[IBM CEO Sam] Palmisano is pushing to complete IBM’s transformation from primarily a hardware company to one led by software and services. The idea is that customers want bundled “solutions” of software, hardware and services tailored to specific industries, rather than a catalog of products.
“Sam Palmisano talks to the business side of the customer and other IBM people talk to the technical end of the customers,” said Amy Wohl, an analyst and president of Wohl Associates. “Technology vendors have learned their lessons that if you’re going to talk to the CEO, you’d better talk about the business value.”
According to IBM, “on demand” means:
Better access to computer systems and data, within and between companies, via Internet technologies.
Integrated business processes for easier information sharing among employees and business partners.
Quicker response times, helping companies react “on demand” to business changes.
Big Blue further defines the transition to an “on-demand business”:
1. Access: Use Internet technologies to obtain information.
2. Integrate: Share data among systems and divisions, such as manufacturing and finance, linking some business processes.
3. Enable on-demand action: Connect corporate processes end to end, enabling systems to share information among employees and with partners. Computer systems will be responsive enough to help companies react quickly to changes such as competitive threats or new business opportunities.
the definition of on-demand remains inexact to almost everyone outside IBM. Some customers associate it with other industry trends and jargon, such as “utility computing” or “hosted outsourcing services.” Those most skeptical of the concept reduce it to little more than a repackaging of existing goods and services.
“On-demand reminds me of the emperor with no clothes–there’s nothing there that’s new or different,” said Michael Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management. “It’s mostly hand waving on the part of a few technology companies that are trying to get people to buy hardware and services.”
IBM managers concede that on-demand is an attempt to redefine the market for computing. The opportunities to make money on smaller-scale jobs, such as PC networks or back-office applications, have largely dried up. Tech companies now sell goods to automate processes that touch many points across a corporation.
In May, IBM launched an initiative called Workplace, which has relatively simple applications that can be delivered via a Web browser from a network server.
Workplace demonstrates IBM’s technology strategy in a nutshell. The entire package draws on several components already in IBM’s arsenal, including its Lotus collaboration software and Eclipse open-source technology. IBM’s strategy is to mix and match the components–whether they’re processors, software programs or business process templates used in consulting–to tailor products for specific industries.