For IBM, it’s all about data, and more specifically, how businesses and individuals can benefit from the unprecedented amounts of data being generated every day. In her letter to investors, Virginia Rometty, Chairman, President and CEO of IBM, says that her company is “executing a bold agenda” as it nears the end of its business transformation process.
She sets out three strategic goals for IBM: “To make markets by transforming industries and professions with data; to remake the enterprise IT infrastructure for the era of cloud; and to enable ‘systems of engagement’ for enterprises.”
IBM says that the world is generating more than 2.5 billion gigabytes of data every day, and 80 per cent of it is unstructured – everything from images, video and audio to social media and impulses from embedded sensors and distributed devices.
“The market for data and analytics is estimated at $187bn by 2015,” wrote Rometty. “To capture this growth potential, we have invested more than $24bn, including $17bn of gross spend on more than 30 acquisitions. Two-thirds of IBM Research’s work is now devoted to data, analytics and cognitive computing.”
Its data and analytics portfolio provides the basis for its cognitive systems work, and earlier this year it launched the IBM Watson Group, which will comprise 2,000 professionals, a $1bn investment and an ecosystem of partners and developers.
“At the same time that industries and professions are being remade by data,” added Rometty, “the information technology infrastructure of the world is being transformed by the emergence of cloud computing. It is estimated that by 2016, more than one-fourth of the world’s applications will be available in the cloud, and 85 per cent of new software is now being built for cloud.”
She adds that the economic significance of the cloud is often misunderstood, and that it has less to do with the actual technology (“relatively straightforward”) and more with the new business models cloud will enable – creating a market that is expected to reach $250bn by 2015.
Whilst big data and cloud are changing global business, IBM says that proliferating mobile technology and the spread of social business are empowering people with knowledge and changing their expectations, giving rise for the need for “systems of engagement” for enterprises. For example, IBM says 70 per cent of people who contact a company via social media today expect a response within five minutes. As a result, it believes that 57 per cent of companies now expect to devote more than a quarter of their IT spending to these new systems of engagement by 2016, nearly twice the level of 12 months ago.
“Enterprises are now taking a systematic approach to engagement with all of their constituencies—customers, employees, partners, investors and citizens, said Rometty. “They are doing so because the way their customers and their own workers expect to engage is undergoing profound change.”
Rometty concluded her letter by warning investors that IBM still has challenges ahead of it, if it is to remain relevant to its customers:
“The first involves shifting the IBM hardware business for new realities and opportunities,” she said. “We are accelerating the move of our Systems product portfolio to growth opportunities and to Linux. The modern demands of Big Data, cloud and mobile require enterprise-strength computing. The second challenge involves the world’s growth markets. While IBM’s growth in Latin America and Middle East and Africa was strong, enterprise spending slowed in other key growth markets. We are intensifying focus on new growth opportunities.”
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