IBM Roars into Business Consulting
In IBM’s biggest foray in business consulting since it acquired PricewaterhouseCoopers Consulting in 2002, the company announced on Apr. 14 that it is setting up a 4,000-person organization focused on helping corporations analyze data better and make smarter decisions. The consultants will mine IBM’s research and software divisions for innovations. They’ll also incorporate products from other companies.
The new business unit, IBM Business Analytics & Optimization Services, is the first major move by Frank Kern, who had run IBM’s sales force until January, since he was shifted to lead the $19.6 billion Global Business Services division. “We’re at the beginning of a new wave,” Kern says. “We’re beginning to instrument the world, but we have to take the data and analyze it to make a better bank, a better electric utility, a better planet.”
Business consulting has become a mainstay at IBM (IBM) since the PricewaterhouseCoopers deal. In 2003, GBS delivered $184 million in profit. Its contribution swelled to $2.3 billion by last year.
Business analytics is a bright spot in an otherwise subdued technology market. While overall demand for corporate technology is expected to shrink this year, market researcher IDC forecasts a relatively healthy 3.45% growth for the $23 billion market for business analytics software in 2008. It forecasts 2% growth in the $45 billion analytics consulting business—which until now has been focused on installing software rather than helping companies transform the way they use data. “Now more than ever, leaders need to know what’s really going on in their businesses,” says IDC analyst Dan Vesset.
The business analytics software market is divided into three pieces. Business intelligence software provides dashboards showing key metrics of business performance on a computer screen, and allows managers to pose questions about the business and receive reports detailing the answers. Data-mining software allows companies to analyze transactions and customer information to glean insights into customer behavior. Business-process optimization software helps companies find ways to improve operations.
Some software competitors are actually cheering IBM on. Russ Cobb, vice-president for alliances at SAS, says IBM consulting installs a lot of SAS software, and this move could drive additional sales. “We see this as a great partnership opportunity,” he says.
