Must-know: IBM’s strategy to generate growth

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IBM’s growth strategy

In IBM’s 2013 annual report, CEO Ginni Rometty outlined the company’s three strategies for 2014—data, cloud, and systems of engagement. Smarter Planet, Growth Markets, Business Analytics and Optimization, and Cloud Computing are the four key initiatives identified to achieve growth.

IBM growth strategy

Business analytics

“Big data” in industry refers to high volume and high velocity data. With the growth in internet and social media, data is generated at an exponentially faster rate. It’s coming in all sorts of formats, be it mail, sms, texts, audio, or video.

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As a result, enterprises are in dire need of managing and mining potentially valuable information from this huge source of data. Advanced data analytics can examine and process huge data sets to provide useful relation, which explains why it is so rapidly being adopted by the industry. According to IBM’s 2013 annual report, through its strategic acquisitions and ~500 analytics patents, the earlier company targeted analytics solutions will contribute $16 billion to its consolidated revenue by 2015. The amount has now been increased to $20 billion. According to Gartner, SAP AG (SAP) led the business analytics market in 2013 with a 21.3 % market share, followed by Oracle (ORCL) with 13.9% and IBM Corp. (IBM) with a 12.7 % market share.

Smarter planet initiative

IBM launched its Smarter Planet Initiative in 2008 to provide new ways of monitoring, connecting, and analyzing the systems. The emergence of big data and analytics, mobile, social, and cloud technologies has led to “Smarter Computing.” Through Smarter Planet, IBM aims to capture markets with huge potential like utilities and e-commerce by offering solutions that can be easily integrated with its middleware software platforms.

Cloud computing

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IBM moved to cloud computing in 2007 with the “Blue Cloud” program. It’s currently the “buzzword” because it allows the business to access technology and computing through the network. This avoids the hefty expense of setting up and maintaining own data centers. According to Gartner, cloud computing is expected to form a major share of IT spending by 2016. IBM doesn’t want to be left behind. It plans to invest $1.2 billion to boost Softlayer cloud services. HP (HPQ) and CISCO (CSCO) are also following this trend by investing million in the cloud space.

Growth markets

Rapid urbanization includes increased government and private spending and favorable demographic shifts. Approximately 93% of the middle class is expected from emerging markets. The rapid increase in social networks is also driving “big data.” IBM, sensing this great opportunity lying in growth markets to increase its top line, has made a huge investment in the form of research labs, innovation centers, and global delivery center in China, India, and other emerging markets.

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