgrade with an eye towards future needs and reduced project risk. The features of the framework include:
- An integrated risk management domain to support a holistic approach to managing financial risk, operational and IT risk, financial crimes detection and prevention, and compliance.
- The customer care and insight domain helps banks build a foundation for creating a single view of the customer and enabling more effective and efficient sales and service.
- The payments and securities domain helps banks progressively transform their payments operations to become more flexible and efficient.
- The core banking transformation domain allows banks to modernize and renovate existing systems that sustain core banking functions while aligning with the changing needs of the business.
Based on a mature model already used by more than 250 banks and 150 insurance companies, the framework provides a methodology for completing gradual core banking transitions on a step by step basis, rather than all at once.
It also has the fail-safe aspect of being based on a tried and tested method that not only reduces the risk inherent in any transition, but also allows easy standards-based integration with other systems the institution may decide to incorporate at a later date.
Follow me on Twitter @daveofdoom.
The Linux Foundation recently released an updated study of Linux development statistics that reveals interesting statistics relating to who actually writes the kernel that allows others to build on top.
More than 70 percent of total kernel contributions come from developers working at large companies including obvious participants like Red Hat, IBM, Novell, and Intel as well as other less obvious small companies such as Parallels.
- Red Hat: 12.3%
- IBM: 7.6%
- Novell: 7.6%
- Intel: 5.3%
- Independent consultant: 2.5%
- Oracle: 2.4%
- Linux Foundation: 1.6%
- SGI 1.6%
- Parallels 1.3%
- Renesas Technology: 1.3%
- Academia: 1.2%
- Fujitsu: 1.1%
- MontaVista: 1.1%
- MIPS Technologies: 1.1%
- Analog Devices: 1.0%
- HP: 1.0%
Another interesting fact is the rate of development and constant refactoring of the kernel code. An average of 10,923 lines of code are added with an average of 5,547 lines removed every day, ensuring that the code is high quality and relevant for the most important implementations of the kernel.
... Read More
