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IBM Reorganizes, Debuts New Version of WebSphere

By Gene J. Koprowski
Apr 27, 2004 2:16 PM PT

Sales growth was slower than expected -- and inflated by the depressed dollar overseas -- at IBM last quarter. So Big Blue is reorganizing a bit.

IBM Reorganizes, Debuts New Version of WebSphere

"IBM today is a company ready to focus more on opportunities than on threats," said IBM chairman and CEO Samuel J. Palmisano in a speech earlier today at the company's 2004 annual stockholders meeting in Providence, Rhode Island.

IBM has revamped much of its sales and services organizations around 12 vertical industries, and the company has released software with specific functions for the energy, consumer-products and government sectors.

WebSphere Software

Eyeing a niche that could be poised for faster growth, the company is debuting some new services software for its WebSphere line of technologies.

The move comes a bit earlier than some analysts expected but will be supported by an array of new hires and 35,000 field consultants schooled in Web software, Big Blue said.

Palmisano, in his speech to shareholders, detailed how the company has "seized leadership in the high value, innovation space" and identified the business gains that resulted from the initiative.

He also talked about the continuing success -- for both clients and the company -- of IBM's on-demand computing strategy.

Collaborative Process

IBM's CEO went on to describe the collaborative process that generated a new set of values for the company and to discuss how those values are playing key roles in the way IBM interacts with its clients and employees.

Today, consulting and IT-services contracts for these projects account for less than 1 percent of IBM's Global Services revenue, according to research by IDC.

However, these projects are worth as much as US$400,000 each.

Sales of WebSphere software rose 24 percent during the first quarter, and overall software sales increased nearly 11 percent to $3.5 billion.

But the 9 percent revenue growth, to $11.1 billion, in the company's Global Services unit was viewed as disappointing. Most of the gain came from a weak U.S. dollar.

The company believes the market for Web services for businesses is worth about $15 billion today and could total $200 billion by 2008.

Major Market

IBM announced an update to its WebSphere integration server, an application environment designed for software written with the business process execution language (BPEL), and said it will sell consulting services to help customers assess their IT environments and plan to use software written with Web-services specs.

The company also unveiled software and services aimed at the consumer-products, energy-and-utilities and government markets.

Additionally, IBM plans to release a new commerce version of its WebSphere software to help customers connect business processes more effectively with channels outside of their companies.

Multiple Web Services

The WebSphere software relies on the new BPEL, a specification for bringing together multiple Web services as part of an interaction between companies. BEA Systems, IBM and Microsoft a year ago signed on to the BPEL specification -- authored by SAP and Siebel Systems -- and provided it to the industry standards body Oasis for approval.

IBM's latest release of WebSphere lets developers visually construct workflows written with the specification. During the next two months, IBM plans to launch additional products and services for companies using Web services.

"We are enthusiastic about our prospects for 2004 and beyond. Part of the reason for this is that economic conditions are steadily improving in many nations, including the U.S. We intend to capitalize fully on the rebound," said Palmisano.

"But it is important for you to understand that our enthusiasm isn't because of a cyclical recovery alone," he added. "It's much more fundamental and long-lasting."


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