BUSINESSWEEK ONLINE : DECEMBER 13, 1999 ISSUE
BUSINESS WEEK E.BIZ -- COVER STORY

IBM's e-Business Strategy


E-IBM

The best way to learn is by doing. So IBM is becoming an e-business. By moving purchasing onto the Web, the company expects to save $240 million on the $11 billion in goods and services it will buy this year. Similar moves to put customer support online will save another $750 million.

COMPETITIVE LANDSCAPE:
The field is split here. IBM is clearly ahead of rivals such as HP, Sun and Compaq. Others such as Dell, Cisco and Intel have been on Internet time longer than IBM.


E-SERVICES

IBM has 130,000 consultants and an e-service business expected to hit $3 billion this year. IBM has handled 18,000 jobs over the last three years-- from Web-site design to hooking older corporate databases into new online systems--for companies such as DHL and Payless ShoeSource.

COMPETITIVE LANDSCAPE:
The giants are plunging ahead--Sun, HP, Intel and EDS--along with upstarts Scient and Lante. Still, IBM has the advantage with corporate databases that need to be hooked into online systems.


E-ENGINEERING

This is where IBM sees e-business heading. Companies will use the Net to cut costs, turning for help on how to do it. United Technologies Corp. has already turned over procurement via the Web to IBM.

COMPETITIVE LANDSCAPE:
Not the usual crowd. Companies with specific skills such as Federal Express will get into logistics, while Andersen Consulting and other Big 4 consultants will help e-engineer business tasks.


PRODUCTS

IBM pumps half of its $5 billion R&D budget into Internet-related areas. Gerstner isn't stopping there: He has created the Institute for Advanced Commerce, a think tank that includes outside consultants and academics as well as 50 IBM scientists--all working on electronic commerce. Initial focus: Auction software.

COMPETITIVE LANDSCAPE:
Growing your own takes time. Meanwhile, rivals Microsoft, Cisco and Intel are using their sky-high stock valuations to buy what they need.


RESEARCH

IBM offers everything from laptop PCs to mainframes that plug easily into the Net. Its software, such as MQ Series, is becoming the glue that allows machines from different makers to pass messages over the Net. Other programs such as Net.Commerce handle huge amounts of e-commerce transactions.

COMPETITIVE LANDSCAPE:
IBM continues to stumble in PCs and servers, as pesky Dell Computer and Sun Microsystems roar ahead. In software, Microsoft looms, while upstarts such as BroadVision have been knocking Big Blue out of some key accounts, such as Ford and Sears.


E-OUTSOURCING

Don't want to run your Web business? Let IBM host it for you at one of their mega data centers. IBM does the works. At Lego, for example, it runs everything, including contracting the Danish post office to handle shipping.

COMPETITIVE LANDSCAPE:
EDS is big, but it has been slow to move its business to the Net. New outsourcing players like Intel and Exodus are piling in. But IBM remains in the lead.



_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

BACK TO TOP


RELATED ITEMS
Inside IBM: Internet Business Machines

TABLE: IBM's e-Business Strategy

TABLE: How IBM Uses the Net

Gerstner on IBM and the Internet

ONLINE ORIGINAL: IBM Sure Is One Undervalued Net Stock



INTERACT
E-Mail to Business Week Online

 
Copyright 1999, Bloomberg L.P.
Terms of Use   Privacy Policy