Up Front With: A Well-Kept Secret?

IBM's NetGen business strategy is no longer "A Well-Kept Secret" with Sam Albert on the case.

• 03/01/2001

Although IBM has been testing its mettle in the high-tech "new economy" business market with the launch of its Global Net Generation Business, more familiarly known as NetGen, it's now out to let the world know.

IBM predicts that Internet-based companies could spend approximately $100 billion on IT services by the close of 2003. In response, it has been rolling out a number of new initiatives to capitalize on this vast, emerging e-commerce market.

We already know that this massive global initiative aims to help Internet Service Providers, Web hosting companies, Web portals, Application Service Providers and some emerging dotcoms become established and profitable. To carry out that goal, we're seeing Big Blue create services that support expanded education, training, networking, b-to-b alliances and customer financing plans. And, we can see from the vast array of resources IBM has put behind its efforts that it intends to be taken seriously as a driving force behind this new economy.

Yet, the lifecycle of Internet-based products and services can be both tentative and fleeting, and that means that IBM - and, indeed, any large competitor in this space - needs to be able to innovate and provide solutions for its customers on a dime. Which begs the question: "IBM, what have you done for NetGen companies lately?"

For one thing, just this past October, IBM and Intel - two industry powerhouses - joined forces to grow the ASP market segment by channeling their talents and resources into an expanded IBM ASP Prime Program.

Peter O'Sullivan, Vice President of Marketing for IBM Global Net Generation Business, explains, "We can now expand our potential to ASP-enable Intel software platforms." And, he adds that IBM intends to grow its reach in the Asia Pacific (offices already exist in Tokyo, Seoul and Sydney), and to work with hundreds of additional software vendors in America and Europe.

O'Sullivan refers to the IBM/Intel collaboration as "leveraging two key competencies." (Let's not forget that other formidable duo: WinTel) I would tend to agree. The ASP Prime Program - an IBM flagship program that helps Internet Service Providers prepare their applications for the Web - can now support a much larger number who seek to transition to the ASP business model. How? By helping them develop Web-hosted applications on IBM's e-server xSeries built on the Intel architecture.

It appears to be another win-win for all involved. IBM, for one, retains its in-place skills, benefits from the new skills brought in by Intel, and penetrates more markets with a combined IBM/Intel sales force.

But, there is even more news unfolding relative to NetGen. Bernie Hoecker, Director of Sector Sales for IBM's Global Net Generation Business, says additional strategies are in place to expand NetGen's global reach. While IBM still, for the most part, organizes its divisions by product group and industry segment, new NetGen "city managers" are being placed in up to 40 key urban metropolises around the globe. Their job is to respond quickly to customer needs that cross product or divisional boundaries.

IBM calls these cities NetGen "epicenters," staffed with managers trained to respond to diverse customer needs that may include - for example, the securing of software, hardware, financing, servers and Web hosting partners - functions that likely required several managers to execute as recently as two years ago. "Seamless service" is a term I'm hearing them use more often.

With these epicenters in place, product and service delivery times are getting shorter. And, feedback, albeit quite recent, has been consistently positive. Hoecker now says IBM plans to extend epicenters into 50 or more major cities by the end of 2001.

Where it concerns emerging Net Generation enterprises, too often we hear of venture capitalists, customers, the media and the public, who expect - and even demand - that they succeed in realtime (a.k.a. "as soon as they leave the gate.")

But, I don't see IBM promising the delivery of overnight success to its customers, nor should it. Through its NetGen initiatives, as evidenced in part by its strategic partnership with Intel, IBM seems to be helping companies pursue a slower (perhaps?) but far more stable road to sustainable profits.

Already, IBM's NetGen programs incorporate some 90,000 business partners (Yes, that's 90 thousand!); customers worldwide exceed 1,000. As IBM's credibility in this market space continues to grow, expect to see those numbers climb yet higher. I truly believe the game is just beginning!