IBM Gives Midmarket an Innovation KickBy John Hazard | Print
Partners find IBM's Business Model Innovation message most relevant to midmarket companies, who are remaking themselves to compete on a larger stage.
IBM's message to its ISV, VAR and system integrator partners at its PartnerWorld conference last week in Las Vegas was simple: Your customers want to pursue IT projects that will transform the way they do business or even the business they do.
IBM's innovation pitchfound the most receptive audience in the midmarket, where such technologies as SOA (service-oriented architecture) and Web services have leveled the playing field between the sector and its rivals.
"There is an enormous opportunity for us in the midmarket to enable companies to be more competitive," said Buell Duncan, general manager of developer relations in the IBM Software Group. "The world is flat. You have small companies competing against very big companies. Whether you're forced to serve a global supply chain or you just see opportunity there, there is enormous opportunity to innovate how those companies operate."
IBM this week announced programs to collaborate with customers and partners to develop "Innovation that Matters," solutions that enable companies to adopt such business model innovations. The Technology Collaboration Solution unit, a new 10,000-person-strong business unit culled from several other IBM units, will collaborate with VARs, ISVs and customers on specific business problem solutions. The former Microelectronics, Technology Development and Manufacturing, OEM Component Sales, OEM Systems Sales, STG Intellectual Property, Next Generation Telecommunications, and Engineering & Technology Services divisions now fall under the TCS banner with Adalio Sanchez at the helm.
IBM also opened its $6 billion-a-year research division to business partners to collaborate on vertical solutions that drive the same business model innovation goal.
Strategic Computer Solutions, of Syracuse, N.Y., a former IBM hardware reseller, has embraced the concept and turned itself into a full-service hardware/software/services provider to take advantage of the trend. Delivering solutions like eCommerce on IBM's WebSphere to SMBs (small and midsize businesses) with $50 million to $500 million in annual revenue such as vision care company Bausch & Lomb, Strategic Computer Solutions went from a $23 million hardware reseller in 2001 to a $90 million solution provider in 2005. It hopes to pass $100 million this year.
Much of that opportunity lies in e-commerce, which lets midsize companies play with rivals, said Darrin D. Nelson, SCS vice president of Software and Services.
"E-commerce is low-hanging fruit, has been for some time," Nelson said. "It's a low cost of sale and on the Web two businesses look pretty much the same. It's an easy return on investment for the line of business managers to … envision."
SCS leveraged IBM's WebSphere portal technology to give Bausch & Lomb an e-commerce solution and an extra line of revenue beyond retail shelves. It employed a similar solution to give Mod-Pac, of Buffalo, N.Y, a specialty package and label printer to develop a business model that relied less on field representatives. Ultimately the project allowed Mod-Pac to launch an online brand, Print-Lizard, that generates $50 million annually in on-demand printing.
"You can almost create a virtual company now," said Fred J. Cuen, president of Americas for Avnet, one of IBM's three distributors. "Small companies have the ability with technology to leverage what they have to make it look and feel like more. You have small businesses that appear from the front end to have the same inventory resources of large companies, when in fact it's all virtual. They've created the same inventory capability of a larger rival without that infrastructure investment."
Ahead of the class.
"It is a misnomer that businesses innovate to be best in class," said Geoffrey A. Moore, the author of "Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution," addressing a crowd of resellers this week. "Businesses innovate to get ahead of the class to have a leg up, or back in the class after they've been left behind by someone else."
As an example, Moore used Google, which redefined search as media to get so far ahead of the class that others have been baffled, and Apple, which appeared to be running out of steam as a PC maker in the 1990s and remade itself as a consumer electronics company to break into the class and eventually ahead of it. "They didn't invent MP3 technology," Moore said. "They simply marketed with the Apple stores to break away."
John Carini, chief software architect at Murray Hill, N.J.-based iEnterprises, a CRM (customer relationship management) vendor that leverages IBM's SOA platform to deliver its own CRM applications and those of several competitors (Salesforce.com, Siebel and Oracle among them) on wireless devices, said his clients never have just one reason for innovation. "Most of them need to improve productivity or gain a competitive advantage, and a lot of them are forced to," he said. "They have pressures from their competition to do it better."
iEnterprises' service allows midsize companies like Plante & Moran, a financial services firm with a small sales force rarely in the office, to leverage data the way a larger organization might. "They're now able to access customer data in seconds, not hours, and it gave them the leg up on the competition that they needed," Carini said. "It also increased user adoption of an application no one was really taking advantage of."