IBM had a record 2008 and expects more of the same in 2009. How?
For one day in January, at least, A silver lining emerged. Among the dread of what's been a dismal earnings season for most companies, the winter of discontent took a much-needed breather when IBM reported its fourth-quarter and year-end financial earnings. Up 12 percent for the quarter? Up 17 percent for year? Record revenue per share? Record revenue of $103.6 billion? Record pre-tax profits? Global Business Services up 9 percent? What bizarre universe is IBM operating in?
"I think it's a testament to our business model, this whole notion of globally integrated enterprise," says Jim Bramante, managing director of IBM Global Business Services, Americas. "We knew there was going to be a pull for labor across the world and moving to this globally integrated enterprise was an important move for us. Each of our brands is really following the same model—this idea of the globally integrated enterprise where we pull the best talent at the best value."
IBM, he says, has shifted its portfolio to rid itself of low-margin business and turned its attention instead to the services and software side of the business. "That's been really powerful for us," he says. "Probably the most powerful thing for us is this notion of driving enterprise solutions for our clients that combines our capabilities in services and software. We're selling both delivery and solutions to solve clients' problems, and this has positioned us well as a company."
These successes have helped keep IBM on the offensive, giving it the cash it needs to continue to invest in research and development, something many of its financially challenged competitors can't. "This is a whole new economic condition we're facing, and I think it's here certainly for at least a couple of years," Bramante says. "This is not your father's or your grandfather's recession. The fact is some of these organizations simply won't survive, but many will."
Those clients that do, he says, will emerge in much better shape than they were before. "I think it's the ones who attack this in the right way that will come out the back end with some new business models and solutions that will position them for success."
While many clients are looking at cost efficiency issues, Bramante says, the biggest opportunities in the future revolve around analytics—the Holy Grail—as he sees it. "There's just too much waste, inaccuracy and missed opportunities today because organizations don't have the right information. It's killing some of them," Bramante says.
Organizations have gotten fairly lean, and now they have to do more with less. Meanwhile, there's been an explosion in the volume of digital data because of all the machine-generated data available from so many sources. "If you can harness that data and use it to gain unique insight, I think that's where the play is for a lot of our clients," Bramante says. "The trick is how to bring some order to the chaos, and that's why they come to us."
— Joseph Kornik
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