IBM in consulting services push

SAN FRANCISCO - IBM, the world's biggest computer services provider, said it's selling its experience running research-and-development programs to other companies as it expands its consulting business.

The company said the new business will help companies manage their research and development departments more efficiently and more profitably.

IBM estimates the research and development consulting market is worth about US$8 billion and growing 13 percent annually. The business will help companies run their research units but won't provide the research itself, IBM said.

For potential customers, "it's about taking new ideas and turning them into commercial opportunities," said Mel Weems, head of the new consulting unit, in an interview. Research and development "is seen as one of the last real ways that companies can drive organic growth."

Weems said IBM consultants from various parts of the company will assess clients' research and development business models and suggest ways to make them more profitable.

IBM said it would soon launch the program in the Americas and Asia-Pacific region, expanding to Europe later in the year.

The new unit is part of an effort by IBM, of Armonk, New York, to sell consulting services that carry higher prices and are more profitable than more routine technical services that care also offered by competitors.

IBM, in part, has done this by taking what it does internally and selling it to other companies, such as supply chain management, which IBM started selling as a service last year.

"This is the trend you are going to see from IBM," said Navi Radjou, a vice president at Forrester Research who studies research and development management.

"They are going beyond areas that have to do with information technology. They're looking for areas where they can take internal learnings and then recast them as external knowledge."

Weems said an IBM survey of chief executive officers found that research and development ranked eighth, on average, as a source for new ideas.

But companies worldwide spend about US$1 trillion annually on research and development, suggesting research and development is underutilised as a tool for
innovation, he said.

Additional reporting by Michele Gershberg in New York.

By: Philipp Gollner

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