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IBM Global Services: A Brief History

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IBM Global Services: A Brief History IBM Corporate Archives May 2002 2405SH01 OVERVIEW Background In 1991 IBM was a $64.8 billion company, of which less than $6 billion was derived from non-maintenance services. Ten short years later, the business of information technology (IT) services alone generated more than 40 percent of IBM.s $86 billion in sales and had become the single largest source of revenue in IBM.s portfolio. How did that happen? It was partly the result of old-fashioned hard work and serious commitment: growing customer by customer; building disciplined management and financial systems; and investing to hire and train experts in everything from IT consulting to systems architecture and Web services. IBM used its financial strength to fund the expensive push into outsourcing, and the company placed informed bets on the future in areas such as IT utility services (.e-business on demand.) and hosted storage. But most important, the success of IBM Global Services came from something very simple: a clear understanding of customers. needs. IBM saw that technology and business were converging to create something new and challenging for every kind of enterprise. And IBM had the deep experience in both areas to help its customers bring them together most effectively. The following pages offer a brief look at the history and growth of the organization that is today IBM.s top revenue generator. Definitions What are .services?. In the IT world, that broad term has encompassed dozens of offerings and meanings, including consulting, custom programming, systems integration (designing, building and installing complex information systems), systems operations (in which a vendor runs part or all of a company.s information systems), business innovation services (such as supply chain management), strategic outsourcing, application management services, integrated technology services (such as business recovery), networking services, learning services, security services,storage services and wireless services. (For a full list of IBM.s various services, visit Http://www.ibm.com/services/fullservice.html) Origins The beginning of IBM.s involvement in IT services can be traced back at least to 1989 when Eastman Kodak Company and ...read more.


In a related move, IBM Canada, Westbridge Computer Corporation and STM Systems Corporation form a new systems management services company: Information Systems Management Corporation. IBM.s Integrated Systems Solutions Corp. announces agreements with a number of U.S. firms, including Supermarkets General Corp., Commerce Bancshares and First American National Bank of Nashville. IBM and Coopers & Lybrand form Meritus Consulting Services, a company that offers consulting services to businesses in the consumer package goods, pharmaceutical, aerospace, automotive and other industries. 1992 The IBM Consulting Group is unveiled with 1,500 consultants worldwide to provide management and information technology-related consulting services to companies and organizations in 30 countries. IBM -- through its Integrated Systems Solutions Corporation -- and Sears, Roebuck and Co. reach an agreement to form Advantis, a joint venture that will be the premier voice and data networking services company in the United States. The State of California awards IBM.s Integrated Systems Services Corporation (ISSC) subsidiary an $80 million contract in February to develop, implement and maintain California.s child welfare system. Included in the plans are 4,500 Personal System/2 computers and a network that will link nearly 10,000 county social workers and staffs. ..... Two California health-care providers award ISSC in June its first outsourcing agreement in the health-care industry. ..... Marriott selects IBM systems integration services, as well as RISC System/6000 servers, for a new hotel management system to be used in more than 230 hotels worldwide. ..... ISSC and United Technologies Corp. announce a long-term agreement under which ISSC will assume data center management for three UTC business units. Canada.s Consumer and Corporate Affairs Department awards IBM Canada a $49 million systems integration contract to automate its patent office. IBM U.K. forms IBM Information Solutions Ltd. as a wholly-owned subsidiary to offer outsourcing services. 6 2405SH01 IBM CSFR announces the availability of the IBM Managed Network Service to customers in Czechoslovakia. IBM.s first systems integration in the Czech Republic is awarded by the Ministry of Finance for the implementation of a system for tax administration and collection. ...read more.


service provider. ..... Aventis, a leading life sciences company, and IBM sign a ten-year, $1.5 billion global IT services agreement under which IBM will manage and run core elements of Aventis. IT operations. ..... In one of Europe.s largest outsourcing agreements, The Bank of Scotland awards IBM a ten-year, $1 billion contract to manage and operate the Bank.s IT infrastructure. ..... IBM announces a 15-year, $1 billion global technology services agreement with mg technologies ag, an IT company. ..... Westpac Banking Corporation selects IBM to supply its IT services for the next ten years in a $2.3 billion agreement. ..... IBM and Xcel Energy, one of the 10 largest utilities in the United States, announce an 11-year strategic relationship to strengthen the latter.s technology infrastructure while cutting IT costs in 12 states. The total value of the relationship now exceeds $1.2 billion. Revenue from e-business services grows more than 70 percent. Total worldwide services revenue tops $33 billion, with a backlog of $85 billion. There are 149,000 IGS employees. 2001 As part of the company.s Project eLiza -- a multi-billion dollar program to develop self-managing systems that reduce the cost and complexity of the IT infrastructure -- IBM 10 2405SH01 delivers the industry.s first services to automate key e-business processes that predict, identify and intercept problems on a real-time basis. IBM announces a worldwide initiative to align its extensive safety and security offerings within an expanded IBM Global Services Practice and to create a new corporate-level Global Solutions Office to address broader and emerging safety and security issues in industry, global commerce and society. IBM services revenue of $35 billion surpasses hardware revenue for the first time. Whereas in 1996, Global Services contributed 29 percent of IBM.s total revenue, IGS now accounts for 41 percent of the total. With 148,300 people, IGS now has nearly half (46 percent) of the company.s employees (see Chart 2). 11 2405SH01 Acknowledgments The author s wish to express their appreciation to Bill Dunne, Ames Nelson, Jon Iwata, Roberta Paul, Ginni Rometty, Ken W. Sayers and Dennie Welsh for their contributions to this history. ...read more.

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