IBM's New Networking World Order

Big Blue is targeting each of its 12 industry segments to form an electronic commerce network

IBM Corp. wants to become the information broker for the world. The Armonk, N.Y.-based company's new strategy involves targeting certain industry sectors, forming alliances with the leaders and ultimately, bringing network computing to all.

Looking at three recent announcements in the retail manufacturing, banking and education worlds, it is clear IBM is pursuing a segmented but integrated model based on its 12 designated "industry solution" units.

Next up are expected to be alliances in IBM's other defined areas, such as insurance, health care and travel.

"It's definitely a pattern," said Lynn Berg, an analyst with the Gartner Group, Stamford, Conn. "The idea is to place themselves as neutral third-party content hosters."

IBM chief executive Lou Gerstner said there is more pressure than ever on corporations to understand and use information technology.

"Every company needs to become an information company as well as a product company," Gerstner said at the Gartner Group's annual information technology conference in Orlando earlier this month.

And by becoming the pre-eminent technology provider for the most influential industries, IBM is creating an electronic commerce network of its own. "It's like a root system that's forming," Berg said.

In a speech appropriately titled "Big Blue Listens to What's on the Minds of the World's CEOs and You," Gerstner walked back and forth in front of 6,000 attendees promoting the IBM way of thinking.

IBM itself has moved more toward the model it is pushing for other industries. "We have turned the entire company... to focus on delivering integrated solutions and not raw technology," said Gerstner.

A common theme throughout the partnerships is the businesses that team with IBM will be able to maintain their own brand names while making use of IBM's technology and name.

The most recent alliance was formed Oct. 10 among IBM and a slew of higher education institutions. IBM Global Campus will use online networks and the Internet to help students get information about colleges, enroll in courses and interact with other students and faculty.

More than 30 colleges and universities signed on to the global campus alliance, including Rutgers, the State University of New Jersey, Boston College and the University of North Carolina, Chapel Hill.

Some examples of how the system will be used are: collaborative teaching through Lotus Notes, ThinkPad University -- which offers mobile computing through laptops -- and online school catalogs.

The first alliance was formed in August with IBM and two retail shopping merchants: Express, a subsidiary of The Limited Inc., and Robert Waxman Camera.

The two stores are the first to do business online through IBM's Internet Mall, called World Avenue, which is expected to attract other manufacturers.

"The most important factor in selling anything is the location, even on the Internet," said Ross Leher, president of Robert Waxman Camera.

The retail system includes sophisticated features, such as the ability to show a customer accessories or other items that match or complement something he has already chosen; intelligent agents for recording consumers' buying habits; data mining tools for tracking market trends; and secure electronic transactions technology for credit card payments.

The next industry IBM targeted was the ever-important banking industry, what many see as the glue of electronic commerce. In September, IBM formed a new company, Integrion Financial Network, with 15 large banks in the United States and Canada, including NationsBank and Bank of America.

Beginning in 1997, Integrion will offer interactive banking and electronic commerce service through online service providers, telephone companies and the Internet.

At the announcement of Integrion, Gerstner explained that IBM has no intention of becoming a content provider, but instead is offering technology.

Each of these alliances also serve as a shot in the arm for the computer industry as a whole. "This will create an explosion of opportunity for hardware and software companies," said Gerstner in announcing Integrion.

More than anything, however, it represents an enormous opportunity for IBM's Global Network, which will run each of these projects.

"It's really diabolical," said Berg about the plan. "No one else can exert this influence."

Tracking IBM's Global Network's Reach Through its 12 Industry Solutions Units

So Far....

  • Manufacturing ( August alliance with two retail companies for World Avenue Internet Mall)

  • Finance (September partnership with 15 banks to form Integrion Financial Network)

  • Education (October formation of IBM Global Campus with 30 colleges and universities)

What's Next?....

Telecommunications/Media - Distribution - Government - Health - Insurance - Process Petroleum - Travel And Transportation - Utilities

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