IBM’s BAO Initiative Will Change the Landscape, But More Is Needed

IBM Global Business Services (GBS) has added its first new service line since IBM acquired PWC and launched itself into the services business. GBS generated nearly $20B in revenue in 2008, a few hundred million more than the hardware side of IBM. Two other units, the software group and IBM Research,  have joined with GBS to create the Business Analysis and Optimization line, intended to make IBM the dominant player in advanced analytics focused on optimizing business outcomes.  GBS has pursued the capture and reusable packaging of intellectual property and methodologies in its engagements for some time, encapsulating business processes and industry requirements, standards and regulations. IBM proposes to combine those assets with software components and advanced work done in IBM Research to deliver a “predict and prescribe” approach to its customers’ business challenges.

This is a formidable array of assets, aligned into a 4000-person organization, and pursuing a carefully targeted set of competencies:

• BI and Performance Management
• Advanced Analytics and Optimization
• Enterprise Information Management
• Enterprise Content Management
• Business Analytics and Optimization (BAO) Strategy

All the contributors bring substantial skin to the game. Ambuj Goyal, who heads the information management portfolio for IBM Software Group (SWG), has assembled an array of data management and data warehousing tools, BI, content management, and other components, and told me, “We’re harnessing everything we’ve built.” He’s been hammering on the notion of an information agenda as part of IBM’s Information on Demand strategy, and driving awareness of the need for data quality and stewardship to attack the need for executives to feel they can trust the data they get. One in three today say they don’t, even for the relatively mundane types of reporting that are commonplace.

In IBM Research, Brenda Dietrich heads a team of 150 mathematics PhDs, many of whom have been working directly with customers to build predictive models in numerous industry contexts that will underpin some of the early projects. Three key plays are in the first round: risk and fraud analytics; analytics and data optimization; and advanced customer insight, which draws upon BAO head Fred Balboni’s recent successes driving GBS business in the retail sector.

The new organization model, in typical IBM fashion, will be rolled out on a massive scale. Of course, most of the people in the organization are being “re-badged;” they aren’t new, dedicated assets just yet, but they are experienced in many facets of the problems to be tackled and are in an accelerated program designed to bring them up to speed to meet an expected demand curve that IBM believes will be very steep. I would not bet against them.

Still, this new effort is only a step on a journey the information technology industry needs to travel. “Predict and prescribe” is necessary but not sufficient to achieving true analytics-based automation, where the “prescription” is applied to operations within policy- and rules-based guidelines, reserving the delivery of guidance to decision makers for the exceptional cases. Some advanced organizations have already built such applications, and they will have a leg up. If you are among them, IT Market Strategy would like to hear your story. Please contact us – leave a comment here, or email merv@itmarketstrategy.com.