IBM Sees Continued Strength In Public Sector, Even In Transition

In a year where many IT businesses have celebrated "flat as the new up," IBM has seen strong growth in its public sector business, even as other IBM segments have softened. The challenge now is for IBM to continue to grow its robust public sector partner community and stay ahead of the competition.

There's no question IBM's public sector practice has been one of its biggest success stories this year. According to its most recent quarterly earnings, in July, IBM's public sector business was its strongest. Since then, IBM has maintained a bullish outlook overall, echoed in a recent 8-K filing with the SEC.

Among other growth areas, IBM has trumpeted Smarter Planet, its massive, worldwide initiative to influence how technology is deployed to make public infrastructure more efficient.

"We're in a position where what we're seeing is great demand for a type of vision as well as the solutions we've developed," said Gerry Mooney, general manager of IBM Global Fiscal Stimulus and Economic Recovery, in a Channelweb.com interview. "We need partners not only at the infrastructure level, but when we look at things like smarter grids, we're talking about things at a whole different level than we used to."

According to Mooney, IBM's success in public sector comes from not only identifying opportunities in such areas as water systems and public safety, stimulus and health care, but also aligning its executive team and channels to address those opportunities in both the U.S. and abroad -- and changing the approach large services organizations took to solving those problems in the past.

It's that "s" word, "services," that keeps coming up. IBM partners say the seismic shift that happened at IBM over the past decade -- that is, the move from hardware and software sales to becoming the more services-oriented "solutions" vendor it is now -- has been keenly felt in how it now engages public sector. "Public sector is learning to change with the economy, because the economy has forced any number of changes on public sector," said Daniel Serpico, president of Jeskell, a Sunnyvale, Calif.-based solution provider. "Green initiatives are critically important, power and cooling, virtualization, storage, all these things are driving a lot of demand. IBM's strength is that it meets that diversity -- it can do everything from the data center up to the cloud and that's really refreshing as opposed to focusing on refreshing laptops and printers, you know? In public sector, IBM can hang with anybody."

"They have a breadth of contracts and they've been good about getting us into contract opportunities we sometimes didn't have before," offered P.J. Byrd, government contract specialist at Sirius Computer Solutions, a San Antonio-based solution provider. "I think there's a level of public sector involvement there that we don't see with other vendors."

IBM's public sector gains also have progressed even as it undergoes a major change in leadership: namely, the retirement of the iconic Robert Samson, IBM's general manager for Global Public Sector, whose succession of leadership roles in IBM's public sector organization throughout the 1990s -- and his stewardship in the current decade -- is credited with bolstering IBM's public sector channel into the powerhouse it is now. Everything Channel awarded Samson its public sector Lifetime Achievement Award in 2006.

Above all, say observers, Samson and IBM's top public sector executives have shaped its strategy into one of being proactive. Smarter Planet and many of its other high priority initiatives, in other words, suggest IBM is attempting to direct the conversation about technology's role in public sector, rather than react to it.

"I think part of what sets them apart is that IBM has a perspective that tries not to look at government as someone to buy stuff," said Andrew Bartels, vice president and principal analyst at Forrester Research. "They're good at looking at the government and thinking about what problems the government is facing, and thinking about the solutions for those problems."

That's one of the differences between selling technology to the government and influencing how the government buys its technology, Bartels suggested.

"They approach the government with a mind-set of not just, 'Hey, you need our stuff' and not just, 'Tell us about your problems and let us figure out how to solve them,' but more, 'We've done a lot of thinking and a lot of research and we know you probably have these problems, and the solution is going to be a mix of our stuff and other people's stuff, so here's a way of addressing a problem in new and creative ways,' " he said.

Next: Setting IBM Apart