Assessing IBM's Strategic Move to Social Business

31 Jan 2013

Strategy is heady stuff. A term rooted in the power struggles of nations, strategy is defined as methods for creating positions of advantage and for control of territory, resources and power. Chess would certainly be seen as a strategic game. Statesmanship, with occasional forays into war, is an expression of national strategy. But both of those can pale by comparison to the struggles for business advantage and success in the terrain of the globally networked world.

IBM has always been known for their strategic thinking and for employing that thinking in their business initiatives. We are watching another example of that right now, and the name of this strategic move is Social Business. It would have been very interesting to be able to watch the internal dialog as IBM made the decision to make a 100 percent commitment to their Social Business initiative. But since I wasn't in those meetings and don't have the e-mails and the OpenOffice presentations (IBMers don't use PowerPoint), we will have to imagine how this proceeded.

Looking back, you can imagine that IBM was not liking their situation in the business communications and UC&C market sectors. Even though IBM was the first to use the term UC&C, just being first to name the space wasn't putting them in a leadership position (a lesson that other "UC&C" or "Collaboration" companies may want to ponder).

IBM had bet that partnerships and alliances with the major PBX vendors would provide the access they needed to the UC&C market, i.e. that the PBX vendors would embrace IBM's capabilities in presence, instant messaging and collaborative technologies such as Domino e-mail, calendar, contacts, apps and IBM Quickr.

But we can now see that those partners had their own agendas. All of them brought their own presence and instant messaging to market. One in particular, Cisco, not only bought Jabber but even came after the collaborative technologies with the acquisitions of Post Path for e-mail, calendar and contacts and of WebEx and Five Across for entry into the collaborative workspace and social networking markets.

All of this was reflected in the Gartner Magic Quadrants (MQs) for Unified Communications where IBM has been stuck as a Challenger while Microsoft and Cisco battle for the top spot in the Leaders quadrant, and in the MQs for Corporate Telephony where IBM never even made it into the report, even while Microsoft was making headway against Avaya, Cisco and others.

Sure, Sametime was well-received by IBM's top accounts for presence and IM, but was most commonly adopted by accounts that were already committed to IBM's Lotus brand, i.e. were already using Domino servers and Notes clients.

Similarly, IBM continued to push for a position in the business productivity market with IBM OpenOffice, IBM Symphony and IBM Docs both on premise and in the cloud. But this, too, was a tough fight, as IBM battled the dominant position of Microsoft Office (Gartner notes a Microsoft Office market share >90%) and the disruptive position of Google Docs in the online market space.

It sure seems like a strategic reassessment was called for! It is not hard to imagine two themes in the discussion. First, what are IBM's clear strengths? Second, where can IBM find a "blue ocean" (with reference to the book, Blue Ocean Strategy, not IBM's corporate color)? From today's vantage point, it seems that IBM found answers to both questions.

The strengths list probably included:

Capabilities for really innovative computing research
Capabilities for in-depth business analytics against both transactions and databases
- Note the recent IBM Watson success in playing Jeopardy, for example
A decades-long record of introducing new business tools that reduce labor content and cost
Deep experience in and a powerful sales force for vertical industry solutions
A strong development platform (WebSphere), and many third-party developers
A Global Business Services organization that can tailor solutions to those industries
Direct access to the CEO and CIO in leading global companies - the Fortune 500 and beyond
A major hosting and cloud operation, perhaps one of the largest on the planet
A global footprint
Profitability and cash

The search for under-served but growing opportunities that point to blue ocean strategies may have surfaced a long list, but based on IBM's actions for the past three to four years, the list certainly included:

The growing use of social networks by consumers
The adoption of social networks as a way of life for a large and growing part of the society
- Especially among the new talent that enterprises would be recruiting
- Note that Facebook came from a Harvard student and Google from Stanford students
Clear evidence, such as in the BYOD movement, that people would bring their personal preferences, including this social lifestyle, into the business environment
The urgent need for businesses to reinvent themselves in this context
- Which clearly would be a joint initiative between the CEO, the CIO and HR
The high likelihood, as shown already by Google and others, that "Big Data" and Analytics would be foundational elements in the response to the social networking paradigm shifts.
The likelihood that Social Business could become a new way of working that would leverage the social media skills of young, lower-cost workers, from anywhere on the globe
The fact that a major global recession was raging and both weak and strong companies would be motivated to do desperate things to survive and to be ready to thrive on the rebound
The digitization of media, documents and communications independent of traditional products

The choice may not have been as clear as this when these imagined meetings were occurring, but the choice was certainly clear enough that the IBM executives responsible for this part of IBM, with the leadership of Mike Rhodin, who is now Sr. VP, Software Solutions, IBM, made a decision. The end result probably sounded something like this: "We're going all in for Social Business and Analytics."

Based on what we saw at IBM Connect 2013 in Orlando this week, the new strategy seems to be working for IBM. Over 60 percent of the Fortune 500 are already using IBM Connections, IBM's social business platform, to some extent. IBM Connections is actually an application running on IBM WebSphere, a well-recognized and widely used portal platform. The IBM Connections interface has openness with standards and flexibility to make it readily adaptable to the uniqueness of industry verticals, playing to IBM's strengths. IBM Connections offers a career path for the IT Teams in IBM's customer base including both those IT staff who are responsible now for Lotus Notes/Domino as an applications and workflow platform and those IT staff who are responsible for the WebSphere platform in support of all forms of internal, customer and partner portals for transactions and commerce.

And, IBM can claim leadership in this space. They are even using the phrase, both in IBM Connect slides and in an ad this week in the Wall Street Journal, that "Liking isn't leading" in which they point out that it's not enough just to be "liked" in the social space, leadership is the goal and IBM claims to have that. Now IBM can build on their Leaders quadrant positions in Gartner's Social Software for Business MQs (shared with Microsoft and Jive but with no enterprise telecom companies) and in Gartner's Enterprise Content Management MQs (shared with Microsoft and Oracle but with no enterprise telecom companies). Of course, IBM continues to have solid ratings in the Gartner MarketScope reports for E-mail (competing with Microsoft, Google and others, but no enterprise telephony players) and for Instant Messaging and Presence (again competing with Microsoft and Google). Three IP PBX players - Cisco, Avaya and Siemens - are also shown in the IM Market Scope, but with de minimis market share.

Meanwhile, the term Unified Communications and Collaboration was almost nowhere to be found at IBM Connect, except on one chart where it was positioned by the leader of the Sametime group as a 15-year old idea which is now replaced by the new model of Social Communications. In this new model, by the way, it would seem that phone calls and video calls seldom happen, since business information is shared by file postings, wikis, blogs and instant messaging. If and when a real-time session is needed, the implication is that the session will always be informed by the information and expertise of the Social Business communities. Even Alistair Rennie, the GM in charge of what was known only a year ago as the IBM Collaboration Group, now goes by the title, General Manager, Social Business, IBM.

IBM Sametime continues as a product suite, for sure, with growing adoption and continued development. The emphasis at IBM Connect 2013 was on video enhancements available in the second half of 2013 on computers, tablets, smartphones and browsers. There were no announcements to this effect, but it certainly seems like Sametime and Sametime Unified Telephony (SUT) will increasingly be positioned as the communications engine for IBM Social Business, working with IBM Connections.

Which brings me to one serious piece of advice to IBM: Don't overreact! You may feel that you want to put as much distance as possible from that not so satisfactory experience in UC&C, but it will be a mistake to forget that Social Business requires communication and that for all the power of texting, IM, posting, YouTube and more, it is pretty unlikely that humans - whether in their personal or their business lives - will entirely abandon real-time communications.

For sure, IBM, your communications components need not (even should not) be enterprise IP Telephony; in fact, it may be a blessing in disguise not to be ranked as a leader in the Gartner MQ for Corporate Telephony, but you still want to build on your experience with Sametime Unified Telephony (SUT). SUT taught you how to interoperate with almost every PBX and video system in the market as well as with the PSTN, rather than having to defend a pseudo-PBX of your own. Use that knowledge to enable the communications elements in the consumer commerce and the enterprise workflows that will be built out on the Social Business interfaces of IBM Connections and the workflow portals of WebSphere.

IBM Connect 2013 has certainly been a fascinating opportunity to observe, in progress, a significant strategic move by an important player in our UC&C (& Social Business) marketplace. It will sure be interesting to watch the story unfold.