IBM CEO Sam Palmisano Wednesday spoke before a gathering of several hundred top IBM customers and executives, offering a State-of-the-Union-like rundown on IBM's view of the IT industry and vision of its future.

The technology industry moves through eras every 20 years or so, and it's now entering a new one: A wave of integration and "on demand" business capabilities that will allow organizations to respond rapidly to constituent needs and market trends, Palmisano said.

On-demand computing was the theme of his talk, as Palmisano outlined the forces and technological advances driving the new wave, to which IBM is committing $10 billion in research & development, acquisition and marketing funds. During his talk, which was also webcast to IBM's 350,000 employees worldwide, Palmisano said that he planned to put Irving Wladawsky-Berger, currently vice president, IBM Server Group Technology and Strategy, in charge of a new on-demand computing initiative.

"In my point of view, what you are seeing is a fundamental shift that is a long-term shift, that is irreversible," he said.

As companies began adopting e-business technologies, they first focused on access: Putting information on the Web, enabling some e-commerce, and so on, Palmisano said. Next came the integration phase, as businesses worked for internal integration, adopting enterprise resource planning and customer relationship management systems and building connections between them.

Now, the next stage, the on-demand transition, is about extending the enterprise beyond its borders, integrating fully with customers, partners and suppliers and using information technology to increase businesses' flexibility and responsiveness, he said.

IBM saved $6.2 billion in costs by adopting integration technologies, but its savings from on-demand technologies will be even bigger, Palmisano said.

He sees open standards and virtualization as major components of on-demand computing, with grid computing and autonomic technologies key to creating infrastructures robust enough to support enterprises' increasing IT complexity.

Grid computing is "operational, it's functional, it's here," Palmisano said, citing a cancer research project IBM is working on in partnership with the University of Pennsylvania. "But there's really another dimension to solving the problem: Become autonomic."

The IDG News Service is a Network World affiliate.