Over the last decade IBM has driven a significant transformation of its business model as they shifted to higher value areas, improved efficiencies, and invested in a number of firms to fill out their portfolio of software offerings. They have acquired over 80 software firms since 2000. More recently, they are focusing a significant portion of their efforts on social business as I wrote about in my coverage of Lotusphere 2011. IBM’s most recent earning reports indicate a strong growth in demand for their Social Business offerings.
Recently, I spoke with Mike Rhodin, SVP, Software Solutions about their moves in the software space. We also discussed the convergence of social business and analytics. We had a wide ranging discussion that I will cover in two posts, with the next one appearing tomorrow.
Mike began by diagramming the interactions of their efforts in analytics, social software, and smarter commerce. At the core is a three-way overlap where web analytics serves all three areas. At the intersection of analytics and social is sentiment analysis and content analytics such as that performed by Watson. At the intersection of social and smarter commerce is the creation of brand-aligned communities. Mike gave Moose Jaw outdoor products as an example where people are passionate about the brand and this passion is the foundation for an online community. Analytics will intersect here to offer a useful view of what is happening within the community.
We next focused on analytics in more detail. IBM projects $16 billion in business analytics revenue by 2015. Business analytics software and services is a key contributor to IBM's growth with revenue up 20 percent in the first half of the year. In the last 5 years, IBM has invested more than $14 billion in 24 analytics-related acquisitions. They have also dedicated nearly 8,000 business consultants worldwide to this space.
The Cognos and SPSS acquisitions helped extend their base for predictive analytics. In the predictive analytics space they are initially looking into two areas: financial performance management and risk. They augmented the capabilities within Cognos last year with the acquisition of Clarity to support automated regulatory filing. In the risk space they added OpenPages and integrated it with IBM's Tivoli brand. They now have eDiscovery capabilities through FileNet and support for legal hold requirements through PSS Systems. Another acquisition, Algorithgmics, also provides deep analytics in the area of financial risk.
We next stepped back a bit to look at what Web 1.0 and Web 2.0 brought to business. Web 1.0 demonstrated that the Web was ready for business. It showed that open standards could work and provided a language for the Web with Java. SOA was created and this supported the modernization of back office functions.
Now Web 2.0 took this further by bringing modernization into the front office. You now have Web apps that look at workforce automation and human capital management. For example, one internal IBM tool allows people to bid on work within their internal market allowing for greater utilization and a better fit of skills with job requirements.
Social tools are being adapted to created the connected enterprise and provide a useful and work related knowledge Web unlike the old style disconnected versions of knowledge management. I certainly agree with this need for connecting knowledge with work. The only knowledge management systems that I saw that were successful from the early 90s on were those integrated into work process. This was harder to do with Web 1.0 tools and so much easier with Web 2.0
To properly leverage the capabilities to handle the front office that Web 2.0 brings, IBM has built a multi-functional social business platform with Connections. They have gone beyond social networking to social business. Here is a blog post that Mike wrote on the topic, Beyond Collaboration: Becoming a Social Business. As I saw at Lotusphere, the capabilities of Connections are being integrated into other IBM software offerings to make them more social.
They are also developing situational workflow offerings, another good move. Two acquisitions in this space are PureEdge for secure XML forms and Lombardi for department level business process management software. IBM is working on rounding out its software capabilities to cover many business capabilities. They are also building an app store provisioning model to provide small business applets for the mobile business market.
We next went on to discuss their efforts in smarter commerce, as well as their next generation of computing, Watson. I will pick up these discussions in part two of this interview.