albert's analysis: Does IBM Practice What It Preaches?

IBM talks the e-business talk, but can it walk the e-business walk? We all know that IBM successfully packages, markets and sells e-business solutions through business partners, and directly to large end-users. But it's one thing for a vendor to embrace and sell a concept. It's another to see that company USE what it sells. So is IBM a bonafide player in its own right? Does IBM do e-business internally?

When Big Blue released its 1Q earnings report, the numbers indicated "yes." They showed outstanding revenue gains through e-business transactions, and projections are equally strong for the coming year.

In the first quarter alone, IBM earned $2.4 billion through online transactions, which averages out to $27 million in revenue daily. Think about it--$27 million per day. These are numbers any computer industry giant could be proud of.

Numbers alone tell only part of the story. It is also revealing that no more than two years ago, IBM created an Enterprise Web Management department, headed by Dick Anderson, general manager, and gave it an ambitious task to turn IBM into its own e-business success story. Anderson began this internal change by aligning his employees along seven functional e-business lines, which were e-commerce, e-procurement, e-care for customers, e-care for business partners, e-care for employees, e-care for influencers, and e-marketing communications.

Without going into each area in detail, these initiatives have the potential to revamp IBM's most basic processes. Through e-procurement, IBM can save millions by implementing Web applications (paperless) that integrate purchasing efforts with suppliers. Through e-care for customers, business partners, employees and key influencers, (such as consultants, analysts, shareholders and the press), IBM can support self-service user sessions, internal education and training, and easy access to worldwide products and marketing information.

IBM is also using the Internet for brand marketing, online sponsorships and advertising. (If you recall, the company is making good on its pledge to pull advertising from Web sites that don't publicly post a privacy policy. A strong argument for industry self-regulation.)

Yet perhaps the biggest success story may remain to be seen and told. The next year will tell a fuller story, but so far I'm encouraged. I see business partners excited about the ripple effect of IBM's success, and more than one has applauded Big Blue for, in essence, practicing what it preaches to external customers.

That's a good thing. It's one thing to talk the talk, as they pay homage publicly to e-business, and collect reams of money from e-business transactions. It's far more difficult to internalize the concept as a daily practice, as this new group is working hard to do. The seven e-commerce initiatives are not a static recipe. They're designed to infiltrate all of IBM's core business processes, to "gain speed, efficiency and business returns," according to Anderson. Is this a fancy way of saying IBM has come on board as well?

With all due respect to IBM, I'd say it doesn't make much sense to do any less, as the e-commerce revolution continues. Just in the month of December, IBM sold more than $1.2 billion of products and services, purchased $629 million in goods and services and handled more than one million technical support inquiries – all via the Internet.

In 1998, IBM's online revenues reached $3.3 billion. In 1Q 1999 the number is $2.4 billion, and the company projects full-year sales to run between $10 and $15 billion. Let's see if IBM can back up these lofty projections.

Regular visitors to IBM's home page will also see a page redesigned to include an enhanced Shop IBM e-commerce site. Since February of this year, sales on that site jumped 400 percent; traffic grew by 120 percent.

So can IBM afford not to heed its own public call? Probably not. If first quarter numbers are any indication, it's off to a roaring start.

We haven't reached the Millennium yet, but it looks like the shoemaker is wearing his own shoes, well at least the left one!

Sam Albert is president of Sam Albert Associates (Scarsdale, N.Y.), a consulting firm that specializes in developing strategic corporate relationships.