March 1, 2004 9:40 AM PST
IBM heightens vertical middleware efforts
- Related Stories
PeopleSoft gussies up inventory toolsFebruary 23, 2004
Commentary: Filling a void for RFIDFebruary 19, 2004
Microsoft hops on the RFID bandwagonJanuary 26, 2004
IBM takes aim at more corporate spendingDecember 4, 2003
IBM thinks vertical with software revampDecember 1, 2003
IBM stocks its business software lineupMay 18, 2003
The introduction marks the second wave of vertical-industry middleware products launched by IBM in the last month. In early February, the company made its debut of software and services bundles for the banking, insurance and finance markets. The launch is part of a companywide effort aimed at pulling together technologies and services that address specific projects for companies in certain vertical markets. By matching the middleware packages to emerging or ongoing business demands in particular industries, IBM says it can better serve customers and increase sales.
IBM's strategy stems from changes in buying patterns as customers increasingly look for products matched to specific projects and dictated by specific areas of business, according to Doug Brown, the company's director of industry marketing.
"When IBM decided to go after these industries, it was with the view that a management consultant would have--or, what were the business transformation projects among the top concerns in each market?" said Brown. "In almost every case, these initiatives were oriented toward customers looking to take costs out of mature parts of their business or trying to increase revenue sources in some way."
The telecommunications industry package offers an example of the kinds of problems that the Armonk, N.Y.-based company hopes to address with the bundles, dubbed IBM Middleware Solutions. With that package, customers are offered tools to help integrate operational network technologies and billing systems. Brown said that IBM's middleware set aims to help telecommunications providers more easily introduce new services, such as downloadable games or ring tones.
Industry experts praised IBM for its focus on vertical markets but cautioned that the company will need to work hard at integrating its various products in each sector. Dwight Davis, analyst with Boston-based Summit Strategies, said the complexity of IBM's broad portfolio of products and services will make that integration a real challenge.
"Competitors will point to the complexity as a weakness, and IBM will need to have all the different elements of these packages working well together so customers aren't faced with major integration," said Davis. But, he said, "it is a very strong strategy for IBM as they have so many of the needed components in-house."
Davis said that the packaged approach will also eliminate some of the pressure put on IBM to create best-of-breed products in different markets by stitching together the strengths of its existing technologies.
"That isn't to say they won't need to develop good 'point' solutions," he said. "But it would be very hard for competitors to put together a package like IBM that reaches from middleware through to services, including the vertical expertise they gained through the PricewaterhouseCoopers acquisition."
IBM's products for the retail sector, meanwhile, dovetail with the company's aggressive pursuit of the growing market for radio frequency identification (RFID) technology. The Middleware Solutions for Retail package is made up of six individual tools aimed at smoothing over retail wrinkles in areas such as inventory management, shipment tracking and trading partner integration.
Jan Jackman, general manager of IBM's retail-on-demand business unit, said the current push among retailers attempting to streamline inventory operations and adopt RFID makes the market an ideal target for the custom-tailored middleware bundles.
"IBM is making a big investment to create product solutions that help retailers create intelligent and more responsive stores via RFID, digital media and kiosks," Jackman said. "A major part of that focus is investment in store integration frameworks, and creating store-level Web services architectures, to overhaul business processes and support this new store."
For instance, the retail package aims to help integrate data collected via RFID tags, microchips armed with antennae that transmit information about products to which they're attached. Combined with other RFID technologies and services, Jackman said the middleware could help companies process the reams of information coming in via RFID tags, in order to realize the benefits promised by the technology, such as more efficient inventory management.