Overview of contents IBM’s growth markets focus + Market drivers + Opportunity + Structure & investment IBM Growth Markets strategy + Market Expansion + IT Infrastructure development + Industry leadership Smarter Planet + Smarter Cities Generating value + Business model + Corporate responsibility + GMU facts
Over the past decade, IBM has sustainedleadership by pursuing the mosttransformational opportunities, it f ti l t iti inventing th ti thebreakthrough technologies to capture them andbuilding an organization able to deliver superiorresults over the long term.Today IBM is pursuing a roadmap laid out to2015 targeting $20 billion in top line revenuegrowth from four growth initiatives: GrowthMarkets, Clo d B siness AnalyticsMarkets Cloud, Business Anal tics and SmarterPlanet3 IBM GMU External Relations 2012
Demand for technology & infrastructure is driving growth markets gy gg Russia has committed a spend of Emerging markets infrastructure is India power sector needs $400bn on 304 infrastructure expected to benefit from: $ trillion p $6 investment of $ 230 billion projects by 2015—and $ $300B on in government and private between 2012 to 2017 railways by 2030 spending by 2013 Argentina’s investment in energy In Africa, 2012 o a ds FDI ca, 0 onwards p China is expected to build some is about $740 million and it has a $ inflows are forecasted to increase 1,000 gigawatts of new power- target of 8% of its energy to be to $150 billion. The decade 2000- generation capacity over the next sourced from renewables by 2016 2010 saw it increase by 87% 15 years4 Source: EIU 2011
Understanding and building business in growth markets requiresfocus and investment . Understanding Assessing the market Investments that growth market opportunity support growth characteristics Developing skills & Making markets Brand eminence talent 55
Growth from new markets k tGrowth in IT will come from newmarkets that are emerging at anastonishing rate. To relieve the strain Revenue from growthon inadequate infrastructure, they are markets will approachleapfrogging to new technologies. 30% of total IBM revenue by 2015; IBM is relying on market expansion to drive 32% of new GMU growth.th6 IBM GMU External Relations 2012
Developing new markets for growth p g g “The IMF expects emerging markets to contribute over 80% of world GDP growth in 2012”. -- The Economist “As IBM begins our second century, we remain driven by our founders vision. To be sustainable a business must be built on intellect, problem solving, imagination, transformation and innovation. And in our growth markets, this is particularly the case. It’s in growth markets that some of the most complex challenges and opportunities exist, as countries and b i d t iti i t ti d businesses grapple with l ith urban migration of levels unknown in the developed world and with demands from citizens – urban and rural – to deliver solutions with unprecedented u p ecede ed speed to connect people and business. o co ec peop e a d bus ess We believe this calls for new operating models, new ways of Jim Bramante innovating, new ways of serving clients and we believe IBM’s Senior Vice President proven experience and advanced expertise will h l public and i d d d ti ill help bli d IBM Growth Markets private enterprise to move quickly to adapt to these new dynamics.”7
IBM does business in more than 147 countries in Growth Markets: Global Headquarters in Shanghai Eight Growth Market Teams Central & Eastern Europe Middle East Africa Korea Greater China India ASEAN Latin America South Asia Australia, New Z l d N Zealand8
IBM does business in more than 147 countries in Growth Markets: Global Headquarters in Shanghai Eight Growth Market Teams Eight regional leaders Central & Eastern Europe David Stokes Korea Middle East Africa HS Lee Takreem el Tohamy Greater China DC Chien India ASEAN Cordelia Chung Latin America South Asia Shanker Annaswamy Elly Keinan y Australia, New Zealand Andrew Stevens9
Significant investment in infrastructure & skills are required todeliver high value systems solutions and services to clients systems, A Globally Integrated Enterprise delivers the same services & solutions 24/7 Global Delivery Center Software & Hardware Lab Research Lab Poland Russia Innovation Center Czech Republic Slovakia Cloud Computing Center Romania Hungary Micro-financing Hub Turkey South Egypt Natural Resources Korea Morocco Telecommunications Mexico Rail India Vietnam Phili i Philippines Health Peru Malaysia Energy Brazil Singapore Finance Retail Australia Public Sector Argentina South Africa11
Key IBM 2011 investments announced in Growth Markets IBM to build Cloud Computing IBM opens first server re- IBM establishes Science & Data Center with local China firm manufacturing center in China Technology Center within the Skolkovo Innovation Center in Moscow. Moscow IBM advances analytics skills IBM sets up services integration The Africa revolution nobody program to global universities hub in Changi Singapore Changi, should ignore. IBM s invests big ignore IBM’s across African countries.12 IBM GMU External Relations 2012
Over $1B investments in business partners across growth markets p gWe’re investing in partners across growth markets • Over 50,000 Business Partners • In 2011, Co-marketing investments supported 600+ Business Partners • Systems technology group spends over $5M annually transforming the partner ecosystem • Access to over 20 innovation centers, 8 cloud labs and 2 cloud datacenters • 133,000+ professional certifications held by 44,000+ partners in 2011
IBM Growth Markets strategies g Market IT Infrastructure Industry Expansion Development Leadership Making new markets High-end Systems Investing in skills beyond capital cities Software solutions Leading in key Prioritized 20 P i iti d Large S i L Services P j t Projects industries Countries Smarter Cities14
IBM has selected 20 countries key for business growth based ona range of variables • IT Market Size & Growth • IT as a % of GDP f • Macro-economic Russia • Business Environment • Political Environment • Human Capital Czech Republic Poland • Physical Infrastructure • Economic Recovery South • Government Effectiveness Korea UAE China Taiwan Saudi Arabia Vietnam Mexico Thailand Philippines Brazil Singapore India Malaysia Indonesia Chile Australia South Africa
IBM’s Geographic Expansion Initiative g p p IBM currently has over 250 branches in more China: 80% IT opportunity outside major cities than 60 growth market countries India: 63% IT opportunity outside major cities ASEAN: 72% IT opportunity outside capital cities IBM plans to open new branches across all Brazil: 6 metro areas outside Sao Paulo, Brasilia, Rio with >$500M growth market regions in 2012 and through to IT opportunity each 2015 IBMs Geographic E IBM G hi Expansion initiative includes i i iti ti i l d smaller, high-growth cities in Brazil, Russia, India, China and Central Europe as well as emerging economies in Middle East, Africa, Latin America, ASEAN and Eastern Europe L ti A i dE t E IBM GMU External Relations 201216
Making markets is making news in growth markets African Banks Turn to IBM to Support New Wave of Innovation in Banking Services IBM signs agreements with leading Kenyan banks as financial institutions across Africa invest in smarter banking solutions IBM Opens 30th Branch Office in China Increases the number of growth market h b f h k branches by 140 percent over the past 10 years
ASEAN Market Expansion • Population surpassed 550 million, majority 40 years and under Growing demand for advanced banking • GDP growth to average 6% annually systems and major investments in • 2011 investments included Global Services telco d t l and energy Integration Hub, the Asia Pacific Cloud Computing Data Centre, and the Smarter Cities Research Collaboratory Lac Viet Computing Joint Stock Co. signed a 2012 top investments and priorities cooperation deal with IBM Vietnam to provide cloud • IBM will open several new branches in smaller, computing-based solutions and services for local g rapidly growing CITIES across ASEAN businesses. • IBM will open its 7th Innovation Center in Singapore making it the leading innovation hub of Asia Global Digital Niaga a subsidiary of Djarum Group Niaga, today launched its new online customer sales website • Across the region, focus on banking and called Blibli.com. The website uses IBM software to finance, telecommunications, healthcare, deliver a personalized and more interactive shopping government, underpinned by Smarter Cities, experience for Indonesians, selling leading brands in apparel, cosmetics, electronic equipment, home pp , , q p , BAO and Cloud furnishings among others.18
Australia & New Zealand Market Expansion • 2011 investments included R&D lab in Australia and a Cloud Data Center in New Zealand Dominated by services sector; • Economic recovery is strengthening, with GDP agricultural & mining sectors account for forecast t grow b 3 25% i 2011 2012 and 2012 f t to by 3.25% in 2011-2012 d 2012- 2013 bulk f b lk of exports • Both the federal and state governments have recognized the need to invest heavily in water, transport, ports, telecommunications, transport ports telecommunications and education National E-Health Transition Authority (NEHTA) infrastructure to expand Australias supply capacity appointed IBM to transform Australia’s health system and help to drive smarter healthcare 2012 top investments and priorities delivery in an A$23.6 million dollar contract to • Expansion in Western Australia and Queensland design and build Australia’s National g support focus on natural resources industry Authentication Service for Health (NASH) project. • Continued focus on banking & finance, telecommunications, public sector and energy & utilities industries Australia’s National B A t li ’ N ti l Broadband N t db d Network - NBN k appointed IBM to implement and manage the core business and operational support systems required to operate Australia’s.
Central & Eastern Europe • Bucharest Systems Laboratory opened in Romania An increased emphasis on innovation- as a facility for Systems Networking related projects driving demand for • A multipurpose Cl d C lti Poland Cloud Computing center opened i ti t d in IT equipment, t i i and i t training d • Poland’s IT market is expected to accelerate and infrastructure grow in 2012 at 7.1% vs 4.3% in 2011 • Investment in infrastructure development in Russia to 2020 will surpass US$1 trillion 2012 top investments and priorities • Increase footprint in high-growth cities and regions I f t i t i hi h th iti d i Guarantee Fund Turns to IBM to Create Smarter through Geographic Expansion initiative Car Insurance System in Bulgaria: IBM’s Smarter Computing solution brings drivers and insurance • Key sectors for investment are banking, government companies faster customer service, decreased and telecommunications levels of fraud and lower insurance premiums. • Drive growth from long term transformational engagements 10 Leading Banks in Central & Eastern Europe turn to IBM to Support Business Transformation: IBM announced details of 10 Smarter Computing Deals.
Greater China The government is making US$$173.2B US$$173 2B worth of i h f investments • Power consumption rose 11.7 percent year-on- year. The growth in 2012 is expected to slow to 8.5 in cloud initiatives percent • China’s largest online retailers expect sales to as much as triple in 2012 as urban per capita income Yi Lian Zhong Information is working with IBM to rose 7.8 percent build a cloud computing platform that will improve the • Continued growth momentum in the mobile, 3G, g life of citizens in China via an online portal for a variety internet and broadband sectors of social services. YLZI f will expand services i f i l i YLZInfo ill d i in Fujian Province to seven more Chinese provinces • The Chinese government has pledged 850 billion allowing them to construct a citizen livelihood service yuan (US$124 billion) for a healthcare reform information network covering 300 million people. • The Chinese government is making fierce Peking University People’s Hospital is being investments in cloud initiatives, with an investment of RMB 1.1 trillion ($173.2 billion) supported by IBM to build an evidence-based patient centric care (ePC3) system that will enable 2012 top investments and priorities cooperation and sharing among medical services providers for improved patient care The ePC3 system care. system, • Further expansion into inland cities developed by scientists at IBM Research - China and People’s Hospital, will provide better clinical decision • Launch of a lab in Taiwan (Taipei) with focus on support at the point of care by offering a Internet of Things. comprehensive overview of a patients’ health data as • Focus on Banking, Energy & Utilities, Rail, well as best practices f ll b t ti from previous di i diagnoses, Healthcare, Retail, Telecommunications, treatment and research. Insurance and Automotive -- to support Chinese governments priorities.
India / South Asia Market Expansion Demand for IT products & services • The region expanded its branch offices by a further 18 IBM branches outside tier 1 & 2 cities expected to double by 2015 to US$41.2B • IT spend was anticipated to reach US$ 5.4 billion by the close of 2011 Nawanagar Co-op Bank Ltd. Chose IBM’s Smart Cloud Resilience Service for core banking solution to the bank in • The US$ 10 billion Indian e-commerce market is partnership with Infrasoft Technologies. As part of the expanding exponentially agreement, agreement IBM will remotely host and manage the IT and networking infrastructures of the bank while also • Indias domestic aviation market expansion has implementing the InfrasoftTech OMNIEnterprise™ core been the strongest in the world banking solution. • Market for IT products and services expected to p p Wave Inc one of India’s leading diversified business groups Inc, India s groups, double by 2015 to US$41.2bilion has engaged IBM to provide a roadmap to make its green- field township, Wave City, a Smarter Township. Located in 2012 investments & priorities Ghaziabad (Uttar Pradesh State), Wave City is among the • Aggressively accelerate Market Expansion with largest integrated township development projects in India’s new branches in smaller rapidly growing cities smaller, rapidly-growing National Capital Region. The 4500 acre township will be one across India/South Asia of the first urban developments in the country residents keeping operating costs low and maintaining high levels of • Focused investments: Banking, Insurance. Natural service. Resources, Manufacturing22
Korea Continuation of government "expansionary• The 2012 government budget concentrates on welfare and job creation and allocated 60% of macroeconomic measures” to counter global the total for stimulus spending in the first six months of the year in the face of expected th f th i th f f t d and local challenges economic problems.• Country aims to gain 10% of the global cloud services market by 2014 through development of Korean cloud computing facilities E Mart E-Mart E-Mart - Mobile Office System• More than 70 percent of its 48 million population carries one or more mobile the largest retailer in Korea chose IBM to undertake their handsets mobile office project for E-Mart, to build the optimized mobile business environment. IBMs mobile office system is designed y g2012 top investments and priorities for utilizing smartphone and will provide the comprehensive services for an optimal working environment. Increase• Expanding into an addtional 19 cities across productivity, client satisfaction and enhanced collaboration are Korea expected through this system.• Focus on Banking & Finance, Government, Finance Government Telecommunications E-Trade Securities selected IBM’s Power System as the hardware platform t establish it next-generation system, h d l tf to t bli h its t ti t following its business expansion to become a comprehensive securities company.
Latin America LA’s income per person has doubled in• Four cities in Latin America are within the 25 most populated in the world (Mexico City, Sao Paulo, Buenos 20 years & governments will invest Aires and Rio de Janeiro).• Net food exporter accounts for 10% of global agricultural US$450B i i f t t in infrastructure b 2015 by exports.; a third of the worlds unused land suitable for farming; has capacity and potential to help solve global food crisis.• Will become an increasingly important oil producer by Nieves de Chapetlco in Argentina selected IBM to 2015 and an important component of the emerging develop a solution to enable rack skiers in real time Atlantic Basin energy system and speed up rescues2012 top investments and priorities• Expand the IBM footprint through geo-expansion initiative in LA countries In Rio de Janeiro, Brazil, city managers apply the• Lead industry agenda/discussion in banking banking, technology through a unified operations center to gy g p healthcare, natural resources, energy & utilities, retail accurately gather, analyze and act on information and telco about city systems and services; analyze real-time information to better model and anticipate problems;• Drive transformational value for our clients through and integrate real-time information from across services, services software and high end systems multiple city systems to foster collaborative decision- making
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