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IBM will beat Amazon Web Services because process beats product

Rob Enderle | Nov. 18, 2013
IBM will eventually beat Amazon Web Services, writes columnist Rob Enderle, but not because AWS has an inferior product. In many ways, AWS is better than IBM's cloud offering. But Big Blue's experience with enterprise customers, not to mention the federal government, shows that great businesses processes often beat great products.

Last week I discussed why IBM will beat Amazon Web Services. I got a lot of supportive comments, while a few folks, mostly young, thought I really didn't get why AWS is superior to IBM. I also got a note from Amazon PR offering me an opportunity to find out why AWS is superior.

This made me realize that I hadn't clearly communicated that this isn't about technology at all. It's about understanding how to work with large government organizations -- something IBM has been doing for nearly a century -- and why process is more important than product.

This points to why the first White House CTO left the job and why, more recently, the Affordable Health Care Act website has been a disaster. The government didn't use a company such as IBM, which knew the risks and had the resources to get the job done; it saved some money and got a train wreck instead.

I spent a bit of time auditing federal contracts in IBM, and some time looking at technology implementation. Let me tell you: Government IT is a very different world.

IBM Serves Its Clients Well; the Government Loves That
In IT, we often cite the old saying, " no one ever got fired from buying IBM." While we might, at times, put another name in IBM's place, IBM was the first company to have that designation - and has had it for the longest time.

I once did a win/loss review of a competitive bid between Microsoft and IBM that showcases how this came to be. It was a massive bid, with five company sites that all had to agree the chosen solution., IBM was nearly impossible to displace at two of the five sites; for each sales meeting, IBM reps made sure the secretaries got fresh flowers and their advocates had all the ammunition they needed to defend IBM. Microsoft focused on the three more flexible sites, and convinced them to go with Microsoft technology, but the two sites that IBM protected refused to move. IBM won the business despite being the higher bidder.

My review, which went to Microsoft's executive management, said the approximately $1 million spent to win the business had been wasted, since IBM had effectively locked Microsoft out. (This earned me a nasty call from the Microsoft sales team leader.) To win, Microsoft would have had to break the IBM lock, but it was unwilling to invest in what was required to make that happen. Microsoft actually had the better technology, but IBM understood the customer's strategic perspective.

IBM understands how to advocate for and protect a client in a large, complex bid -- and there's nothing more complex than the federal government. IBM knows that secretaries and administrative assistants at would-be customers are critical to IBM's intelligence and support, so the company treats them particularly well and makes sure its advocates are protected. (I could go on longer about why flowers are important, but those who understand this get it already, and I'd likely need to write a book for those who don't.)


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