IBM bankrolls a new $100M #CX unit. Will it work?

Yesterday, IBM announced expansion plans for its Interactive Experience professional services practice. The numbers align a bit too perfectly: 10 new labs, $100M investment, and 1,000 new roles.

Yesterday, IBM announced expansion plans for its Interactive Experience professional services practice. The numbers align a bit too perfectly: 10 new labs, $100M investment, and 1,000 new roles.


While the numbers sound great, here’s what matters:

  • Access to technology. Brands need to connect with customers along all points of the buying/loyalty loop, same as it ever was. But today, engagement is impossibly inefficient without the help of technology. On the front lines, high tech enables high touch experiences. We could always assume that IBM services had access to the firm’s leading-edge research and this announcement includes specifics regarding influence analysis, intelligent customer profiles, and customer identity resolution, in addition to behavioral pricing, life event detection, and psycholinguistics analytics.
  • Global scale. In addition to four Experience Labs in North America, IBM adds 10 locations that provide presence on all continents with the exception of Africa and Antarctica. This allows the firm to match the operating needs of multinational clients, in addition to collecting local insights that can be transferred to broader programs. For example, consider the social media ecosystem in China, which has influenced the roadmaps of Silicon Valley-based platforms (and vice versa).
  • Ability to sign talent. Finding great talent that can pair campaign creativity with quantitative analysis is difficult, and constrained supply drives higher prices. IBM can afford to poach talent from other firms, as evidenced by its hires from Accenture, Wunderman, SapientNitro, DigitasLBi, CapGemini, and Ogilvy. IBM is the professional services equivalent of the New York Yankees.

But I wouldn’t consider the game over yet by any means. In fact, some of these strengths come with significant challenges:

  • Legacy branding. International Business Machines has a world renown legacy in enterprise hardware and the current software organization is also well-known. These groups capture the public’s attention with innovations like Watson and support of the US Open, which can lead to consulting business. However, internal corporate relationships could lead buyers to lean towards other firms that may not carry a perception of bias towards proprietary technology solutions.
  • You don’t have to be the biggest to be the best. Consider the change that technology has driven in the agency landscape; the traditional agencies with roots in the mad men era have been increasingly displaced by smaller shops that are nimble and can react to shifts in current culture. IBM claims to be a “new breed of service provider” but it must be careful that the positioning doesn’t become a Napoleonic mistake of creating competition on too many fronts. Moreover, IBM needs to operationalize knowledge from its global network without letting its sheer size get in the way of learning.
  • Fast enough? IBM isn’t alone in seeing the marketing opportunity around digital customer experience. Two years ago, Deloitte acquired Ubermind to create Deloitte Digital. Last year, Accenture acquired Fjord and formed Accenture Interactive. Good help is hard to find in this market, which is why SIs are buying digital shops to get in the game quickly. IBM has been hiring talent from the right places, but this one-at-a-time approach may not be a fast enough ramp, leaving money on the table for competitors.

IBM sees the market opportunity in customer experience and appears committed to winning in the market. There are a couple of elements in this announcement that take me back to 2008 as I launched my last company — “a new service provider that’s agency + consultancy” and a multi-million dollar funding commitment — and the emerging opportunity seems to be wide open. If nothing else, IBM is signalling to potential clients and hires that they’re open for business as the “social business” era fades into the next generation of digital transformation.

IBM loses employee records: Is ignorance bliss?

A Single Data Breach Costs Businesses 3.5 billions

A friend of mine got a letter this week from IBM, where he worked over a decade ago.  The letter reads:

“We are writing because of an incident that has resulted in the loss of information relating to your IBM employment, and we wanted to inform you about what happened and explain steps IBM is taking to help protect you.

Recently data tapes were lost while being transported by a vendor.  Those tapes contained primarily archival IBM employment-related information, including Social Security numbers.  After a thorough investigation…we have concluded the tape loss was inadvertent and not associated with theft or any other unlawful activity.”

The letter goes on to explain that no one has reported identity theft and the tapes can’t be read by a personal computer.  But the Q&A gives more details; namely that the tapes were lost on February 23, 2007 and they not only have SSNs but also birthdays, contact information, and work history.

IBM has also included a year of free credit monitoring, just in case.

So:  it’s bad that the tapes were lost.  It’s good that they didn’t wait a year like TJX to identify the problem and alert consumers.  But in this case, does ignorance = bliss?  I’m not a PR/crisis management type; this was certainly a proactive move by IBM.  However, another strategy would be to have a quick response prepared in case signs of trouble pop up (e.g. using brand monitoring tools).

Any thoughts on what IBM’s “right” move would be in this situation?

UPDATE:  See this Consumerist post about the GAO and data breach notification…