1. Implications for the CIO Point of View Presentation of CIO Implications of the 2010 IBM CEO Study: Capitalizing on Complexity 20 & 21 July 2010

3. The IBM Global CIO and CFO studies are part of our C-suite series 2005 study 2004 study 2008 study 2007 study 2008 study 2005 study 2003 study Total interviews: 450 Total interviews: 889 Total interviews: 1230 Total interviews: 1130 Total interviews: 404 Total interviews: 456 Total interviews: 320 2010 study Total interviews: 1917 CFO studies CEO studies 2006 study Total interviews: 765 CHRO studies 2009 study Total interviews: 393 CSCO study 2009 CIO study (NEW) Total interviews: 2598 Face-to-face: 2598 Total interviews: 1564 Face-to-face: 1564 2010 CEO study Recent studies of interest to the CIO

5. In this largest known sample of face-to-face CEO interviews, we spoke with over 1,500 CEOs and public sector leaders The study represents organizations in 60 countries and 33 industries Note: The CEO response sample has been weighted based on 2008 Actual Regional GDP of the IMF World Economic Outlook, October 2009; * Growth Markets include Latin America, Asia Pacific (excluding Japan), Middle East and Africa Sectors Regions 13% Communications 25% Distribution 18% Financial services 24% Industrial 20% Public 25% Growth markets* 21% North America 42% Europe 12% Japan

7. Successful CIOs blend three pairs of roles that seem contradictory, but are actually complementary By integrating these three pairs of roles, the CIO makes innovation real, raises the ROI of IT and expands business impact Source: IBM Global CIO Study 2009 Able Pragmatist Savvy Value Creator Relentless Cost Cutter Collaborative Business Leader Inspiring IT Manager Making Innovation real Raising the ROI of IT Expanding business impact Insightful Visionary ANZ ANZ ANZ

8. The Global CFO Study 2010 is the largest known CFO-level study of its kind with over 1,900 participants Source: IBM Global CFO Study 2010 Geography Asia Pacific 27% EMEA 42% Americas 31% Organization Size <=$500MM 25% $501MM to $1B 15% >$1B to $5B 28% >$5B to $10B 11% >$20B 14% >$10B to $20B 7% Sector Public 13% Communications 13% Industrial 25% Distribution 28% Financial Services 20% Others 1%

9. Using Regression analysis, we developed a model that segmented participants into four profiles based on capabilities and maturity Finance Profiles Source: IBM Global CFO Study 2010 23% 12% 32% 33%

11. Today’s complexity foreshadows an even more complex future Expect high/very high level of complexity over 5 years Currently experiencing high/very high level of complexity 32 % more “ Complexity is increasingly multi-faceted. It presents an opportunity and a threat at the same time.” Yoichiro Ushioda, Chairman and CEO, JS Group Corp, Japan Experienced and expected level of complexity 79% 60% Expect high/very high level of complexity over 5 years Feel prepared for expected complexity 30 % Complexity gap* “ The world is non-linear, so the ability to cut through complexity relies on processing a large amount of information quickly and extracting nuggets to make quick decisions. Building advantage will be an outcome of dealing with complexity better than our competitors” Julian Segal, Director and CEO, Caltex Australia Limited, Australia Expected level of complexity and preparedness to handle 49% 79% Source: 2010 CEO study Source: IBM Global CEO Study 2010

12. In the 2008 CEO study a similar “capability” gap was identified regarding managing change The Change Gap* Triples * Difference or ‘gap’ between expected level of change needed and past success in managing change “ We have seen more change in the last ten years than in the previous 90.” Ad J. Scheepbouwer, CEO, KPN Telecom 2006 2008 Source: IBM Global CEO Study 2008 Change Needed No/limited Change Moderate Change Substantial Change No/limited Success Moderate Success Successful Past Change Success 22 % CHANGE GAP* 8 % CHANGE GAP* 6% 11% 83% 19% 20% 61% 13% 22% 65% 12% 31% 57%

14. Increasing CEOs recognize that Technology is driving much of this change…. Source: IBM Global CEO Study 2010 Three most important ‘external’ forces over the next three years And that the impact of Technology will continue to increase in reshaping the competitive landscape A/NZ 52% A/NZ 36% A/NZ 42% A/NZ 42%

15. In the CEO Study we identified “Standout” organisations that delivered superior performance during both the long term and recent short term Complexity gap* “ Really, I am not afraid of complexity at all. On the contrary, this just motivates me.” Jacques Pellas, Secrètaire Général, Dassault Aviation, France * Complexity gap = Difference between expected complexity and the extent to which CEOs feel prepared to manage it Long-term, steady-state performance Short-term, crisis performance Top 50 percent Standouts 22 % Gap 6 % Gap 52 % Gap 35 % Gap Top 50 percent Standouts are also better prepared to manage the expected complexity

18. Decision making and its technological supporter, Business Intelligence and analytics, ranked high for both CEOs and CIOs A/NZ 100% A/NZ 92% A/NZ 100% A/NZ 95% A/NZ 89% A/NZ 76% 54 % more Thorough decisions Quick decisions Both 42% 15% 43% 41% 31% 28% Standouts Others Ways in which to achieve rapid change over next five years: Decision Making Source: IBM Global CEO study 2010 86% 80% 77% 76% 73% 70% Business intelligence and analytics Virtualization Risk management and compliance High growth Low growth The most important visionary plan element for CIOs: Business Intelligence Source: IBM Global CIO study 2009

21. CEOs want to better understand customer needs and actively work with them A/NZ 37% A/NZ 42% A/NZ 67% A/NZ 34% A/NZ 85% A/NZ 46% Better understanding of needs New or different services New or different products New or different channels 82% 70% 69% 61% 51% CEOs’ view of “How customer expectations will change over the next 5 years” Respondents answered “very large extent” Source: IBM Global CEO study 2010 44% 68% 54% 74% 36% 58% ... and anticipate much greater levels of integration and transparency with customers In five years, CIOs expect end-customers to continuously explore new channels... High-growth CIOs proactively craft data into actionable information High growth Low growth +37% +55% +61% CIOs’ view of changes in customer interaction Source: IBM Global CIO study 2009

22. Customer-centric CEOs will need customer-centric CIOs to fulfill their agendas Impact on organization of information explosion 29 % more More focus on insight and intelligence to realize strategy 18 % more 49% Other CEOs 63% Customer focused CEOs 66% Other CEOs 78% Customer focused CEOs “ Cu stomer relations will require near-real time information and the ability to change ‘on the fly’ which will require innovation.” Energy and Utility CIO Customer focused CEOs use data... ... to generate insight and intelligence Source: IBM Global CEO study 2010 Source: IBM Global CEO study 2010

25. Standouts simplify operations and products to better manage complexity A/NZ 59% A/NZ 46% Others Standouts 30 % more 61% 47% CEOs see changes to operating strategy: Simplify Source: IBM Global CEO study 2010 Others Standouts 16 % more 45% 39% The most crucial capability for execution success over the next 5 years is execution speed Source: IBM Global CEO study 2010 “ The aim is adaptability, the tool is execution speed. ” Dr. Faruk Yarman, General Manager, Havelsan, Turkey High growth Low growth 22 % more 50% 61% CIOs think business processes will be completely standardized and low cost Source: IBM Global CIO study 2009

26. Execution speed and global integration provide Standouts with increased dexterity A/NZ 78% A/NZ 78% 60 % more 10% Others 16% Standouts Most crucial capabilities for execution success over the next 5 years CEOs focus on global integration Source: IBM Global CEO study 2010 Many CIOs foresee a strongly centralized infrastructure in five years 76% 76% High growth Low growth Source: IBM Global CIO study 2009

28. Seizing the upside of complexity for CEOs and CIOs Imperatives for CEOs Implications for the CIO Honor your customers above all else Use two-way communications to sync with customers Profit from the information explosion Embrace ambiguity Take risks that disrupt legacy business models Leapfrog beyond “tried-and-true” management styles Simplify whenever possible Manage systemic complexity Promote a mindset of being fast and flexible Be “glocal” Reinvent customer relationships Build operating dexterity Embody creative leadership Build a customer-centric IT organization Enable customer interaction and collaboration Embrace business analytics embrace customer relationships Enable smarter decisions Advocate the “art of the possible” Enable the collaborative enterprise through technology Simplify IT whenever possible Manage systemic complexity Enable operational speed and flexibility Embrace “glocal” IT operations

29. Standouts capitalize on complexity in three ways Do you understand what technology is on the horizon to empower your CEO and executive team to achieve their vision? Is your IT environment designed to be flexible and adaptable to change, including its use of flexible operational models and service providers? Is your IT environment capable of capturing, synthesizing, and analyzing diverse information sets for analytics purposes and ultimately for optimizing customer operations?