IBM on Monday is taking the wraps off a “smarter commerce” strategy that looks to integrate the parts of acquisitions such as Unica, Sterling Commerce and Coremetrics, wrap services around them and better target enterprises and midmarket companies selling to consumers.
The upshot: IBM is betting that commerce—the bridging of offline and online sales channels and the infrastructure that goes with it—can be a growth engine much like analytics was.
Another thread with the commerce move by IBM: The tech giant isn’t necessarily targeting chief information officers with wares. Instead, IBM is looking to pitch its commerce message to chief marketing officer, procurement chiefs and line of business executives. Yuchun Lee, former CEO of Unica and now vice president for enterprise marketing management at IBM, said two-thirds of the technology buying decisions in commerce are made by executives such as sales, marketing and procurement officers.
Big Blue’s strategy for targeting commerce was highlighted at IBM’s investor meeting last week. IBM CFO Mark Loughridge had mentioned commerce as a big market for the company.
According to IBM, the educated consumer has changed the dynamics for companies, which have seen their margin for error evaporate. Now the consumer has mobile devices, social networks and more information available on purchasing decisions. To reach those consumers, companies are going to need to be more analytical and use better tools that integrate sales with the supply chain. The buyer is in charge and sellers have to become more savvy and tap into the “feedback loop” that can make or break brands.
In a nutshell, IBM is making a big push into commerce similar to what it did for analytics. Like IBM’s push into analytics, Big Blue is throwing some bodies at the category. IBM said it will launch a consulting practice with 1,200 commerce experts as well as another 1,200 sales people. The IBM is also looking to form commerce communities to share best practices and data.
Among the key parts of IBM’s commerce push:
- A consulting practice focused on commerce.
- Analytics software designed to enable companies to monitor social media channels, tune marketing campaigns and organize sales efforts quickly.
- Applications to automate personalized shopping and promotions online or via mobile devices.
- A community effort dubbed IBM University as an ongoing resource for best practices.
On the surface, one could argue that IBM is merely wrapping together $2.5 billion in acquisitions over the last 18 months. That argument is probably valid to some degree. However, IBM is betting that it can leverage its retail customer base—the company has big share of point-of-sales systems at stores—into a more integrated effort. “Many last generation commerce solutions have missed the connection between online and offline sales,” said Lee.
Lee said that IBM’s competition in commerce is really best of breed software. The bet here is that Big Blue can integrate various commerce pieces and sell a suite delivered via cloud computing, on premise or on demand. Boil it down and you have the conventional IT tug of war between suites and best of breed. Some executives such as Salesforce.com’s Marc Benioff pan the suite approach as tired. Benioff argues that APIs can make best of breed on demand services act as if they were integrated.
IBM’s promise is that by integrating parts ahead of time, targeting the consumer doesn’t require an IT project. IBM argues that commerce has been crushed by inventory backlogs, failed IT projects and inefficiencies. The company’s trial commerce clients include yogurt and water company Danone (OTCQX:DANOY), paper giant Kimberly-Clark (NYSE:KMB), distributor McKesson Medical (NYSE:MCK), Staples (NASDAQ:SPLS) and 1-800-Flowers to name a few.