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Posted by Chris Mines on December 6, 2011
I spent some of this week at IBM's annual Connect analyst event, a cornerstone for understanding Big Blue's direction from the perspective of its fastest-growing and most profitable division.
And the direction is pretty clear: behind-the-scenes product integration is enabling tighter marketing and sales integration across what have been separate brands (Lotus, Tivoli, Cognos, etc.) in the software portfolio. Now the emphasis is on capabilities, and on tuning or packaging those capabilities into industry-oriented bundles such as "social business" or "smarter commerce."
IBM's Smarter Planet initiative is starting to have a positive impact in its software business. For the first couple of years since launch, Smarter Planet was principally a door-opener for IBM's business consulting teams, creating interest among clients in how IBM could help assess and improve business performance.
As those engagements have progressed and multiplied, the consulting organization has created "patterns" across them, problems that they run into repeatedly in a particular industry or geography. Those patterns are now being put into code for industry-specific solutions, for APIs that other software vendors can hook into, and other software artifacts. So Smarter Planet is starting to drive opportunity and revenue for the software group as well as consulting services.
For example, IBM noted it has several dozen wins this year (since its launch in June) of its Intelligent Operations Center (IOC). This is a software product — available in code, in a dedicated hosted facility, or from the cloud — that is aimed at the smart city market.
It enables city administrators to tie together disparate operations such water/sewer, public safety, and transportation into a single dashboard or control panel. My colleague Jennifer Belissent recently blogged about what the IOC looks like in Rio de Janeiro.
The IOC's target is city governments, but IBM has found that other types of clients that run mini-cities are interested too. Port authorities, stadium owners, airports, railroads, and the like operate big, multifaceted operations that need integrated management.
About half of these IOC wins are in what IBM calls the growth markets, basically the rest of the world outside of North America, Western Europe, and Japan. The US is also a strong market, while, paradoxically, Europe is a "distant third."
This pattern fits with IBM's overall strategy to rapidly expand its presence in the growth markets; the company's target is to get 30 percent of its overall revenue from those regions in 2015, up from 17 percent in 2009. That includes a doubling of revenue in China, and "capturing Africa's growth," where IBM now has a presence in 23 countries, up from 6 in 2009.
Another element of Smarter Planet is the smart buildings effort housed in (what was) the Tivoli organization. Through a series of acquisitions, most recently Tririga earlier this year, IBM Software has built an impressive portfolio of capabilities: infrastructure asset management plus real estate portfolio management plus energy and carbon management.
It's a portfolio that is at once broader and more focused than many other players in the market. It stretches across many asset types, includes multiple facility management, but is still focused on improving the efficiency of buildings. My guess is that there are more pieces to add to the mix (carbon reporting? water and other resource planning?), but the real work for IBM is integration — with itself, and with others.
Integration with building management systems, for example, is a weak link for many of the carbon and energy management systems in the market. Energy demand management, likewise. IBM is in the process of rolling out the Tririga real estate management system across its internal portfolio of 1,700 buildings; this is an essential precursor to becoming a credible partner that can help customers reach their efficiency and sustainability goals.
Slowly but surely, Smarter Planet is evolving from the general-purpose corporate positioning you see during football games on Sunday to an initiative that has teeth in the form of measurable revenue and profit improvement in IBM's results. And it's spreading from consulting to software, which means even more visibility and contribution ahead.
What do you think? Have you seen your company considering or implementing any of these types of technologies? Let us know in the comments below.
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