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IBM Gearing Up For BPTS

For the past few years, a juicy business opportunity in the information technology consulting industry has been maturing, along with the development of Web services built on open standards. Now, IBM officials claim, that market opportunity is ripe for the plucking. It's called Business Performance Transformation Services, and IBM is eager to take a bite.

How big a bite? During the company's annual spring meeting with Wall Street analysts, IBM Chairman Sam Palmisano said the market opportunity with BPTS is about $500 billion over and above the traditional $1.2 trillion that businesses around the globe spend on information technology products and services each year.

Ginny Rometty, a managing partner with IBM Business Consulting Services, said three key factors are driving the market to fruition now.

First, the rise of open standards in an optimized business; second, the spread of Internet and Web-based technologies; and third, Rometty said during a press briefing, the combination of two previously distinct spheres of expertise, business model design and advanced information technologies and research. The demand for such high-level transformation services, she added, is driven by a high-level performance need.

"We've amassed a capability to capture more of that spend," she said, referring to the $500 billion market opportunity. "It's not built on invention, it's more on capability," as clients decide to shift spending on these services to external providers.

Big Blue's $3.5 billion acquisition of PwC Consulting two years ago is a key linchpin behind the drive to offer these services. Since last quarter when the company started tracking the market for BPTS within its Global Services division, it has posted $1.4 billion in revenue from these high-end engagements, Rometty added.

In order to serve companies that are looking for answers to serious computing and internal IT problems, IBM has opened a new supercomputing center on its Somers, N.Y., campus called the Center for Business Optimization. The idea with the new center is to gather its supercomputing resources and put them to work for the consulting division's efforts to help clients re-shape their internal business processes.

For example, one of IBM's business transformation clients is the United States Postal Service, which has hired IBM's Business Consulting Services Group and Mathematical Sciences Group in order to develop modeling tools to streamline its global mail processing and transportation operations. In this engagement, IBM said it is planning to optimize one of the largest transportation networks in the world, one that it said moves more mail in a day than FedEx and UPS combined.

The new center is to be managed by William Pulleyblank, who oversaw IBM's Deep Computing Institute for the company's research division. One of his most recent projects was Blue Gene, a supercomputing effort that is simulating how proteins operate in the body.

"This is not a think tank. It is not a research project. It's much bigger," he said. "We're finding ways to deliver the values of this to the client." The center will leverage other IBM supercomputing centers, including those in Poughkeepsie, N.Y., Houston, and Montpellier, France, as part of its service arrangements.

Details on the scale of the computing center's abilities were sketchy. As previously reported, IBM's Blue Gene computing project for the Tokyo-based Computational Biology Research Center (CBRC) of The National Institute of Advanced Industrial Science and Technology (AIST), is using Blue Gene/L to map out 3-D protein structures. When the computing system is installed by February of 2005, it is expected to be based on IBM's Power architecture, with a peak processing speed of 22.8 teraflops, or trillions of calculations per second.

Pulleyblank said he expected the new center to eventually leverage computing resources approaching a petaflop (a thousand teraflops) and plans to deploy several hundred staff from the research division, as well as much of IBM's hardware and software family, as part of that supercomputing effort. In the interim, though, he said the goal is to hit 360 teraflops of processing speed.

"There are all kinds of things that have to come into existence and be pulled together." But this much is clear, he added: A computing center designed exclusively to solve complex challenges for many large businesses with far-flung operations is open for business. "We will handle the operational challenges encountered in having a business respond minute-by-minute to a changing environment," Pulleyblank said. "We will deal with the extraordinary complexities of handling information of different scales, such as the effect of a drug, not only on the disease it attacks, but also on the patient 10 years later."