IBM forms autonomous customer services company
Reuters, Monday, August 10, 1998 at 20:09
By Eric Auchard
NEW YORK, Aug 10 (Reuters) - IBM Corp. (NYSE:IBM) plans to
announce on Tuesday the creation of an independent software
company aimed at the customer services market, forming what
will be the largest single player in a fast-growing business.
The new company, which has yet to be named, will develop
out of Software Artistry, the customer support software firm
IBM acquired earlier this year, together with other customer
service and "call center" phone operator systems from IBM.
IBM's new business will build integrated software with
features for product marketing and sales, customer service and
support and which can be tied into a wide variety of existing
corporate computer databases and phone operator call centers.
The new company, which is estimated to have sales of about
$250 million, is in the business of what is known as "customer
relationship management," or CRM. This market is expected to
grow up to 50 percent annually into a multibillion dollar
business within in a few years, analysts estimate.
"With this new independent company we are committing the
necessary resources and skills to lead in what we expect to be
a very high-growth market," said Linda Sanford, general manager
of IBM Global Industries, the umbrella under which the new
company will exist.
IBM has already dedicated more than 500 people to the CRM
company. The new company is expected to grow to more than 2,000
employees worldwide over the next 12 months, IBM said.
W. Scott Webber, former CEO of Software Artistry, will
serve as Chief Executive of the new company, reporting to a
board of directors composed of IBM executives, including
Sanford, but potentially also including outsiders to IBM.
Customer relationship management refers to the ability of
an organization to build-up and hold onto a profitable base of
customers.
The technology to accomplish this is in hot demand as
competitiveness increasingly becomes measured less in terms of
product feature differentiation and more in terms of winning
customer loyalty through improved services and support.
"Companies in all industries are fundamentally challenged
to rethink the nature of their customer relationships as the
forces of deregulation, globalization and electronic business
dramatically alter the competitive landscape," Webber said.
By setting the new customer services business apart from
IBM's central organization, IBM hopes to reduplicate the
chemistry that has fueled the rapid growth of two existing
stand-alone software companies in recent years.
These two businesses -- Lotus, which supplies desktop and
networked software and Tivoli, which makes systems management
software used to run complex computer systems -- were, like
Software Artistry, also the result of IBM acquisitions.
From the outset, IBM opted to keep these other businesses
autonomous from the parent organization in the hopes of
preserving their aggressive origins as independent software
suppliers.
The same holds true for the new customer services business,
Webber said.
Like the other companies, the new business is designed to
reassure customers that they will be free to do business with
IBM competitors and not be locked into buying IBM computers or
other equipment in order to use the customer services software.
IBM plans to operate the customer services software company
as an autonomous business unit headquartered in Indianapolis,
Ind., although sales, product development, and support
locations would be located worldwide, he said.
The IBM company faces many rivals in a fragmented market,
but no one competitor that now offers such complete customer
relationship management -- from initial sales contact to
product fulfillment and ongoing support -- all linked to the
necessary behind-the-scenes corporate phone and database
systems.
Rivals to the old Software Artistry piece of the business
include Siebel Systems Inc. (NASDAQ:SEBL), Vantive Corp. (NASDAQ:VNTV),
Clarify Inc. (NASDAQ:CLFY). Each sells software to companies for
handling customer technical support and trouble-shooting.
But the IBM system will also compete with customer service
software makers like Pegasystems Inc. (NASDAQ:PEGA) and Broadway &
Seymour Inc. (NASDAQ:BSIS), whose products are used to set up and
maintain customer accounts, analysts said.
Other possible competitors include makers of corporate call
center software used by corporate telephone service operations.
These include Genesys Telecom (NASDAQ:GCTI), Dialogic Corp.
(NASDAQ:DLGC), Natural Microsystems Corp. (NASDAQ:NMSS)
"They have competitors on multiple fronts but they are
probably the only company that combines large scale
professional services, software and the computer telephony
integration capabilities into one unit," said Hugh Bishop, an
industry analyst who tracks the market for Boston-based
Aberdeen Group.
CLFY.O VNTV.O SEBL.O IBM.N NMSS.O DLGC.O GCTI.O GPI.V
BSIS.O PEGA.O
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