IBM Global Services slims down to grow again
Published: 04 Jul 2005 13:00 BST
The two main drivers of growth that Dominique Cerutti referred to were Business Performance Transformation Services (BPTS) and Business and Infrastructure Solutions.
Business and Infrastructure Solutions (of which there are 45 Business Solutions and 16 Infrastructure Solutions) can be read as repeatable services, which are to varying degrees documented and standardised. This is positioned as a growth engine for the company because of the word 'solution ' — much abused though it may be, it refers here to a more integrated selling approach from the various parts of IBM (for example, software, systems and services). To encourage this more integrated sales effort, remuneration packages are being changed at the highest levels to reflect a more IBM-wide approach. The old IGS lines of business, such as Strategic Outsourcing, Application Management Services and Integrated Technology Services, can be found sitting underneath these solutions providing their 'point services' as part of the wider solution.
This brings us to BPTS. Nailing down exactly what BPTS refers to is a difficult task, other than to say IBM believes it to be a huge market. The concept, according to IBM, is that BPTS is a market in its own right and is characterised by a focus on business processes and their optimisation. In this context, BPO becomes only one means by which this market can be addressed. This is because it also includes the IT enablement of new processes (for example, road charging) and the aggregation of services to clients in industries that were previously too fragmented to benefit from shared services (for example, freight shipping).
To be specific on value, IBM values the worldwide market for BPTS at around $1.4tn (£790bn) as opposed to $1.3tn for the IT market. Of this, IBM reckons it can address $500bn and it aims to capture 10 percent of that market over the next ten years.
While it is all too easy to pick holes in BPTS and spot inconsistencies between explanations as to what it is, it underlines the fundamental change IBM has gone through and continues to go through in order to move away from cost-plus boxes to become a value-based supplier of business-oriented IT services. However, before we get too excited, the addition of $50bn to IBM's revenues over the next ten years amounts to a 5 percent compound growth rate — this will not be enough, as even on their own estimates BPTS is not the full answer to IBM's quest for growth.
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