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Tuesday, December 11, 2007

IBM relies on SOA for growth

As an ‘innovators’ innovator’ with an industry-leading collection of 3,621 patents in 2006, IBM is today pursuing a growth strategy to develop business solutions that combines innovation, new business models, technology testing and delivery on a global scale to clients in several industries and to governments.
Globalisation has opened up immense markets and 87 per cent of chief executives polled by IBM felt that fundamental changes are required in the next two years to drive innovation, mainly by integrating business and technology. That great leap in productivity and growth can be achieved, IBM believes, by implementing what it calls Service-Oriented Architecture (SOA), an open standards web services platform that it rolled out in 2006.
“Business and IT transformation must come together. SOA makes it possible to integrate people, information and processes,” said Robert LeBlanc, General Manager, Global Consulting Services and SOA, in a presentation to invited journalists at the company’s facilities in New York State. Going well beyond the advantages of labour arbitrage, IBM’s focus is on differentiated, comprehensive end-to-end solutions that resemble a “Lego box” of components with a high degree of repeatability and reliability that can be combined in several ways to deliver value and create innovation. Innovation
Innovation in business models, which is the central concern of CEOs, can be achieved in the front office, core business processes, back office and IT services. In keeping with the global trend, IBM’s transaction mix has been changing over the past decade, from one dominated by point products to solutions.
Yet, while it is expanding in the global business solutions and technology services areas to increase profits from software and services, the company says it continues to develop semiconductor process and technology (it is a leader in gaming console chips), and global server and storage systems (it is number one in overall servers and in supercomputers according to the Top 500 survey).
IBM solutions in innovation, technology and services are founded on a base of pure research that generates intellectual property and on groups working in the areas of business processes, software delivery, technological services, consulting and integration.
Given the multinational nature of business, the company says, it has developed certified facilities in many geographical areas with domain expertise and language/culture capabilities that cater not merely to the local market but to clients in far-flung countries; an example is the servicing of Japanese clients from IBM centres in India and China.
“Globally integrated means that any customer has access to all the facilities of IBM,” said Robert W. Moffat, Jr., Senior Vice President, Integrated Operations. In India, where the company is targeting an annual revenue of $1 billion by December, the focus is on higher domestic growth. India investment
IBM India announced last year an investment of $6 billion over three years; it raised employee strength from 3,000 in 2002 to 53,000 last year and opened nine centres in 2006 including dedicated centres for global business and service-oriented architecture solutions.
The emerging market dimensions in India are an important component for growth.
As one of the fast-growing BRIC countries (Brazil, Russia, India and China), the projected IT growth for India is 17.5 per cent between 2006 and 2010; the 2007 national IT market size assumed by IBM stands at $6 billion. This, along with the global delivery and innovation platforms will spur revenue growth for the company in India, said Jesse J. Greene, Jr., Vice President, Financial Management. Major contributions are made to IBM’s India operations by its units, IBM Daksh in e-services and PwC Consulting among others.
Providing an example of the value of IT solutions for business, IBM on December 6 announced that one of its major international clients, Telstra of Australia, would be making additional cost reductions of 200 million Australian dollars through further improvements to its supply chain management solution. Telstra is already on target to achieve a $500 millon cost reduction under the programme and the improvements would enhance that figure.
The development of innovative solutions depends on globally accessible talent. As the global economy comes to rely heavily on identification and recruitment of talent, says Eric Lesser, Human Capital Management leader, Institute for Business Value at IBM, companies must develop a workforce that is adaptable to change, and encourage fresh thinking and leadership development.
Companies with vast scale of operations also need better workforce analytics tools, which few possess at present, to constantly monitor efficiency and upgrade skills.

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