IBM: Services and Verticals Will Help Us Beat Rivals in 2008

IBM is betting its global services and verticals strategy will propel it past Dell and HP in 2008.

IBM is betting that its global services and verticals strategy will propel it past rivals Dell and Hewlett-Packard, whom it says remain mired in commodity markets and products.

Mark Hanny, IBM's vice president of developer relations, ISV alliances and go-to-market, said the company's 2005 sale of its PC group to Lenovo and its continued commitment to open standards will give it a big edge over Dell and HP in 2008. "We got rid of the PC side of the business not because we don't think there's money to be made, but we did not want to get bogged down with procurement," he said.

With hardware margins shrinking and an increasing emphasis on services, Hanny said VARs need to focus on services solutions and verticals. "Dell is just now trying to right its course," by making a push into the channel and managed services and away from being strictly a hardware provider, he said. "And I think HP is headed down the same road" toward commoditization by continuing its emphasis on industry-standard products that are rapidly commoditizing, Hanny added.

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Mark Wolfson, sales manager at TeleQ Network Solutions, an IBM partner in King of Prussia, Pa., who now sells Lenovo products, is not ready to ditch hardware just yet, however. Wolfson said while his company is still very much in the business of reselling and integrating hardware, most of his business comes from more lucrative services opportunities. While hardware margins have been declining, increasing his markup and transitioning his company to a managed services focus have helped to maintain profits, he said.

In 2008, IBM's move to an open strategy will continue to reap benefits for VARs, according to Hanny. "We know our customers work in a heterogeneous world," he said. For IBM, that means being open to complementary partnerships with companies such as Lawson and Oracle and creating vertical industry solutions in retail, food and beverage, and others through IBM Express Advantage, as well as making more strategic acquisitions.

Click here to read more about IBM's relationship with Lawson.

Big Blue's vertical market focus will help push IBM and its partners to better growth in 2008, Hanny said. "We're organized by industry, and most of the people running those divisions grew up in that industry," giving them deep and broad expertise in the field and their regions, he said. Another area of focus in 2008, he said, is business intelligence, and the concept of "information on demand." "From talking to customers, we understand that they want to be able to quickly find structured or unstructured data, wherever it may be, and be able to act on it really quickly," he said.

The "information on-demand" concept, combined with continued focus on SOA (service-oriented architecture), will continue to create opportunities for IBM VARs in 2008, he said, both in the United States and in global markets. "People are scared of the 'rip-and-replace' mentality, and SOA helps customers big and small use legacy applications in the most efficient way possible," Hanny said. Combining that with business intelligence solutions can help VARs grow their solutions practices in 2008, he said.

"Unlike our competitors, we focus on making sure that our acquisitions fit tightly with our existing strategies, not just a 'roll-up' strategy where they're continued as a wholly owned subsidiary," he said. Hanny referenced the acquisition of Cognos, a business intelligence firm IBM announced it would acquire in November. Cognos' corporate culture, technology and growth strategy, for example, fit very closely with the strategic goals IBM set, said Hanny, especially "information on-demand."

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