Posted by Tom Foremski - November 9, 2005
It's always good to catch up with Irving Wladawsky-Berger, one of IBM's chief strategists and architect of its Linux and open standards policies.
I used to cover IBM when I was working at the Financial Times. It is a fascinating company because it has managed to adapt to the changes in the IT industry with an agility that masks its huge size. It is the world's largest computer company, it is also the largest IT services company, the second largest software company, and one of the largest chipmakers.
And it was the first to recognize and capitalize on the broad industry move to IT services, and outsourcing IT systems.
Now, it is signaling a new direction: becoming a vendor of highly automated business processes. Companies that need to add a business process within their industry will one day be able to buy one off the shelf, so to speak. IBM is collecting best practices within each industry, within each business process, and using applications, middleware, and its integration skills, to create ready-to-go business process modules that can be rapidly slotted into a company's operations.
This means faster time to market, lower IT costs, and having the most efficient business process without having to do it all yourself. It's a compelling vision and one that fits perfectly into the New Rules Enterprise idea that I've been describing here on SVW over the past year.
"Companies want to buy a business process, they don't want to buy applications," Irving explains.
This is also the reason why IBM is not in the applications business and has no plans to acquire a big apps company such as SAP, as some of the leading Silicon Valley analysts (Ray Lane) seem to think it should.
"We don't need to be in the apps business because we can get the apps from others. We pull together the right apps, and the other software and hardware components to create automated, highly optimized business process modules."
But to become a business process vendor requires the adoption of many industry standards within many different industries--a long, slow process. "Once we have the standards in place, such as agreement on document formats and many other categories, we will then have the building blocks that we can use to build the business process modules."
Irving said that the health care industry is a chief focus for IBM, and it is offering free access to its current and future patent portfolio to those companies in the health care sector that adopt industry standards. The goal is to create a common standards platform on which many others, including IBM, can innovate and create far more efficient healthcare systems.
"The Internet was based on common standards, it was more of a standards revolution rather than a technology revolution."
But to remake IBM into a business process vendor will require huge amounts of R&D to figure out how things are done today, how business processes can be best optimized, develop the tools to design and implement automated business processes, and many other related issues.
It will be a long haul but Irving says IBM is well equipped for the job. It is acquiring companies that have domain expertise, and it has its former PricewaterhouseCoopers group of 30K business consultants with multi-vertical industry expertise to draw upon, plus the world's largest R&D labs, spending more than $5bn a year on research work.
Please see: SVW--I told IBM they should buy SAP-- Kleiner's Ray Lane says...
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