Software Market Update - IBM · Software Market Update Steve Mills Senior VP and Group Executive IBM Software ... $160 $200 5% $243 4% Application Software $75 …

IBM Software

© 2005 IBM Corporation

Software Market Update

Steve MillsSenior VP and Group ExecutiveIBM Software

February 7, 2005February 7, 2005

2 © 2005 IBM Corporation

IT Industry Growth

-10%

-5%

0%

5%

10%

15%

20%

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08

WW GDP IT Software

Software

WW GDP

IT

Real GDP; IT Industry Revenue at constant currency

Source of Growth Rate Projections: IDC Data


Growth is Back on Top of the Corporate Agenda

1. Revenue growth is a renewed priority

2. Responsiveness is the newkey competence

3. The challenge lies within – executing and managing change will be key to success

Key Focus Area for Strengthening Financial Performance Over the Next

Three Years

Key Themes from the IBM 2004 CEO Survey

0% 20% 40% 60% 80% 100%

Risk Management

Asset Utilization

Cost Reduction

Revenue Growth

Source: IBM Business Consulting Services, The Global CEO Study 2004


($B) 1998 2003 ’98 – ’03CGR 2008 ’03 – ’08

CGRCustomer

in-house labor $616 $595 (.7%) $620 0.8%

Systems Integration $160 $200 5% $243 4%

Application Software $75 $101 6% $134 6%

Middleware $59 $78 6% $115 8%

Operating Systems $22 $29 5% $39 6%

Labo

r Ass

ets

Cod

e A

sset

s

MiddlewareMiddleware

Operating Systems

ApplicationsApplications

Systems IntegrationSystems

Integration

CustomerIn-house Labor

CustomerIn-house Labor

Software Market Dynamics

Source of Growth Rate Projections: IDC Data


2004 Opportunity

’04 – ’08 CGR

% Share – Top 3 Companies

$ 349B 6.5% 10%

$ 100B 6.0% 4%

$ 6B 6.3% 74%

$ 84B 8.2% 31%

$ 31B 6.1% 74%

$ 334B 6.3% 38%

$ 30B 4.5% 94%

IT Industry Landscape

Services

Vertical Applications

Enterprise ERP

Middleware

Operating Systems

Hardware

Technology

Services

Vertical Applications

Enterprise ERP

Middleware

Operating Systems

Hardware

Technology

Source of Growth Rate Projections: AMR Research, Gartner, and IDC


Management Costs Outpace Server Spend

Source: IDC Survey Data, 2002 – 2004.

$0

$20

$40

$60

$80

$100

$120

$140

$160

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '080

5

10

15

20

25

30

35

Spending Cost of Management Installed Base

Serv

er S

pend

ing

and

Cos

t of M

anag

emen

t ($B

)

Inst

alle

d B

ase

(Mill

ion)


E01-EDI

Data Warehouse(Interfaces to and from the

Data Warehouse are notdisplayed on this diagram)

G02 - GeneralLedger

A05 - AP

S01 - SalesCorrections

I01 POReceiving

I03 Return toVendor

I06 WarehouseManagement

MainframePC/NT apps Unix apps3rd Party Interface

S06 - Credit App

P15 EES EmployeeChange Notice

OTHER APPS - PCAP - Collections/Credit

TM - Credit Card DB

ACCTS REC APPS - PC990CORBad Debt

Beneficial FeesBeneficial Reconcile

JEAXFJEBFAJEBKAJEDVAJESOAJEVSAJEVSFNSF

TeleCredit Fees

INVENTORY CONTROL APPS - PCCode Alarm

Debit ReceivingsDevo Sales

Display InventoryIn Home

JunkoutsMerchandise Withdrawal

Promo CreditsRTV Accrual

ShrinkAP Research - Inv CntrlAP Research-Addl Rpts

Book to Perpetual InventoryClose Out Reporting

Computer Intelligence DataCount Corrections

Cross Ref for VCB DnldsDamage Write OffDebit Receivings

DFI Vendor DatabaseDisplay Inventory ReconcileDisplay Inventory Reporting

INVENTORY CONTROL APPS - PCDPI/CPI

IC BatchingInventory Adj/Count CorrectInventory Control Reports

Inventory LevelsInventory Roll

Merchandise WithdrawalOpen ReceivingsPI Count Results

PI Time Results from InvPrice Protection

Sales Flash ReportingShrink Reporting

SKU Gross MarginSKU Shrink Level Detail

USMVCB Downloads

Journal Entry Tool Kit

Scorecard - HR

L02-ResourceScheduling(Campbell)

P09 - P17Cyborg

M02 - Millennium

M03 - Millennium 3.0

Banks - ACH and Pos toPay

Cobra

B01 - StockStatus

S03-Polling

P14 On-line NewHire Entry

CTS

Plan Administrators(401K, PCS, Life,

Unicare, SolomonSmith Barney)

D01 Post LoadBilling

I04 HomeDeliveries

I02 -Transfers

Arthur Planning

I07 PurchaseOrder

I12 EntertainmentSoftware

I05Inventory Info

E13E3 Interface

S04 - Sales Posting

V01-Price ManagementSystem

I10 Cycle PhysicalInventory

I55 SKUInformation

K02Customer Repair

Tracking I35 Early WarningSystem

B02 MerchandiseAnalysis

I13- AutoReplenishment

U18 - CTO

Intercept

I09 Cycle Counts

E02-EmployeePurchase

Texlon 3.5

ACH

Stock Options

I17 Customer PerceivedIn-Stock

U16-Texlon

SiteSeer

C02 - CapitalProjects

F06 - FixedAssets

US Bank ReconFile

Star Repair

EDICoordinator

Mesa Data

NEW SoundscanNPD Group

AIG Warranty Guard

Resumix

Optika

Store BudgetReporting

P16 - Tally Sheet

Cash Receipts/Credit

S05 - HouseCharges

Ad Expense

L01-PromoAnalysis

V02-PriceMarketingSupport

BMP - Busperformance Mngt

StoreScorecard

I11 PriceTesting

Valley Media

P09Bonus/HR

I15 Hand ScanApps

Roadshow

POS

S08 - VertexSalesTax

A04 - CustRefund Chks

Equifax

ICMS Credit

CellularRollover

S09 - DigitalSatelliteSystem

NPD,SoundScan

Sterling VANMailbox (Value)

I18SKU Rep

X92-X96Host to AS400

Communication

S02 -Layaways

Washington,RGIS,

Ntl Bus Systems

V04-SignSystem

I14 Count CorrectionsNARM

P01-EmployeeMasterfile

I06 - CustomerOrder

FrickCo

UAR - Universal AccountReconciliation

DepositoryBanks

S07 - CellPhones

S11 - ISPTracking

AAS

Fringe PO

Cash Over/Short

L60 MDFCoop SKU Selection

Tool

SKUPerformance

SupplierCompliance

1

I35 - CEI

ASIS

Misc Accounting/Finance Apps - PC/NTCOBA (Corp office Budget Assistant)

PCBS(Profit Center Budget System)Merchandising Budget

AIMSMerch Mngr Approval

Batch ForcastingAd Measurement

AIMS Admin

AIMSReportingAd

Launcher

V03- MktReactions

SpecSource

CTO2.Bestbuy.com

RebateTransfer

SignSystem

CopyWriter'sWorkspace

ELTPowerSuite

StoreMonitor

AIS Calendar

Stores & Mrkts

Due Dates

Smart Plus

InsertionsOrders

BudgetAnalysis Tool

Print CostingInvoice App

AIS Reports

BroadcastFilter

Smart PlusLauncher

GeneralMaintenance

Printer PO

PrinterMaintenance

VendorMaintenance

Vendor Setup

Connect 3

Connect 3Reports

Connect 3PDF Transfe

Spec SourceSKU Tracking

S20-SalesPolling

Prodigy

PSP

In-HomeRepair

WarrantyBillingSystem

Process Servers(Imaging)

Prepared by Michelle Mills

IT Realities


SupplierNetworks

InternalSystems

CustomerConnections

Bridging the gap between business transformation and IT Bridging the gap between business transformation and IT

Horizontal Integration is the New Challenge


An enterprise whose business processes are:Dynamically responsive to any customer demand, market opportunity or external threat

Integrated end-to-end across the company

Integrated across industry value nets: partners, suppliers and customers

ACCESSACCESS INTEGRATIONINTEGRATION ON DEMANDON DEMAND

AA BB CC AA BB CCAA BB CC

Processes Bounded by Functions

Processes Extend Beyond Functions

Business Led Processes Extend to Value Nets

Develop Services & ProductsDevelop Services & Products

Provide Financial ManagementProvide Financial Management

Manage Supply & LogisticsManage Supply & Logistics

On Demand is About Integration


30-50% of design time is copy management

40% of IT budgets may be spent on

integration

30% of people’s time is spent searching for relevant information

Wired and wireless devices

Global 24x7 access and real-time collaboration needs

Unconsolidated and untailored information

Development and integration of application assets

Application silos (legacy and packaged applications)

Heterogeneous internal and external systems

Distributed data environments

Heterogeneous data types and sources

Untransformed and inconsistent data

85% of information is unstructured

PeoplePeople InformationInformationProcessProcess

Integration Landscape


Service Oriented Architecture (SOA)A Service Oriented Architecture enables flexible connectivity of applications or resources by

• representing every application or resource as a service with a standardized interface,

• enabling them to exchange structured information (messages, documents, ‘business objects’),

• mediating the message exchange through a service integration bus,

• providing on-ramps to the bus for legacy application environments

This allows quick combination of new and existing applications to address changing business needs and improve operational effectiveness by managing the topology of the application ‘network’The SOA infrastructure is also used to facilitate the management of business performance and quality of service

Data

ServiceFlow

ExistingApplications

NewService Logic

B2B Interactions

Portal Service SOAPService Request(e.g. J2EE, .NET)


Evolution Towards Middleware

SystemsManagement

& Security

HumanInteraction &Collaboration

Transactionsand

Messaging

InformationManagement

SoftwareDevelopment

Servers Storage

ProcessesProcesses

Systems Environment

Application EnvironmentApplication Environment

Distributed OS EvolutionDistributed OS Evolution

Business Process Integration EvolutionBusiness Process Integration Evolution

MiddlewareEnvironmentMiddlewareEnvironment

AutonomicIT EfficiencyResource Optimization

BPMBAMBusiness Efficiency

BPMBAMBusiness Efficiency

ModelingExecutionManagement

ModelingExecutionManagement

Linux Unix Windows OS/400 z/OS



Linux Unix Windows OS/400 z/OS

Servers Storage

ProcessesProcesses

SystemsEnvironment

RationalRational


ManageManage BuildBuildRunRun

RationalRationalMiddlewareEnvironmentMiddlewareEnvironment LotusLotus WebSphereWebSphere DB2DB2 TivoliTivoli

Middleware Platform – Componentization / Integration


Business Integration Reference Architecture

Development Tools, ServicesModel, Design, Development, Test ToolsModel, Design, Development, Test Tools

Common Runtime InfrastructureCommon Runtime Infrastructure

Monitoring ServicesMonitoring Services

Data Access ServicesData Access ServicesApplication Access ServicesApplication Access Services

Enterprise applications Enterprise data

Enterprise Service Bus

Process ServicesProcess Services

Partner ServicesPartner

ServicesBusiness

Application Services

Business Application

Services

Information Services


Interaction Services



IBM’s Business Integration Solution

Development Tools, ServicesModel, Design,Development, Test Tools

Model, Design,Development, Test Tools

Common Runtime InfrastructureCommon Runtime InfrastructureMonitoringServices

MonitoringServices

Data Access ServicesData Access ServicesApplication Access ServicesApplication Access Services

Enterprise applications Enterprise data

Enterprise Service Bus

BI ModelerBI ModelerWebSphereWebSphereToolsToolsRationalRational

Business Integration MonitorBusiness Integration MonitorWebSphereWebSphereTivoliTivoli ToolsTools

Application Server

Application Server

Business Integration

Connect


Connect


Server


Server

Information Integrator

Information Integrator

Process ServicesProcess Services

Partner ServicesPartner

ServicesBusiness

Application Services

Business Application

Services



WebSphereWebSphere WebSphereWebSphere WebSphereWebSpherePortalPortal



WebSphereWebSphere

Lotus

Business Integration AdaptersBusiness Integration AdaptersWebSphereWebSphere

Web Services GatewayWeb Services GatewayMQMQWebSphereWebSphere

Business Integration Event / Message BrokerBusiness Integration Event / Message BrokerWebSphereWebSphere

Information Integrator ClassicInformation Integrator Classic

WorkplaceWorkplace

WebSphereWebSphere

WebSphereWebSphere


The Next Era of Computing

1960 1970 1980 1990 2000

Client / ServerClient / Server

On Demand EraOn Demand Era

MainframeMainframe

Source: U.S. Department of Commerce

Administrative Productivity

Personal & Departmental Productivity

Organizational Productivity

IBM Software

© 2005 IBM Corporation

Software Market Update

Steve MillsSenior VP and Group ExecutiveIBM Software

Documents

Software Market Update - IBM · Software Market Update Steve Mills Senior VP and Group Executive IBM Software ... $160 $200 5% $243 4% Application Software $75 …