IBM 2011 Annual Report Download - page 31

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29
Management Discussion
International Business Machines Corporation and Subsidiary Companies
Total Global Services backlog includes GTS Outsourcing, ITS, GBS
Outsourcing, Consulting and Systems Integration and Maintenance.
Outsourcing backlog includes GTS Outsourcing and GBS Outsourcing.
Total backlog is intended to be a statement of overall work under
contract and therefore does include Maintenance. Backlog estimates
are subject to change and are affected by several factors, including
terminations, changes in the scope of contracts, periodic revalidations,
adjustments for revenue not materialized and adjustments for currency.
Global Services signings are management’s initial estimate of the
value of a client’s commitment under a Global Services contract. There
are no third-party standards or requirements governing the calculation
of signings. The calculation used by management involves estimates
and judgments to gauge the extent of a client’s commitment, including
the type and duration of the agreement, and the presence of termination
charges or wind-down costs.
Signings include GTS Outsourcing, ITS, GBS Outsourcing and
Consulting and Systems Integration contracts. Contract extensions
and increases in scope are treated as signings only to the extent of
the incremental new value. Maintenance is not included in signings
as maintenance contracts tend to be more steady state, where
revenues equal renewals.
Contract portfolios purchased in an acquisition are treated as
positive backlog adjustments provided those contracts meet the
company’s requirements for initial signings. A new signing will be
recognized if a new services agreement is signed incidental or
coincidental to an acquisition or divestiture.
($ in millions)
For the year ended December 31: 2011 2010*
Yr.-to-Yr.
Percent
Change
Yr.-to-Yr.
Percent Change
Adjusted for
Currency
Total signings $57,435 $57,696 (0.5)% (4.0)%
Outsourcing signings $29,251 $31,268 (6.5)% (9.7)%
Transactional signings 28,184 26,428 6.6 2.6
* Reclassified to conform with 2011 presentation.
Software
($ in millions)
For the year ended December 31: 2011 2010*
Yr.-to-Yr.
Percent
Change
Yr.-to-Yr.
Percent Change
Adjusted for
Currency
Software external revenue $24,944 $22,485 10.9%8.0%
Middleware $20,650 $18,445 12.0%9.0%
Key Branded Middleware 16,051 13,879 15.6 12.7
WebSphere Family 40.5 37.4
Information Management 12.5 9.6
Lotus 3.8 0.2
Tivoli 10.2 7.4
Rational 4.9 1.8
Other middleware 4,600 4,565 0.8 (1.9)
Operating systems 2,479 2,282 8.6 5.6
Other 1,814 1,758 3.2 0.4
* Reclassified to conform with 2011 presentation.
($ in billions)
At December 31: 2011 2010
Yr.-to-Yr.
Change
Yr.-to-Yr.
Change
Adjusted for
Currency
Backlog
Total backlog $140.6 $142.4 $(1.7) $ 0.0
Outsourcing backlog 92.5 96.5 (4.0) (2.8)