IBM: Creating A Software Strategy Creating A Software Strategy

Last week, IBM invited the analysts in and, perhaps for the first time, looked across its entire software portfolio and offered a strategy and positioning not just for individual products and product groups, but for its infrastructure software portfolio as a whole.  It’s a big undertaking for IBM – and a big one for anyone who’s trying to see the forest, not the trees – but it’s worth the effort.

IBM makes it clear that what it’s all about is permitting easy integration across the entire portfolio.  IBM is not in the applications software business (having decided that to do so means competing with potential partners), but it’s a real powerhouse in the infrastructure software business.

It emphasizes scalable, modular, flexible, standards-based, and reliable infrastructure software, available across essentially all of the major platforms (IBM mainframes and AS/400’s, everyone’s UNIX, including IBM AIX, HP-UX, and Sun Solaris, Linux, and Microsoft’s Windows.

An important element of IBM’s strategy is that while it would like all of a company’s infrastructure software business (and is sure that it can provide the best integration with its own products), its adherence to open standards insures that it can offer to let customers pick and choose, selecting IBM products for part of the infrastructure, while retaining or selecting other products for some functions.

The individual brand families – DB2 (data management), Lotus (messaging and collaboration), WebSphere (transaction management – this category also manages the CICS and MQ Series products), and Tivoli (systems management and security) remain important in their categories.

An important aspect of managing the portfolio is the notion of taking the modular components of each product and re-using them in other products.  So, for instance, Lotus will be using a DB2 data base as its repository, and any product that requires a portal uses the WebSphere portal.  The Portal itself incorporates collaboration and workflow elements from Lotus, security and management elements from Tivoli, and data base components from DB2.

Over time, products are being componentized to make this modular re-use (as well as updating) easier.

Customers spend a major portion of their IT budget and time resources (an estimated 40%) on integration.  Added complexity will only make that increase.  Today, no one can afford to throw out developed, performing systems for wholesale replacement.  Instead, new systems will nearly always be a federation of existing systems, highly heterogeneous, and new ones.  The IBM emphasis on supporting heterogeneous environments, open standards, and ease of integration, is designed for this kind of evolving architecture.

The idea is to integrate at the business process level, with the software infrastructure enabling that integration.  All data bases should be accessible across the system, users should be able to access all their information from within a single sign-on, and any type of device (including mobile) and any type of connection should be securely supported.  Systems should be able to include not just employees, but also contractors, partners, suppliers, and customers, all receiving appropriate information, distinguished by their roles.

Ambitiously, IBM hopes to provide this within an increasingly autonomic environment, in which systems will be self-diagnosing and predict points of stress or future failure and avoid problems rather than fail and fix.  This, of course, will start with basic functions and evolve over time.  Don’t think of autonomic computing as a separate offering, but rather as technology components which will be incorporated into every offering.

IBM estimates that the middleware market will be a $115 billion opportunity in 2006.  Today IBM enjoys 14% of that market, its single largest player.  It claims a #1 position in many of the middleware categories.  As IBM moves from a mainly host-based software vendor (95% of its software was host-based in 1991) to a more distributed vendor (35% distributed versus 65% host in 2001), its access to higher growth rates steadily increases.

Recent IBM software acquisitions have helped to fill out its Tivoli portfolio.  We wouldn’t be surprised to see other appropriate acquisitions – this is a buyer’s market and IBM seems to have lost its NIH attitude.

We suspect that IBM will be followed by a number of other large, multi-category software and system vendors, trying to rationalize how what they bring to market fits together.  

 

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