IBM: We need more innovators, less integrators

First, some compliments. I am pleased to see so many IBMers comment on my post where I said we need more Apple/Google/Amazon moments, less IBM ones. Good on them for being proud employees of an iconic company celebrating its hundredth birthday.

One even called me “pathologically ridiculous” –  I presume that is a clinical state I was previously unaware of.

But they did not address the basic question in my post. How much of IBM’s revenues comes from new products innovated in the last 5 years? Because that is the benchmark that Apple and Google and Amazon blow IBM away on as what I consider a legitimate claim to innovation. The author above asks “What about all of the other (IBM) brands? Tivoli, WebSphere, DB2, Rational?” and by naming those brands just reinforces my point IBM is old-in-the-tooth. If Pharma patents applied to software, there would be generic versions of those by now – we call them Open source in our industry. IBM prides itself as supporting and leveraging Open source but cordons it off from its own proprietary and profitable products.

Here’s another benchmark for innovation – for the $ 100 billion (give or take) IBM charges its customers every year, how come I cannot find more reasons to post about them on my daily innovation blog, New Florence? (Last week I posted one on their massive data drive from its Almaden Labs, but for that much customer investment there should be at least one a week innovation I could profile and trust me I scan every announcement their PR folks send me).

The reality is IBM in the last decade has transitioned away from innovator to integrator. Even in its Smarter Planet projects that it heavily markets as innovative, very little of technology is IBM’s, it is usually just the service integrator.

Nothing wrong in that except even with the largest services revenue in the world, it has less than 10% market share in the global services marketplace. We have too many integrators out there. If IBM was truly innovative it would be automating and commoditizing much of that labor – its own and that of the rest of the market.

What I find disconcerting is that even at the top IBM confuses its nice margins from milking old software and old data centers and old partners like SAP as “innovation”. This WSJ article I should  have written about a while ago summarizes that state of delusion.

“In a rare public broadside, IBM Chief Executive Samuel J. Palmisano said he doesn’t worry about companies such as H-P that have slashed their investments in core technologies and need to make expensive acquisitions to keep up.”

Talk about a pot-kettle mindset.

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CEO of Deal Architect, a top advisory boutique recognized in The Black Book of Outsourcing, author of a widely praised book on technology enabled innovation, The New Polymath, prolific blogger, writing about technology-enabled innovation at New Florence, New Renaissance and about waste in technology at Deal Architect.  Previously Analyst  at Gartner, Partner with PwC Consulting. Keynoted at many business and technology conferences and has been quoted in the Wall Street Journal, BusinessWeek, The Financial Times, CIO Magazine, and other executive and technology publications.

One response to “IBM: We need more innovators, less integrators”

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    […] IBM: we need more innovators, less integrators – covers essentially the same topic with some additional financial analysis of their books and what we can learn from that. […]