IBM has just announced that it has inked an IT deal with the government of the Canadian province of Nova Scotia the details of which offer a very good explanation as to why most countries around the world want a Big Blue set up inside their borders.
IBM, Nova Scotia
The deal is essentially about analytics and about establishing Nova Scotia as a global analytics hub, but there are other things in the announcement of the deal that conjures up IBM’s Smart Planet strategy, even though the term doesn’t appear in the details that were released.
To put this in perspective, here’s a little bit of info about Nova Scotia. Located on the eastern seaboard, it has a population of 921,727 according to the 2011 census making it the second most densely populated province in Canada.
More importantly for IBM, it has 11 universities which are a key element in this deal. It also has the Nova Scotia Community College system, which has 13 campuses and which is driving the deal from the Canadian side.
The deal itself was signed between IBM Canada and envisages the creation of an analytics center in Halifax that will employ 500 people over eight years who will work in technology support services and software development around analytics during that period.
Nova Scotia Analytics Center
We have seen in recent quarters how important analytics has become in the IBM figures, but technology services has also been a growing element in those figures, and Halifax will be getting both. The services will be shared with a center in Sydney, Cape Breton.
Ultimately, the goal is to create a new Canadian delivery center for application services, and will be the first of its kind in Canada. However, it will not be a standalone center -- it will become part of IBM's network of global delivery centers for the delivery of IT systems for local government departments, businesses and universities.
Running parallel with this, IBM has also agreed to provide SAP application management services for Nova Scotia’s Core Competency Centre (CCC) and Health Administrative Services Program (HASP) programs.
Tackling Analytics Skills Gap
However, on an international level, it is the university and education program that really stands out. Let’s just step back three months to August and a Forrester report that we examined which caught a lot of people’s attention.
The report was entitled "The State of Customer Analytics 2012", and one of the principal take-aways that we noted in the report was that customer analytics is currently severely restricted by a serious skills shortage.
In fact 42% of organizations surveyed for the report cited human resources issues as one of the principal issues around customer analytics adoption in the enterprise, while 37% of organizations said that those that used analytics were having considerable difficulties transmitting the findings to key stakeholders.
IBM has clearly been looking at this and other reports that consistently show that skills shortages is going to be one of the principal problems around analytics in the near future.
And this deal is one of the ways IBM has set out to deal with this problem. Part of the deal is that IBM is investing millions of dollars in third-level institutions to create a province-side center of excellence that will provide education, certification, training and research in analytics.
The objective, IBM says, is to provide an analytics curriculum that will produce a workforce of highly skilled analytics workers that are in demand all across the globe.
These investments weave together our business insights, industry-leading software portfolio, world-class technology research and operations expertise with application development and analytics to successfully extend our long-term collaboration with Nova Scotia and its higher educational institutions,” said John Lutz, president, IBM Canada.
Before leaving this for today -- because we will definitely be coming back to it in the future -- some of the figures involved are interesting.
It is estimated that over the life of the deal payroll alone could be worth US $130 million, generating US$ 18.7 million in income tax for the province, of which the government will hand back two thirds if IBM succeeds in hitting its employment targets. The SAP contract is worth US$ 8.4 million per year over 10 years.
The time scale over which the education program will be unfurled has not been clarified yet, but this is definitely one to watch for as the skills shortage around analytics becomes critical.