IBM CEO Sam Palmisano is aiming to make the 92-year-old IT giant great once again. IBM is already the largest IT provider, but Palmisano envisions IBM once again creating entirely new categories as it did with business computing more than 30 years ago. Palmisano sees double-digit profit growth by assuming the processes ancillary to clients' main business -- functions such as human resources, finance, customer relations, and supply chains. He estimates there is about $500 billion worth of business in those areas, and that IBM will be able to leverage its scope and industry expertise to serve those markets more effectively than competitors. One of IBM's biggest strengths lies in matching IT services, business consultants, and researchers. Palmisano says IBM used this approach to increase the revenue per shopping cart at one of the largest U.S. retailers, which executives at that company said was their toughest business challenge. The combined IBM team discovered shoppers would buy more if they had smart shopping carts that guide them through the store, keep track of purchases, and make suggestions. IBM has also moved into new territory with customers such as British Petroleum, which not only comes to IBM for IT, but now depends on IBM for its entire finance and accounting functions. Palmisano says the groundwork for IBM's new approach was laid in the 1990s with former CEO Lou Gerstner, who built up IBM Global Services and focused on holistic solutions. Even more than the turnaround Gerstner achieved during his tenure, Palmisano says "What will be most sustainable over time is his strategic approach, which got IBM focused on the client." Charles Schwab is another example of where IBM's multifaceted approach to client problems has paid off. IBM researchers, consultants, and sales representatives collaborated to deliver a grid computing solution to Charles Schwab's portfolio analysis software, speeding its operation and making more efficient use of existing infrastructure. Copyright 2004 INFORMATION, INC. |
