The real message in the metrics of IBM.

Bruce Nussbaum

IBM's 22% profit rise reflects a lot of things, including significant cost cutting, but the deeper message in the figures is that IBM is making progress on becoming an innovation and design consultant to Corporate America. IBM has been moving its traditional business consulting work upscale by doing two things: 1) taking over increasingly sophisticated operations from companies and running them;
2) using its top-notch design and technology expertise to do innovation for other companies. The profits numbers show real progress in expanding both businesses.

I spoke with Lee Green, the director of corporate identity and design at IBM, Robert Steinbugler, program manager of strategic corporate design and people at IBM's Engineering & Technology Services (E&TS) group recently. They say they can go to companies, manufacturing and service companies and help them in six different ways:

1- improve time to market
2- cut R&D budgets
3- integrate advanced IBM technologies
4- gain access to IBM's intellectual property
5- provide engineering skills from IBM's 40,000 engineers.
6- provide differentiated experiences to customers.

IBM says it can be the content designer for certain kinds of products for certain kinds of companies. The next step is for Flextronics or other mass manufacturers to actually make the stuff. If you want, IBM also says it will plug you into their global supply network.

This is all good stuff, if IBM can deliver, and the profits numbers show that a growing number of companies say it can. Revenues rose 3% but business consulting was up 6% and the business of handling other companies' operations jumped 45%. Boeing, Sony, Brother, Panasonic, the NYSE, Mayo Clinic--all customers. And for those who scoff at the idea of IBM as a design leader, just remember that the ThinkPad may be as much an iconic product design as the iPod.

Before it's here, it's on the Bloomberg Terminal.