IBM 2014 Annual Report Download - page 30

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Management Discussion
International Business Machines Corporation and Subsidiary Companies
Global Services: is a critical component of the company’s strategy
of providing IT infrastructure and business insight and solutions to
clients. While solutions often include industry-leading IBM software
and systems, other suppliers’ products are also used if a client
solution requires it. Approximately 60percent of external Global
Services segment revenue is annuity based, coming primarily from
outsourcing and maintenance arrangements. The Global Services
backlog provides a solid revenue base entering each year. Within
Global Services, there are two reportable segments: Global Tech-
nology Services and Global Business Services.
Global Technology Services (GTS) primarily provides IT infra-
structure and business process services, creating business value
for clients through unique technology and IP integrated services
within its global delivery model. By leveraging insights and experi-
ence drawn from IBM’s global scale, skills and technology, with
applied innovation from IBM Research, clients gain access to
leading-edge, high-quality services with improved productivity,
flexibility, cost and outcomes.
GTS Capabilities
Strategic Outsourcing: delivers comprehensive IT outsourcing ser-
vices dedicated to transforming clients’ existing infrastructures
to consistently deliver improved quality, flexibility, risk manage-
ment and financial value. The company integrates long-standing
expertise in service management and technology with the ability
to exploit the power of new technologies from IBM systems and
software, such as cloud computing, analytics and virtualization,
to deliver high performance, innovation and improved ability to
achieve business objectives.
Global Process Services: included within Strategic Outsourcing,
delivers a range of offerings consisting of standardized through
transformational solutions including processing platforms and
business process outsourcing. These services deliver improved
business results to clients through the strategic change and/or
operation of the client’s business processes, applications and
infrastructure. Global Process Services will be integrated within
Global Business Services beginning in 2015.
Integrated Technology Services: delivers a portfolio of project-
based and managed services that enable clients to transform and
optimize their IT environments by driving efficiency, flexibility and
productivity, while reducing costs. The standardized portfolio is
built around key assets and patented software, and incorporates
best practices and proven methodologies that ensure predictive
quality of delivery, security and compliance.
Cloud: delivers a comprehensive set of cloud services ranging
from assisting clients with building their own private clouds, to
building customized dedicated managed clouds, to allowing cli-
ents to leverage standardized cloud infrastructure services from
the SoftLayer and Cloud Managed Services offerings, to creating
hybrid environments linking their private and public workloads
together. This portfolio of cloud offerings spans across the GTS
business lines.
Technology Support Services (Maintenance Services): delivers
a complete line of support services from product maintenance
through solution support to maintain and improve the availability
of clients’ IT infrastructures.
Global Business Services (GBS) has the mission to deliver pre-
dictable business outcomes to the company’s clients across two
primary business areas: Consulting and Systems Integration and
Application Management Services. These professional services
deliver business value and innovation to clients through solu-
tions which leverage industry and business process expertise.
The role of GBS is to drive initiatives that integrate IBM content
and solutions and drive the progress of the company’s strategic
imperatives. As clients transform themselves in response to market
trends like big data, social and mobile computing, GBS helps cli-
ents use these technologies to reinvent relationships with their
customers and realize new standards of efficacy and efficiency
in the internal processes, data and applications that they use to
run their businesses.
GBS Capabilities
Consulting and Systems Integration: delivering client value with
solutions in Strategy and Transformation, Application Innovation
Services, Enterprise Applications and Smarter Analytics. Consult-
ing is also focused on bringing to market client solutions that drive
Smarter Commerce, Cloud, Mobile and Social Business.
Application Management Services: delivers application manage-
ment, maintenance and support services for packaged software,
as well as custom and legacy applications. Value is delivered
through advanced capabilities in areas such as application test-
ing and modernization, cloud application services, the company’s
highly differentiated globally integrated capability model, industry
knowledge and the standardization and automation of applica-
tion management.
Software consists primarily of middleware and operating sys-
tems software. Middleware software enables clients to integrate
systems, processes and applications across a standard software
platform to improve their business results, solve critical prob-
lems and gain competitive advantage within their industries. IBM
middleware is designed on open standards, making it easier to
integrate disparate business applications, developed by different
methods and implemented at different times. Operating systems
are the software engines that run computers. Approximately
70percent of external Software segment revenue is annuity based,
coming from recurring license charges, software sold “as a ser-
vice” and ongoing post-contract support. The remaining revenue
relates to one-time charge (OTC) arrangements in which clients
pay one, up-front payment for a perpetual license. Typically, the
sale of OTC software includes one year of post-contract support.
Clients can also purchase ongoing post-contract support after
the first year, which includes unspecified product upgrades and
technical support.