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4/20/2010
08:39 AM
Bob Evans
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Global CIO: IBM Sees Surge In Customers' Transformation Projects

That's a clear sign that many companies are overhauling operations to drive growth—are you a participant or a spectator?

Question: although we're still only a few months clear from the global economic downturn of 2009, are your primary efforts still centered on cost-control and regaining some stability, or have you begun working closely with your CEO and peers to transform your company from what it used to be into what it needs to be?

If you're still holding off on those aggressive and risky but essential moves, you need to know that time is not on your side: one of the key points IBM made yesterday in announcing its first-quarter results was a sharp jump in consulting revenue driven by customers looking to significantly overhaul everything from strategies to processes and operations.

Reporting its strongest consulting performance in more than three years, IBM said consulting signings grew 18% last quarter and mark "a shift in customer buying patterns toward more transformational offerings."

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The company also reported strong demand for its business analytics software and services, and for the forward-looking analytical initiatives offered within its Smarter Planet programs.

IBM CFO and senior vice president Mark Loughridge underscored that point very specifically in two separate points during yesterday's earnings call, according to the transcript from SeekingAlpha.com:

Early on, Loughridge said, "We are starting to see a shift in customer buying patterns toward more transformational offerings which are reflected primarily in our consulting business. We have reengineered this business to align with the strategy around smarter planet and business analytics, making investments and adding significant talent."

And a bit later he added this: "The second thing I will say across the spend environment, we are seeing a transition in the kinds of deals and the IT spend mix that our customers are looking for. Specifically in this quarter you can see that transformational offerings especially within consulting were much more highly driven with consulting signings now up 18% or 12% in constant currency. That is very strong performance. We haven’t had that growth rate in the consulting business for over three years."

Now, sure, you can say this is only one company's opinion, or that 18% isn't really that much growth, or that words like "consulting" and "transformation" can be interpreted in many ways. But IBM CFO Loughridge is not prone to exaggeration and like most CFOs during earnings announcements always errs on the side of conservative outlooks.

So when IBM's Mark Loughridge points out very specifically that IBM customers have begun showing a strong tendency toward undertaking transformative projects, that's an indicator that all CIOs should take very seriously. Take a look at these three questions and then gauge your own level of comfort:

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