In his first major address after adding the title of chairman to his CEO tag, IBM's Sam Palmisano said businesses must move to on-demand computing if they are to remain competitive. Speaking to a roomful of CIOs and reporters in New York's Museum of Natural History, Palmisano was almost admonishing in tone. "You are the ones who have to drive this; you have the organizational perspective," he told them.
IBM's campaign unites a number of initiatives that the company has been pursuing for a couple of years, including grid computing, storage virtualization, open-source operating systems, and middleware and Web services.
"This is the next phase of E-business--it's the on-demand phase," said Irving Wladawsky-Berger, IBM's VP for technology and strategy. Wladawsky-Berger will head a new on-demand unit within IBM that will pull together resources from across the company to develop new technologies.
While the strategy sounds grand, some observers say it's merely the culmination of works in progress that IBM has been engaged in for several years. "This is very evolutionary," Merrill Lynch analyst Steve Milunovich says. "On the other hand, businesses don't like their strategic vendors to go off on radical changes," he added.
Palmisano said the company will invest $10 billion in related R&D, business activities, and acquisitions. The company will also open on-demand design centers around the world to help customers implement pilot projects. The centers will be in Poughkeepsie, N.Y.; San Jose, Calif.; as well as in Japan and France. IBM is also launching an on-demand assessment practice within its business consulting practice.
IBM also is changing the way it sells hardware and software to better align with the way it thinks customers will need to acquire technology in an on-demand world. The company says its entire line of business hardware and software will be available under flexible, utilitylike pricing models under which customers pay for only what they use, when they use it.