Smarter Enterprise: Six Principles for Successful Transformation


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Road to a Smarter Enterprise: (1) Start a movement, (2) Establish clear transformation governance, (3) Transformation requires a data-driven discussion, (4) Radically simplify business processes, (5) Invest in transformative innovation, (6) Embody creative leadership.

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Smarter Enterprise: Six Principles for Successful Transformation

  1. 1. George Mattathil -5/19/2011The Road to a Smarter EnterpriseSix Principles for Successful Transformation © 2010 IBM Corporation
  2. 2. IBM’s strategyA decade ago we saw change coming and took decisive actions that haveenabled IBM to turn today’s disruption into opportunity. Changes Changes in Changes in world information in client markets technology needs © 2010 IBM Corporation
  3. 3. In response, we changed our business mix and model Business Model, Operating Model and Workforce TransformationRemixed 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. 4. Improved performance has allowed us to invest in futuresources 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. 5. IBM’s ongoing transformation journey The “Smarter” phase of our transformation is beginning2003 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
  6. 6. Start amovement © 2010 IBM Corporation
  7. 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
  8. 8. Establish cleartransformationgovernance © 2010 IBM Corporation
  9. 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
  10. 10. Transformationrequires adata-drivendiscussion © 2010 IBM Corporation
  11. 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
  12. 12. Radicallysimplifybusinessprocesses © 2010 IBM Corporation
  13. 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
  14. 14. Invest intransformativeinnovation © 2010 IBM Corporation
  15. 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
  16. 16. Embodycreativeleadership © 2010 IBM Corporation
  17. 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. 18. The Road to a Smarter EnterpriseSix 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. 19. Trademarks and notes IBM Corporation 2009  IBM, the IBM logo and 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  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:  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