Cobb: IBM?

June 26, 2003

IBM?

The Economist speculates that IBM will lead the computer industry out of its slump. Stranger things have happened. I say don't bet against it.

IBM has indeed taken some bold steps in the right direction. By embracing Linux, avoiding enterprise software, absorbing PWC, and concentrating on infrastructure IBM may very well lead in a new direction. The question is 'if', based on 'when'. IBM knows that it is slow. Its biggest advantage is that it can outlast everyone else in a down economy and that it can take time to perfect that which others must deliver profitably in a short time.

I know that IBM has wisely decided to stay out of the enterprise applciations business. They sought to avoid precisely that stew that PeopleSoft, Oracle and JDEdwards find themselves in which is not merger hell, but bloated with a lot of people on staff who build things in a market now full of things that are already built.

1999 was the golden age of the enterprise software company. There were ERP vendors, EAI vendors, BI vendors, ETL vendors, CRM vendors, Database vendors, and SCM vendors coming out of the woodwork. The then Big Five consulting companies had sold Business Process Re-engineering and made billions for the industry through huge lengthy projects which installed ERP systems like SAP, Baan, JD Edwards and Peoplsoft. Data was moving all around corporate America like never before. All we had to do was survive Y2K and the next golden era would emerge. All that, web enabled!

It didnt.

I had long been a trooper in the BI space. The Business Intelligence crowd has found itself in a decent enough position these days as some of the few software companies that are profitable. However, BI did not become the next big thing. The next big thing (after ERP) turned out to be SAN, a hardware triumph. That market is already consolidating and a dozen smaller vendors are dropping like flies.

CRM made Siebel a quick bundle, but the wind is falling out of those sails. Why? Because the complexity of all this software was more than anyone could handle. You needed very sophisticated business people and very sophisticated technical people just to get the damned things sold into and running in a company, much less deliver on their promise of improved business.

IBM proved itself to be wise by staying clear and just saying they'd provide the hardware. The problem was, as far as the internet generation was concerned, Sun had the servers to beat. After all it was Bill Joy who said 'the network *is* the computer'. The internet bubble seemed to be a confirmation of all his predictions. But all this was taking place outside of IBM's domain, the IT center.

These days I'm working with some of IBM's infrastructure people and my experience is very good. These folks, along with PWC people who have industry experience can make a killer combination, so long as they have a large palette of products and services they can deliver. IBM can be a one-stop shop. They practically invented the term "Service Level Agreement". In short, they can guarantee. This is precisely what companies are going to require.

That's why IBM can win, again.

Posted by mbowen at June 26, 2003 12:18 AM

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