IBMs Tech Appeal

On-demand computing is helping restore excitement in the IT marketplace by enabling businesses to leverage technology without making big, upfront investments.

"This is a great time to be in technology. I love these times." Not a comment youd expect from someone in corporate IT in this era of budget cuts, outsourcing and general technology wariness. However, Sherra Pierre, vice president of IS for Sesame Workshop (yes, the Big Bird folks), was sincere in her observations about using technology to compete in a world full of Disney-size competitors.

Pierre was on a panel about midsize-business operations assembled by IBM in New York last week. Two years after announcing that on-demand computing was the centerpiece of its technology strategy, IBM is engaged in an aggressive drive to expand its presence in the SMB segment. The panel was part of a daylong event to showcase IBMs efforts.

A panel handpicked by a vendor does not indicate a trend, but there are signs of energy and excitement coming back into the technology market. "Technology is the critical enabler" for business growth, said Linda Sanford, IBMs senior vice president in charge of the companys transformation into an on-demand business.

Technology remains the fastest way to accelerate a good business strategy. The difference this time around, I believe, is that the on-demand underpinnings let you increase your technology capacity as your business grows. This is a big change from the era of big, upfront technology investments that you hope pay off.

IBMs attempt to become the on-demand company outlined by Chairman Sam Palmisano two years ago is proceeding well, said Sanford. The first focus has been on the supply chain, a segment that represents $40 billion in spending for IBM. Sanford said IBM, so far, has integrated 30,000 suppliers with an online supply chain in which 90 percent of the transactions are hands-free operations. Creating a digital supply chain can save $4 billion to $6 billion, said Sanford.

/zimages/6/28571.gifIBMs Sam Palmisano enlists technology partners in on-demand effort. Click here to read the story.

While the dollar savings are not as great for a small or a midsize company, the percentage of savings is similar, according to IBM. Smart companies will take those savings and plow them into growth investments. And those investments related to software should go to open systems, Sanford said. "Vote with your pocketbooks, and only invest in open systems," Sanford told the conference attendees.

The problem for IBM and other companies promoting on-demand or related concepts has been explaining what the term means not just to technology execs but to CEOs as well. While Marc Lautenbach, IBMs general manager of global small and medium business, said the company is launching a $200 million advertising campaign, among other activities, to drive home the SMB on-demand message, IBM still has a ways to go.

I suggest that IBM look to two companies to explain on-demand computing. Those companies, Amazon and eBay, represent the new energy that seems to be building for renewed technology investment. On those platforms, technology is the underlying business enabler for buyers and especially sellers. The technology underpinnings let the business process scale from the smallest one-off sale to sales of cars and real estate. With such a model, as your business grows, the computing resources can scale to meet your needs. The sellers requirements for financial transactions, security and scale are met without the seller worrying about operating systems, application compatibilities or hardware upgrades. The systems simply grow to accommodate business growth.

As part of their IT and business strategies, Amazon and eBay opened their platforms to developers. Those developers are busy writing the add-on programs that generate business for them and increase sales for the sellers. Again, the sellers dont have to worry about system compatibility for those add-on capabilities.

Of course, Amazon and eBay take a piece of the action for worrying about the technology in what is a subscription model based on a sales percentage. Come to think of it, maybe that is the way vendors such as IBM should price their products—now that would show real faith in selling technology as a business enabler.

Editor in Chief Eric Lundquist can be reached at

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