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January 23, 2012 / berniespang

In today’s economy, budgets are for rapid value, not misleading hype

I read and heard a few seemingly unrelated items this week that led me to the title of this week’s post.    First were the IBM 4Q and 2011 results and our CFO’s presentation and Q&A with financial analysts, next an analysis of these results in context of other technology providers, and finally was Conor O’Mahony’s analysis of recent Oracle benchmarks.

Positive results

IBM results were positive and accompanied by other encouraging indicators of IT demand, while Oracle had recently suggested that its latest disappointing results were  largely due to a general market slowdown.   I was particularly happy to hear IBM CFO Mark Loughridge say:

“Information Management grew 9 percent and again gained share. Our Distributed Database grew double digits led by strong performances from our Netezza offerings, which were up nearly 70 percent. …. For the quarter, almost a third of the transactions were with new Netezza clients.  Since acquiring Netezza, IBM has expanded its customer base by over 40 percent. And when we go head-to-head against competition in Proof of Concepts we had a win rate of over 80 percent this quarter. Our business analytics software offerings, most of which are part of Information Management, continue to outpace the market with double-digit growth.”

But it was an answer he gave to an analyst question that really stuck with me.   An analyst asked something along the lines of do you see a general tightening of CIO budgets?   Mark’s reply included a point that clients are focusing their spending on things that will rapidly deliver value to the business.   And that IBM results reflect our ability to bring that value to our clients.  (You can find a replay of the call at the link above).

Business Value vs. misleading hype

I thought of Mark’s answer as I read Conor’s analysis of the Oracle marketing spin on its benchmark results.  A 3x faster claim is based on a meaningless comparison of its current offering with IBM results from 2007,  and a claim of 60% faster is based on a comparison with a more current IBM system that used half the number of processors.   When you look at the apple to apples comparison that matters – current price for performance – IBM is 39% less expensive.   This is the real business value that we see our clients paying close attention to these days.

The bottom line is that most organizations are demanding a smarter use of their IT investments.   They no longer accept business as usual as the automatic answer.  It is true among solution architects and developers who are considering NoSQL / Big Data management systems in addition to relational database systems; and among IT leaders who are seriously evaluating the most effective and cost efficient systems for their business.

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