IBM Moves Ahead In Smart Computing, But Still Has Ways To Go

IBM threw a big event in New York City on Thursday, October 1, and Friday, October 2, to publicize its Smarter Cities initiative, part of its Smarter Planet marketing message.  The event featured an impressive list of politicians (Mayor Bloomberg, NY Governor Patterson, governors from Vermont and North Carolina) and CEOs (CEOs from ABB, Verizon, American Electric Power, etc.).  I was part of the crowd of hundreds of attendees and IBMers on Friday, and my colleague Doug Washburn attended on Thursday. 

It would be easy to dismiss this as part of hype machinery that IBM is running to build awareness of and create customers for its Smarter Planet initiative and the emerging offerings that it is creating under that rubric.  But I think there is more going on here.  What IBM is really doing is creating a vision – or more precisely, half a dozen visions – of how a new generation of technology can help address some critical challenges facing the planet.  Visions of course can easily become hype.  But as several speakers noted, visions are also a necessary first step in any transformation process, building awareness of what can be different at the end that will inspire people to start the journey.  And IBM to its credit put concrete examples behind the proposals.

Here is what IBM is doing right:

• Focusing on key social and economic problems facing many countries around the world.  Cities and national governments face challenges of providing healthcare more efficiently, improving the quality and delivery of education, managing greater and greater volumes of people travel and goods transportation, providing public safety and security in the face of increased threats of terrorism and persistence of crime, and encouraging energy conservation and alternative energies to counter global warming.  These are the problems that IBM’s Smarter Cities initiative focused on.
• Identifying ways that new technology solutions can address these problems.  IBM has begun to describe and document that ways that new awareness techniques like embedded sensors and capture of real-time data on the location and movement of objects, people, and energy, plus more advanced analytics, can be applied as part of solutions for governments and infrastructure providers like utilities.
• Starting to build solutions for vertical industries with these problems.  Classic horizontal technologies still represent the vast majority of IT purchases and will provide the foundation stones for these new technology solutions.  But we think most of the future growth in the IT market will come from highly verticalized solutions.  IBM’s organization of its Smarter Cities presentations shows that it understands this prospect.

These actions are putting IBM way ahead of most other vendors in building the case for business and government investment in what we at Forrester are calling (coincidentally) “smart computing” technologies.  But IBM still has work to do to translate its early lead into actual business success.

1. Show the pay-offs.  The presentations at the New York Smarter Cities event were strong in vision and soft benefits like helping reduce CO2 emissions.  However, the case studies with concrete dollars-and-cents benefits were less concrete.  While IBM does have some examples of how health care providers, transportation departments, utilities, policy departments, and school districts are realizing tangible savings, it will need to show many more examples of financial and public benefits if it is going to get these generally slow moving institutions to buy what it is offering. 
2. Create the needed solutions.  So far, IBM has some experiments and pilots in helping clients in local governments, utilities, health care, and education assemble many of the elements of what they need to make their operations more effective.  But in many ways IBM is at the same stage as the early ERP systems in 1990 and 1991.  It is still working with individual clients to try to pull together the pieces of what are admittedly complex solutions.  It is also building what it calls software frameworks for different industries.  But IBM is still learning what works and doesn’t work, what is needed vs. what is available, and what it would provide and what partners would contribute.  So, IBM still has work to do to create replicable solutions. 
3. Make its solutions software-and-hardware products, not consulting projects.  IBM for the past decade has been moving from being a product vendor to a services vendor.  But now it has to start moving the other way.  It won’t make economic sense for thousands of utilities to implement smart grid and smart meter systems as individual, custom-built service solutions; they will need offerings that are much more like turn-key products at a fraction of the cost of a customized service solution, albeit with extensive configuration options to meet their requirements.  Same thing for health care systems, urban transportation management systems, etc.  Will IBM have the discipline to resist the temptation to keep building high-cost (and high-revenue) custom consulting solutions for individual clients, and instead create the core industry-focused offerings that could be sold as lower-cost (and lower revenues) semi-packaged products to dozens or hundreds of clients?

Will IBM be the first vendor to get Smart Computing right, or will other vendors get there first? Let me know what you think.  Thanks.

Partner Vendor - as defined by a customer

By Peter O'Neill

As part of my research around the IT management software market, I spent some days with CA last week and met several of their customers as well. One of the customers is a large financial service institute – their name is not relevant to the point of this blog so I will not name them (I would have to ask their permission first).

What particularly interested me was this customer’s definition of a partnership with their suppliers. They are pursuing a strategic sourcing strategy for their IT management software and wish to restrict their interactions to a select shortlist of vendors whom they wish to consider as "vendor partners". They have three simple requirements of a vendor who wishes to be in this list.

* Become transparent.  The vendor must be open to provide long term product roadmaps, be available for public briefings, provide educational whitepapers and speak at their internal events. The FSI even has their own advisory council where these vendors sit together at one table and discuss the customer’s plans.
* Become embedded. The vendor must commit to providing local and responsive support resources, include them in their product beta programs and contribute to events with customer peers where notes are compared among the customers.
* Share the journey. The vendor is committed to deliver and demonstrate value to the business of the customer – beyond talking about the technology itself. 

I thought that was a very succinct way of describing how vendors can work as partners. By the way, this customer was also quite clear with me about which vendors did not match these expectations and what that meant to their business relationship.  He also iterated that these requirements do not mean that only the largest of vendors can qualify as a partner-vendor. He also has some smaller vendors that provide best-in-class technology in critical areas – but he expects the same approach as described above.

I hear more and more that strategic sourcing is becoming a standard operating practice in IT management software. Does anyone disagree?

 
Always keeping you informed!
Peter

HP's IT Financial Management Solution Launch

By Peter O'Neill

Vendor Strategy Professionals have been discussing the difference between product and solutions for as long as I have been in the industry. And I would like to claim that those 30 years of experience gives me the right to state that most vendor product launches still do not actually reflect that difference. So, it is al the more refreshing to observe HP Software's annoucement of their new IT Finanancial Management solution earlier this week in Las Vegas.

They have got it all extremely right: the right message, the right development process and the right package of technology and services.

In our March 2009 report, "Market Overview: IT Financial Management Software", where we described this emerging segment, see http://www.forrester.com/Research/Document/0,7211,54520,00.html,
we were quite clear about the challenges of providing solutions in this segment. The buying center will be complex and the probable users will be a mix of IT experts who know little about financial analysis and finance experts who know little of IT details. The proof of IT financial management project success will be getting good role-based reporting and ensuring all the plumbing of data sources are in place.

HP has built a capable financial analystics product using the Business Objects platform, plugged it into their existing software solutions for Project Portfolio Management and IT Asset Management, though it can work with other PPM or ITAm solutions as well, More importantly though, they have realized that most ITFM projects will be data wharehouse projects and so they have set up consulting services across the whole project lifecycle to help those customers who sign up to HP to be successful. This is possible because the HP Software and Solutions organization, as they now call themselves, also has hundreds of business intelligence expert consultants doing data wharehouse projects for enterprises.
Combined with their other processional services practice if IT service management and operations consultants, this enables HP to put together a most compelling solutions proposition.
        
They are also hitting the road running because they have report templates and ETL (extraction,transform and load) connectors built out during 20 lead projects for enterprise customers during their "Design Partner Program" over the last months.
 
Always keeping you informed!
Peter

Do You Like To Be Benchmarked?

By Peter O'Neill

I have just completed a benchmarking excercise where we invited various IT vendors to tell us about their Channel Incentive Operations as a basis for a research report we will publish in the summer.
Many of the vendors we contacted were suprised that we do this type of research at all, but Forrester clients are getting used to this as we expand our library of reports for vendor strategists. 
Those vendors who did talk to us get, in return for their providing us highly-sensitive operating cost and headcount data, illuminating benchmark feedback so that they have an idea of how they operate compared to their peers. The feedback phase starts next week and we have 10 vendors in the benchmark so a good comparison can be made. The funniest interview was with a very high ranking executive of one vendor (so clearly, they thought it was important to talk to Forrester) who then had to tell me
every five minutes, "I am sorry, we cannot give you that information" -- a total waste of his and my time. 

In our prospecting for interviews, several vendors told us that they did not wish to participate in this excercise, which is reasonable, but nobody told us never to come back with another idea.  

We would like to more benchmarking and write it up in reports. We see the opportunity for Forrester to acquire the role as mediator within the industry for comparing notes between peers without revealing secrets to competitors. That is our idea but we’d also like your feedback. Do you agree with us? Please leave a comment for us below on this. Thanks.
 
Always keeping you informed!
Peter

IT Partnerships - Do You Understand The Terms Anymore?

Introducing a new partner-type Lingua Franca for the new era

By Peter O'Neill

We have been getting numerous inquiries from both vendor and user clients about the strange collection of terms used to describe partners in our industry.
What is a "Preferred Partner"? Who prefers them and why should that be important to me the buyer.     Or what does "Advanced Partner" mean?
So we looked at the partner-taxonomy for 16 different IT vendors and, lo and behold, it is truly a mess!

Of course, compared with other industries, the IT industry is still relatively young and we are still more influenced by technology than business trends - so most decisions of this type are still made by technology experts with only occasional business-savvy. The partnerships that IT vendors develop and communicate tend to reflect their bias.

And yes, our partnership monikers reflect inconsistent usage and even abuse of terminology, so it is no wonder that buyers find themselves confused by the morass of definitions.
As our industry evolves toward maturity, the ecosystem of supply chain and channel partners will become less dynamic and we should now begin to push for an industry-standard taxonomy when communicating partnerships and partner portfolios to buyers. Forrester has made a stab at a partnership taxonomy and proposes the following groupings are adopted when listing vendor partners to external audiences:

• Technology partners. Partners that provide platform technology, hardware, or software underlying the business solution proffered. This partnership is important to buyers wanting to know these details for architectural and vendor governance reasons.
• Solution partners. Partners leverage the vendor’s technology into a purchasable business technology solution by adding their own technology, which is productized.
• Implementation partners. Partners certified to implement the vendor’s technology through customization and project programming.
• Consulting partners. The consulting offering can include the phases of technology selection as well as business process and organization consulting. The partner CAN also be listed as an implementation partner.
• Hosting partners. Many business solutions are now offered in a managed services, an outsourcing, or even an SaaS scenario.
• Education/training partners. These companies offer classroom or computer-based education.

Please see the Forrester report just published here: Forrester's Partner-Type Taxonomy: Lingua Franca For A New Era

These partner types are not mutually exclusive: A partner will often be qualified as more than one type. But this is the partner-type information that most interests a buyer. After all, the primary audience for communicating partnerships is prospective buyers, with the secondary audience being potential partners themselves. So it is therefore important to provide clarity and transparency about which partners a vendor is working with. The above listing simplifies the partner classifications for this purpose.

Other findings: well, you should definitely avoid the “strategic” moniker. Buyers perceive no immediate value from an additional label on the partnership such as “strategic” because the only “strategic” they care about is the commitment to their installation.
Also, many vendors who have more complicated product portfolios of hardware and software, or even several different types of software often end up with a long list of labels alluding to product type or "solution competencies.” The larger the vendor is, the more complex and laborious this list becomes. If you must, introduce the product or competency specialization under the above generic terms list to make it easier for the audience.

That is our proposal but we’d also like your feedback. Do you agree with us? Do you propose a different or modified taxonomy? We are going to continue our thinking and work out a similar taxonomy for the new types of partnerships around SaaS.  So please leave a comment
 
Always keeping you informed!
Peter