Big Blue restructures software business

IBM is in the process of overhauling its software division to enhance its vertical focus. As a result, it hopes to grow its market share.

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By  Matthew Southwell Published  December 31, 2003

|~|kilani_M.jpg|~|Bashar Kilani, head of software, IBM Middle East.|~|IBM is reorganising its US$13.1 billion software business to focus on a dozen vertical industries. As a result, Big Blue’s sales, marketing and development efforts will cease to focus on its five existing software brands — WebSphere, DB2, Rational, Tivoli and Lotus — and target cross-brand application packages tailored for industries instead. “IBM is taking its software business one level higher by focusing on certain industries and [developing] solutions for these industries based on our technologies,” says Bashar Kilani, manager of IBM’s software group in the Middle East & North/West Africa. “For the last three to five years we have been working on brands and we are number one in most of those areas. However, we believe the market is asking for value add for its particular industry and we are now addressing that,” he explains. The enhanced vertical focus will centre on insurance, banking, financial services, automotive, retail, consumer packaged goods, utilities, telecommunications, electronics, healthcare, government and life sciences. The vertical products will, essentially, be bundles of IBM’s existing products that have been customised for each industry. For example, Big Blue’s insurance industry offering will include WebSphere for managing claims processing and workflow, DB2 Information Integrator for aggregating claims information and Lotus Notes as a front end for insurance agents. In addition to its own software, IBM will add further value to each package through the numerous independent software vendors (ISVs) with which it works. Big Blue’s systems integrators will also be encouraged to add complementary vertical packages to the IBM core as they take the tools to market. Concurrent to this, the vendor will carry out its own customisation work to ensure each industry package has the appropriate engineering, look and feel. “In the banking industry, for example, there are going to be certain formats the technology needs to interact with, such as SWIFT, mainframes and so on. These banking-related formats will be packaged in our offerings to the banking industry. The software group will provide more focused solutions for each vertical and ensure it has the particular features each requires,” says Kilani. Locally, the vendor is already working towards the industry-specific solution sets and the Middle East team will undergo training in the US during January. From there, products will be made available in the region as soon as they go to market in the States. “We will be in synch with what is happening with IBM worldwide,” confirms Kilani. “There is a complete education and skills transfer session happening and our team will be bringing to the market what it can immediately. We will not be lagging behind the rest of the world,” he adds. While IBM globally will focus on the full 12 verticals from the off, the local operation has narrowed the number down considerably. To begin with, Big Blue intends to target the sectors in which it currently enjoys a decent market share, notably the government and banking arenas. However, the vendor believes its vertical packages will enable it to eventually extend its sphere of influence into other industries. “This reorganisation is a huge opportunity for us to grow in markets where we have more room for growth,” says Kilani. Whether IBM’s vertical focus will result in more business remains to be seen. However, IDC Middle East & Africa’s senior analyst, Torben Pedersen, believes the initiative is key if Big Blue is to expand its installed base beyond its current enterprise accounts. “Because vendors are moving down market and the competition is intensifying, they have to have the ability to compete with companies already in those segments that already have the knowledge,” he says. “They [have to] build vertical sales and target individual verticals where they know there will be funds and liquid assets,” Pedersen adds. Kilani is confident that IBM will succeed, however, arguing that the reorganisation will make IBM more relevant to its customers and better able to add value for users of its solutions. “With this industry focus we will have a value proposition for those who did not recognise the value of IBM’s infrastructure software in the past. It will help us grow our market share,” he says. ||**||

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