International Business Machines Corp. (IBM), salesforce.com, inc. (CRM): Six Future Trends that Investors Cannot Ignore

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Editor’s Note: This article has been amended to correct the 2025 projection of Americans over 60.

I recently read an interesting report entitled “Future Work Skills 2020” that was written by the Institute for the Future. The report outlines six trends that are likely to continue into 2020. For us investors, it is more important than ever to understand the needs of the marketplace before the marketplace understands itself.

International Business Machines Corp. (NYSE:IBM)The six trends of the future

These are the six trends that were identified by the Institute for the Future:

  • Increasing life spans will change the nature of careers and learning. By 2025, the number of Americans over 60 will increase by 70%. Investment into health and healthcare systems will be a priority.
  • Automation will push humans out of the workforce and cause workers to abandon rote tasks. Software and robotic automation will reduce the need for repetitive job roles and functions in certain segments of the economy.
  • The computational world will increase the amount of sensors, data, and communication technologies. International Business Machines Corp. (NYSE:IBM) defines it as big data and analytics.
  • A new media ecology will emerge, with various forms of content like video, pictures, and text blending together in a unique way that will change the way people work and learn in the business and education environment.
  • Super-structured organizations driven by social technologies will drive new ways of becoming productive and generate value. Examples of this include salesforce.com, inc. (NYSE:CRM) and its customer-relationship management tools. The services allow for large organizations to communicate across all levels in order to better manage sales relationships. Repeat this function using social tools in other aspects besides selling and the super structured organization will become much more horizontal.
  • A globally-connected world whereby Internet connectivity will increase. This will eliminate many barriers of entry, as the Internet is a great equalizer. The global economy will continue to outsource certain job functions to other companies. Service companies like Accenture Plc (NYSE:ACN) will prosper.

Let’s start with IBM

The company isn’t really well-known for business analytics and big data services. There are a variety of business-to-business and public sector solutions that the company currently markets and sells across the world, however. Data and the ability to analyze it will become increasingly important as companies can better deploy resources and extract gains in productivity.

International Business Machines Corp. (NYSE:IBM) plans to generate 90% of its earnings from software and services by 2015. The company has plans to diversify and reduce its current exposure to systems and technology. In the first quarter, the company was able to grow revenues by 7% in business analytics, 25% in smarter planet technologies, and 70% from the cloud.

By 2015, International Business Machines Corp. (NYSE:IBM) will cut its costs by $8 billion, initiate a share buyback program of $70 billion, and pursue $20 billion in acquisitions. I believe that the company will be able to reach its own target of $20 in earnings per share by 2015.

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