Commentary
11/16/2010
08:14 AM
Bob Evans
Bob Evans
Commentary

Global CIO: IBM Leads IT Industry With Surge In Analytics & Hardware

The Year's Top Tech Stories: IBM proved reports of its hardware demise were simple-minded delusions and continued to expand its transformative analytics business. (#7 on our Top 10 list.)



In his prime, Muhammad Ali purred that he could float like a butterfly and sting like a bee, able to mesmerize opponents with grace and elegance or stun them with unprecedented speed and power.

And here in 2010, IBM has shown a similarly lethal blend as its Smarter Planet megatheme has paved the way for its flashy services and analytics prowess even as it has been simultaneously developing what might well be the industry's most-sophisticated hardware lineup, stretching from custom chips to servers and on up to some of the world's most powerful mainframes.

What some competitors tried desperately to portray as IBM's abandonment of the hardware market was in fact the company's decision to divest itself of commodity products—or as IBM puts it, products that can't carry their cost of capital—and pour that money instead into specialized hardware specifically designed to power the new generation of data-intensive businesses with insatiable appetites for predictive analytics and business intelligence accessible to all in real time.

Speed plus power: real-time customer insights and blazing new workload-optimized systems.

As I wrote last month in a column called Global CIO: As IBM Accelerates Analytics Business, Can Anyone Keep Up?: "It's not just the $14 billion IBM has invested in acquiring 24 analytics companies in the past four years. It's not just that revenue for IBM's Business Analytics and Optimization unit are expected to double over the next five years to $16 billion from this year's $9 billion.

"And the battle won't be won or lost on the fact that IBM in the past year has almost doubled to 7,000 its in-house roster of full-time business consultants specializing in applying analytics and optimization across multiple industries.

"Or on the fact that IBM has 200 mathematicians and 10,000 software developers devoted exclusively to expanding and refining IBM's extensive product line for this high-growth business.

"But when you put all those pieces together, and then add on top some of the customer testimonials IBM is compiling, it's clear that the game's going to get very tough out there for companies that don't have distinctly differentiated products, market segments, and solutions in the dynamic analytics market" (end of excerpt).

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On the hardware side, IBM's one of the only companies on Earth that have continued to pursue mainframe technology, and a small but significant slice of IBM's customers are rewarding that tenacity with big orders for the new mainframes that, quite simply, can do what no other computing machine.

In a column called Global CIO: IBM's Blazing New Mainframe Wins Raves From Citigroup, one of Citigroup's top IT executives discussed the advantages his company gleans from the new z196 system—here's an excerpt:

"If you think that's just hype, you should consider the early impressions of Martin Kennedy, the managing director of Citigroup's enterprise systems infrastructure and the guy who believes IBM's new z196 mainframe is 'the highest-performing mainframe ever made' and represents 'an architectural change of significant magnitude that has the potential to completely change the IT landscape.'

"Because the new system's 96 processors deliver unprecedented computing speed and power, Kennedy said, early indications suggest Citi will be able to collapse multiple existing large systems into the new water-cooled z196, which is a huge step in the company's attempt to shift more of its IT dollars away from internal operations and maintenance and toward customer-facing efforts (emphasis added).

" 'With this first machine that we've brought in-house, we'll be running many of our core applications on it and looking closely at reliability characteristics, which have always been a strength of mainframes,' Kennedy said in a Wednesday phone conversation. 'So for our customers, we think this will lead to our ability to deliver a very highly reliable and innovative package of core banking applications in a very efficient way. . . .

" 'For us in the Operations & Technology group, we want to be regarded throughout the company as innovative and creative in bringing the best possible outcome to our clients, and our culture is to be highly focused on delivering real advantages to all parts of our business,' he said. 'And we are finding that the z196 can deliver some very real advantages.' "

And IBM's hardware resurgence extends beyond mainframes. Mid-year, IBM knocked down a huge organizational silo by giving longtime top-level software executive Steve Mills control over all of IBM's systems and hardware business to accelerate the company's move into the booming new market for highly integrated and optimized systems. At the time, and IBM memo from CEO Sam Palmisano made it unmistakably clear that IBM is looking to be a leader in that market as well. Here's an excerpt from our column called Global CIO: IBM Doubles Down On Red-Hot Optimized Systems:

"Palmisano minced no words about that commitment in a memo to IBM employees describing the management changes analyzed insightfully by my colleague Paul McDougall: " 'For example, we know that IT infrastructure performance is greatly enhanced when every element—from microprocessors and storage through operating systems and middleware—is designed and brought to market as tightly integrated, optimized systems,' Palmisano is quoted as saying."

Earlier in the year, IBM senior VP Rod Adkins, who heads up the hardware business under Mills, underscored the company's unrelenting commitment to fairly broad and deep leadership in cutting-edge servers and blades that all leverage that deep vertical integration. From a column called Global CIO: IBM Claims Hardware Supremacy And Calls Out HP's Hurd, here's an excerpt:

" 'We are accelerating our market position through continued innovation' at every point across the stack, Adkins said. 'It's what I call intelligent performance versus raw performance. We can definitely scale the technology to get the raw performance, but given the complexity of today's IT infrastructure environments, IT managers also need to see improvement and simplification in how they manage that environment: virtualization, consolidation, systems management, and workload optimization. So we're gonna continue to drive the thinking about Moore's law but at the same time we're going to build in those things that give CIOs a better way to simplify, manage, automate, and get energy optimization.' "

In that column, Adkins then goes on to describe how IBM's hardware approach is superior to those of HP, Dell, Oracle, and Cisco—yes, it's a one-sided discussion, but it also underscores IBM's commitment to being the leader not in price but in customer-centered technology and performance.

As an example of that, later in that column comes this comment from IBM customer and highly regarded CIO David Guzman of Acxiom: " 'The IBM eX5 systems are game changers. We've been able to double our virtualization capacity, dropping our software licensing costs. The price/performance equation is extraordinarily compelling, with five times the performance at a fraction of the cost. Moreover, there is a positive impact on all of the other key components of IT cost—space, power, labor, maintenance. The concrete results of this next generation machine are exciting, and the roadmap has 'knock-your-socks-off' vision.' "

Ali used to boast of his opponents that "all must fall in the round I call." IBM's certainly not approaching that level of self-aggrandizement, but the company in 2010 definitely advanced its willingness to speak out bluntly and boldly about its market intentions and about why its approach and its products and solutions deliver greater value to customers than the approaches of competitors.

Perhaps Ali's best-known line was , "I am the greatest!" Is IBM "the greatest" player in the IT world today? Well, the company itself might not use just those words, but the results seem to supporting the claim. Because in this business, the number of companies that can truly float like a butterfly and sting like a bee is very, very small.

RECOMMENDED READING:

Global CIO: Oracle Needs More Than Ellison's Talk To Beat IBM's Systems

Global CIO: IBM Claims Hardware Supremacy And Calls Out HP's Hurd

Global CIO: IBM Doubles Down On Red-Hot Optimized Systems

Global CIO: IBM's Brilliant Trojan Horse Strategy Transcends Technology

Global CIO: IBM Top Product Exec Discusses Strategy, Systems, & Oracle

Global CIO: IBM's Blazing New Mainframe Wins Raves From Citigroup

Global CIO: Is IBM Or Apple The World's #1 Tech Brand?

Global CIO: Larry Ellison And IBM Lead Surge In Optimized Systems

Global CIO: IBM Turns Guns On Cisco With Acquisition Of Blade Network

Global CIO: Tibco Surges And CIO Flips Off IBM, Oracle, And SAP

Global CIO: The Top 10 Most Influential IT Vendors (Apple And Facebook?)

Global CIO: As IBM Accelerates Analytics Business, Can Anyone Keep Up?

Global CIO: IBM CEO Sam Palmisano Talks With Global CIO

Global CIO: Why IBM CEO Sam Palmisano Earned His $24.3 Million

GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

To find out more about Bob Evans, please visit his page.

For more Global CIO perspectives, check out Global CIO,
or write to Bob at bevans[email protected].

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