how ibm software works

IBM Software

How IBM software works

2 How IBM software works

A little more than 15 years ago, IBM set out to change the face of the software industry by bringing together a collection of high-quality software that would help clients solve their most pressing business problems.

As client needs changed, new approaches were adopted. Strategic relationships were formed. Dozens of acquisitions were signed. And inside software labs around the world, breakthrough discov-eries were made.

This leads to where we are today, with all of IBM’s different soft-ware products and solutions working together as never before to help clients get to a smarter and much more efficient way of doing business—virtually regardless of what industry they’re in.

As we at IBM Software have discovered, to get the most value for our own business and our clients, we need to continually reinvigorate our strategy and technologies through multiple approaches and channels. This creates a steady stream of new capabilities and areas of growth, which this paper will cover.

Intelligent infrastructure at workIBM has a long history of helping clients transform their organi-zations, integrate their business and IT environments, and operate diverse objects and platforms—such as production facilities, elec-tric grids, pipelines and railways. Now our software is being used to make these grids, infrastructures, facilities and products more intelligent to save money, improve operations, manage risk and better manage the use of natural resources.

This means more than just managing traditional IT assets such as servers and software; it means managing an environment that requires the integration of business services, transactions and a variety of physical infrastructures such as water, chemical, energy and transportation. And the good news is that the technology on a number of fronts—such as cloud and stream computing as well as sensors, Web 2.0 tools and analytics—is here and ready.

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Smarter cities at work

Technological advances have opened the door for a new order of intelligent infrastructure inside our cities. In city buildings, thousands of wireless sensors monitor everything from motion, temperature and humidity to precipitation, occupancy and light.

Sensors, meters and radio frequency identification (RFID) tags are being embedded in cars, roads, pipelines—even the wheels on a train. Analytics tools then sift through the collected infor-mation to help cities respond in real time to changing conditions and keep everything running more safely and efficiently.

And from central command centers, cities can manage not only their IT and data centers but also physical assets such as water mains, office equipment, heating systems and fire hydrants.

Turning information into insightToday, information pours in faster than we can make sense of it. It’s being authored by billions of people—and flowing from billions of intelligent devices, sensors and all manner of instru-mented objects.

This “big data” comes in one size—large—and in many different varieties. And with potentially 80 percent of new data growth existing as unstructured content—including music files, 3-D images, medical records and email keystrokes—the challenge is trying to pull it all together and make sense of it.

But what if you could tap into this information to uncover lucra-tive business opportunities? What if you had the inside infor-mation you needed to retain customers or improve research? What if you could inject certainty and predictability into the decision-making process?

Commandcenter


Savvy organizations are asking these questions, and they’re find-ing highly intelligent and profitable answers in clever analytics software that can organize, store and mine the information scat-tered throughout their organization; spot hidden trends before they occur; predict outcomes in weather forecasting, transporta-tion scheduling, financial performance and more; and provide customized intelligence designed to gain faster insight and return on investment from all the different data.

IBM has taken aggressive steps to remix its business so that it is positioned for leadership in the high-growth business analytics space. The combination of its middleware and consulting exper-tise makes IBM well suited to help clients extract new value from their business information and respond at the same rate at which the data arrives.

The Watson supercomputer is a big data machine. And its underlying intelligence is being applied to solve complex business and societal problems and to drive progress across many industries. It can handle online technical support questions, parse vast tracts of legal documents, help diagnose disease and more.

Analytics at work

• Police departments can access and analyze billions of records and zero in on criminal suspects within minutes.

• Retailers can create precise portraits of their customers—their wants, needs and buying patterns.

• Insurance companies can see patterns in billions of claims and identify the few that are fraudulent.

• Doctors can make better diagnosis and treatment decisions, develop new drugs, and predict health issues before they hap-pen by crunching data in days and weeks instead of months and years.

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A planet of intelligent things There are billions of devices that now talk to each other.

You have a car that can talk to a mechanic to signal the fact that it needs a repair. You have store shelves that can talk to a supply chain when they’re running low on inventory of a certain product.

You have all kinds of smart things—sensors; cameras; cars; ship-ping containers; intelligent appliances; and tiny, traceable chips by the hundreds of millions—all becoming interconnected and mak-ing the smallest exchange more productive, efficient and better.

With computational power now being put into things we wouldn’t recognize as computers, virtually any object, process or service can become digitally aware, connected and smart.

Smarter software for smarter products

Smarter products don’t just roll off the assembly line with all the bells and whistles in place. Even after they’re made, shipped and purchased, their makers need to build their capacity for con-tinual updating—to respond to upgrades, audits and the inter-active nature of how products are used today.

If the software doesn’t meet performance or functionality require-ments, it might fail, and then you lose the anticipated benefit. IBM’s software business responds to these challenges by helping clients develop smarter software for hundreds of different products and manage IT as a strategic asset within the enterprise.


Computing in the cloud Despite enormous advances in computing power, the world’s IT infrastructure—already under severe stress from today’s comput-ing tasks—could easily become overwhelmed by the onrushing complexity and extraordinary amount of data generated by bil-lions of instrumented and interconnected devices, objects, pro-cesses and people.

Help is at hand in the form of cloud computing, in which pro-cessing, storage, networking and applications are accessed as services over networks—public, via the Internet, or private, via intranets. This makes possible a new level of system intelli-gence with the potential to safeguard, authenticate, customize and just plain keep up with the coming wave of data complexity and volume.

The power of the cloud

Just as the clouds above us are differentiated—cirrus, stratus, cumulus—the clouds of a smarter planet are developed around particular tasks and workloads as diverse as software develop-ment, virtual desktops, retail and traffic management.

The technologies supporting cloud computing—virtualization, web-delivered services, open standards and Internet-scale computing—are some of IBM’s core capabilities.

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Safeguarding a smarter planetAs today’s systems become increasingly interconnected, instru-mented and intelligent, they are also becoming more complex, forcing organizations to protect themselves from all kinds of security and compliance risks.

Across multiple industries and sectors of society, security is a key component of our planet’s vital systems. And those systems are shared—and shaped—by businesses, cities, government agencies and communities. This means that, as these systems get smarter, there’s a collective responsibility to also make them highly secure and reliable.

Many security strategies resemble a patchwork quilt of products and services that, no matter how costly, still contain tiny holes that hackers can slink through. And as organizations introduce more technology into their systems and devices, they introduce more holes and more risk—that’s just the way it works.

That’s why IBM software engineers and consultants are working behind the scenes to help organizations analyze and understand the way complex systems operate and design software from the ground up to be security rich.

This includes high-speed data analytics that can sift through vast quantities of data to help uncover threats before attackers launch them and anticipate a range of other security threats and breaches, such as an employee trying to access unauthor-ized information.


Secure by design

“Secure by design” is an IBM software development approach that involves building security into the initial design of an appli-cation—as opposed to bolting it on after the fact.

A team begins by testing software source code line by line to identify potential security and compliance vulnerabilities during the earliest stages of software development when they are less expensive to fix.

Next, the team builds the application using the IBM Secure Engineering Framework—a set of best practices and specifica-tions for building and deploying security-rich software.

The framework acts as a blueprint for the testing of defects. And it makes intelligent fix recommendations designed to improve productivity.

And finally, before everything goes live, the team tests the appli-cation from the outside in to identify security holes—using the same techniques known to be used by hackers.

Smarter processes at workIf you look at the way just about any business is run, you’re likely to find a set of business processes and activities that interact in some form or another to address the needs of the customer and deliver goods or services that will fulfill those needs.

But if the software isn’t integrated and the databases don’t talk to one another, this can lead to costly errors, bottlenecks and inefficiencies all over the place. Making changes often means dismantling the whole process and building it back up again.

As IBM clients have discovered, you create effective business processes by making them dynamic, automated and intuitively integrated into the work environment—connecting to a wide range of systems and people in a variety of ways as they orches-trate the activities flowing between departments and from the outside world.

And with software and services built on service-oriented archi-tectures and open standards, businesses can tap into their exist-ing technology investments and link previously fragmented data and business processes on demand—creating a more complete view of operations, potential bottlenecks and areas for growth.

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The problem that bedevils most corporate IT systems stems from the way companies automate their activities. This has typically involved a bunch of separate departments and lines of business trying to connect and corral the activities, applications and pieces of information scattered across the organization.


Commerce and the connected customerJust like the Internet transformed retailing, media and entertain-ment in the 1990s, social networking and mobile communications are now putting even more power in the hands of individuals. Think of this as the era of the connected consumer.

This big shift in how customers connect brings profound conse-quences—redefining the term commerce. What used to be seen as a flow of goods from manufacturers through a distribution chain to customers has become an interactive feedback loop, where con-sumers, producers, distributors, the media and marketers all have new roles to play. Smart companies see selling not so much as a traditional function of their organization but rather as an ever-evolving set of services they perform for their customers.

IBM has powerful software tools and services available to help companies better address the connected consumer. In 2010, IBM Software added to its own IBM WebSphere® Commerce software platform with three related acquisitions: Sterling Commerce, for order management and supply chain optimization; Coremetrics, for analyzing customer behavior; and Unica, for comprehensively managing marketing campaigns.

Smarter tools for smarter commerce

Building dynamic business networks that span human, digital, social and mobile access modes isn’t easy. Businesses often find themselves with too many siloed systems and too many unique processes that don’t share information or integrate very well.

But now there’s new technology that enhances and automates the way businesses connect across the wide range of systems and activities.

And there’s clever analytics that can turn vast streams of data into a narrative that people can understand and put to use, helping businesses make better decisions at just about every step along the way.

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Connecting and empowering peopleAs the systems that run the way we work and live become smarter, the workplace as we know it is changing in significant ways. Everywhere we look, new devices, social collaboration and shift-ing mind-sets are transforming how we work today—how we share information, build relationships and make decisions.

Gone are the days when a person had to be tied to a desk and chair in the office to get his or her work done. When innovation was a guarded secret and all novel ideas were created in isolation.

We’re in a new era now in which virtually any person, object, pro-cess or service, and organization—large or small—can become digitally aware, connected and smart.

The mobile enterprise

Mobile technology lies at the core of a social business. And as organizations struggle to find ways to more accurately gather, share and gain insight through smart devices, IBM is there to help with new software and services designed to bring a new level of intelligence to the mobile enterprise marketplace.


Thanks to clever social software tools that make collaboration happen easily and naturally, new delivery models such as cloud and mobile computing, and new ways of finding and sharing information, businesses are becoming social businesses—ones that are connected in a variety of ways, both inwardly and out.

As the web and digital technologies have evolved, IBM’s software portfolio has been built out to include a broad set of collabora-tion offerings. Business-grade instant messaging and web confer-encing, web team spaces, and enterprise portals are among the collaboration categories pioneered by IBM Software.

Now IBM is at the forefront of the next wave of collaboration tools as organizations seek the benefits of social networking as ways to communicate and collaborate, share expertise, and gain competitive advantage.

The empowered workforce

IBM itself is one of the most advanced social businesses in the world. More than 400,000 IBM employees collaborate every day with their colleagues; with growing networks of clients, advo-cates, experts and peers; and with their neighbors, local orga-nizations and millions of people they have never met and may never meet.

IBM employees use these relationships as gateways to rich sets of information, relevant expertise and valuable networks.

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Appendix: Formulas for growth

Delivering industry solutionsThe dynamics of the healthcare sector are not the same as the challenges facing financial services companies. The issues con-fronting major retailers are different from those faced by clients in transportation and government. Simply put, different industries are diverse in nature and needs, but all require business solu-tions that provide them with new capabilities at a reduced risk and reduced cost.

IBM’s strategy is to approach clients with a clear understanding of their needs, demonstrating that it has the expertise and technol-ogy specific to their business. First it asks, “What is the client try-ing to accomplish within its industry?” Then it looks at how different technologies can be used to address the client’s needs.

To help organizations apply technology more easily to their industry, IBM has created industry frameworks—collections of industry-specific data and process models, design patterns, middleware, servers, and other assets that have been proven to perform well in prior client engagements.

A framework is like a supporting structure around which some-thing can be built. Like building blocks, frameworks enable teams to put into practice technologies that can be reused throughout the enterprise, making it easy to tackle the critical issues on a client’s plate.

A network of Business Partners and alliancesBuilding a rich and diverse ecosystem that integrates employees, clients, IBM Business Partners and suppliers is central to driving share gains in high-growth areas of the middleware marketplace and is a key source of competitive advantage for IBM. At the heart of this ecosystem is IBM’s relationship with approximately 100,000 Business Partners, including consultants, integrators, software vendors, value-added resellers and distributors.

The strategic alliances that IBM has struck with marketplace-leading independent software vendors (ISVs) are a key reason that its software brands have surged into leadership positions in key segments.

IBM’s efforts are innovative. It’s aggressively reaching out to new sources of innovation—academia, venture capital firms, local ISVs and even individual developers—to develop long-standing rela-tionships that influence its smarter software development strategy.


The IBM Business Partner ecosystem

• IBM has approximately 100,000 Business Partners, including ISVs, value-added resellers and systems integrators.

• Approximately 30 percent of total IBM revenue comes from IBM Business Partners.

• Midsize clients generally cannot be effectively served without Business Partners. IBM Business Partner relationships account for more than half of its small and midsize business practice.

Targeting the midmarketGrowth companies know how to reach out to underserved client sets and to reallocate resources in key market segments. One of the largest opportunities of this type is midmarket companies with 100 to 999 employees.

When IBM deals with midsize businesses, it doesn’t just take generic solutions that were built for large enterprises, scale them down and wrap them up with different colored bows. Midsize clients demand systems that have been tailored to address the needs of their specific industry and can be used out of the box because they often have limited IT departments and don’t do much of their own development work.

New market segments, new growthTo grow its business, IBM Software needs to gain new clients. This is true for growth market segments but is equally impor-tant in established economies. This means creating new oppor-tunities in the established market segments beyond the small number of large accounts IBM largely relies on today. It also means directing investments to emerging growth market seg-ments to help ensure that IBM has virtually unmatched capabili-ties and talented people available to clients practically anywhere in the world.

While the recent dialogue has been dominated by IBM’s suc-cess in the BRIC countries (Brazil, Russia, India, China), glo-balization has paved the way for new players in the global economic scene, which is why IBM Software is making strate-gic investments in places such as South Africa, Poland, Singa-pore and Vietnam. Its investment in mature market segments, along with investment in emerging geographies, is a winning combination for IBM Software.

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Growth through targeted acquisitionsEven with everything IBM Software brings to the table, it needs more. That’s why it has made more than 75 acquisitions since 2003, ranging from multibillion-dollar deals such as the acqui-sitions of Rational Software Corp. and Cognos Inc. to smaller, targeted purchases aimed at filling out its portfolio.

The model is not to buy a company just for the revenue it delivers but to drive its value and intellectual capital across IBM and integrate its capabilities into IBM’s go-to-market strategy. Each company IBM Software has acquired fills an important piece of the puzzle as it continues to evolve toward high-value innovation segments, such as analytics, business process man-agement and smarter commerce.

Acquisitions done right

In addition to focusing on high-value business, IBM makes a con-certed effort to acquire companies with whom it has a strong his-tory or relationship to help ensure a faster, successful integration.

The industry has seen many failed attempts to bring two compa-nies together. One reason IBM is successful is because it finds companies with whom it already has existing marketing, sales and development agreements; similar cultures; and joint clients.

Unleashing the labsAnother way IBM grows its business is by developing a wide range of emerging technologies that matter to clients. “Unleash the Labs” is a concerted effort to bring IBM research, scientific, engineering and developer talent closer to clients to work collab-oratively on all sorts of real-world business problems.

This goes far beyond lip service about listening to customers. IBM Software’s development strategy involves actively collabo-rating with clients, incorporating their knowledge and require-ments into the development process. Clients benefit from working directly with IBM’s technical community through quick access to expertise and resources and innovation that’s more tar-geted to their needs. Meanwhile, IBM developers get first-hand knowledge of clients’ technology, business processes and pain points and use their experiences to spur further innovation.

Today, IBM Software has some 4,000 lab services employees in this role, focusing on deep technical skills, proof of concepts and installation support as required by clients. Last year they participated in more than 10,000 engagements.

For more informationTo learn more about IBM software, please contact your IBM representative or IBM Business Partner, or visit: ibm.com/software

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