Operating revenue down, but profits are up at IBM NZ

Operating revenue down, but profits are up at IBM NZ

Pre-tax income was up 3.5 per cent at $56.5 million.

Local arm of global firm IBM has noted an after-tax profit of $40.32 million for the year ended December 31, 2013 year, up slightly from $39.46 million in 2012, even as operating revenue dipped by $42.83 million to $386.86 million.

Pre-tax income was up 3.5 per cent at $56.5 million.

"We know the market is shifting in New Zealand. IBM is transforming its business and is remixing toward higher-value, more profitable markets and opportunities – like cloud, analytics, social and mobile. We are placing significant investment in developing and sourcing the best skills and capabilities in these areas that will drive growth and higher value for our business and for our clients,” said Lay Chin, CFO at IBM New Zealand.

Chin’s belief that IBM has a healthy business in NZ was echoed by IDC services research manager Adam Dodds.

”IBM is actually setting up well for its next phase. Historically, New Zealanders want global companies to act local but you can't now escape the importance of being global,” said Dodds.

There has been a level of contraction in the market as a whole, he said.

“Market behaviour has changed. Partly, that's because of government strategy around procurement. People have had to realign [their businesses].

“We're seeing a significant shift in the market, with the commoditisation of infrastructure hardware. All of the big companies are going through a transformational process. IBM's results are a reflection of that.”

Dodds said each of the global companies had a different go-to-market strategy and each has found different layers in the market. “People are finding out what they're good at and they're going for it.”

Read more: Our strategy is about being digitally-led and people-backed: Westpac NZ

IBM had a heavily consultant-led strategy.

In a statement accompanying its results announcement, IBM noted that it implemented a nationwide unified health information platform for the Ministry of Health to provide reliable access to patient data and signed a five-year contract with Westpac to deliver application development and management services out of the IBM Delivery Centre at Unitec.

It also delivered consulting and enterprise architecture to BNZ Bank to support a major front office transformation project.

According to IBM NZ, it awarded nine community grants to support local organisations, including schools, volunteer-run emergency services and charitable organisations in the fiscal.

Read more: NZ firms struggle to realise business value with unstructured data: survey

In May 2013, a team of international experts visited Christchurch following a successful application by the Canterbury Development Corporation for an IBM Smarter Cities Challenge grant. The recommendations, released in November, aim to help Christchurch become a more knowledge-intensive city supported by long term economic development.

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Tags IDCWestpacIDC ResearchIBM NZchristchurchMinistry of HealthCanterbury Development CorporationUnitecIBM Delivery CentreLay ChinIBM Smarter Cities ChallengeIBM New ZEalandBNZ Bank


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