Points of View

The strategy behind IBM GBS’ “Cognitive Enterprise” makes sense, but will it be enough to ensure success?

Mar 1, 2019 Saurabh Gupta

Musings from conversations at IBM Think 2019

 

While the rest of the world focused on IBM’s “Project Debater” AI at the recently concluded IBM Think in SFO, I spent almost all of my time with IBM GBS Leadership and its clients. To my defense, I just had one day at IBM Think, which is not enough to cover the massive event — mental note to self!

 

Our recent conversations with outsourcing clients and service providers suggest that the demand for third-party services is expanding, but the nature of demand is very different. Cost reduction alone no longer ensures success; driving top-line growth is equally important. Data explosion, digital disruption, and customer experience are the three most important drivers impacting business operations. Consequently, enterprises’ use of offshoring is slowing down considerably, at least from a mindshare perspective. Emerging technologies across RPA, AI, smart analytics, and blockchain are captivating the C-suites. Will IBM GBS succeed in this changing third-party services’ world order? Let’s evaluate.

 

IBM GBS leadership articulated a coherent go-to-market strategy, but is that enough?

 

IBM’s “Cognitive Enterprise” vision for its GBS business seems to have a coherent go-to-market strategy behind it. The “consult-to-operate” mantra is IBM’s version of the OneOffice; it tries to stitch together all of its siloed capabilities to singularly focus on client efficiency and efficacy. IBM is willing to go on a journey with clients with its design thinking-led “Cognitive Garages,” which help clients move from ideation to POC to pilots to production. But, to successfully gain the market traction that IBM GBS deserves, it needs to simplify the “how.” We’ve spoken to multiple IBM clients through the course of our research initiatives in 2018 and 2019, and the one common feedback is that IBM continues to be a complex organization to navigate. The complexity makes it hard for IBM to seamlessly deliver all that it has to offer and compete with smaller but more nimble and flexible competitors. We are keenly following IBM’s GBS in 2019 to see how its strategy translates into measurable market success.

 

Reliance on “platform” makes logical sense, but does it scare potential clients?

 

“Platform” is a much-used and abused term that almost everyone is obsessed with using to describe their offerings these days. It’s right up there with “digital,” which people often use without a common understanding of its meaning. IBM is also on the “platform” bandwagon. To its credit,it defines “platform” as a combination of data, people, processes, and technology with the aim to scale-up intelligent automation. Still,the word “platform” often connotes a BHAG (big, hairy, and audacious goal) for clients, who immediately get worried about their existing legacy investments and sunk costs. We’ve seen far too many clients get scared of the “platform” discussion and instead pursue a phased approach with bite-sized steps. Also, IBM’s platform appears very similar to Accenture’s recently launched “SynOps,” which is tangible, and clients can touch and feel it to understand what it really is. 

 

It has the deepest technology investments, but they often lack business context (except enterprise blockchain)

 

IBM is a clear market leader in making investment-backed bets on technologies that will define the future — exemplified by Watson (AI), blockchain, and now quantum. However, it often struggles to translate tech to business outcomes. Most enterprises perceive it as a technology powerhouse — but one that lacks the business translation and context to apply emerging technologies successfully, which is where IBM lags Accenture, especially for the GBS business. The lack of clear business use cases has been most evident in the go-to-market for Watson where other services providers (such as TCS) have been able to translate Watson’s capabilities into tangible business use cases better. However, it seems the IBM GBS team is learning from its past mistakes considering the superlative early mover advantage IBM has had with its go-to-market for enterprise blockchain (IBM was rated the #1 service provider on enterprise blockchain services in our recent Top 10 report). Quantum is too far out to discuss credible business use-cases, but for now it is super cool (and I mean it literally as quantum computers need to run at near absolute zero temperatures or -459 degrees Fahrenheit) to look at one!  

 

IBM has strong digital change management capabilities, but practically no one knows about them

 

We firmly believe that success will not be a function of digital adoption, but digital change management. And we were pleasantly surprised by the nifty change management capabilities that IBM has to offer. IBM’s Digital Change practice provides a unique blend of the latest technology, strategy consulting, and creative services with practical industry-oriented and personalized solutions. We rated IBM #2 in the recently released Top 10 report on digital change management. However, few clients have a robust understanding of its digital change offerings. IBM continues to be more internally focused and marketing shy in sharing success stories, which prevents these capabilities from being known as powerfully as they should.

 

The Bottom Line: IBM’s GBS strategy brings forth the most robust suite of digital capabilities (“what”) as well as robust execution (“how”), but it still lacks a clear and concise articulation of the business problem (“why”).

 

IBM needs an articulated problem and a defined desired outcome for its technology investments. It requires a solution roadmap that wisely picks and chooses the appropriate value creation levers. IBM GBS has the right ingredients to become the leader for the next generation of digital operations, but whether it will succeed or not depends on how well it executes its strategy. And we will be watching… closely!