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8/17/2010
06:00 PM
Bob Evans
Bob Evans
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Global CIO: IBM's Brilliant Trojan-Horse Strategy Transcends Technology

IBM makes mainframes and microprocessors and middleware—can it also predict business conditions in totally unrelated industries? The answer seems to be yes.

It's become pretty clear over the past year that what CIOs want from their primary IT partners isn't servers and software and networks but rather speed and insight and opportunities. They don't want hardware nearly as much as they crave competitive advantage, and if they could have either software or better customer engagements, they would surely take the latter.

If CIOs could have the coolest private cloud in the galaxy or a 5-point swing in the percentage of IT budget devoted to innovation versus maintenance, then private clouds would be the tech world's most unloved phenomenon.

If that's so obvious—and I think it should be—then why do so few IT companies, either big ones or small ones, express their value propositions in those terms? Why, instead, do they typically choose to rely on brute-force jargon about whose stuff is really the biggest and fastest and gnarliest?

And so it was that I did a spit-take into my Wheat Chex and peaches while reading a tiny little article in the Wall Street Journal the other day about some company making a forecast about retail-sales volumes for home appliances and consumer electronics for the months of September and October.

Here are three sentences from that article that caused all the breakfastime disruption:

"Electronics and appliance retailers will likely see their sales increase 5% in September and October compared with a year earlier, according to a forecast from [XXXX] Tuesday. . . . [XXXX] said it expects sales of those products in the two months combined to reach $15.8 billion, with sales losing a little momentum in the latter month. The growth projection, which includes the back-to-school shopping season, indicates retailers should consider keeping inventory levels up, according to Michael Haydock, the company's head of retail analytics."

I know the suspense is killing you, so even if you've missed the headline above I'll break the tension: the company behind the very precise forecast for retail sales of home appliances and consumer electronics in the next two months is none other than IBM.

Yes, IBM—the very same company that invented the mainframe, that makes its own microprocessors, and has led the world for several straight years in patents received—is now in the business of forecasting retail sales for specific types of products through specific types of channels at specific times of year.

What also struck me about the very short article was that there was absolutely no mention of the apparent strangeness of IBM—an iconic computer and technology company—making such forecasts. Instead, the reporters and the editors at the business-savvy Wall Street Journal just attributed the projections to IBM as if the company had spent the last several decades making business predictions instead of making computers and software.

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An IBM spokesman said it's not any sort of official IBM business or service, but rather that it's the brainchild of IBM's Michael Haydock, leader of the company's retail analytics group. The spokesman said that Haydock's a mathematician specializing in applying advanced analytics to the fields of retail and manufacturing, and that Haydock has been putting together this index for the past several quarters for his clients.

The index is based on 18 years of data accumulated by IBM, and has proven to be 99% accurate, according to the IBM spokesman, who added that while Haydock is officially part of the Global Services team, he spends significant amounts of time working with IBM Research as well as the company's Software Group. And so here's why I think this is such a big deal, and not just for IBM but for the entire industry:

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