COLLEEN ARNOLD, IBM

It's too bad Bill Clinton made a cliché of the phrase, “I feel your pain.” The people at IBM have earned the right to say it with a straight face. The company endured unprecedented downsizing and hard financial and technology choices in 1999, long before telcos saw the bubble-bursting freight train coming their way.

IBM went from blue chip to cow chip, but it's headed back into the blue now that, as some analysts have said, it has found its voice. Experience gives the company added credibility in a telecom industry that has been very incredulous. And it could give IBM a bigger play in an industry where it has been somewhat marginalized — relegated to the IT shop, as IBM's Colleen Arnold put it.

As the company's worldwide general manager for the communications sector, Arnold sees IBM as so much more than just IT. And the company is investing $10 billion in long-term initiatives to make sure that the rest of the world, including telecom, sees it that way.

“Most tech companies are reducing their spending in telecom and shifting resources to other industries,” Arnold said. “We have put more resources and more focus on telcos. It was one of two major organizational focuses for [CEO] Sam Palmisano last year.”

In one way, having a pithy slogan about feeling someone's pain might be useful to IBM. It would help the less worldly get their minds around the colossus that is Palmisano's vision: on-demand computing.

It's a concept so broad that service providers might be inclined to set it aside while they concentrate on dousing the flames of an economy gone bad. It encompasses emerging concepts such as grid computing and data storage virtualization. It includes a major cost-cutting component and the service provider delivery environment, or SPDE, a WebSphere-based server and software framework for delivering voice and data services and promoting easy integration.

At first blush, getting on board with such a vision would appear to require an infrastructure change on a scale that service providers are just not up to right now. Not so, says Arnold.

The SPDE scheme is designed to allow a gradual migration to an ultimately open end-to-end architecture. So patience is IBM's new virtue. “The name of the game in 2003 is to be the best trusted advisor to the telcos while they are going through this [slowdown] such that when they do spend, they spend more with us than with anybody else,” Arnold said.

And spending has begun. BellSouth was, until recently, an Accenture and EDS shop. But IBM recently convinced the carrier to embrace IBM's vision and turn over its hosting business. The companies agreed in March to collaborate on hosting network services for business customers.

The dealmaker, Arnold said, was vision. “It was a win based not on revenue but on strategy and on our drive to open standards.”

That drive includes helping to convert skeptics of the Linux operating system. Karl Whitelock, OSS program manager for Stratecast Partners, said you have to give credit where credit is due. “Linux open source software has some pretty interesting market appeal right now.”

But appeal is not enough to overcome concerns about budgets and potential consolidation. Arnold said not to worry. “That could well shift into next year — who knows?” she said. “So be the most efficient delivery mechanism you can possibly be for today's business.” Naturally, she can help.