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A SPECIAL ANNEX NEWSFLASH
IBM Continues Its Emphasis on Small and Medium Businesses with New Services Offerings
Finally Heard, Part II!
$100 Billion/Year to Be Spent by Small and Medium-size Companies on Integration Technologies and Services
PHOENIX, Nov 3 - IBM continues to build momentum behind its strategy to focus on the specific needs of medium-sized businesses, Big Blue said today in a release. This time, the emphasis was on services, already IBM's biggest and most profitable business segment.
"These companies are also investing in better information management solutions to help them integrate information and processes internally and externally with their customer and suppliers," IBM said. "IBM estimates that medium business customers at the 'integration' stage of e-business will invest $100 billion on integration technologies and services within each of the next three years."
"Looks like they're listening to you," one Annex Bulletin reader said about the IBM release. Indeed. Here's what we said in an article titled "Finally Heard!" - about the first small and medium-size (S&M) market initiative that IBM launched in January of this year:
Today's announcement expands IBM's "Express Portfolio" of products and services specifically priced and designed to meet the needs of medium-sized businesses. Ten new offerings focused on the integration and information management requirements of "on demand" computing are being unveiled.
The company also announced it has now signed over 100 independent software vendors (ISVs) as part of its ISV Advantage initiative, through which IBM works collaboratively with business partners to build an open-standards based on demand operating environment for their applications.
Once again, that's a strategy that we have been advocating for years when tackling the S&M market. Given the relatively high sales expense of using the "blue suits" to market to S&M companies, we said back in 1999, for example, that using e-commerce and partnering with smaller companies to reach the S&M prospects was the way to go:
Well, EDS, like IBM of the old, evidently never really followed through on our advice, even though it made a stab at it back in 1999-2000:
Well, Mulrooney is no longer with EDS. And his four-year old S&M initiative appears dead in water, too, as far as any outsider can tell anyway. No senior EDS executive has broached the subject in recent years. But the "new IBM" (under Sam Palmisano's leadership) has now picked up the S&M ball and is running with it (also see “Small Is Now Big at Big Blue”, Oct 16).
Today's new IBM "Express" offerings are being released after more than 2,000 Business Partners had been through the "Early enablement" program, with 350 ISV applications produced and enabled for "Express" as a result of the program.
The latest group of ISVs to join the ISV Advantage initiative include: Ascendant Technology, DST, GeoSpatial Solutions, GridNode, Gruppo Formula and hybris GmbH, IBM said.
"IBM market research indicates medium business spending on integration is growing faster than the market as a whole (emphasis added)," IBM said, adding that, "more than half of midsize companies are making investments in connecting to their customers and suppliers in real time."
Well, that the S&M market is growing faster than the market as a whole should come as no surprise to our clients, IBM included. Here's an August 1996 chart that quantifies our forecast published seven years ago (see “Louis XIX of Armonk,” (Aug. 1996).
It will be interesting to see how many companies that have missed their chances to lead the IT industry into new markets will now end up following IBM?
It takes courage to lead. It takes deference to follow. As Alaskan "mushers" (dog-sled drivers) may tell you, "scenery only changes for the lead dog."
Happy bargain hunting!
Here are also some additional Annex Bulletins in which we had urged our clients to reach down to small and medium companies for growth:
For additional Annex Research reports, check out...
2003: “Small Is Now Big at Big Blue” (Oct 16), “On the Nose But No Cigar” (July 16), “A Paler Shade of Blue” (June 2), “Save, Spend and Split” (May 8), “Shrunk by the Marketplace” (Apr 17), “Turnaround Continues...” (Apr 15), “Start of a Real Turnaround?” (Jan 17).
2002 IGS: "Half or Double Trouble?" (Aug. 12, 2002), "IBM to Take $500M Charge" (Sep 3, 2002), IBM-PwCC Update (Oct 2, 2002), Analysis of IBM Second Quarter Results (July 17, 2002), IBM Layoffs Confirmed! (Aug 14, 2002), Analysis of IBM Third Quarter Results (Oct 16, 2002), Boom Amid Gloom and Doom (Oct 10, 2002)
2002 IBM: “Gerstner: The Untold Story” (Dec 27), "Gerstner Spills the Beans" (Dec 13), "On a Wing and a Prayer" (Oct 21), "IBM-PwC Tie the Knot" (Oct 2), "Half or Double Trouble?" (Aug 12), Wall Street/Main Street Chasm (June 25), “Wall Street Casino,” (June 21), Big Blue Salami (June 19), "Looming IBM Layoffs" (May 14), "IBM 5-Yr Forecast: From Here to Eternity?" (Apr 2002), “Tough Times, Soft Deals,” (Apr 25, 2002), “Gerstner’s Legacy: Good Manager, Poor Entrepreneur” (Jan 2002), IBM Pension Plan Vapors: Where Did $17 Billion Go? (Mar 2002), "Sir Lou OutLayed Lay!" (Apr 1, 2002).
A selection from prior years: Is IBM Cheating on Taxes, Annex Bulletin 99-17 (May 1999), IBM 5-year Forecast 2001: An Unenviable Legacy (June 2001), "Break Up IBM!" (Mar. 1996), Fortune on IBM (June 15, 2000), “Smoke and Mirrors Galore,” July 2000), "Slam Dunk of Bunk" (Jan 2000), Annex Bulletin 98-14 ("Wag the Big Blue Dog"), Armonk's Fudge Factory (Apr. 9, 1999), Where Armonk Meets Wall Street, Greed Breeds Incest (November 1998), Stock Buybacks Questioned: Is IBM Mortgaging Its Future Again?, 97-18 (4/29/97), "Some Insiders Cashed In On IBM Stock's Rise, Buybacks" 97-22, 7/27/97, Djurdjevic’s Forbes column, "Is Big Blue Back?," 6/10/97; “Executive Suite: How Sweet!,” (July 1997), "Gerstner: Best Years Are Behind", Aug. 10, 1999), "IBM's Best Years Are 3-4 Decades Behind Us" (July 1999), "Lou's Lair vs. Bill's Loft" (June 1999), "Corporate Cabbage Patch Dolls," 98-39, 10/31/98; Djurdjevic’s Chronicles magazine October 1998 column, "Wall Street Boom; Main Street Doom", “Louis XIX of Armonk,” (Aug. 1996), "Mountain Shook, Mouse Was Born" (Mar. 25, 1994), “A Nice Guy Who Lost His Compass” (Jan 26, 1993), “Akers: The Last Emperor?” June 1991), Industry Stratification Trend (Mar. 30, 1990), etc.]
Volume XIX, Annex Newsflash No. 2003-11
Editor: Bob Djurdjevic
P.O. Box 97100, Phoenix, Arizona
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