IBM to CIOs: Who Needs You?
An IBM executive is quoted as saying Big Blue—in at least one instance, for now—is bypassing the IT department to sell technology directly to business users.
IBM Vice President Rod Smith tells Business Technology, a blog published at WSJ.com, that he's beginning to sell directlly to workers his "mashup" software that combines data from multiple systems. IBM used to go to IT departments, who would in turn go to business people. "Why can't I short circuit this and talk directly the business?" Smith asks. For a long time, the WSJ.com blog says, the reason was that the technology IBM was selling was too hard to use and so it wouldn't appeal to workers.
Of course, IBM is emulating the model Google employs to bypass the IT department to get workers to use its productivity and collaboration tools.
As I pointed out in my blog posted on Leap Day, Google Sites Challenges CIO's Authority, the ability for companies to offer applications over the Web will give business people the power to decide what tools they want to use regardless of the feelings of IT.
Smith stressed to the Journal the valuable role IT departments still play. "But," the blog says, "on a sliding scale where the traditional approach of setting up sales meetings with the head of IT is a '1' and the Google model is a "'10,' Smith says his group is now a '7.'"
Comments (21)
I do not think that this is a very smart move by IBM. I just purchased $1.3 million dollars of hardware from IBM, and that had nothing to do with the end user. Most end users do not know the difference between hardware vendors.
Posted by Jared Lormand | March 17, 2008 10:35 AM
Smart move if all your interested in is making money... However, if this trend catches on, than those who understand that there are problems with IT now, just wait...
Posted by Steve Naidamast | March 17, 2008 10:43 AM
This is an interesting approach to marketing software and it will probably result in a number of sales for IBM, Google and the other software / service vendors as they catch-up with the trend.
The challenge for the business and the traditional IT organizations is to ensure that the productivity improvements produced, at least theoretically, by these new tools and new approaches (SaaS, Web 2.0, etc.) is quantified.
More than anything, this looks like a repeat of the introduction of the PC into the corporation. The same kind of approach occurred. PC vendors (e.g. IBM) couldn't sell their hardware into the traditional, big iron, data centers so that opted to sell directly to the business. The business folks saw the potential value in the business applications and spent their money to but the hardware, the software and the technicians. As these pockets of productivity expanded in the organization, we eventually arrived at a point where consolidation and / or centralized management became a more efficient use of company resources.
Not sure I would count the CIO out, just yet. This appears to be another is a series of gorilla marketing efforts that introduce new technology to business.
Posted by Dennis Hill | March 17, 2008 11:02 AM
The challenge for IT vendors is that in many cases, vendors who focus on meeting the needs of a specific industry often understand the business requirements of that industry better than the IT organization does.
To the extent that a buying decision is being made by the business, vendors are feeling like they can no longer trust IT to adequately understand the business requirements and demonstrate to the business how the proposed solution meets them.
While IT should understand the business better than anyone, that is often not the case. Years of a technical focus has created a divide between the technology and the underlying business drivers. Until that changes, I would expect this trend to continue.
Posted by Charles Araujo | March 17, 2008 11:54 AM
Excellent points, Mr. Hill. I agree that this appears to be a guerilla warfare approach to marketing directly to the business. I think the approach works in accelerating the acceptance of the technology, but it does not take into account the support issues that will most likely arise with the new tools.
Once the users start using the new tools, they will invariably run into support issues. Users will most likely turn to their internal IT support resources who are not necessarily prepared to deal with the new issues. This type of approach wreaks havoc on IT organizations who try to maintain IT standards to minimize support costs.
I think this is good for IBM marketing and good for accelerating the acceptance of the technology, but bad for IT standards and supportability.
Posted by Jaime B. Sainz | March 17, 2008 12:11 PM
Well, mashups are designed to be used by the business, so why not sell to them? Answer: because IT eventually needs to be involved, especially if the mashup becomes strategic. But: the order in the channel path will probably shift from vendor-IT-business to vendor-business-IT. I can imagine some IT folks not even wanting to hear "mashup." Reminds me of the early PC skirmishes, and we know who won those--lot of early PCs were invoiced as "word processors."
Posted by Tom Lodahl | March 17, 2008 12:26 PM
Clearly the business customer who would make purchases directly without CIO involvement is making a statement about the value of the CIO to the P&L. When a company or agency CIO is not in the strategic planning loop, I can't fault a vendor selling directly to the business people. After all, this CIO is no more than the network guy.
I have to agree with Jaime Sainz, that such a strategy is a double-edged sword. Given the growing information assurance concerns, a more involved CIO may well be a long term benefit to the vendor as well as to the company or agency. It is interesting though that the services side of IBM seems to advocate a strong agency CIO role.
Posted by Len Sadauskas | March 17, 2008 1:02 PM
Why stop with IT services? Shouldn't the Sales Manager be able to acquire payment and cash management services from whomever he wants? What if R&D can get a better deal for office space and equipment from a local college? Any problem if they move out? If they show superior ROI, the CIO should be very happy.
Posted by Mike Tulig | March 17, 2008 1:25 PM
Suppliers bypassing the IT department is nothing new. This is a fairly standard selling technique. A bit like the Iraq War: quick initial results, but a long term headache remains afterward.
The problem is that vendor bypass tends to create Instant legacy solutions. These give apparently quick results, but hide the on-going support and integration costs. Vendors often have great solutions, but sometimes they do not map to the organization strategy and/or compliance rules.
Posted by Charles Smith | March 17, 2008 2:00 PM
One problem with this is that it assumes no need for coherent interaction between vendor-supplied solutions. Isn't that what SOA and SaaS are trying to address? I do think that IT and its people will change over time, but things will get more architected and strategic, not less. It's kind of like where industrial production was 100 years ago: even if we're going to buy our conveyors and motors from other vendors, we still need a plan to integrate them to our business.
Posted by Charles Hammell | March 17, 2008 2:35 PM
Just wait until the business users promise to latch up their IBM mashup software, Google maps, Microsoft Excel spreadsheet data and legacy IBM mainframe data in two days because it's "so easy." Watch the outsourcing contracts fly out (with the money of course).
Posted by Fred Gross | March 17, 2008 4:16 PM
It's critical for the CIO to have a place at the business table. IBM or any other vendor can sell whatever they'd like to a business but having the CIO (and I'm not talking IT manager here) at the business table should ensure the information-and-communications-technology-specific strategic requirements are addressed, just like any other facet of that strategy will be addressed by representatives of those business units. If the CIO is not present, ICT strategy will not get a look-in.
Posted by Pamela | March 17, 2008 5:19 PM
IBM has sold around the CIO for years. IBM has always maintained contact with the CIO's boss and the boss's boss.
Posted by Norm Noerper | March 17, 2008 6:39 PM
So what's new? IBM have been doing this for years. Their sales pitch, particularly when it comes to large spends, has always been to senior business management, who are at the end of the day controlling the corporate purse strings.
The difference is that at last one "beamer" has come out and admitted the IBM marketing strategy.
As most CIOs no longer see value in a total "IBM world," I don't blame IBM for trying this "innovative" approach but the fact remains that IBM's strategy has never changed.
Posted by Bob James | March 18, 2008 12:21 AM
IBM is selling hardware. So what has a CIO got anything to do with hardware, even the name says information. Companies that have CIOs looking after hardware purchases get what they deserve. Wonder if the CIO was actually able to reverse the purchase or was it the CEO who bypassed the CIO (toothless tiger?) only good to impose mandatory easy-to-remember 16 character passwords every 2 months.
Posted by Amin Adatia | March 18, 2008 11:34 AM
This is nothing new as IBM has always fostered their marketing and sales focus to the front office using every sales technique available to them. This has been a very effective over the history for IBM with certain organizational structures but the obvious dangers are very easy to spot with the risks of in house alienation very high.
CIO's closely aligned to the business needs of their enterprise will have no worries with this and those that are not, well weakness provides openings for your competition be it IBM, Perot Systems or EDS and the like.
Google is a totally different enterprise and for IBM to be so bold to compare themselves to it is a bit of a stretch. I would think with Google becoming the world's best at what they do fostering innovation over the highly structured and firm (rigid) corporate world. There is probably a much higher gap then the 10 to a 7 as stated.
Posted by Mike Hodges | March 18, 2008 1:22 PM
This is sooooo reminiscent of Big Bad Blue in the 60s and 70s, when the IBM "suit" sold to top management ("no one ever was fired for buying IBM").
It's hard enough to get the business-side people to focus on thinking through their processes and then communicating with IT's business analysts/subject matter experts.
Let both sides (business and IT) plan for using IT, especially the software, and then look to see which vendors have the best product for the application's requirements.
Posted by Marc Leopold | March 18, 2008 5:30 PM
Big Problem @ the top.
Bypassing and belittling the CIO position is not the target and/or "focus" of our American Initiative. Sneaking around the CIO to deal with the business guys is stupid division and interruption of integrity - and identity management. CIOs come in many makes and sizes these days -many are there simply because they were formerly network administrators - which CEOs and board members simply couldn't do without - and yet couldn't comprehend, absorb - or even take the time to understand in the vast worlds of network management complexities, connectivity problems, upgrades and version controls - let alone the many information explosions which were and have been taking place since the introduction of AI, multi-core, nano, etc.
When CIOs had to be responsible for facilities management, with EIS, SCADA and FIELDBUS as well as MIS for total firm comprehensive coverage [in Global situations], many old school CEOs fell by the road in comparison. They were outclassed by the transcendental "reach" of consciousness - which has prevailed in third-wave societies. The CIOs and CTOs did not go to school to "learn" how to do their jobs in this new age "re-configuration in real-time" with rapid prototyping - and artificial intelligence being used in management science. Indeed, there still are no "schools" which have any kind of adequate world class global program in this regard. Further, as far as IBM is concerned, it bears major responsibilities for lack of those advantages in dealing with its client base. Many now have MBAs, PhDs and "customized" degrees from "leading edge" universities, as well as vast military and global experience -yet, still there is not the "high-mindedness" of information sciences, Gnanam yoga, integral yoga, exploratory meditation, and Zen realization - which takes us beyond the "wake state" to the realm of pure knowing - Hi-tech and low-tech as well. As intelligence, knowledge, wisdom, speed, excellence pass into the non-human "worlds" [virtual and other],no one CEO, business manager, etc., can comprehend the allness of this ramification and enlightenment. Teamwork is essential for the many "gurus" - especially during the population explosion and other challenges we face these days.
The higher responsibility of the CIO/CTO "combo"/"hybrid" is to "go beyond" the management picture of the "now" in the current "wake state" and to "stay with" that level of "enlightenment" which provides the innovation, excitement, creativity and value-added engineering - which makes this "position" the "heart" of divine manifestation. It is for this reason that ISO 9000 Excellence Councils must be implemented -rather than the pyramid style "bossism" of the second wave - with its sneaky, funky "slaves" from an "out-of-date" IBM world of the past.
Posted by Frank Wright | March 18, 2008 7:09 PM
If IBM's software has an outstanding value proposition, then any good CIO would be more than willing to take it to the business with IBM. Of course the opposite is also true.
Does IBM allow vendors proposing software to them let the vendors sell directly to IBM business units without involving the IBM CIO?
Posted by R. Holman | March 18, 2008 10:22 PM
If a business go implement a system with a vendor directly, we'll start seeing increase support on IT in no time. All unforecast and unbudgeted support overhead that IT has to bear.
First, IT will be called on to inteface with existing legacy systems. Next will be enhancement to increase productivity and lastly 2 years down the road, there is a need to upgrade the system. Not forgetting, during that 2 years in production, IT will have the Audit dept knocking on their door to provide reports for compliance and SOX requirements.
A classic CSS scenario which weakens the organization instead of growth.
Posted by OC Chong | March 19, 2008 12:23 AM
IBM isn't belittling the CIO here. IBM is getting to people to help solve problems. That's the sales reps jobs.
CIOs are busy and frankly, to do their job properly means that most projects take months to research.
If a business unit goes to IT and asks if there is a tool available for a task and the answer is no and we've not researched any solutions, and have no plans to buy a product, then the business group should buy their own product with some guidance from IT. It may not be desirable to buy an IBM product in a total Oracle shop.
As I look at IT after more than 30 year of service, there is simply too much for any one person to know the details about. We need specialists for just about any area IT has under it's control -- processors, storage, databases, tools, phones, network, power, UPS, air conditioning, etc.
The only thing I would ask as a CIO, is to put into place a polling tool to find out if someone in the organization already has a tool, and if not, the business unit can suggest a tool to start the standard.
IBM has put a lot of dollars into their software unit. The products are typically open and pretty good. Someone is always better, but I can't live my life worrying about that.
Posted by Bill | March 20, 2008 2:54 PM