IBM and Enterprise Applications: Big Moves?

Is Big Blue maneuvering to become a major competitor in the enterprise applications market?


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IBM has always – meaning in the last six years or so – eschewed a direct role as a competitor in the enterprise applications market, following some disastrous acquisitions and other painful learning experiences. But, as the market matures and competition for IT dollars heats up, what IBM will and won’t do to compete with SAP, Oracle, Infor, and others has been the source of much speculation.

And here comes some more. IBM’s recent acquisition of MRO Software is moving IBM more closely than ever into a directly competitive role in the applications space. While there may be some nuanced way that IBM can still claim not to be directly competing for applications revenues, it’s hard to see the MRO deal for what is it and still buy IBM’s hands-off stance.

Here’s the deal in a nutshell: MRO does asset management, meaning it can help manage any asset – a shop floor robot, a HVAC system in a warehouse, a fleet of service vehicles, and even a nuclear power plant. IBM’s Tivoli division is all about IT asset management. But if you look at what MRO manages, by definition these are a collection of “smart” assets that have some sort of internal intelligence and some way of sharing that intelligence with the outside world. So it makes sense that MRO plus Tivoli equals asset management squared – IT management of non-traditional IT assets – and that’s exactly what IBM had in mind when it bought MRO.

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But wait, as they say, there’s more. Guess who is looking at these assets and thinking of a little corporate power play? Any smart CIO worth his or her budget battle, that’s who. Because, as IBM has clearly figured out, one of the amazing truths about all these smart devices and smart assets is that they are grossly under-managed at the enterprise level, particularly by those lords of technology sitting in the office of the CIO.

We’ve known this in the manufacturing arena for some time – ERP consolidation has made it even more obvious that the manufacturing shop floor is basically a mess of different devices, standards, and interfaces that are hardly linked up with one another, much less anywhere near the IT back office. Not only is integrating these assets a good idea from a management perspective – what some call the sensor to boardroom opportunity – it’s a great place for CIOs to go find a little more territory and some more budget with which to enhance their fiefdoms.

So, here’s comes IBM with a great proposition, one that IBM simply can’t refuse to offer. Let’s take every technologically-enabled asset in the enterprise and manage it from a single application – using a combination of MRO’s Maximo EAM product and Tivoli’s change and configuration management database – and then help build out the CIO’s power base in the enterprise while building out IBM’s powerbase with the CIO.

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