FACULTY OF SCIENCE AND TECHNOLOGY.

DEAKIN UNIVERSITY.

UNIT CODE: SIT 794

Name: MOHAMMED ZAHEERUDDIN
Student ID: 213380999
ASSIGNMENT 1
DUE DATE: 26-08-2013
Declaration,
I certify that the attached work is entirely my own. I
also certify that it has not been submitted for
assessment in any other unit or course.
I agree that Deakin University may make and retain
copies of this work for the purposes of marking and
review, and may submit this work to an external
plagiarism detection service who may retain a copy
for future plagiarism detection but will not release it
or use it for any other purpose.
Date: 26th August 2013.

ANALYSING AND
UNDERSTANDING THE NATURE
OF SERVICES & SERVICE
STRATEGY EMPLOYED BY
INTERNATIONAL BUSINESS
MACHINES CORPORTATION
(IBM)

1. SERVICE MANAGEMENT
Service management is the activity done to monitor as well as optimize a service to ensure that it
meets the outcome which a customer values, and the stakeholder promises to provide. [1]

2. IT SERVICE MANAGEMENT
IT Service management is nothing but implementing and managing the quality IT services. In todays
business environment which prioritizes speed and efficiency, having a strong IT strategy is important.
Therefore, a lot of companies offer clients in achieving these qualities by providing various services
such as system integration, testing, application development and solutions along with management
services.[1]

3. Analysing IBM
International Business Machines Corporation, or IBM, is an American multinational technology and
consulting corporation founded in 1910, with headquarters in Armonk, New York, United States. IBM
deals in computer related machinery or technology which includes both software and hardware. IBM
offers a vast array of products and services for almost all business needs worldwide. Besides the
products, the company also offers solutions and services. IBM operates in five segments: Global
Technology Services, Global Business Services, Software, Systems and Technology, and Global
Financing. The company was formerly known as Computing-Tabulating-Recording Co. and changed
its name to International Business Machines Corporation in 1924. [2]
IBM began its Australian operations in 1932 and now employs around 10,000 people across the
country. Low Inflation, competitive salaries, transparent and efficient regulatory environment were the
compelling reasons for IBM to do business in Australia. IBM Australia reported revenues of A$ 3.7
billion in 2004, ranking it as one of the top 50 companies in the world. IBM was reassured by the
countrys stable legal and political environment. Australias welcoming, open and direct approach to
foreign direct investment was also important in IBMs success down under. According to IBMs
report, the availability of faster broadband in Australia has the potential to generate $1 trillion in
revenue for the country by 2050.

4. IBMs Business Model: Continuous Transformation

In an industry characterized by a relentless cycle of innovation and commoditization, one model for
success is that of the commodity player who wins through low price, efficiency and economies of
scale. But, IBMs choice and model is the opposite. IBMs choice is the path of innovation,
reinvention and shift to higher value.
IBMs business model is built to support two principal goals. Firstly, helping the clients in becoming
more innovative and competitive through business insights and other IT solutions. And secondly, IBM

provides long term value to its shareholders. IBM always looks to remix to a higher value. They remix
their research and development. According to IBMs statistics, twenty years ago, 70 percent of their
researchers were working in material science, hardware and related technologies, even the 10 percent
working in software were only focussed on compilers and operating systems. But today, 60 percent of
the researchers are in the fields that support IBMs key growth initiatives. For example, there are 400
mathematicians who develop algorithms for business analytics. Also, there are diverse group of
specialists that include medical doctors, computational, biologists and weather-climate forecasters.
IBM also acquires new capabilities. IBM practices a disciplined approach while fulfilling any new
strategies or transformations. For IBM, moving on to the future doesnt just means to invent
something new. Proper decisions are needed about when to move on, IBM divested about $15 billion
of their annual revenue from the businesses that no longer fit in their strategy. IBM would have been a
much larger company today with lower margins if they had not divested their non-strategic assets.
And as a result, it would had been less essential to their clients.

5. IT SERVICES OFFERED BY IBM:1.Business continuity and resiliency services

8.Security services

2.Data centre services

9.Server services

3.End User services

10.Services A-Z

4.Integrated communication services

11.Services for midmarket business

5.IT strategy and architecture services

12.Site and facilities services

6.Technical support services

13.Storage and data services

7.Middleware services

14.Virtualisation services

[2]

6. IBMs Service Concept

Among the services that IBM provides, the major segments are business analytics and optimisation,
strategy and transformation, application innovation, Innovation management. IBMs strategy and
transformation helps businesses in managing constant change by leading through increased
complexity and volatility.

[3]

The IT strategy and performance assessment helps align current IT strategies, resources and
investments with changes in organisational direction and corporate strategy. This assessment
addresses the way an organisation balances its IT supply with IT demand to maximum value. IBM
combines their own experience in becoming a social business with their consulting services and
leading software to deliver a fully integrated social business transformation to their clients. IBM looks
to exploit current social media trend in their solutions. The Finance & Risk segment works on
improving the forecasting and reporting, developing predictive capabilities, reducing enterprise risk
and optimizing the finance organisation. Also, Finance Transformation services are the core of the
IBM management consulting services. By using the strategic and diagnostic tools for profit
improvement and modelling, IBM helps enterprises in assessing their organisational design by
integrating financial functions, improving forecasting and reporting, reducing Risks and optimizing
the strategic functions of the finance organisation. Since the beginning of 2000, IBM has acquired
more than 140 companies in strategic areas that include analytics, security, cloud and smarter
commerce.
In IBMs social business culture, the genius lies in the 400,000 employees who are free to create
circumstances that enable their associates to build on each others ideas. Its genius lies in fostering
innovation through co-creation with its employees, suppliers, partners and customers. Remove one
genius, and there are thousands more in the network to fill the vacuum.
IBM Global Services has the modest goal of making a smarter planet. The information technology
and business services arm of International Business Machines operates in about 170
countries, providing a comprehensive range of enterprise IT and consulting services to commercial
and public sector clients. IBM's service operations are organized into two primary units: Global
Technology Services, which encompasses the company's business process outsourcing, infrastructure
support, and product maintenance offerings; and Global Business Services which handles application
management services, consulting, and systems integration. IBM Global Services integrates both IBM
products and third-party hardware and software. IBMs service revenue is $42 billion and its services
revenue share is 38 percent of its total revenue where as its closest competitor HPs service revenue is
$34.09 Billion with a services revenue share of 24 percent of its total revenue.

7. IBMs Operating Strategy: Creating Markets

IBM creates new markets by categories, geographies and clients. IBMs software and business is
different from what it was some years ago, IBM now offers new solution categories like MobileFirst,
Social Business and Smarter commerce. In the hardware business, IBMs new PureSystems family is
slowly gaining momentum. IBM opened 144 new branches in these markets in 2012.IBM is looking
forward to continuing remixing to more profitable opportunities in these countries with the help of
smarter planer solutions such as smarter transportation, smarter finance and smarter cities. Also, IBM
always looks to unlock new opportunities within their existing client base by creating capabilities for
a new generation of IT buyers.
By following the Innovation model, IBM continuously remixes and deepens their expertise. In the
past three years, IBM has added around 10,000 sellers in key areas of industry expertise such as
healthcare, telecom, banking as well as in emerging sectors like energy, mining and metals.
The products that IBM deals in can be categorized into four different categories.
1. PCs
IBM offers notebook PCs, Desktop PCs and Workstations.
2. SERVERS
IBM offers blades, mainframe, Entry Level and midrange servers, Clusters.
3. SOFTWARE
IBM offers Desktop office and Productivity software such as Product finder, Business Analytics,
Enterprise Content Management, Information management, Lotus, Rational, Security, Tivoli and web
sphere integration and optimization.
4. STORAGE
In the storage category IBM deals in Disk systems, Flash systems, Tape systems, Storage area
networks, Network attached storage, Storage software and media.

The Global Technology Services segment provides IT infrastructure and business process services,
including outsourcing, process, integrated technology, and technology support.
The Global Business Services segment offers consulting solutions for strategy and transformation,
application innovation, enterprise applications, and smarter analytics; and application management,
maintenance, and support services.
The Software segment offers middleware and operating systems software, such as Web Sphere
software to integrate and manage business processes; information management software for database
and enterprise content management, information integration, data warehousing, performance
management business analytics and intelligence, and data analytics; Tivoli software for cloud and data
centre management, enterprise endpoint and mobile device management, asset and facilities
management, storage management, and security systems; Lotus Software to connect people and
processes for communication; rational software to support software development in IT and embedded
systems; and operating systems software. According to IBM, about 50% of their segment profit is
expected to come from software by 2015.

The systems and technology segment generates a substantial portion, 17%, of International Business
Machines' total revenue. The performance of the hardware segment has been a drag on the company's
consolidated performance. The Systems and Technology segment provides computing power and
storage solutions; and semiconductor technology, products, and packaging solutions. The Global
Financing segment provides lease and loan financing to end users; commercial financing to dealers
and remarketers of IT products; and remanufacturing and remarketing services for equipment. The
company has a strategic alliance with Kutxabank.

8. COMPETITION
IBM faces tough competition in the market in all these categories. IBM faces competition from Dell
and HP in notebooks, Desktops and workstations. Other than these four categories, IBM provides
small and medium business products along with hardware financing and software financing.
IBM offers consulting too. Among the Services that IBM provides are Business services, consulting
services, outsourcing services and training. IBM is among the worldwide leaders in IT services. IBM
faces tough competition from Accenture, HP and Microsoft in IT services worldwide. There is also a
competition from Infosys, Tata consultancy services and Wipro.

IBM faces competition from Accenture and HP in Services. When it comes to servers, it is direct
battle between IBM and HP. Microsoft emerges as a good competitor when it comes to software.Intel
challenges IBM in systems and technology. So, overall the markets in which IBM deals with are quite
competitive. [4]

9. THE INNOVATION AND SERVICE

DIFFERENTIATION THAT HAS LED TO THE
SUCCESS OF IBM

IBM is an innovative company which persues continuous transformation in what they do. Providing
service differentiation is hard for services firms because of the intangibility of what they provide.
Undergoing a transformation requires consistency and persistence and hence takes some time. The
clients now a days are more sophisticated and aware of information regarding assets, tools and
solutions. Hence, the bar for service providers is increasing rapidly and has risen to an extent that the
providers can afford few mistakes. The IT industry and the global economy have undergone a big
transformation due to massive amounts of data, new ways of delivering computing as well as the rise
of mobile and social platforms. IBM always looks to increase the value of their offerings and skills in
their operational and management practices and also in the transformational capabilities they deliver
to their clients. IBM understands that the buyers needs are driven by trends like security,
infrastructure, business intelligence etc.

[5]

Cloud, Security and Mobility are the latest IT trends, In a constantly changing business environment,
they are the functionalities that organisations need to stay competitive in the current business
environment. The latest innovation and service differentiation that led to the success of IBM services
was the emergence of the smarter planet in which the big data turned out to be the planets largest
resource in which billions of connected sensors and devices together created a massive and invisible
flow of digital 1s and 0s making that a global information gush. Their new model of computing
known as The cloud is delivering on demand computing over the internet. Cloud has brought an
altogether new scale to the growth and efficiency of the service delivery and therefore, enabled more
accurate and agile ways of doing businesses.
In order to keep on moving forward in their innovations, IBM is pioneering a new computing model
called smart computing.
Smart Computing has three core attributes.
1. DATA
As the new sources of data are continuing to grow in volume, variety and velocity, so is their potential
of revolutionizing the decision making processes in every industry. IBM has the world deepest
portfolio of analytics solutions and software. IBM has the business and industry expertise of 9000
business analytics consultants,400 researchers and 9 analytics solution centres who get involved in
30,000 enterprise analytics engagements with their expertise and help clients in turnings massive

volumes of real time, unstructured data into high value knowledge, all of which is instantly made
available.
2. SOFTWARE
All thanks to the all-new model known as software-defined environment, the entire IT environments
have become simple, adaptable and programmable, similar to the normal individual system. In
software defined environments, networks, storage and servers as well as the software, can be tuned
flexibly to a desired workload. Even the hardware systems such as the IBMs system z mainframe,
power systems and IBMs new pure systems are creating new significant business value. Cloud is its
first major manifestation but it surely wont be the last. IBMs smart cloud manages 13 billion
security events for more than 4000 clients per day and therefore, connects more than 300,000 trading
entities. IBM also assisted their clients in building more than 3,500 private clouds.
3. Open and collaborative
IBM helped open platforms such as LINUX, Eclipse and apache become standards with vital industry
ecosystems and after that developed high value businesses on top of them. IBM in collaboration
supports open platforms such as Openstack and Hadoop. For the last three years, IBM is the leading
organisation in the social enterprise software. IBM helped more than 1000 clients become mobile
enterprises with thousands of mobile experts and 270 patents in wireless innovation. Around 160 of
IBMs research scientists focus on mobile technologies.
IBM hired new chief marketing officers who are reinventing the practicing of marketing. As a result,
IBMs Global Business Services smarter commerce grew by nearly 200 percent in 2012.Smarter
planet therefore, is becoming a platform for growing array of new markets like Smarter commerce,
smarter cities and social business. These markets can take concrete shape only through the
engagement and enablement of a new generation of IT clients.

REFERENCES:
1.
2.
3.
4.
5.

Service Management:Operations, Strategy,Information technology / James

A.Fitzsimmons,Mona J, fitzisimmons,Sanjeev Bordoloi.
http://www-935.ibm.com/services/au/en/it-services/gts-it-service-home-page-1.html
http://www-935.ibm.com/services/au/gbs/strategy/
http://www.rodenberg.nl/publications/publications/IBM_vs_HP_case.pdf
http://www-935.ibm.com/services/au/en/it-services/gts-it-service-home-page-1.html