IBM Goes VerticalIBM Goes Vertical

Two deals IBM disclosed last week to provide customers with business-process outsourcing services are the latest in its effort to sell computing power as an on-demand utility. As part of a deal to supply procurement services to logistics company CNF Inc., IBM will host spend-management software from Ketera Technologies Inc., which CNF will access as needed via a Web browser. IBM is also teaming with Intacct Corp. to host its real-time accounting software for maritime shipping company Transmarine Navigation Corp.

Ketera marketing director Brian Desmond likens the arrangement with CNF to using minutes on a cell phone: CNF will be billed based on how much employees use the software. The two shipping deals are "critical to IBM's utility-services business model," Gartner analyst Bruce Caldwell says. The vendor hopes to promote utility computing by developing unique business processes for vertical industries. "If IBM doesn't have the standard practices those industries use," Caldwell says, "then they're not going to be able to extract higher value."