Table Of Content

- .. • INPUT -REPORT PRODUCTION 00SCHEDULE PRINTING/BINDINGSPECIRCATIONS AUTHORPLEASECOMPLETE: ProjectCode: — Cover GBCSof—tVinyl — SoftVinyl'WindowCover HotStripPaperCover 80lb.WhitePaper ColorCardstock Binder 3-HoleDrill ShrinkWrap — CoverTitle Exactlyhowitistoappearonthe,reporfcover: Front: Spine:(1Line) (morethan67pagesonly) Estimatednumber'oTpages: <32Dl/ie'spine (Binderspinejriayhave2lines) Pleasenoiei-WS'^ineistoosmallfortitletobeprintedonit. 33-66 1/8"spine 67-130 1/4"spine 'ExecutiveOverviews: . - _.131-196 3/8"spine . \v?/No'requiredforThank-Youpackages: 7 T.r:"". i97:26o 1/2"spine-;— ^-'crixiir 261-324 5/8"spin^'"'~ ProgramManagerApproval: Date: CENTRALFULFILLMENT/PRINTINGPLEASECOMPLETE: H.-REPOR-TS-:--sFutlofcikll"ment-: :2=.i_OE:VX,EE™CR,LVT^IT.„EI:V:W:ES.:-:.:L"~Fuu.;lZfiSlltmoecnkt1-_1 forThank-Youpackages TOTAL - TOTAL 3.Binding: CoverCoIor_ _SpineSize HotStripColor 4. Datetoprint: 5. Datetobeshipped: Completeactualshipdateonfirstside. 6. Fulfillment,PLEASEPRINT: labels packingslips ADM400/02 10/94 Vol.VII,No.4 June1996 IBM Global Services' De Facto Strategy IBM'scompetitorssometimesdismissIBMas • IBMConsulting offeringlowvalue-addedservicesthatfocus onyesterday'stechnology. InINPUT'Sview, • SystemsIntegration/Application therealityofIBM'sservicesisquitedifferent Development fromthatimage. Thisresearchbulletinwill showwhereIBMisnow,andwhereitis • Education&Training heading. • AvailabilityServices(mostly"break-fix" IBMserviceshavebeenorganizedas"IBM services) GlobalServices"sincetheendof1995. GlobalServicesconsistsofsixunits: GlobalServicesisbig,andgrowing: bythe beginningof1997,INPUTbelievesthe • ManagedOperations(commonlyreferred GlobalServicesheadcountwillbecloseto toas"ISSC") 100,000. Excludingthebreak-fixbusiness, thisrepresentsacompoundgrowthrateof • IBMGlobalNetwork over20%(SeeExhibit1). ©1996byINPUT.Reproductionprohibited. MMAP INPUTResearchBulletin Exhibit1 \BMGlobalServices: NumberofEmployees(Thousands) 100 90 est. 80 70 60- OtherServices 50- 40- 30 20 10-t Jan.94 Jul-94 Jan.95 Jul-95 Jan.96 Jul-96 Jan.97 Source:INPUT Inthelastyear,IBMhasbeenaggressively Theseinitiativeshavenotyethadmuch repositioningitselfasaserviceprovider. impactonIBM's"mindshare"among Newofferingsareaimedatnon-traditional customersandanalysts: platformsandat"sunrise"partsofthe business. Thefollowingrecent • Thereisgenerallyalagbetween announcementsarerepresentativeofits announcements,salesanddelivery. expandedrangeofserviceofferings: • IBMhasnotyetprovideda"map"to • Environmentalhealthandsafety showhowindividualofferingsorfamilies managementproductsandservices ofofferingsfittogether. • Electronicpurchasingservices • mIBaMn'yssciommipleatritaonrnsouhnacveembeenetns,marakiisnigng • Anarrayofmultimediasolutions theoveralllevelofnoiseand • Aselectionofdesktopanddistributed "informationclutter" managementservices ButIBM'sservicesinitiativesarefarfrom • Intelligentagent-basedproductsfor beingjusttalk.Muchoftheincreasein networkinformationsearches GlobalServicesheadcountwillcomefrom addingresourcesforthemainstream • An"ethicalhacker"servicetotest outsourcingandsystemsintegration customers'networksecurity business. However,IBMisalsointhe 2 ©1996byINPUT.Reproductionprohibited. INPUTResearchBulletin processofaddingsignificantnumbersof Successwilldependon: staffinareasfaroutsidetraditionaldata centeroutsourcing(Exhibit2). INPUT • Expanding(and,insomecases, believesthatthesehiringplansexemplify rationalizing)itsserviceofferingsto thenewlookofIBMservices. covermajormarketrequirements. Exhibit2 9 Formingsolidpartneringarrangements tocoverotherservicerequirements. SelectedHiringTargetsofIBIVI GlobalServices • Seamlesslyintegrating(fromthe customer'sstandpoint)managed Approximate operationsandotherservices. Headcount Business/TechnicalArea Target • RetoolingsomeoftheManaged NetworkOutsourcing/NetworkStation Operations(ISSC)employeeswhowere Management 1,000 transferredtoISSCfromcustomersto serveassalessupport. Internet/IntranetSystemsIntegration 400 NotesSystemsIntegration 300 IBM'sImplicitHorizontalSerw'ices Network-FocusedBusinessConsulting 125 Strategy InternetSecurity 75 IBM'sservicesstrategyisstillevolving. Source: INPUT Thereisnomasterplanprovidedtothe Don'tCountOutsourcingOut osuttrsaitdeegywoisrlidn.paTrhtepolsaictkivoef,agniveexnpltichietrapid bSuosmienevsiseawsIaBMc'oswdtaotbaecmeinltkeredouutnstiolurcing cfohramnaglesplianntchoeumladrlkeeatdtaondinfilnesxiidbieliItByM.. A mainframesareputouttopasture. In AfterdiscussionswithIBMservices INPUT'Sview,thisisamistake. executives,INPUTinfersahorizontal iIatBssMic'gusnsitlfeiocgmaaencrtysootpuoptosmroatukurnceiinttghy,efoitrnrabfnaosctith,tiIroenBpMorueatsneondfts msaeasrjtvoriracetcseogmsyptretathtiaettgoiyrssodni(fStfeheeereEpnxathriftbriootfmI3m)B.aMn.yTohfiistsis oldertechnologiesandpractices. 3 ©1996byINPUT.Reproductionprohibited. INPUTResearchBulletin Exhibit3 StrategiesofSelectedITServicesFirms High otherBig6 Andersen EDS esc Vertical Emphasis BSG HP• Low Low High HorizontalEmphasis Source:INPUT ThesalesanddeliverystrategiesofAndersen IsIBMoutofstep? Or,isIBMdeveloping andEDSareprimarilyvertical,i.e.,driven positivedifferentiation? IBMcouldhavea byindustryknowledgeandspecific winningstrategy: applications. Andersenhasalwaysfollowed thisapproachashasEDSsinceits • Rapidchangesintechnology(e.g., reorganizationin1989. Theirvertical client/server,objects,Internet)meanthat approacheshavebeenveryeffectiveinterms technicalissuesmayoftenbeas ofgrowth,recognitionandprofitability. importantasindustryknowledge. CSC'srecentacquisitionofContinuum underscoresitsintentiontobecomeamajor • HPandBSGhaveshownthata playerinverticalmarkets. (EDSandCSC technology-orientedstrategycanbevery alsohavelargehorizontaloutsourcing successful. businesses.) IBMdoeshavesomeverticalofferings(for • cMlaenany-ucpu"stpohmaeser:saTrheenyohwavineath"esybsutseimnsess eIxBaMm'pslceo,nisnulbtainnkgianrgmahnadshfeoaclutshecdarper)imaanrdily rseolliuatbiloyn.-nowtheyhavetogetittowork onindustrymarkets. However,mostof IBM'snewofferingsarehighvalue-added, • AndersenandEDScannoteasilypartner technically-orientedservices. Thehorizontal withotherverticalsolutionproviders; a approachisthecommontraitofthenew horizontally-focusedGlobalServicescan. servicesandhiringpatternsnotedearlier. ThisResearchBulletinisissuedaspartofINPUT'SU.S.InformationServicesMarketAnalysisProgram. Ifyouhavequestionsorcommentsonthisbulletin,pleasecallyourlocalINPUTorganizationor TomO'FlahertyatINPUT,401W.BurrBlvd.,Teaneck,NJ07666-6810,(201)801-0050. 4 ©1996byINPUT.Reproductionprohibited.