Supply Chain Matters has opined in prior commentaries that significant high-stakes battles are underway among the major enterprise-level technology vendors as to which provider will ultimately dominate the cloud computing paradigm.  This battle involves incredible amounts of money and big strategic bets. Vendors such as Amazon Web Services, EMC, Microsoft, Oracle, SAP, Salesforce and IBM, to cite just a few, are placing big money stakes into this computing dimension.

By our lens, IBM got a late start in the area of cloud, but has dedicated much more effort and resources since.  In June 2013, we featured a commentary reflecting on the announcement of IBM’s intention to acquire privately held SoftLayer Technologies Inc. at a deal estimated to be around $2 billion. At the time, IBM signaled its intent to establish a Cloud Services division positioning SoftLayer as an anchor technology.  Our commentary further wondered as to when cloud computing strategies would make a more profound presence in IBM’s Smarter Commerce portfolio which includes elements of Buy, Sell, Service, business analytics and intelligence.

A new data point to IBM’s intent and commitment is IBM’s CEO Virginia Rometty’s published letter to IBM stockholders that, in essence, outlines efforts to invent a new and very different IBM. Ms. Rometty is clear and concise in acknowledging that short-term performance in 2013 did not meet the company’s expectations and that significant business change is underway in two dimensions. The first is shifting IBM’s hardware business to new, more lucrative market opportunities.  A part of that strategy was the January sale of the Intel-based x86 server business to Lenovo. The second strategy component is renewed concentration on future growth markets in specific global regions such as Africa, Asia, Latin America, the Middle East and other growth regions.

A broader agenda involves three declared strategic imperatives, each betting big on what IDC defined as the “Third Platform” of computing, namely Big Data Analytics, Cloud and Mobile.

The first IBM imperative is to leverage market opportunities in an all-in effort to transform industries thru leveraging use of advanced Big Data, analytics and applications technologies.  Stated is that two-thirds of IBM’s Research efforts are now devoted to data, analytics and cognitive computing.  Over $24 billion has been invested thus far in this area, with 15,000 consultants and 400 mathematicians focused on data-driven initiatives. This includes IBM Watson Group which alone consists of 2000 people and a $1 billion investment in ecosystem partners.

The second declared strategic imperative relates to transforming enterprise IT infrastructure for the new paradigm of cloud computing. The letter notes that in 2013, $4.4 billion in revenues originated from IBM’s cloud segments, a 69 percent increase. Approximately $7 billion on 15 acquisitions have been invested to-date to support this initiative. That includes the acquisition of SoftLayer, noted above, which is now characterized as the foundation of Big Blue’s cloud infrastructure level moving forward. Other elements are noted as a “cloud-first” approach for all IBM software development labs globally coupled with a new class of “cloud middleware services” to manage complex environments. IBM is further expanding its global cloud footprint from the current 25 data centers to 40 data centers strategically spread globally.  This is obviously an effort directed at countering cloud computing providers Amazon, Apple, EMC, Oracle and others.

The third strategic imperative is to enable “systems of engagement” for enterprises. That should be music to many supply chain and B2B/B2C focused teams. Quoted are forecasts that in just two years 57 percent of companies now expect to devote more than a quarter of their IT investments in this specific area. Unstated but implied is that the implication is that business focused teams will drive and own more of the final say in technology selection and adoption. This area is about leveraging social media based tools, mobile based interaction and computing needs. Over a dozen acquisitions have been initiated thus far to support this imperative. IBM is further leading by example, launching an internal Connections social platform supporting 300,000 users and 200,000 communities. Client Collaboration Hubs have also been formed to support collaboration and coordination directed at IBM’s top 300 accounts.

Many of today’s enterprise technology vendors hype their efforts for investing in cloud and other “Third Platform” computing support strategies and the reality is that this is indeed a high-stakes effort as to which vendors will dominate the future technology landscape.  IBM is not the only vendor that is quickly altering its strategic agenda, betting over $30 billion to-date on the new technologies that will form the landscape of future IT technology needs. Not all vendors have that clout as well as existing reach and mind-share, and this represents the high-stakes of this massive competition for technology dominance.

In prior commentaries, Supply Chain Matters noted that IBM’s most significant challenge was in cutting through layers of organization to harvest strategic investments into compelling solution offerings for customers, much quicker than others in the market.  It would appear that the company is starting to internalize that very need, including leveraging the use of “systems of engagement” for its own internal needs to accelerate time to benefit for its B2B and B2C customers.

For the product management, supply chain, and B2B/B2C networks community, the added proof points are the declared IBM strategic imperatives applied to the key competency components that make up IBM’s Smarter Commerce portfolio.  This coming May, the annual Global Smarter Commerce Summit once again convenes, and we, along with others, will be seeking and probing for evidence of harvesting strategic investments to dramatically enable faster, smarter and more timely value-chain business process capabilities for manufacturers, retailers and services providers. That is where the rubber truly hits the road in strategic imperatives.

Bob Ferrari

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