ZDNet presents an interview with Paul Horn, director of IBM Research about its $ 6 billion R&D budget.
While some of the research he describes in hardware like blade servers and power management reflect the traditions of "Big Blue", I was less impressed with what he calls "R&D" in software and services.
a) Microsoft R&D
"We have a very different corporate culture and corporate focus than Microsoft....Microsoft is sort of where we were at 15 or 20 years ago. They are
manically focused on how they will build their next generation of their
application suites and how they will maintain the Wintel duopoly and
how they will maintain Windows position."
CIOs pay IBM twice as much for software as they do SAP. They want IBM to be just as maniacal in its R&D as Microsoft or SAP. Most of IBM's software innovations have come from the wide range of acquisitions it has made, not from its labs.
b) Open source
"We have over a billion dollars a year of bottom line profit from
licensing intellectual property and yet we're embracing open source
because we know it's going to be completely disruptive."
Where are Open Source principles being aggressively applied in IBM's proprietary software stack and where are Open Source communities being leveraged to cannibalize their expensive consulting resources? IBM is THE "cathedral" to the "bazaar" that is Open Source.
c) Automation of services delivery
"...technology hasn't been applied to IT
services delivery. So there is more opportunity for automation, and the
surface is barely getting scratched."
Paul, we have been waiting for a while for this as I wrote in Systems Integration v/s Management Complexity
d) Process Improvement
"Just think of the gross domestic product of the world with all these
companies operating in some inefficient manner. If you could squeeze a
little inefficiency out by detailed analysis and modeling of how a
company operates--there are huge opportunities there."
IBM's $ 50 billion services unit is itself a huge opportunity for process efficiencies as I wrote in Frederick Taylor and Technology Services. For many clients re-engineering their IBM (and in fairness, their Accenture or EDS or TCS) contract is one of their biggest improvement opportunities given the inefficiencies in services today.
Paul seems like a sincere guy. But the old IBM salesman and the more recent PwC consultant in the blue suits now just outmuscle the engineer in the blue jeans. I know R&D spend does not directly correlate to innovation, but IBM now spends 4X on SG&A as it does on R&D. To me, the icon of US technology innovation is dying. And that is a reason to feel blue.
Update : Jeff Nolan posts about IBM's SOA hub in India. My comments there say I view it more as a marketing than an R&D investment - till I can see tangible labor productivity improvement.
Money is Money. Results are Results.
Toby Redshaw of Motorola, when asked at a conference earlier in year about the promise of SaaS and open source economics versus incumbent software models, said "Money is Money. The total cost matters." As they gain in momentum, SaaS and open source vendors will do well to remember buyers typically tend to not get religious about categories - they are more interested in how the categories look in the budget spreadsheets.
By the same token, courtesy of Sadagopan I saw this CIO magazine country offshoring assessment. I have been struck in recent months at how many clients are saying " We do not want to overlook the time zone and proximity advantage. We realize India or China may offer several advantages in cost and quality - but let's not ignore the "hassle factors". Let's at least consider nearshore and rural options." Like SaaS and Open Source, new country entrants have a nice opportunity, but cannot just bad mouth the incumbent leaders. Results are results.
August 02, 2006 in Enterprise Software (Open Source), Globalization and Technology, Industry Commentary, Outsourcing (other vendors) | Permalink | Comments (1) | TrackBack (0)