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IBM: Modernize your business or risk being Uber-ized

http://fortune.com/2015/10/26/ibm-modernize-business-disruption/

By Jonathan Vanian

Executives from Kohl’s department store, Urban Outfitters, and HSBC share how to avoid being passed by a new rival.

IBM has a stern warning for big old companies that fail to modernize their technology and business practices. You risk being disrupted by an Uber-like startup.

Big Blue executives took the stage at an IBM conference in Las Vegas on Monday to urge companies to undergo a so-called “digital transformation.” That usually involves using more software and data technology — preferably IBM’s — and paying closer attention to how customers shop online and use social media services like Twitter.

“You better figure it out, because there’s an Uber out there that’s already figured it out,” warned Glen Finch, IBM’s global leader of big data and analytics.

When talking to customers, Finch said he’s noticed that companies are worried about more nimble startups like Uber overtaking their business. Uber, of course, has upended the taxi industry, which was seen as being slow to counter its fast-rising rival.

“The bottom line is that the c-suite is staying up at night,” Finch said.

To drive home the point, IBM IBM -1.39% trotted out executives from Kohl’s KSS 0.33% department store, Urban Outfitters URBN -1.01% , British bank HSBC, and others to explain how they’ve updated their business

Mark Clare, HSBC’s chief data officer, said his bank no longer thinks of data as something that benefits only its IT department. Instead, his data team has a seat on the bank’s executive team and is highly involved with making business-related decisions.

The bank, for example, is tweaking its mobile banking app and website to make it as simple and easy to use as popular social media sites, Clare boasted. HSBC is also monitoring customers on social media so it “can react and manage that customer experience,” rather than merely collecting data about what they do with their accounts like making deposits.

Ratnakar Lavu, the executive vice president of digital technology of Kohl’s department store, talked about overhauling the company’s mobile app, which customers said was difficult to use. He said the company now has an app that makes it easier for customers to buy products, and uses data crunching technology to send customers personalized discounts and recommendations.

Urban Outfitters, another big fan of data analysis technology, uses its technology to figure out where to best place music records in its stores, explained Holly Devine, the company’s executive director of planning. While Urban Outfitters is primarily known for selling clothing, it’s also been selling record players and vinyl albums to capitalize on a renewed retro interest in pre-digital music. Last year, the company claimed to be the biggest seller of records.

Of course, because this was an IBM conference, every company that appeared on stage bragged about how IBM’s data analytics technology helped their business. And everyone patted themselves on the back.

IBM is itself going through a challenging time with fourteen straight quarters of declining revenue. The company has been shifting its business to focus more on cloud computing and data analytics. But because the company doesn’t break down the hard numbers behind its new initiatives, it’s difficult to know how the units are doing.

Meanwhile rivals like Amazon AMZN 0.41% and Microsoft MSFT -0.48% have generated a lot of interest with customers looking to use cloud computing services, much to the chagrin of IBM.

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