Friday, October 16, 2009

Software and analytics key to IBM 3Q 2009 results

Yesterday, IBM announced its third quarter 2009 financial results. On his call with Wall Street analysts, Mark Loughridge, IBM senior vice president and chief financial officer, discussed business analytics as one of IBM's primary investment areas, and IBM's Software unit which contributed almost one-third to IBM's gross margin improvement.

Since 2005, IBM has invested $12 billion in strategic acquisitions and organic innovation to build its business analytics capabilities, assembled 4,000 consultants with industry expertise to help clients use business analytics aligned to their specific business needs and opened six analytics centers dedicated to clients worldwide to help them take advantage of industry-specific expertise from IBM.

Most recently, earlier this month IBM announced a new advanced analytics center in New York City with 450 consultants and researchers.

But why the focus on analytics?

Advanced analytics of Software and Services allow customers that generate enormous amounts of data to predict trends, optimize their operations and create new sources of revenue. Much is this demand is also being created by the stimulus investment on electronic medical records, better government services to its citizens, need for accountability and transparency in government spending, and fraud detection.

For example, one key issue clients are facing today, whether its business or government organizations, is managing the "data glut." One in three business leaders frequently make critical decisions without the information they need. IBM's approach to analytics is moving beyond just the statistical data, but really offering clients the technology they can use to make critical information available for frontline employees within an organization, and not just the programmers and IT analysts. It's almost like "democratization of data" making it available to regular employees who can impact the bottom line of a business based on the decisions they make each minute.

This kind of change is transformative and it impacts our lives in new ways. For example, law enforcement officials from Edmonton Police in Western Canada use analytics to help their own real-life crime fighters’ better surface leads, more effectively deploy policing resources and ultimately improve police and public safety and reduce crime rates.

Analytics is a key part of IBM's strategy of moving to higher value capabilities for our clients. As we've discussed before on this blog, the transformation of IBM's business positions IBM for the future with a much better business profile and a more competitive cost structure.

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