IBM: Let Us Help with Your R&D
In an initiative announced June 14, IBM Global Business Services experts will advise customers on methods that IBM uses to annually earn more U.S. patents than any other company.
IBM Global Business Services is formerly known as IBM Business Consulting Services and traces its heritage to PriceWaterhouseCoopers Consulting, which IBM acquired four years ago.
The initiative will work hand-in-hand with IBMs TCS (Technology Consulting Services), another effort to leverage IBMs research expertise by bringing together the work of many IBM technology units and making it available to customers.
IBM announced TCS in March, placing it under the leadership of Adalio Sanchez and giving it a revenue goal of $10 billion.
"You can think about what were dong as the consulting front-end for that service," said Mel Weems, global leader for IBMs R&D management consulting practice, based in Houston, Texas.
"Before, Global Business Services was not involved. Now it is," he added. He declined to specify a revenue goal for the new R&D consulting initiative.
IBMs own R&D expenditures are between $5 billion and $6 billion annually, Weems said.
"We find our clients are keenly interested in that and in sharing that experience. We bring in R&D people from IBM as subject matter experts. Thats something that makes us fairly unique."
"They want to teach clients how to fish," said Navi Radjou, an analyst with Forrester Research in Cambridge, Mass.
"There are some areas of R&D that are ripe for outsourcing and IBM can do them," he added.
The initiative adds to IBMs presence in the increasingly competitive R&D outsourcing arena.
Radjou noted that Indian outsourcer Wipro has about 7,000 engineers handling outsourced R&D for a variety of clients.
The work accounts for about one-third of Wipros revenue, he said.
Booz Allen is ramping up a similar practice, and McKinsey is also active in this area, he said.
"Its not body-shopping, but brain-shopping," said Radjou, contrasting R&D outsourcing with traditional outsourcing work.
The initiative is similar to business process outsourcing, in which a provider such as IBM Global Services takes over a customers business process, such as finance, accounting or human resources.
"IBM wants to start using the term R&D processes, just like business processes," said Radjou. "They want to prove R&D can be managed as a disciplined process. If you take the glory out of R&D, you can put some process around it," the analyst said.
R&D that yields payback to companies is important for competitive reasons, said Weems.
"Companies have done mergers and acquisitions. Now they need to focus on organic growth," said Weems.
That growth will come through innovation through better R&D practices, he said.
Weems said several customers, including some in Japan, have pilot projects under way, but declined to name the companies.
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