IBM exec Duncan outlines software strategy shift

In this interview, Buell Duncan, former chief of the iSeries division and now general manager of ISV and developer relations, gives details on IBM's energized focus on vertical markets.

Users can expect to see a number of new offerings next year from IBM -- including new versions of WebSphere, support for UCCnet, and tools to help with HIPAA compliance -- as a result of the company's intensified focus on vertical markets.

News leaked out earlier this month that, in January, IBM will start selling specialized software for individual industries and that the company's sales force will focus on selling to those industries, rather than on selling the IBM brand. This will be the most significant shift in the company's $13 billion-a-year software business since 1999, when IBM exited the applications business.

The IBM software group, which is headed by senior vice president Steve Mills, will be divided into 12 industry-specific segments, including retail, manufacturing, health care and financial services. IBM will pump hundreds of millions of dollars into the initiative, which also includes boosting partnerships with ISVs within each industry sector.

The news hardly came as a shock to IBM watchers, who know the company has, before now, introduced numerous products for specific markets, including the automotive, manufacturing and health care industries.

Now, though, the devil is in the details for Big Blue, and the industry is waiting to see how IBM will execute this ambitious new strategy.

The follow through

Buell Duncan, former chief of the iSeries division and now general manager of ISV and developer relations, said the initiative will be delivered in essentially three ways: through new technology, a reorganization of IBM's sales teams, and increased partnerships with ISVs.

"This is a transformation, it's not a revolution. It's something that we've been heading toward for some time," Duncan said. "This whole notion of extending and building out our vertical industry connection, well, this is what our customers have been asking for."

In addition to retail, manufacturing, health care and financial services, IBM will target several other industries, including insurance, banking, automotive, retail, consumer package goods, utilities, telecommunications, electronics, government and life sciences.

An integrated offering for an insurance company, for example, would include WebSphere to help manage claims-processing transactions and integrate the claims workflow; DB2 Information Integrator to centrally integrate the claims data from many different databases (including IBM and non-IBM databases); and Lotus Notes, which will help insurance agents automatically process appraisal and claims forms.

Duncan said there will also be a packaged infrastructure software solution for retail companies that helps retailers manage storage operations, marketing and promotions, merchandising and item management. A package for the automotive industry will provide infrastructure software support for product life cycle management and will enable auto dealers to collaborate more effectively.

"The beauty of this [initiative] is that this complements our global services alignment -- allows us a level of specialization that, frankly, we never had before," he said.

Sales shuffle

Perhaps the most sweeping changes, however, will be among IBM's 13,000 salespeople. IBM will train salespeople so that more than half the sales force will have industry-specific expertise.

"We are increasingly shifting the skills of our software salesforce to focus on these industry-specific middleware solutions," Duncan said.

In January, and throughout the year, IBM will announce a series of marketing and technology programs that will help existing and new ISVs build solutions to tie their applications to IBM's industry-specific middleware offerings, Duncan said.

The strategic shift encompasses the company's entire software business, including the underlying software technology and routes to market, Duncan said. Development, marketing, sales, products and ISV programs will shift increasingly to fit this model.

"We will still support our brands, but the lion's share of our work will move to the industry model," he said.

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