IBM Claims the Title

By Jeffrey Burt  |  Posted 2009-12-22 Print this article Print


"All of the major vendors are looking to expand their services one way or another," Pund-IT Research analyst Charles King said. "IBM has been doing this a long time. The HP acquisition of EDS was to some degree to let HP ... grab some of the [services] business that IBM was taking."

There's a lot of business to be had. In 2008, IBM Global Services generated almost $59 billion, while HP generated over $22 billion. Dell-pre-Perot-had about $5.7 billion in services revenue.

"It is fair to say that IBM Global Services has represented the gold or platinum standard for IT services for several years now," King said. "If you're a vendor looking to grow your services, you couldn't do much better than using IBM Global Services as a model."

Michael Daniels, senior vice president of IGS, said over the past few years IBM has worked on tighter integration with the company's software unit around such capabilities as analytics, bringing new tools from IBM's research group and instilling greater automation-"creating more capacity with the same number of people"-as avenues to expanding its services capabilities.

IBM's use of a combination of industry expertise and software-like services has helped fuel IGS' growth over during this decade, according to IBM officials. It's also that ability to draw on other parts of IBM-from software to hardware to IBM's research labs to the vendor's vast IP (intellectual property)-that differentiates IBM from others like Dell and HP, Daniels said in an interview.

"When I look at what they say to shareholders, they talk about their ability to extend product through a service channel," Daniels said. "I don't believe clients will buy commodity products through a service channel. ... At the end of the day, the services business is vastly different than the product business. Product companies celebrate a sale. With services, our work begins once the contract is signed."

King said IBM's $3.5 billion acquisition of PricewaterhouseCoopers in 2002 also has led to IBM developing industry-focused schemas, essentially templates that simplify the services engagement by creating a common starting point for discussion with the customer. In addition, IBM has created a Service Science area in IBM Research to improve its capabilities.

"They've been winning a lot of business," King said.

David Gee, vice president of worldwide marketing for HP Enterprise Services, in contrast to what IBM's Daniels argued, said HP's portfolio-including its PC and server businesses-is a key part of the company's overall services strategy.

"We're big for a reason, and it gives us economy of size and scale," Gee said.


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