Analytics is a theme that cannot have escaped anyone in IT over the last few years. As a mainframe and enterprise vendor, it would be easy to think that IBM already had all the tools it needed in this space but apparently not.
IBM’s Analytic Investment
At Analyst Insights 2012 in Madrid, IBM told the audience it has spent over US$16bn on acquisitions in the analytics space in order to create its product portfolio. This is not the only big number that they were throwing around. The IBM analytics business contains almost 9,000 consultants, 10,000 technical professionals and has already generated over 500 patents. Between 2010 and 2015, IBM expects at least US$6bn in growth from its analytics investments.
Do not think that with 9,000 consultants, this is an IBM only play. IBM is engaged with 27,000 partners in this area. Some will just sell the IBM solutions to their customers but IBM is also looking at collaborative and even OEM style engagements. These will take the form of IBM partners creating solutions and then IBM either promoting those solutions or, where there is significant benefit, OEM them and selling them under the IBM brand.
IBM also claims to be working with 5,000 universities to help develop the skillbase to support an analytic rich future. Those engagements are intended to ensure that analytics remains top of the IT agenda and ensure that IBM is seen as a key partner as graduates enter the workforce. One of the key shifts in IT has been the increased use of analytics from sales, marketing, IT support, fulfilment and inventory management.
Research amoung CIOs shows benefits are real
None of this is new in terms of the use of analytics but what has changed is the increased belief by CIOs that analytics represent a competitive edge that they need to have. Underpinning that belief are statements contained in research from research teams such as the Said Business School at Oxford University who say that those companies embracing analytics outperform competitors by 3.6x.
IBM is not the only vendor commissioning research, talking about the benefits and highlighting CIO engagement. Its competitors such as Teradata, Oracle, Microsoft, SAP, HP, QlikView and many other analytics vendors are making the same statements. There is no question that the appetite for analytics has grown consistently over the last decade. What is important here is that there is now a significant financial and performance gap between those who have embraced analytics and those who have not.
BI and Analtics key battlegrounds for all vendors
Despite its investments, IBM is under significant pressure from the competition across the entire breadth of its customer base. Big enterprises are just as likely to have solutions from IBM’s competitors such as Oracle, SAP, Teradata and Microsoft as they are IBM. The challenge for IBM is to prove that they can translate that established enterprise analytics business into the small and mid-size enterprise (SME) market.
This is no easy task for IBM. Since the mid 1990’s it has targeted the SME market almost exclusively through its partner channel. The success of IBM partners has been patchy and they have had to deal with aggressive market strategies from IBM competitors such as Microsoft, Salesforce and QlikView. Not only have these vendors been very successful in building their SME analytics businesses but many of IBMs partners are also Microsoft partners. Without an attractive offering from IBM, they have been all too willing to sell other vendors solutions in this market.
That, however, is beginning to change. Part of that change has come from the way IBM has encouraged some of its partners to resell IBM solutions under their own name including several white label offerings that are built on IBM’s SmartCloud.
Cloud opening up new opportunities
Another and much more recent change, has been the launch by IBM of cloud based BI as a Service (BIaaS). This has allowed other IBM partners to sell BIaaS and use the IBM brand to sell customers an enterprise level solution as a Pay as You Use solution. Not every SME will want to take on BI which can be complicated and take time to generate results.
For this market, IBM has announced Analytic Answers an Analytics as a Service (AaaS) solution. Built by IBM and specialist partners using the customers own data, this will be a very focused end-user experience that will ensure the SME does not have issue over skill shortages. One of the interesting parts of this solution is that the customer pays nothing until the service goes live. All the data integration, transformation and model building costs will be borne by IBM and its partners.
If IBM is to recapture a significant portion of the SME space, it will have to depend on both its channel partners and the deals it can do with other companies. BIaaS and Analytic Answers will be key to IBM’s success in this space with Analytic Answers an offering that is, at time of writing, unmatched by any of IBM’s competition.
Competition already has solutions in place
The competition, however, will not be easy to overcome. Microsoft has been extremely successful in bringing BI to the desktop. With Windows Azure, Microsoft has targeted BI as a key business process that it believes customers will want to move from their internal IT to the Azure platform. Like IBM, it has a cloud model that supports federated management and deployment making it possible for customers and partners to create their own BIaaS solutions.
The acquisition of Sun by Oracle to gain its own hardware platform and control over the Java stack it depends upon means that it is able to challenge IBM at every level of the enterprise space. At the same time, vendors such as Teradata with their BI appliances are also making large numbers of acquisitions and seeing their market share go.
This is a good time to be a customer in the analytics market. Everyone wants your business, everyone has a solution for you and there are some great opportunities from BIaaS to gain access to platforms that just 12 months ago would have been beyond any budgetary opportunity.
There is no doubt that analytics can improve the bottom line. The key for customers will be to take advantage of everything that is on offer and use the knowledge of the big analytics vendors to help them create competitive advantage for their business. As IBM spreads its skills throughout its partner base, now is a good time to take a long look at what is on offer.