An article in the Wall Street Journal last Thursday sums up why IBM is focusing on helping create smarter cities, smarter government, and smarter industries. The article highlights the strategic shift brought on by the acquisition of PriceWaterhouseCoopers Consulting and the selling of the PC business, and also ties in the recent acquisition of SPSS.
I'd recommend giving the whole article a read, but below are the pieces I found of particular interest (emphasis mine):
Samuel Palmisano has been busy. The previously low-profile chief executive of International Business Machines Corp. has crisscrossed the globe in recent months, talking to government leaders about promoting the use of technology to improve everything from roads and water systems to the environment and health care.
Government spending on such programs can stimulate economic development, argues Mr. Palmisano. And it has another benefit: boosting IBM's bottom line.
No longer a slow-footed behemoth, IBM is proving nimble at finding new opportunities far afield of corporate computer centers. On Tuesday it expanded its portfolio by agreeing to pay $1.2 billion to buy SPSS Inc., whose data-mining software, among other things, is used by Atlanta police to predict which parolee is likely to become violent.
IBM's recent success is the result of a strategic turn in which the company is downplaying hardware, expanding software and focusing its giant services business on advising government agencies and companies on their fundamental operations.
Mr. Palmisano has become an informal technology adviser to White House, frequently exchanging phone calls with President Barack Obama's chief of staff, Rahm Emanuel, according to people familiar with the matter. Last month, Mr. Palmisano hosted a "smarter cities" gathering in Berlin that drew officials from 400 cities, including Madrid, Stockholm and Helsinki.
"There has been a very significant change at IBM," says Harvard Business School professor Rosabeth Moss Kanter, who features the company among a handful of others in her upcoming book "SuperCorp."
Rather than merely making sales calls to push computers, Ms. Kanter says, IBM is showing customers how to revamp business functions. IBM "is back," she says.
In addition to the usage of SPSS software by the Atlanta police mentioned above, the article highlighted a few other IBM customers and the impact they are seeing:
StatoilHydro ASA, the Norwegian oil giant, hired IBM to build a €15 million ($21 million) system that uses readings of well-hole pressure to fine-tune the pumping rate of deep-sea drilling platforms. Statoil, says the program is expected to increase recovery from offshore oilfields by 5%, or $1.5 billion a year.
Such consulting transactions sometimes lead to larger deals. Statoil later gave IBM a five-year, €70 million contract to support software and desktop computers.
....Now those consultants are helping customers such as Geisinger Health Systems, a Danville, Pa.-based medical group that covers 2.3 million people. By analyzing patient data collected from financial records, doctors' offices, hospitals and drug companies, IBM helped Geisinger develop a system that can predict heart attacks based on patients' frequency of doctor visits and the type of lab tests ordered for them.
"With greater than 80% accuracy we can tell a given patient is likely to develop heart failure two years from now," and propose treatment or lifestyle changes, says Ron Paulus, Geisinger's executive vice president.
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