IBM research: ultimate source for new businesses: the emerging business opportunities team plays a major role in accelerating research technologies from the labs to the marketplace.

OVERVIEW: Research organizations must have a strong balance of near-term and exploratory projects. Having a system that tracks and nurtures the development of these projects enables the organization to advance or eliminate them based on strategic milestones. IBM has developed an organization

to identify emerging business opportunities (EBO) within the research organization. By teaming with researchers earl), in the development process, the EBO team can provide support, funding, and the business advice necessary to advance new technologies more quickly to the market. Over the past three years, IBM has taken a systematic, company-wide approach to growing these new businesses. Beginning with a handful of EBOs, the program has grown to 17 EBOs--and generated market leadership for IBM in prime growth areas like life sciences, Linux, pervasive computing, and business integration.

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IBM's emerging business opportunities (EBO) program can be viewed as a group of startup companies being developed and nurtured inside the management constructs of the industry's largest information technology company. Although funded and managed within business divisions, the strategies are managed centrally and the funding for the EBOs is protected centrally--based on strategic milestones, rather than standard near-term business results. The EBOs are managed very differently from the rest of IBM's business units, and for good reason, because they represent the future.

EBOs have become a critical element in delivering IBM's sustained, future revenue growth. The EBO program was established in 2000 to improve the company's ability to explore, develop and test emerging business opportunities, and ultimately, to exploit these opportunities to grow our business. The intent was to identify new businesses that would develop into scalable growth businesses with significant, recurring revenue streams. The EBOs are not product upgrades or simply technical opportunities--they are business opportunities, ones we believe we can commercialize and turn into revenue-producing businesses because they meet the needs of our customers.

EBOs, by their definition, are changing the dynamics of our marketplace by introducing new business models like business transformation outsourcing, new customer sets like life sciences, new offerings like pervasive computing, and disruptive technologies like Linux and grid computing. IBM's future success is predicated on the ability to gain share and generate new streams of revenue growth and profit in areas like these. The identification and marketplace execution of EBOs is critical to this effort.