IBM: Software Smorgasbord

By Baselinemag  |  Posted 2005-08-04 Print this article Print

IBM covers the waterfront like nobody else now that it's digested Rational, though customers see room for improvement in some tools.

Two years ago, IBM wolfed down Rational Software, a major provider of tools to manage the software development process. Rational has been comfortably digested, customers say, and now Big Blue offers the most generous spread of application development products in the business.

"IBM is right on, in terms of its strategy," says Sara Garrison, senior vice president of network and open systems at Visa USA, which uses several Rational products.

She adds, however, that IBM's grand vision—of being able to tie the application development process into the broader life cycle of an information-technology project—isn't fully realized yet. Also, she says, Visa doesn't ever expect to rely on one vendor for everything; for example, the company occasionally uses Microsoft development software. "There will always be a need for us to wrap multiple tools from multiple vendors together," Garrison says.

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Some customers say IBM was able to preserve the best of what Rational had to offer. "The transition from Rational to IBM was pretty seamless," says David Haas, lead information-technology methodologist at Thrivent Financial for Lutherans, a financial services company. "From my perspective, that was a good thing."

Tom Sawyer, software manager at Moog, a manufacturer of airplane parts, says IBM, with its greater resources, has improved technical support. "I had to train the tech support guys at Rational to understand where I was coming from," he says. "As part of IBM, they're more structured in their processes."

Not everyone believes the change has all been for the better. After IBM bought Rational, "the help desk went downhill," says Elizabeth Honig, application manager for drug company Novartis. Now, instead of being able to call one of Rational's engineers directly, she must call IBM's main technical support line—so it takes longer to get answers.

And some pieces of IBM's product lineup could be beefed up, customers say. Nandan Dasgupta, an e-business systems consultant in Wells Fargo's mortgage division, says neither IBM's nor Rational's Java development environments have been extremely strong, but that newer offerings, like Rational Software Architect, show promise. "IBM and Rational should come up with more tools to aid developers," Dasgupta says.

Application Development Management

New Orchard Rd.
Armonk, NY 10504
(914) 499-1900


EMPLOYEES: 329,000

Daniel Sabbah
General Manager, Rational
Joined IBM in 1974, working for the telecommunications software division. Before heading the Rational group, he was in charge of software development, strategy and architecture for all IBM software products.

Lee Nackman
VP, Product Development, Rational
Previously chief technology officer at Rational, he initiated the Eclipse open-source Java development platform.

Rational Application Developer for WebSphere Software lets programmers design, develop, test and deploy Web and Java applications. Rational Software Architect allows development managers to specify higher-level application design guidelines. Rational ClearCase provides version control for development teams. Rational ClearQuest tracks code changes as well as a project's overall status.
Reference Checks

Visa USA
Sara Garrison
Senior VP, Network and Open Systems
(314) 982-7722
Project: Credit card company uses ClearCase and ClearQuest to manage development by about 400 programmers of applications for accessing its transaction network.

Tom Sawyer
Software Manager
Project: Aircraft controls maker uses ClearCase and ClearQuest to manage development of code that operates rudders and flaps on planes.

Office Depot
Mike Kirschner
VP, Customer Systems
Project: Office supplies retailer uses Rational Application Developer for WebSphere Software to maintain its proprietary order-management system and other applications.

Elizabeth Honig
Application Manager
(862) 778-4311
Project: Drug maker manages code written for SAS' statistical analysis program using ClearCase and ClearQuest.

Thrivent Financial for Lutherans
David Haas
Lead I.T. Methodologist
Project: Financial services firm uses Rational Application Developer for WebSphere Software and has adopted Rational's development methodologies.

Wells Fargo
Nandan Dasgupta
E-Business Systems Consultant
Project: Bank's mortgage group uses Rational products to manage Java development, including ClearCase and RequisitePro for requirements gathering.

Executives listed here are all users of IBM's products. Their willingness to talk has been confirmed by Baseline.

IBM operating results*

2005YTD 2004 2003
Revenue $45.18B $96.29B $89.13B
Gross margin 37.7% 37.4% 37.0%
Operating income $4.74B $12.03B $10.87B
Net income $3.23B $8.43B $7.58B
Net margin 7.2% 8.8% 8.5%
Earnings per share $1.96 $4.93 $4.32
R&D expenditure $2.94B $5.67B $5.08B

* Fiscal year ends Dec. 31; YTD reflects first six months

Source: Company reports


Total assets - $103.39B

Stockholders' - equity $30.13B

Cash and equivalents - $8.66B

Investments - $48.67B

Long-term debt - $17.58B

Short-term debt - $6.13B

Shares outstanding - 1.63B

Market value, 7/25 - $136.23B

**As of June 30, 2005, except as noted


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