Why you need to dig deeper than straightforward rankings: IBM as a case study in brand

By Alison Huntington.

By many metrics in our annual survey of clients’ opinions about consulting firms, IBM Global Business Services is doing extremely well. It’s top-rated for the quality of the work it provides in a range of consulting services, and, as we’ve discussed previously on these pages, manages to turn the heads of clients of firms like McKinsey. Other studies seem to confirm the power of the IBM brand—in a 2017 survey by Interbrand, it was ranked as the tenth “best brand” in the world.*

So can the IBM brand team put their feet up for the rest of the year? Is their work here done? We suspect not: Despite their many successes, there’s evidence that, for the consulting part of their business at least, there’s still some way to go.

Our survey covers a range of consulting services, and it’ll surprise no one that IBM Global Business Services is extremely highly regarded in areas like data & analytics, robotics and AI, and legacy technology. The firm has long been regarded as a technology pioneer, and who better to advise a client on how to use it than the consulting wing of the firm that invents it. But it’s more surprising to see it highly-regarded for business strategy—a service with which it hasn’t historically been associated.

Of course, strategy and technology are becoming ever more intertwined. Many would argue you can’t really do good strategy work these days without having a solid grasp of the technologies that enable it. And conversely, you can also argue that technology work is moving upstream to be seen as more strategic, boosting perceptions of IBM’s business consulting credentials. But I think this is only a partial explanation for why it is seen so positively in our survey.

One limitation of asking about consulting services in a quantitative survey is that most are a broad church. Business strategy could mean working out whether a company should enter a new market, or it could mean graduates crunching numbers in a darkened room. Increasingly, it can mean products or assets sifting through big piles of data to help arrive at a decision. Similarly, digital transformation can mean highly strategic conversations about a company’s future business model, and it can mean IT integration. My suspicion is that whenever clients are telling us how highly they think of IBM in a range of services, they’re really still talking about the firm’s technology expertise rather than business consulting skills.

“When I think of IBM,” says one finance director at an automotive company in the Nordics, “I think of a firm that's not very fancy, not at the forefront, but that does the job in a neat way, especially concerning IT management.” A VP of finance in the US echos their opinion: “In my opinion, IBM is a very good firm, and I would trust them to add value around anything involving technology advice.” “We use IBM for some specific things, but not in terms of the more strategic view and long reaching strategy,” says a VP in corporate strategy in the US. “We use them for certain technology in the products and certain tech in the organisation.” Sensing a theme?

Being strongly associated primarily with the technology side of consulting is hardly a huge problem for IBM today; the digital transformation wave has driven growth for all types of firm. Recently, we estimated IBM’s digital market share as an impressive 7%—a figure that will hardly have anyone at IBM weeping into their coffee cups.

But how well positioned is its consulting brand for the future?

Two things should cause pause for thought. The first is that everyone else is getting much better at technology. Firms of all stripes are investing in technology capabilities, both in people and machines. And just as firms are succeeding in moving “upstream” into more strategic work, others will be moving “downstream” to ensure they can give clients the full end-to-end experience that digital transformation requires.

The second is where the future growth in digital transformation is going to come from. It may feel like the gift that keeps on giving today, but the nature of that gift is changing. As digital morphs its way back into traditional service lines, colonising them as it goes, IBM may struggle to compete in a world in which the established business consultants are as tech-savvy as they are. We estimate that in the near future, the fastest growth in digital transformation will happen predominantly in service lines outside technology, where IBM is less well positioned. Technology will still be a huge driver of consulting demand, due to the sheer size of the service, but the growth will be faster elsewhere.

Just as the Big Four struggle to shake off the “spray-painted auditor” label, IBM struggles to shake off the IT implementer tag. “I don’t think of IBM as a consulting firm,” a marketing director at one of the world’s largest security firms recently told me. That may be OK in today’s world, but if too many clients continue to think this about IBM’s consulting brand, it could spell trouble for the future.

*It’s important to note that the Interbrand study considers the wider IBM brand, while we ask clients about IBM Global Business Services specifically.