IBM plans industry-focused software rejig

IBM is reorganising its $13.1bn software business, focusing its sales and development efforts around a dozen vertical industries.

IBM is reorganising its $13.1bn software business, focusing its sales and development efforts around a dozen vertical industries.

The company will retrain its staff so that more than half of its 13,000 worldwide sales employees focus on industry-specific product sets. It will also shift its marketing and development efforts away from a focus on IBM's five software brands and toward cross-brand application packages tailored for specialised industries, according to spokesman John Reilly.

The changes will come throughout the next year, and will affect all aspects of IBM's software group's operations, including IBM's partnership programmes.

Next month IBM will announce a selection of middleware packages for industries including insurance, banking, financial services, automotive, retail, consumer packaged goods, utilities, telecommunications, electronics, health care, government and life sciences.

IBM cited its forthcoming insurance industry offering as an example of its new approach. The bundle will be an integrated package of applications including WebSphere for managing claims processing and workflow, DB2 Information Integrator for aggregating claims information from disparate databases, and Lotus Notes as a front end for insurance agents.

Packages will also be unveiled which will help retail companies manage store operations, marketing and inventory, and an automotive industry bundle with support for dealer collaboration and build-to-order manufacturing.

IBM began targeting vertical industries in mid-2003 with packages built around its WebSphere Business Integration software. It has also built industry bundles as part of a push to increase its sales to small and midsized businesses, an initiative that relies heavily on IBM's channel resellers and relationships with ISVs (independent software vendors).

Several years after its rocky acquisition of Lotus Development, IBM decided to stop selling applications and focus instead on providing middleware, hardware and services to support applications developed by its partners, which include top business applications suppliers such as Siebel Systems and SAP, along with a host of smaller ISVs.

In April, IBM created ISV Advantage, a support programme for ISVs which specialise in serving midmarket customers and are willing to commit to using IBM technology in a significant portion of their customer projects.

As part of its vertically focused shift, IBM will adjust that programme to encourage participating ISVs to couple their applications with IBM's industry-specific middleware products.

IBM will co-market third-party applications optimised for use with its hardware and software, particularly software in its midmarket-aimed Express portfolio of scaled-down applications.

IBM's software group posted revenue of $13.1bn last year, and brought in $10.1bn in the first nine months of 2003.

The division includes five software portfolios, IBM's WebSphere application server and integration software, DB2 database, Rational development tools, Tivoli management software and Lotus collaboration and information management applications.

Stacey Cowley writes for IDG News Service

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