Business Technology: IBM Gives Customers A Hand In Future Of IT

Something extraordinary happened last week, and it's going to change, in remarkable and profound ways, many of the relationships between buyers and sellers of business-technology products and services. And there will be no going back.

It happened at IBM. Or, perhaps more appropriately, it could happen at IBM customer sites throughout the world. And at its very core was this question: "Are customers interested in what I make and sell, or are they interested in what I know and what that knowledge can do for them?" For lots of IT vendors, the answer will be the first part. For many others, though, the for-sale products and services represent only a portion of the extraordinary value locked up inside those companies: in their R&D teams, their engineering teams, their labs, their university affiliations, their field-service teams, integration teams, and business-process experts and scientists. And the vendors that can figure out how to unlock those assets and apply them profitably to the problems and opportunities of customers--while still, of course, continuing to create world-class products and services--will hold the future of this entire business in the palms of their hands.

As we reported Nov. 20, "IBM has formed a new business unit that the company says will for the first time give customers direct access to its vaunted research arm with an eye to helping them solve complex business problems more efficiently. IBM's new On Demand Innovation Services group will be staffed with 200 research consultants and will receive $1 billion in funding over the next three years" (see "New IBM Unit Will Give Customers Access To R&D Labs"). As IBM research executive Paul Bloom put it so elegantly, "Research has always been our crown jewel, but we've kept it to ourselves."

Hints of this blockbuster shift in thinking can be traced to IBM's 2001 annual report, wherein chairman Lou Gerstner wrote of the technology industry, "To many observers today, its future is unclear, following perhaps the worst year in its history. A lot of people chalk that up to the recession and the 'dot-com bubble.' They seem to believe that when the economies of the world recover, life in the information technology industry will get back to normal. In my view, nothing could be further from the truth."

Gerstner then notes that "a massive shift is under way in our industry," but he says the reason is not the Internet or simply a matter of everyone becoming "connected." Rather, "the revolution I'm describing is that customers are finally driving the direction of the information technology industry."

Lots of us say that, but how many companies actually take the hard steps to act on it? So new CEO Sam Palmisano decided that if customers are indeed going to drive the future, then why not link them directly with the thinkers and builders deep inside IBM responsible for helping to create that future? Founded in 1945, IBM Research has eight labs worldwide with more than 3,000 employees and an illustrious history that includes five Nobel Prize winners. And the new Innovation Services group tapping into all that expertise won't be prattling esoterically about which color of M&Ms taste best--its work will focus on software development and four primary disciplines: advanced analytics, business-process transformation, information integration, and experimental economics to help optimize business models.

This is the type of thinking customers want and need. This is the type of strategy that will let customers more vigorously shape the future of the IT industry. This is the new standard for customer collaboration to which serious technology vendors, like it or not, will be held. It is extraordinary, it is risky as hell, it is brilliant, and it is the future.

Bob Evans
Editor in Chief
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