IBM Click-To-Buy Consulting: Gimmick Or Growth Engine?
As more tech spending moves outside IT, IBM needs new ways to get in on the action.
Do people want to buy consulting services online, like they order a pizza? IBM is trying out a click-to-buy web approach for five of its consulting services. It sounds a tad gimmicky, perhaps, but the reasons behind IBM's idea are real, and they say something about who's driving a lot of technology spending (not the CIO) and what these new buyers expect from consultants and the technology they bring.
Here's what IBM is up to. The company's website now offers five narrowly defined services in the US and UK, using menu-based pricing, that companies can order online. IBM promises to respond in 24 hours, and the consultant will confirm the order and the expected outcomes. Payment options include using a credit card.
The five services focus on digital services such creating a dashboard and report that will tell an executive how a brand or a product, or a competitor's product, is perceived in social media. IBM is targeting projects that are "consumable in small pieces, it's not a large engagement," says Sarah Diamond, general manager of IBM Global Business Services.
IBM intends to quickly add more services through this online, menu-pricing approach, along with extensions to non-English-speaking markets, if the services sell well. "We're moving fast because we see the market moving fast," notes Diamond, who says we're undergoing a "fundamental shift in the consulting industry."
The other four services are analysis of your development environment with recommendations for improvements; migration of mobile apps to IBM's Worklight mobile platform; and two services aimed at the assessment of SAP and Oracle implementations to look for areas to wring out more value.
Here are some of the forces to which IBM is reacting with this click-to-buy approach.
More tech spending is outside the CIO's control Diamond points to a Forrester study that forecasts that the share of IT projects primarily or exclusively run by the IT department will fall from 55% in 2009 to 47% by next year. "We're definitely seeing that," she says.
IBM doesn't have the same long-running relationships with the likes of chief marketing officers and chief digital officers that it does with CIOs and IT departments. And those execs often don't want the kind of long-term engagements that IT has taken on, such as application management services. IBM needs ways to grab these potential new buyers who don't have IBM ties, who probably are relying on the web for their initial vendor research, and who are used to buying no-hassle, pay-as-you-go software-as-a-service.
IBM's website isn't quite as transparent about pricing as, say, a Salesforce.com SaaS service, which lists pricing publicly on its site to see and compare; would-be IBM buyers need an "IBM ID" to see prices and to order. But I was able to set up an ID in only a few minutes and see pricing. The site shows a social media dashboard and report of one brand or product runs $10,000, for example.
So does IBM risk alienating the CIO with this approach, becoming yet another tech vendor trying to route around the IT department? "The CIOs already realize that their peer group in the C-suite are out there looking at choices and solutions that meet their needs," Diamond says, adding "we're well past the point" where companies expect all tech spending to route through IT.
Execs want results faster This new breed of non-IT, tech-buying executive is impatient to see outcomes from their spending. So are traditional IT buyers for that matter. Our own research shows CIOs' No. 1 concern is they can't deliver fast enough to meet business needs. The social media analysis, for example, promises "actionable insights" in two to four weeks.
"We're talking a matter of a few weeks, not months," says Diamond, on the timelines for these new services. "That's very much in sync with how we're seeing our customers want to buy."
Diamond says IBM teams will use more tools such as online assessments that can "accelerate the front end" of research and get results faster. The social media analysis has an 8-page short-answer form for buying companies to fill out, for example.
Digital business opens new markets Digital business strategies -- from social media marketing to mobile app engagement with customers -- create a new and wide-open market for consultants, and there are execs driving digital business efforts who just wouldn't consider IBM for their needs. They might be wary of the cost and time that comes with a squadron of consultants showing up onsite for a project, and may think that's the only way IBM works. There also are smaller companies that haven't thought IBM would tailor something to their needs, Diamond acknowledges.
"It's very important to expand our traditional market," she tells us.
IBM describes the services it's offering via this model in detail at its US and UK websites.
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Chris Murphy is editor of InformationWeek and leader of its Strategic CIO community. He has been covering technology leadership and strategy issues for InformationWeek since 1999. Before that, he was editor of the Budapest Business Journal, a business newspaper in Hungary; ... View Full Bio
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