No. 18: Technology and service fuel IBM

Collaboration services key to Big Blue's growth

IBM Corp.

Top 100 revenue: $1.2 billion

2006 Revenue: $91.4 billion

2006 Net Earnings: $9.5 billion

2005 Revenue: $91.1 billion

2005 Net Earnings: $7.9 billion

"Collaboration services are core in our wheelhouse." Anne Altman

Rick Steele

IBM Corp. has been in the federal market since Big Blue was founded, but resting on those laurels is not an option.

To satisfy agencies' evolving and increasingly complex needs, the company continues to invest in innovations and resources, including shared services, reusable assets and the newly opened IBM Federal SOA Institute.

"We work hard to be recognized as a market leader," said Anne Altman, managing director of IBM's U.S. Federal Division. "I would hope agencies would say, 'I respect IBM because of its commitment to excellence, its support and delivery record, and the innovation they supply to solve business challenges.' "

Those abilities have placed IBM at No. 18 on the Top 100 list with more than $1.2 billion in federal prime contracting dollars.

During the past five to six years, IBM's federal division has experienced a compound growth rate of more than 20 percent. "In the past year, we've experienced a more challenging environment," Altman said. In 2007, however, "in the first quarter we grew faster than the overall corporation."

Driving many of the investments IBM has made to serve the federal government ? the corporation's largest market ? is the need of agencies to meet more sophisticated demands while operating under continuing budget resolutions. "We systematically harvest and reuse assets," Altman said, adding that the company also helps agencies seek opportunities for sharing services.

IBM has invested heavily in mastering open-standards technology and recently established the IBM Federal SOA Institute to focus on what service-oriented architecture means in the federal marketplace. The institute includes a laboratory to create, develop and demonstrate SOA methodologies and technologies and also cultivates SOA collaboration and innovation among IBM researchers, universities, and federal agencies. It also educates customers and partners.

IBM's strategy for meeting the needs of its federal customers, evenly divided between defense and civilian agencies, includes acquiring software companies. IBM wants to boost its capabilities in information on demand, SOA, and middleware integration and system management. Notable 2006 acquisitions include Internet Security Systems Inc., which provides security solutions to governments to protect against Internet threats, and MRO Software Inc., which addresses applications for managing industrial equipment and keeping tabs on physical assets.

"Our software business is now as large as our hardware business, and our services business is still more than half our overall business," Altman said.

Other IBM investments in the federal marketplace include 80 government-dedicated engineers and architects, and solution centers in Bethesda, Md., and McLean, Va., where prototypes and proofs of concept are developed, tested and deployed. In addition, IBM works with systems integrators and has established Competency Centers to bring IBM technology directly to its partners and users.

Innovation also is coming into play in a five-year, $58 million research and development effort awarded last year by the Energy Department to further enhance the capabilities of one of the fastest computers. IBM is working on the project with Lawrence Livermore and Argonne national laboratories to help solve scientific problems and safeguard the country's nuclear stockpile.

In 2006, IBM was selected by the Defense Information Systems Agency to provide network-centric collaboration services. The $17 million contract is a key part of DISA's Net-Centric Enterprise Services project.

"Collaboration services are core in our wheelhouse," Altman said. "IBM is the only company with the capabilities to do this."

Other major wins include a renewable, five-year Enterprise Acquisition Gateway for
Leading Edge Solutions contract from the Homeland Security Department to consolidate its information technology environment and improve efficiency and effectiveness.

The Veterans Affairs Department picked IBM to create a more standardized,
interoperable and secure IT environment. That contract is worth about $16 million through 2008.

One 2006 disappointment was losing out on the Air Force Expeditionary Combat Support System contract. On March 1, the Government Accountability Office rejected IBM's protest of the award of the $628 million contract to Computer Sciences Corp.
Common challenges IBM clients face include budget constraints, worker retirement, administration priorities and constituents' demand for improved service.

"In general, agencies are continually being stressed with how they can deliver against their missions rapidly, efficiently and more cost-effectively," Altman said, adding that they turn to contractors such as IBM to meet those demands.

Profiles of the Top 20 companies in the 2007 Top 100

No. 1: Lockheed Martin's reinvention

No. 2: With SBInet, Boeing IDS takes flight

No. 3: Northrop Grumman rises to new challenges

No. 4: KBR gets down to business

No. 5: IPO catapults SAIC into a new era

No. 6: Raytheon strives for balance

No. 7: General Dynamics in full sprint

No. 8: Fluor's ready in a pinch

No. 9: L-3 leadership stays the course

No. 10 EDS, Hard-learned lesson

No. 11 CSC, Experience that counts

No. 12: Battelle seeks new frontiers

No. 13: Booz Allen, Quality over quantity

No. 14: Bechtel telecom makes a splash

No. 15: For BAE, persistence pays off

No. 16: ITT makes a push into new markets

No. 17: Dell, Talking about evolution

No. 18: Technology and service fuel IBM

No. 19: Verizon caps off a busy year with a big win

No. 20: United Technologies gains altitude

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