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At its annual investor briefing, IBM chairman, president and CEO Ginni Rometty announced IBM is increasing its previously stated 2015 revenue target for analytics and big data from $16 billion to $20 billion.
Business analytics is one of IBM’s strategic growth initiatives — along with cloud computing, Smarter Planet and emerging Growth Markets — that are key drivers of growth and profit within IBM’s 2015 operating earnings per share (EPS) roadmap objective of at least $20.
At the investor briefing, which was held February 28 in San Jose, Calif., Rometty outlined three strategic directions for IBM. One is IBM’s model of continuous transformation as the company continues to remix to higher value, high-margin businesses, acquiring new capabilities through acquisitions, divesting of non-strategic assets and focusing R&D on growth initiatives like big data and analytics. This makes markets through new categories, geographies and clients; reinvents its core businesses and skill levels; and continues to generate the strong cash flow to fund the transformation, IBM said.
The second strategic direction is IBM is embarking on a new era of computing — Smarter Computing — driven by the rise of Big Data and analytics, mobile, social and cloud technologies; built on software-defined environments and based on open platforms.
And as its third area of strategic focus, IBM is making new markets and engaging with new front-office clients — such as Chief Marketing Officers (CMOs), Chief Procurement Officers, heads of Human Resources, and city leaders — that IBM is serving.
The investor briefing took place at IBM’s Almaden Research Center and Big Blue opened up the lab to investors to showcase some of its prized research projects that are likely to soon result in products or further scientific breakthroughs.
On the continuous transformation front, since 2010 IBM announced or closed 35 acquisitions for around $12 billion and divested of non-strategic assets. Indeed, over the past decade IBM divested almost $15 billion of revenue, divesting its PC group, its printing systems division and retail store point-of-sale business, among others — businesses that no longer fit IBM’s strategy. If IBM had not done these divestments it would be a larger company today, but with lower margins and capabilities less essential to its clients.
Moreover, IBM has had a long history of remixing research and development. Today 60 percent of IBM researchers are in fields that support its key growth initiatives, such as 400 mathematicians developing algorithms for business analytics.
Meanwhile, Smarter Planet is spawning Smarter Commerce, Smarter Cities and Social Business focuses. IBM opened 144 new branches in growth markets in 2012, for a total of 285, where the company sees continued profitable growth through solutions such as Smarter Transportation and Smarter Finance. And over the last three years IBM has increased its skills base in analytics by 8,100, while the company also added nearly 9,500 sellers with expertise in sectors such as healthcare, energy, telecom and banking, plus metals and mining and assigned 5,000 consultants to its new Globally Integrated Enterprise practice in GBS.
IBM: Big Data, Analytics to Drive $20B in Revenue by 2015
Also, in reinventing the IBM enterprise, IBM applied analytics to manage risk, drive efficiency, and increase marketing effectiveness. Big Blue also used social technologies to match IBM experts in high-value client engagements — on target to achieve its goal of $8 billion in productivity savings over the 2015 Road Map, with 60 percent of these savings reinvested in the business.
With the new era of computing IBM has seen and been intimately involved in enterprise computing’s move from monolithic applications to dynamic services, from structured data to unstructured data in motion, from standard client devices to an unprecedented number and variety of devices, from stable workloads to unpredictable workloads, from static infrastructure to cloud services, and from proprietary standards to open standards.
Also for its part, IBM said its Smarter Computing initiative is designed for big data. As data grows in volume, velocity and variety it can revolutionize clients’ decision making, IBM said. IBM’s analytics business is growing strongly – with its new target of $20 billion by 2015. And it is rapidly advancing the marketplace applications of Watson’s cognitive computing capabilities. The first commercial offering of Watson was announced in the first half of 2013.
In addition IBM Smarter Computing is built on software-defined environments. Cloud computing, which grew 80 percent at IBM last year, is the first manifestation, but software defined environments are bigger than cloud, able to adapt to constantly changing workloads and demands. And unbeknownst to many, IBM hardware such as System z, Power, Pure Systems and storage systems are all software-defined, IBM said. Moreover, Smarter Computing is open. IBM supports such open platforms as Linux, Eclipse and Apache and is involved with open efforts such as OpenStack, Hadoop and new cores.
Meanwhile regarding new clients and markets, front-office transformation is the biggest wave of business change since ERP, IBM said. And Big Blue is targeting the CMO. IBM Global Business Solutions’ Smarter Commerce signing grew nearly 200 percent in 2012. IBM has been working with hundreds of CMOs to apply technology from acquisitions like Unica, SPSS, CoreMetric and TeaLeaf to transform marketing.
IBM also is going after CPOs and HR leads. Industry analysts predict CPOs will increase annual investment in supplier intelligence by 30 percent through 2015; reinventing global supply chain. And IBM has been number one in enterprise social business for three straight years according to IDC.