Services Revenue Down In IBM's 4Q


Execs say partners will play bigger role in '06


IBM CFO Mark Loughridge last week said the vendor&'s Global Services unit plans to target more midmarket opportunities in 2006 after reporting a 5 percent decline in services revenue for the fourth quarter of 2005.

Loughridge&'s comments were made during a call with analysts. But Donn Atkins, IBM&'s general manager of Global Business Partners, said business partners shouldn&'t view the strategy as a competitive threat and that IBM intends to expand partner involvement in services this year. “The presence of partners in a lot of our midmarket customers is an asset, and it&'s one we want to build upon,” he said.

An IBM spokesman said IBM expects to triple the number of managed services offerings it sells through partners in 2006.

Greg Starr, the president of See-Comm, a New Boston, Texas-based solution provider, said his services business is up dramatically as a result of partnering with IGS last year. “We are doing front-end assessments and long-term projects with IGS,” he said. “We are getting into three- to six-month deals that are very profitable.”

IBM also revealed last week that it is adding two new IGS business units to go after high-growth areas. The new Business Transformation Outsourcing (BTO) unit will be headed by Erich Clementi, former head of IBM&'s mainframe division. It will seek engagements in which IBM redesigns critical business processes to gain efficiencies by better use of technology. IBM also has created a Technology Collaboration Solutions unit, headed by Adalio Sanchez, formerly head of IBM&'s pSeries group. This new unit will serve as an outsourcer and consultant for companies&' technology research operations.

For the fourth quarter ended Dec. 31, IBM&'s total net income reached $3.2 billion, compared with $2.8 billion for the year-earlier period. Revenue totaled $24.4 billion, compared with $27.7 billion for the same quarter of 2004.