IBM 2014 Annual Report Download - page 27

26 Management Discussion
International Business Machines Corporation and Subsidiary Companies
DESCRIPTION OF BUSINESS
Please refer to IBM’s Annual Report on Form 10-K filed with the
SEC on February24, 2015 for a more detailed version of this Des-
cription of Business, especially Item 1A. entitled “Risk Factors.”
The company creates value for clients through integrated solu-
tions and products that leverage: data, information technology,
deep expertise in industries and business processes, and a broad
ecosystem of partners and alliances. IBM solutions typically create
value by enabling new capabilities for clients that transform their
businesses and help them engage with their customers and
employees in new ways. These solutions draw from an industry-
leading portfolio of consulting and IT implementation services,
cloud and cognitive offerings, and enterprise systems and software;
all bolstered by one of the world’s leading research organizations.
Strategy
In a time of unprecedented technological change, IBM’s strategy
remains one of innovation and a constant drive to deliver higher
value for our clients.
Key tenets of the company’s strategy include:
1. Our strategic imperatives: Data, cloud and engagement are
fundamentally transforming the IT industry, the company and our
clients’ businesses. The tremendous growth of data is redefin-
ing today’s competitive advantage. With data as the world’s new
“natural resource,” it is fundamentally transforming industries and
professions. Yet as with all natural resources, only by refining data
into actionable insights through analytics does it become valuable
to the customer’s business. Cloud computing—the delivery of IT
and business processes as digital services—offers opportunities
for enterprises to reinvent not just their operations, but their entire
business model and approaches to innovation. Engagement,
including mobile and social technologies, is profoundly changing
how people interact and the way work gets done. Finally, these
transformations are all supported and protected by high levels
of security to ensure privacy and integrity of action. These three
imperatives—data, cloud and engagement—are the foundation of
IBM’s strategy today and its vision for the future.
2. Our unique strength: Our ability to connect new technologies
with the systems currently running today’s enterprises is a key
value-added service and market differentiator for IBM. Clients
today want more than just adopting new technologies—they want
IBM to fuse new solutions with their existing systems. This “bring-
ing together” is what the company calls Hybrid Cloud, and IBM is
uniquely able to bring this value to its clients.
3. Our migration to higher levels of business value: Clients look
to IBM to solve their business challenges and opportunities rather
than just providing technology. Our evolution over decades—from
hardware to software and services, and increasingly to full-fledged
business solutions—reflects this critical shift in meeting client
needs. IBM brings together the full breadth of its integrated offer-
ings and industry expertise to be essential to its clients and deliver
higher value.
1. Our Strategic Imperatives
Data: transforming industries and professions
Fueled by the proliferation of mobile devices, social media and the
infusion of technology into virtually all aspects of business, data
is the world’s new natural resource. Without powerful analytics,
however, it is just data.
Across all industries, enterprises are working hard to harvest
new insights from the explosion of available data—the new basis
for today’s competitive advantage. The advantage for enterprises
increases as they apply more sophisticated approaches to refin-
ing their data, turning them into insights that are actionable and
add value. The advent of cognitive computing, which mirrors the
same cognitive process that people use every day to understand
the world around them, is profoundly redefining the relation-
ship between humans and information. Cognitive systems learn,
navigate the language and protocols of expert communities, and
communicate in natural language.
IBM has invested more than $26 billion, including over $17
billion on more than 30 acquisitions, to build its capabilities in
big data and analytics. One third of IBM Research’s spending is
focused on data, analytics and cognitive computing.
In 2014, IBM reported nearly $17 billion in business analyt-
ics revenue, and the company established the Watson Group
to develop and commercialize cognitive computing innovations.
The company has committed a $1 billion investment to Watson,
including $100 million dedicated to venture investments to support
start-ups building cognitive apps through the Watson Developer
Zone on Bluemix. The company is also making Watson more
widely available through the Watson Ecosystem, which has grown
to more than 160 partners with nearly 4,000 future partners seek-
ing to build a new generation of cognitive apps. IBM also launched
Watson Analytics, a breakthrough natural language-based cogni-
tive service that provides instant access to powerful predictive
and visual analytic tools for businesses. Through Watson Analyt-
ics, IBM is extending analytics to the end user, not just the data
scientist. IBM’s goal is to give every business professional access
to advanced cognitive-powered predictive analytics, coupled with
new forms of data.
In addition in 2014, the company made bold moves by estab-
lishing key alliances. In the data space, the company announced a
ground-breaking partnership with Twitter to incorporate Twitter’s
massive data streams into IBM’s cloud-based analytics, customer
engagement platforms and consulting services. Enterprises will
now be able to understand customer sentiment more deeply and
anticipate sudden shifts in moods and markets by tapping into the
Twitter data in powerful new ways. This capability will also allow
clients to integrate Twitter data into their own cloud services and
mobile apps.