Global Business ServicesKeynote Address:Collaboration Goes Critical          Electronics Supply Chain Association         ...
Global Business Services    Getting down to business: First bold prediction                                               ...
Global Business Services    Getting down to business: First bold prediction                                               ...
Global Business Services    Second bold prediction                                                    16      Average Numb...
Global Business Services    Second bold prediction                                                                        ...
Global Business Services    How do we come up with these brilliant insights?                                              ...
Global Business Services    3 current realities             Product innovation is important,      1      but it is not eno...
Global Business Services    3 current realities             Product innovation is important,      1      but it is not eno...
Global Business Services    Everyone thinks they’re an innovator                                  Industry Position for In...
Global Business Services To some extent, that’s actually true             COMPANY                                         ...
Global Business Services But not always:                                   Assignee:                                Armonk...
Global Business Services A lot of our “innovation” is product in search of a problem. Case in point: internet TV12    Supp...
Global Business Services Operational and business model innovation are collectively equal to product innovation, CEOs tell...
Global Business Services Operational and business model innovation defined…                                   Revenue     ...
Global Business Services 3 current realities            Product innovation is important,     1      but it is not enough. ...
Global Business Services Blockbuster products are requiring operational and business innovation standard                  ...
Global Business Services Bringing such highly integrated products to market is becoming more and more challenging         ...
Global Business Services Content providers may actually turn out to be the easiest part of this equationAudio:      Prior ...
Global Business Services Advanced chipsets are likely to be a much tougher delivery for CE companies            Number of ...
Global Business Services A similar consolidation is taking place in network equipment providers…     Number of NEPs From 2...
Global Business Services …who are just mirroring the consolidation of their customers, the network operators21   Supply Ch...
Global Business Services Despite these challenges, there has never been a better time to innovate nor more at stake     Ty...
Global Business Services 3 current realities            Product innovation is important,     1      but it is not enough. ...
Global Business Services We’ve been paying lip service to collaboration for years, can’t we keep doing that?              ...
Global Business Services     Core to strategy: Nowhere more true than in     semiconductor space                          ...
Global Business ServicesCollaboration is tightly integrated today. Welcome yourmarketing department to supply chain manage...
Global Business Services Rocket Science: Information volumes required for retail channel management are rising exponential...
Global Business Services ...and globally… China and India, with thousands of independent dealers pose their own challenges...
Global Business Services It’s difficult, but transformational products weave together different kinds of innovation       ...
Global Business Services We’ve come a long way: IBM has had more success since we’ve focused on collaborative efforts     ...
Global Business ServicesThank You    Paul Brody, Partner    IBM Global Business Services    pbrody@us.ibm.com    Wendy Hua...
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Electronics Supply Chain Association Keynote Address 2007

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How going to extremes with regard to collaboration is serving IBM well in our pursuit of industry leadership

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Electronics Supply Chain Association Keynote Address 2007

  1. 1. Global Business ServicesKeynote Address:Collaboration Goes Critical Electronics Supply Chain Association © 2007 IBM Corporation
  2. 2. Global Business Services Getting down to business: First bold prediction Really Big Average LCD Screen Size in Consumer Household 82 cm 28 cm 2.5 cm 1987 1997 2007 20172 Supply Chain Strategy © 2007 IBM Corporation
  3. 3. Global Business Services Getting down to business: First bold prediction Really Big Average LCD Screen Size in Consumer Household 82 cm 28 cm 2.5 cm 1987 1997 2007 20173 Supply Chain Strategy © 2007 IBM Corporation
  4. 4. Global Business Services Second bold prediction 16 Average Number of Remote Controls per Consumer Household 7 3 1 1987 1997 2007 20174 Supply Chain Strategy © 2007 IBM Corporation
  5. 5. Global Business Services Second bold prediction 16 Average Number of Remote Controls per Consumer Household Omnipotent Universal Universal 2 Universal 3 7 1 2 3 4 5 6 7 8 9 10 11 12 3 1 1987 1997 2007 20175 Supply Chain Strategy © 2007 IBM Corporation
  6. 6. Global Business Services How do we come up with these brilliant insights? Experience 3 CEO CE Industry as Interviews + Research + Electronics = Current Player Realities6 Supply Chain Strategy © 2007 IBM Corporation
  7. 7. Global Business Services 3 current realities Product innovation is important, 1 but it is not enough Operations & business model innovations are 2 becoming harder to execute Extreme collaboration is required to compete 3 and succeed7 Supply Chain Strategy © 2007 IBM Corporation
  8. 8. Global Business Services 3 current realities Product innovation is important, 1 but it is not enough Operations & business model innovations are 2 becoming harder to execute Extreme collaboration is required to compete 3 and succeed8 Supply Chain Strategy © 2007 IBM Corporation
  9. 9. Global Business Services Everyone thinks they’re an innovator Industry Position for Innovation in Products and Services Clear Innovation 68% Leader Fast Follower 11% Moves with Peers 11% Follows Peers 11% 0% 10% 20% 30% 40% 50% 60% 70% Respondents Source: The Global CEO Survey 20069 Supply Chain Strategy © 2007 IBM Corporation
  10. 10. Global Business Services To some extent, that’s actually true COMPANY PATENTS IBM 3,621 Samsung 2,451 Canon 2,366 Matsushita (Panasonic) 2,229 HP 2,099 Intel 1,959 Sony 1,771 Hitachi 1,732 Toshiba 1,672 10 of top 10 companies Micron Technology 1,610 filing patents are in electronics Source: US Patent and Trademark Office – 2006 top 10 list http://www.uspto.gov/go/oeip/taf/topo_06.htm#PartB10 Supply Chain Strategy © 2007 IBM Corporation
  11. 11. Global Business Services But not always: Assignee: Armonk, New York December 11, 200111 Supply Chain Strategy © 2007 IBM Corporation
  12. 12. Global Business Services A lot of our “innovation” is product in search of a problem. Case in point: internet TV12 Supply Chain Strategy © 2007 IBM Corporation
  13. 13. Global Business Services Operational and business model innovation are collectively equal to product innovation, CEOs tell us.. and we agree.. Innovation Area of Most Importance Operations 26% Business and Enterprise 31% Models Products, Services and 43% Markets 0% 10% 20% 30% 40% 50% Respondents Source: The Global CEO Survey 200613 Supply Chain Strategy © 2007 IBM Corporation
  14. 14. Global Business Services Operational and business model innovation defined… Revenue Enterprise Industry Model Model Model Innovation Innovation Innovation Change how Change how Change how industry is revenue is products & defined generated services are delivered14 Supply Chain Strategy © 2007 IBM Corporation
  15. 15. Global Business Services 3 current realities Product innovation is important, 1 but it is not enough. Operations & business model innovation are 2 becoming harder to execute Extreme collaboration is required to compete 3 and succeed15 Supply Chain Strategy © 2007 IBM Corporation
  16. 16. Global Business Services Blockbuster products are requiring operational and business innovation standard Media Content Advanced Hardware Network Connectivity16 Supply Chain Strategy © 2007 IBM Corporation
  17. 17. Global Business Services Bringing such highly integrated products to market is becoming more and more challenging 1997 2007+ Sold separately Integrated CONTENT Felt like tangible Subject to license property ADVANCED Long life cycles Short life cycles COMPONENTS Wide choice Limited availability NETWORK SneakerNet Integrated CONNECTIVITY17 Supply Chain Strategy © 2007 IBM Corporation
  18. 18. Global Business Services Content providers may actually turn out to be the easiest part of this equationAudio: Prior to 1998: Stability 1999-2001:Napster 2002+:Legal Downloads • Centralized • Rise of P2P, lack of • Paid market grows market, 6 leading viable paid back up Apple’s content companies alternatives • Apple dominates market Market Value: $20BVideo (US): Prior to 2005: Stability 2004-2007: Broadband Critical Mass 2007+ • Broadcast, cable & • 27 million us homes • Paid market grows Up for satellite with DSL back up Grabs • Rise of UGC • Apple dominates Market Value: Up to $130B Content companies are eager not to let this opportunity pass them by18 Supply Chain Strategy © 2007 IBM Corporation
  19. 19. Global Business Services Advanced chipsets are likely to be a much tougher delivery for CE companies Number of IC Design Enterprises in Number of IC Companies with 200mm vs. China, 1995-2005 300mm Fabs More and more fabless companies chasing an ever smaller number of state-of-the-art development facilities.19 Supply Chain Strategy © 2007 IBM Corporation
  20. 20. Global Business Services A similar consolidation is taking place in network equipment providers… Number of NEPs From 20th Century to Today 2000 2000 Dot com 2000 -- Today 2000 Today Dot com Collapse Collapse Convergence & Convergence & Late -- 90s Liberalization Liberalization Late 90s Internet Internet 1991 1991 Boom Boom Introduction of Introduction of 1971 the World Wide the World Wide 1971 Web Web First mobile First mobile phone network phone network 1876 1876 Invention of Invention of Telephone Telephone Before 1900- 1940s 1950s 1960s 1970s 1980s 1990 1992 1994 1996 1998 2000 2002 2004 2006 2007 1900 1940 Source: IBM IBV analysis20 Supply Chain Strategy © 2007 IBM Corporation
  21. 21. Global Business Services …who are just mirroring the consolidation of their customers, the network operators21 Supply Chain Strategy © 2007 IBM Corporation
  22. 22. Global Business Services Despite these challenges, there has never been a better time to innovate nor more at stake Typical Ecosystem Revenues Gross Margins By Component $385 $620 Network 70% Ads 90% $25 $10 $200 Content 30% Device 10% Device Content Ads Network Source: IBM research, client engagements22 Supply Chain Strategy © 2007 IBM Corporation
  23. 23. Global Business Services 3 current realities Product innovation is important, 1 but it is not enough. Operations & business model innovation are 2 becoming harder to execute Extreme collaboration is required to compete 3 and succeed23 Supply Chain Strategy © 2007 IBM Corporation
  24. 24. Global Business Services We’ve been paying lip service to collaboration for years, can’t we keep doing that? Complementary Loosely Unstructured, to business integrated to back of the strategy operations envelope NO! Core to business Tightly coupled to Rocket science strategy operations24 Supply Chain Strategy © 2007 IBM Corporation
  25. 25. Global Business Services Core to strategy: Nowhere more true than in semiconductor space Case example: IBM’s Process and Common Platform materials research Product engineering excellence High yield chip design Consumer products leader Complimentary Product Pure-play foundry Capabilities manufacturing Chip expertise manufacturing scale Common Fab process synchronized25 Supply Chain Strategy © 2007 IBM Corporation
  26. 26. Global Business ServicesCollaboration is tightly integrated today. Welcome yourmarketing department to supply chain management Process Rigor: Deep integration across teams internally to line up supply and demand Integrated S&OP Collaboration: Close working arrangements to manage across multiple channels Product Sales Market Supply Force Promos One Viewpoint: Timely, integrated data accessible in a single environment Short life cycles and “hit driven” sales activities require collaboration between inventory management, the sales force, marketing & retail partners26 Supply Chain Strategy © 2007 IBM Corporation
  27. 27. Global Business Services Rocket Science: Information volumes required for retail channel management are rising exponentially National Locations Information Aisle Forecasts End Cap Supply Plans Regional Check Out Plan-O-Grams Display Allocations S t o r e Best in class management drives stocking levels based on promotions, store locations, and individual store history27 Supply Chain Strategy © 2007 IBM Corporation
  28. 28. Global Business Services ...and globally… China and India, with thousands of independent dealers pose their own challenges The problem: layers in the distribution To solve both issues, a major mobile device maker is developing a system add cost, reduce data accuracy: direct to retailer wireless solution for the China market OEM OEM Enterprise CRM System Functionality: system Orders Distribution National layers Inventory status Shipments Regional Credit Invoicing Incentives & news Local All accessible from a mobile Wireless smart device, all data available in phone retail from anywhere in China Retailer Retailer A direct connection to the end retailer has never been more important, something that’s hard to do with 10,000 independent retailers in one country28 Supply Chain Strategy © 2007 IBM Corporation
  29. 29. Global Business Services It’s difficult, but transformational products weave together different kinds of innovation Revenue Enterprise Industry Model Model Model Innovation Innovation Innovation Hardware? Usage fee? Integrated? Software? Subscription? Virtualized? Service? Device? Joint venture?29 Supply Chain Strategy © 2007 IBM Corporation
  30. 30. Global Business Services We’ve come a long way: IBM has had more success since we’ve focused on collaborative efforts IBM then… IBM now… Cell processor, collaboratively designed with Sony and Toshiba on power platform30 Supply Chain Strategy © 2007 IBM Corporation
  31. 31. Global Business ServicesThank You Paul Brody, Partner IBM Global Business Services pbrody@us.ibm.com Wendy Huang, Managing Consultant IBM Institute for Business Value wendy.w.huang@us.ibm.com © 2007 IBM Corporation

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