IBM Impact Event – Process is King

IT vendors perpetually balance between “business” and “product” messages. And it’s a “damned if you do, damned if you don’t” kind of problem. Take a mixed load of analysts and half will always think one of the dimensions got short shrift – and the other half will say exactly the opposite. So take my first impression of IBM’s Impact event, the WebSphere gathering, with a grain or twelve of salt: “IBM didn’t say nearly enough about product at Impact this year.” And there was much to say, so for me, it felt like a missed opportunity.

Analysts are spoiled creatures; I was annoyed that there was no analyst workroom, no power at our “special seating” (as if the good seats weren’t enough), bad connectivity on Day Two….as I said, spoiled. I try not to behave like a diva. Mostly I succeed. I did manage to remain focused enough to see clearly that business process has become the focus for the WebSphere gang – they’ve moved beyond an obsession with technology to focus on what we do with it. That’s a very positive step up.

[edited 6/1/2010 to add Palmisano comments on IBM’s prospects.] It must also be said that for the attendees I talked to, the event was “on target,” “exciting,” “filled with useful ideas.”  With over 20,000 of its own practitioners, and an annual investment over $1 billion in R&D as well as continuing strategic acquisitions over the past 18 months, IBM has reason to be upbeat. It showcased a partner list that, oddly, seemed larger than the number of named accounts referred to in the keynote. Partners in a well-populated solution center said they were getting lots of leads and were very happy with traffic. (James Governor of Redmonk reported the same in his contributions to a tweetstream that was more like a mighty river – twitter is now a massive component of the event experience. ) The momentum IBM has been gathering seems strong: it reported double-digit revenue growth in its BPM and integration software portfolio.

The big themes – Discover. Impact. Optimize – were introduced with the challenge: “What if you could change the world?” The opening day’s host, Frank Caliendo, was very funny and never overstayed his welcome, so things moved along crisply. Nancy Pearson put it in early perspective: “Process is King.” And that was evident throughout the morning as Steve Mills took us back us through a decade of IBM’s progress, revisiting and commenting on slides from 2002 till today. As always, he mixed the techspeak –

“Can I function as a service to instantiate process flows?”

with memorable aphorisms:

“The best code is always the code not written.”

because of automation.

Harvard professor and author Rosabeth Moss Kantor keynoted in an inspirational tone – companies need to perform larger than life feats, she proclaimed, and in standard business-book fashion discussed validating use cases. (My current reading of The Black Swan is making me increasingly suspicious of theories validated by retrospectively chosen examples that “prove” them. It’s a very good book; highly recommended.) She was followed by several other speeches and a customer panel – all were fairly good. But until Craig Hayman, GM of WebSphere took the stage, we were short on product.

Craig delivered. IBM introduced more than 30 new products and services including:

• IBM Business Process Management Suite – expanded to include IBM WebSphere Lombardi Edition (which provides visibility and real-time control for process owners react) and enhancements to the Dynamic Process Edition (new feature packs.)
• IBM BPM Blueprint — new web-based tool for communicating and improving business processes, ideas and initiatives.
• IBM ILOG Business Rules Management System — easier, more comprehensive rule authoring.
• IBM WebSphere Commerce — a social networking customer interaction platform for information, events, wish lists.
• IBM Rational Automation Framework for WebSphere (RAFW) — to automate environment administration for WebSphere products

The company also announced its acquisition of Cast Iron Systems, a play to hasten its role in driving the adoption of private cloud implementations.  Cast Iron’s expertise, customer experience and formidable collection of partners will make an immediate impact. And its sizable array of existing templates will be a great asset for IBM’s sales force to add to IBM’s own hardware appliance play.

In the rosy glow of hindsight weeks later, the subsequent announcement of IBM’s intent to acquire Sterling Commerce, a massive ($1.8B) play that is the largest for IBM since the Cognos acquisition, upped the ante still further. It’s fair to say the sequencing mirrors the assemblage of firms IBM used to vault into contention around business analytics in the last few years. Business process appears to be what’s next, and in retrospect, IBM was making the strategy quite clear at Impact. Process is getting its time in the spotlight, and if the market is finally ready for it, the conversation is about to change.

CEO Sam Palmisano, with his legacy clearly in sight (an unspoken IBM policy suggests that he will retire before his 61st birthday), recently made some bold predictions about the continuation of the course the firm has been on. He noted that when IBM claimed back in 2007 that it could get to $9 per share in earnings by 2010, there was considerable skepticism. He led the firm to a more services-focused portfolio, drove integrated solutions and a focus on business solutions enabled by IT, a subtle but profound shift. Under his leadership, IBM grew revenues around 4 percent through most of the first decade of the century, despite a severe economic downturn. Palmisano believes that IBM will drive 5 percent revenue growth per year over the next five years, and that doing so will have a profound impact on its share price. Timothy Prickett Morgan covered Palmisano’s speech in detail at http://www.itjungle.com/tfh/tfh051710-story02.html, and his story is  well worth reading. IBM continues to offer a clearly differentiated vision, and the market will speak in the next few years about whether it’s the right one.

Disclosures: IBM is a client of IT Market Strategy