This is a REALLY awesome article!
This story from Businessweek profiles IBM's software business, the impact of the recent acquisitions and the importance of service oriented architecture as "the next big thing" for IBM.
A few highlights include;
Here's the big surprise: Big Blue's $16.8 billion software business now contributes even more profit to the bottom line than services, and it's just now emerging as the $91 billion company's most dependable growth engine. "Software is not only the fastest-growing but the most entrepreneurial and the most profitable part of IBM," says analyst Bob Djurdjevic of Annex Research.
The profit picture for software is even prettier. Annex Research estimates that for 2006, software will account for 20% of IBM's revenues but 37% of its profits.
The most successful products fall within the so-called "middleware" segment—software that sits between computer operating systems and run-the-business applications like payroll that a company's executives and employees use day to day. IBM leads the $80 billion middleware market with an 18% share ($12.6 billion in revenues last year), compared with less than 10% shares for Oracle and Microsoft.
Now a fundamental shift is taking place in middleware that could light a fire under IBM's software business. More and more, companies are using a new kind of technology called service-oriented architectures (SOA) for building new computer systems or revamping old ones.
SOA allows companies to build new applications faster, reuse older software, and reuse the new components they create. So it's fast and efficient. No wonder an April survey of chief information officers by Merrill Lynch showed that 87% of them expect SOA to be the " next big thing" in enterprise computing. IBM is already the leader in SOA, and that puts it in a great position to benefit from its soaring popularity.
Mills' group has a 44% share of the market, compared with 13% for second-ranked Sun Microsystems and 10% for BEA Systems, according to WinterGreen Research.
Motorcycle maker Harley-Davidson (HDI ) shows how SOA works—IBM-style. The company has a vast portfolio of applications for running every aspect of its business. But it found that once its applications are created they're very hard to change. So it bought IBM software and hired IBM consultants to revamp its systems using SOA technologies so they can be more flexible.
To make life simpler for customers, IBM last month introduced a catalog of premade components and a collection of templates designed for more than 15 industries. It developed these pieces in the course of more than 2,000 SOA engagements. The Webify purchase adds pages to the catalog, since Webify has focused on components and templates for the telecommunications industry and government.
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