As many Westside tech companies downsize or collapse, IBM Corp.’s fledgling e-Business Innovation Center in Santa Monica is booming.
Its workforce has exploded from 16 people last January to 135 today, and Fred Janczyn, executive and managing principal, is dead set on hiring more.
The hiring spree flies in the face of the prevailing trend: New York-based Razorfish Inc., with offices in Santa Monica, reduced its workforce by 10 percent in October. Chicago-based MarchFirst Inc., which also has offices in Santa Monica, slashed 1,000 staffers in November and cut an additional 550 last week, leaving the company with about 7,600 employees.
Janczyn declined to comment on IBM’s investment in the local e-Business Innovation Center or on revenues since its doors opened last January, but according to analysts, Big Blue is increasingly focusing on e-business.
“It’s a bigger and bigger part of the direction IBM is going,” said Laura Conigliaro, computer industry analyst with Goldman Sachs & Co. “And e-business revenue was a very fast-growing portion of their business.”
When IBM Corp. announced two weeks ago that its fourth-quarter profits had topped Wall Street’s reduced expectations, the computer maker’s CEO, Louis Gerstner, crowed that the company could weather any economic downturn because of its diverse portfolio.
Indeed, IBM’s various e-business service organizations generated revenues of $5.2 billion in 2000, up 70 percent from 1999. Overall, IBM generated revenues of $88.4 billion last year, up from $87.5 billion in 1999.
“There’s a lot of demand for e-commerce-related consulting, and those centers are solidifying the fact that IBM is playing in that space,” said John Jones, an analyst with Salomon Smith Barney.
According to Jones, e-business services represent a modest 6 to 7 percent piece of Big Blue’s total revenue pie, but e-business services are growing at a rate that is seven times the corporation’s average.
“Even though the revenues from the centers are a small piece of the total, it has a meaningful effect,” Jones said.
“Our market is not the dot-com market,” Janczyn said. “It’s established businesses that are extending business into e-space. ”
With its e-Business Innovation Centers there are 25 in various stages of development worldwide IBM wants to establish itself as the one-stop shopping source for customers seeking Web-related creative design, consulting and tech support.
IBM defines “e-business innovation” as anything that helps its customers to harness the power of the Web to expand markets, run more efficiently, cut costs, boost customer service and look good.
“I like to think of it as a location that integrates all of IBM’s competencies, as well as some new ones,” said Janczyn. “It’s not just about technology. It’s design. It’s e-branding.”
Throughout its history, IBM has positioned itself to go beyond just hardware to offer ever more complete packages of products and services. The foray into business applications software in the early 1990s, for example, was part of an effort to offer one-stop shopping for big customers trying to use its computers to automate an expanding range of business tasks.
So far, the local e-Business Innovation Center in Santa Monica has completed work for firms like Nestle, which got a new Web site that is designed to improve supplier and distributor relationships.
