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Smarter Enterprise: Six Principles for Successful Transformation
- 2. IBM’s strategy
A decade ago we saw change coming and took decisive actions that have
enabled IBM to turn today’s disruption into opportunity.
Changes Changes in Changes
in world information in client
markets technology needs
© 2010 IBM Corporation
- 3. In response, we changed our business mix and model
Business Model, Operating Model and Workforce Transformation
Remixed our portfolio toward services, Shift in geographic mix…
software, and integrated solutions…
2009 revenue:
Exited commoditized businesses: – 22% Asia Pacific
– PCs – 35% Europe, Middle East, Africa
– Hard disk drives – 43% Americas
– Printing Systems
Growth markets share of geographic revenue:
Strengthened position in: – Growth markets accounted for 19% of IBM’s total
– Business Consulting geographic revenue in 2009
– Service-Oriented Architecture
– Information on demand Strong Performance in 2009…
– Virtualization
– Open, modular systems – $18.1B pre-tax earnings, up 9%
– $95.8B revenue, down 5%
Acquired over 60 companies in last 5 years
Pre Tax Income & Free Cash Flow ($B)
– to complement and scale our portfolio of products and
offerings Revenue ($B)
EPS
34% 42%
41% 42%
2003 2009 Software
Segment Segment
Profit Profit Services
34 Mix
Mix
Hardware & – $10.01 Earnings Per Share, up 13%
25% 16% financing – Strong performance in services, software and growth
markets
© 2010 IBM Corporation
- 4. Improved performance has allowed us to invest in future
sources of growth and provide record return to shareholders
…while continuing to invest in R&D—
more than $56 billion from 2000 to 2009.
© 2010 IBM Corporation
- 5. IBM’s ongoing transformation journey
The “Smarter” phase of our transformation is beginning
2003
Sharing & partnering
2006
Globally integrating
Consistent set of
processes worldwide 2010
Leverage best practices Making things smarter
Standardize and reduce Right skills, right
waste place, right cost
Governance and Rationalize support
performance discipline functions for greater
efficiency
Instrumented, interconnected,
Radically simplify intelligent
processes
Enable growth and productivity
Optimize the whole system
© 2010 IBM Corporation
- 7. Start a movement
IBM engages workforce through
―jams‖ and social media
– Exchanging ideas
– Moving the culture
– Capturing the imagination
ValuesJam reestablished IBM’s
culture and brand for the 21st
century
WorldJam generated 35 ideas
leading to $500M in savings
InnovationJam established 10 new
businesses within IBM, forming
basis of the Smarter Planet
agenda
“Jams have helped change our culture
and the fundamental way we collaborate
across our business.”
- Sam Palmisano, Chairman & CEO, IBM
© 2010 IBM Corporation
- 9. Establish clear transformation governance
IBM establishes high-level
governance councils to guide GIE SVP Forum
key process and IT
transformation initiatives
– Cross-unit representation Enterprise Process GIE Shared
– Aligns business and Owner Board Services Council
transformation strategy Incentives, Order-to- IT, HR,
– Consistent metrics Cash, Hardware Product Marketing/Comm,
Mgmt, Business Partner Finance, Legal, ISC, Real
Good governance ensures the Enablement Estate, Sales Ops
business value of transformation
investments gets measured and
delivered CIO Operating Team
Members: CIO Leadership Team & ITD, AS Partners
Brands & Geographies
Brands: STG, SWG, GBS, GTS, IGF / Geo: NA, NE, SW, Japan, GMU
© 2010 IBM Corporation
- 11. Transformation requires a data-driven discussion
IBM applies leading-edge
business analytics to turn raw
data into operational advantage
– Territory optimization analysis
puts sellers over the best
opportunities Every day, 15 petabytes of new information
– Real-time data analysis are being generated -- 8x more than the
information in all U.S. libraries. Smart
improves manufacturing yields
enterprises turn this raw data into
– Matching engine aligns competitive insight
services staff to open
positions
Over the past four years, the Market Alignment Program has contributed over $1 billion in
revenue, applying analytics to sales management
With the Resource Analytics Hub, Global Business Services has improved productivity of
consultants by 18 percent and reduced unassigned resources from 8 percent to 3 percent
© 2010 IBM Corporation
- 13. Radically simplify business processes
Created end-to-end process
improvements to smooth
global integration
– Simplified, standardized process
across business units and geos
– Developed hundreds of Lean Sigma
process experts
Process transformation improvements
yielded $500M in productivity gains
in 2009
– Sales Transaction Hub coverage up
by 6%, giving time back to sellers
– Hardware Product Management
“With processes, our mantra is radical
reduced features & options by 35% simplification – eliminating, standardizing and
automating work that adds to complexity and
hinders integration.”
- Linda Sanford, Senior Vice President,
Enterprise Transformation
© 2010 IBM Corporation
- 15. Invest in transformative innovation
IBM applies collaborative technologies
to accelerate transformation and
engage employees
– Converted intranet into robust
social computing
– Broad social media portfolio
connects global, mobile, multi-
generational workforce
Lotus Connections
– Clouds for research, analytics,
& storage – 80% of internal
development testing supported
by cloud
More than 100K IBMers – sales,
developers, marketing – tap into
BlueInsight, the world’s largest
analytics cloud for better client insights
© 2010 IBM Corporation
- 17. Embody creative leadership
Leaders must create the climate and
culture that fosters successful IBMers at our Best: Our Competencies
transformation Embrace challenge Build mutual trust
– Created a collective leadership group Partner for clients’ Influence through expertise
of 300 executives to integrate the success Continuously transform
company and lead by IBM’s values Collaborate globally Communicate for impact
– Refreshed core set of competencies Act with a systemic
perspective
Help IBMers succeed
for all IBMers
– Assigned senior leaders to growth
markets to develop new leaders
IBM’s Corporate Service Corps has
deployed hundreds of high-potential
employees to short-term assignments in
emerging markets to work on economic
development projects
© 2010 IBM Corporation
- 18. The Road to a Smarter Enterprise
Six Principles to Consider
Start a movement
– Engage the workforce
– Jams and social software are great enablers
Establish clear transformation governance
– Appoint business, process and IT leaders to councils
– Key decision-makers must have accountability for results
Transformation requires a data-driven discussion
– Analytics can improve operational performance
– Enable fact-based decisions
Radically simplify business processes
– Design processes from viewpoint of users, not process owners
– Establish standards & eliminate process steps that don’t add value
Invest in transformative innovation
– IT doesn’t create transformation, but can be great accelerator
– Experiment with new ways to stimulate work environment & fuel new thinking
Embody creative leadership
– Takes new approach to lead global, multi-generational workforce
– Leadership competencies must evolve for new realities
© 2010 IBM Corporation
- 19. Trademarks and notes
IBM Corporation 2009
IBM, the IBM logo and ibm.com are registered trademarks, and other company, product or
service names may be trademarks or service marks of International Business Machines
Corporation in the United States, other countries, or both. A current list of IBM trademarks is
available on the Web at ―Copyright and trademark information‖ at
www.ibm.com/legal/copytrade.shtml
Adobe, the Adobe logo, PostScript, the PostScript logo, Cell Broadband Engine, Intel, the
Intel logo, Intel Inside, the Intel Inside logo, Intel Centrino, the Intel Centrino logo, Celeron,
Intel Xeon, Intel SpeedStep, Itanium, IT Infrastructure Library, ITIL, Java and all Java-based
trademarks, Linux, Microsoft, Windows, Windows NT, the Windows logo, and UNIX are
trademarks or service marks of others as described under ―Special attributions‖ at:
http://www.ibm.com/legal/copytrade.shtml#section-special
Other company, product and service names may be trademarks or service marks of others.
References in this publication to IBM products or services do not imply that IBM intends to
make them available in all countries in which IBM operates.
© 2010 IBM Corporation