PartnerWorld: IBM chief says SMEs will be its 'largest industry'

The head of IBM expects the company's small and medium enterprise (SME) operation to become the vendor's biggest industry focus within a couple of years.

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The head of IBM expects the company's small and medium enterprises (SMEs) operation to become the vendor's biggest industry focus within a couple of years.

"In two to three years, SME will be the largest industry for us," IBM chief executive Sam Palmisano told the company's PartnerWorld conference in St Louis. Financial services has long been IBM's number one industry in revenue terms.

Palmisano described the SME market as "the biggest IT growth opportunity in the world today", valued at $487bn (£243.5bn), with the global market currently growing at 6.5% annually. Forty-seven percent of IBM's SME revenue is currently driven by the vendor's business partners, he said.

IBM's most significant announcement at PartnerWorld focused on the expansion of its Express Advantage programme aimed at companies employing between 100 and 1,000 staff.

Launched at last year's PartnerWorld in Las Vegas, the initiative was previously limited to the US and Canada, but is now being rolled out to 23 countries in Europe, Asia-Pacific and Latin America, IBM. Express Advantage wraps up IBM's Express range of products for SMEs with the vendor's financial services. IBM also unveiled new Express server, storage and software offerings.

Looking at IBM's business as a whole, Palmisano described the vendor's financial 2006 profit mix as "a much more balanced portfolio, and therefore much more stable" as compared to financial results in previous years. Quoting pretax income figures for financial 2006, he said IBM's business split was 23% systems and financing, 40% software and 37% services.

"2006 was the result of multiple years of strategic shifts," Palmisano said. "We made a series of bold bets and they all came together last year." Those bets included the vendor's focus on service-oriented architecture (SOA), blade servers, managed business process services, virtualisation and the coming together of software and services, he added.

As IBM continues to acquire companies, Palmisano reiterated that the company makes its purchases in order to add strategic capabilities to its existing product portfolio, not to consolidate markets.

He said IBM was not trying to become a holding company. "That's not our strategy, it's all about innovation, integration and collaboration."

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