Businessmodel of IBM

Customer Segments

IBM serves two customer segments: large enterprises looking to invest in virtualization, cloud or other software or hardware solutions and services to streamline corporate operations and end-users interested in personal computers and mobile applications.

Value Propositions

IBM has always been characterized by a powerful drive for innovation and development and these continue to make the larger part of its value propositions. The company actively engages in research in the fields of nanotechnology and mainframe and personal computers with recent years seeing it slowly expand into digital data management, cloud services and virtualization.

It offers corporate clients high-value solutions based on its working model of integrating technology and business model innovation to deliver scalable solutions. IBM also provides IT consulting and implementation services for the design, setup, management and maintenance of cross-industry and industry-specific processes.

Channels

After consolidating its channel sales and marketing groups for all business units IBM has announced a single channel team to better support its business partner network.

The One Channel Team improves communication with clients who are now given a single point of contact within the global giant. A single interface platform with increased functionality is also available through the company’s web portal.

Customer Relationship

IBM customer relationships are primarily self-service, although as a hardware and software developer there is a midmarket channel as well as one for larger enterprises.

They have a designated Marketplace on their official web page, which is easy to navigate and can be used by both individuals and businesses to select the products and services that meet their needs and requirements.

Key Activities

IBM focuses on the development and distribution of hardware, software, business consulting and IT services at enterprise-level.

In recent years it has shifted its focus towards capitalizing on business intelligence, data analytics, business continuity, security, cloud computing, virtualization and green solutions as well as semiconductor manufacturing.

Key Partners

In recent years IBM has struck a number of high-profile partnerships with other global companies, such as Apple Inc. in mobile enterprise and Twitter for the integration of social media data and cloud-based analytics.

The company has been involved in a lot of mergers and acquisitions, actively reshaping and changing the structure of its divisions through the formation of new units to position itself better within a global context.

Key Resources

IBM operates numerous research laboratories worldwide that are all bundled under IBM Research.

Major campus installations, science centres and a Linux Technology Centre make the spine of the company’s development core with a collective working force of 435,000 employees worldwide, making it the second largest US firm in terms of workforce.

Cost Structure

IBM continuously directs investments into its growth initiatives in order to improve cost structure. Its main goal is to focus on more profitable services and phase out products and services that are no longer generating public interest. This has allowed the company to continue to operate profitably despite seeing a decline in revenues in recent years. It currently combines an increase in investments in cloud and analytics with leveraging lower-cost talent.

IBM’s cost structure is very much driven by investing into its people and customer acquisition.

Additionally, the shift towards service and app development has resulted in increasingly lower qualified service employees that are cheaper to retain than skilled resources.

Revenue Streams

Despite a thirteenth straight decline in sales, IBM continues to invest in cloud technology and data analytics as strategic imperatives. The company’s software business is responsible for a big part of the drop in sales while the aforementioned categories contributed $25 billion and represented 27% of IBM’s total revenue in 2014 alone. IBM investors are reassured with focus on new growth areas will offset consulting business losses.

Under Rometty’s leadership IBM has shifted focus towards its membership-based cloud and data services, which it markets through its web platform. With over 1,500 clients that consist of small and medium-sized businesses worldwide – a significant portion of the company’s earnings are contributed to service and maintenance fees. IBM’s service packages are currently sold in an annual subscription format.