The document summarizes findings from IBM's Global C-suite Study, which surveyed over 5,000 executives including 347 from government organizations across over 50 countries. Key findings include: - Industry convergence and new digital competitors are disrupting many industries and forcing companies to reassess business models. - Both global executives and those in government see technologies like cloud, mobile, and cybersecurity posing major impacts and risks. - While most executives rely on conventional techniques to identify trends, higher performing "Torchbearers" place greater emphasis on emerging technologies and customer feedback. - When exploring new business models, government executives favored open and platform models but faced challenges deploying innovation.

1. Redefining Boundaries
Insights from the Global C-suite Study
Government Industry Perspective

2. ©2015 IBM Corporation2
For this study we surveyed
industry leaders…
Chief Executive Officers (CEOs)
Chief Financial Officers (CFOs)
Chief Human Resources Officers (CHROs)
Chief Information Officers (CIOs)
Chief Marketing Officers (CMOs)
Chief Operating Officers (COOs)
818
643
601
1,805
723
657
©2015 IBM Corporation2
were from Government organizations
347

3. ©2015 IBM Corporation3
The study covers more than countries
North America
Central and
South America
Western Europe
Middle East
and Africa
Central and
Eastern Europe
Asia Pacific
Japan

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interviews
6%
4%
5%
7%
3%
2%
8%
4%
3%
3%
2%
6%
18%
6%
8%
5%
3%
8%
Our respondents represent
a wide range of public
and private enterprises
Energy and Utilities
Media and Entertainment
Telecommunications
Consumer Products
Life Sciences and Pharma
Professional and
Computer Services
Retail
Travel and Transportation
DISTRIBUTION SECTOR
COMMUNICATIONS SECTOR
Banking and Financial Markets
Insurance
Aerospace and Defense
Automotive
Chemicals and Petroleum
Electronics
Industrial Products
Education and Research
Healthcare
Government and NGOs
INDUSTRIAL SECTOR
PUBLIC SECTOR
FINANCIAL SERVICES SECTOR

5. ©2015 IBM Corporation5
We identified a small group of leading innovators
that financially outperform: Torchbearers
Torchbearers
24%
of the total population are
Leading Innovators
20%
of Leading Innovators are
Outperformers; thus
5%
of the total population
are Torchbearers
*
Peer level
Market
Followers
Leading
Innovators
24%42%34%
2% 5% 20%
*
Outperformers in revenue growth and profitability
Market perception of the enterprise

6. ©2015 IBM Corporation6
What’s putting the world’s
top executives on edge?
“The ‘Uber syndrome’ – where a competitor with a
completely different business model enters your
industry and flattens you.”
CIO, Transportation, United States

7. ©2015 IBM Corporation7
So what does this mean for Governments?
2. Governments must create business environments that enable the private sector to
compete in increasingly dynamic industries and contribute to economic vitality
1. Governments can leverage lessons from market leaders to help improve service
delivery and transform business and operating models

8. ©2015 IBM Corporation8
Industry convergence – redefining boundaries
Prepare for the new digital competition
Create a panoramic perspective
Be first, be best, or be nowhere
Enabling economic vitality
Agenda
©2015 IBM Corporation8

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CxOs expect industry convergence to have the
biggest impact on their business
Total CEO CFO CHRO CIO CMO COO
70%
60%
50%
40%
30%
20%
10%
0%
Industry convergence
The “anywhere” workplace
Rising cyber risk
The redistribution of
consumer purchasing power
The sustainability imperative
Alternative finance and
financing mechanisms
The sharing economy
Top trends to impact business (in 3 to 5 years)

10. ©2015 IBM Corporation10
Government CxOs expect rising cyber risk and the
“anywhere” workplace to have the greatest impact
Industry convergence
The “anywhere” workplace
Rising cyber risk
The redistribution of consumer
purchasing power
The sustainability imperative
Alternative finance and financing
mechanisms
The sharing economy
Top trends to impact business (in 3 to 5 years)
66% 49%
50% 65%
46% 67%
43% 18%
32% 39%
25% 17%
24% 26%
Global Government

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CEOs again selected technology as the most
important external force that will affect their enterprise
External forces impacting the enterprise (in 3 to 5 years)
2006 2008 2010 2012 20152004
Technology factors
Market factors
Regulatory concerns
Macro-economic factors
Socio-economic factors
Globalization
People skills
Geopolitical factors
Environmental issues
2013

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Government CxOs rate budgets, people skills and
geopolitical factors higher than global CxOs
External forces impacting the enterprise (in 3 to 5 years)
Technology
factors
Budgets People skills Geopolitical factors Regulatory
concerns
72%
15%
48%
31%
55%
72%
68%
64%
51%
49%
Global Government

13. ©2015 IBM Corporation13
New permutations are emerging
out of “old” industries

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“The biggest threat is new competitors
that aren’t yet classified as competitors.”
Piotr Ruszowski, CMO, Mondial Assistance, Poland
©2015 IBM Corporation 25 January 201614

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Industry convergence – redefining boundaries
Prepare for the new digital competition
Create a panoramic perspective
Be first, be best, or be nowhere
Enabling economic vitality
Agenda
©2015 IBM Corporation15

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CxOs continue to see interactions with constituents
moving increasingly online…
no change
no change
Business landscape change (in 3 to 5 years)
More face-to-face interaction More digital/virtual interaction
Global Government

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…and CxOs plan to create more individualized
customer experiences
no change
no change
Business landscape change (in 3 to 5 years)
More focus on customers as segments More focus on customers as individuals
Global Government

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…against
of the global sample
of Government CxOs plan to
expand their partner network

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CxOs in general see a need for more decentralized
decision-making – Government CxOs are mixed
no change
More centralized decision-making More decentralized decision-making
Business landscape change (in 3 to 5 years)
Global Government

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How to prepare for the new digital competition
Decentralize and delegate
Delegate all but the most important decisions to the people closest to your customers
Share to shine
Ratchet up plans to form new partnerships and share key resources with partners
Seize the middle space
Look to become the linchpin in networks where other companies reach their customers
©2015 IBM Corporation20

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Industry convergence – redefining boundaries
Prepare for the new digital competition
Create a panoramic perspective
Be first, be best, or be nowhere
Enabling economic vitality
Agenda
©2015 IBM Corporation21

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“The hardest thing is working
out whether what’s happening
is hype, trend or tsunami.”
Faik Açıkalın, CEO, Yapı Kredi Bankası, Turkey
©2015 IBM Corporation22

23. ©2015 IBM Corporation23
CxOs see cloud and mobile having the greatest
impact on their business in the future
Cloud computing and services
Mobile solutions
Internet of Things (IoT)
Cognitive computing
Advanced manufacturing technologies
New energy sources and solutions
Bioengineering
Man-machine hybrids
Technologies revolutionizing business (in 3 to 5 years)
63% 79%
61% 72%
57% 54%
37% 38%
28% 13%
23% 17%
12% 6%
10% 5%
Global Government

24. ©2015 IBM Corporation24
“There’s no one technology that matters
most. It’s connecting the dots between
them all that’s important.”
Mike Mancuso, Executive Vice President & CEO, Philips Healthcare, United States
©2015 IBM Corporation24

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IT security has emerged as the top risk;
Government CxOs are even more concerned
68% 83%
36% 36%
35% 30%
35% 26%
30% 35%
27% 29%
25% 11%
24% 26%
Global Government
IT security risks
Reputational damage
Financial risks
Regulatory compliance violations
Loss of intellectual property
Extended periods of downtime
Data tampering
Workforce disruption
Future risks (based on next “wave” of technology)

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CxOs rely mainly on conventional techniques to
identify new trends – Governments are no exception
Brainstorming Predictive
analytics
Simulations Prescriptive
analytics
Crowd-sourcing Cognitive
computing
Internal tools and techniques to identify and explore new trends and technologies
Global Government

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Government CxOs look to external thought leaders for
insight; less than half rely on customer feedback
External thought leaders
Customer feedback
Market research firms and analysts
Competitors
Companies in adjacent industries
Blogs and social media sites
Traditional media
55% 69%
51% 45%
50% 42%
47% 26%
39% 32%
29% 30%
21% 41%
Global Government
External sources to identify and explore new trends and technologies

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Torchbearers pay greater attention to customer
feedback than CxOs in Government…
External sources to identify and explore new trends and technologies
Customer feedback
GovernmentGlobal Torchbearers

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… and they place far more weight on next
generation technologies than Government CxOs
Cognitive computing Advanced manufacturing
technologies
New energy sources
and solutions
GovernmentGlobal Torchbearers
Technologies revolutionizing business (in 3 to 5 years)

30. ©2015 IBM Corporation30
How to create a panoramic perspective
Form your own futures squad
Set up a specialist forecasting team, equipped with the right technologies and skills
Cultivate your cognitive capabilities
Look to cognitive and predictive analytics capabilities to improve confidence levels in forecasts
Take an ecocentric view of the world
Leverage the collective abilities of your ecosystem to better read – and prepare for – the future
©2015 IBM Corporation30

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Industry convergence – redefining boundaries
Prepare for the new digital competition
Create a panoramic perspective
Be first, be best, or be nowhere
Enabling economic vitality
Agenda
©2015 IBM Corporation31

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Partnerships
Product/service
portfolio
Operating
model
Strategic
direction
Customer
segments
Delivery
channels
Revenue
model
“Disruptive technologies could change the
fundamentals of our business.”
Kazuo Hirai, CEO, Sony Corporation, Japan

33. ©2015 IBM Corporation33
Government CxOs believe technology will force
them to reassess most aspects of their business
Product/service
portfolio
Operating model Partnerships Delivery channels Revenue model Customer types
or segments
Parts of the business most impacted by technology
Global Government

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of global CxOs are experimenting with different
business models or thinking of doing so
©2015 IBM Corporation34

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When Government CxOs explore new business
models, “open” and “platform” are the top choices
Open
(ecosystem)
Platform Integrator Freemium Razor and blade Long tail
Business model types (experimenting with or considering)
Global Government

36. ©2015 IBM Corporation36
“Uber has a market cap that exceeds the
market cap of all the car rental companies
combined, and it’s only an app.”
CMO, Transportation, United States
©2015 IBM Corporation36

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Nobody said it would be easy: CxOs face many
obstacles when deploying new business models
©2015 IBM Corporation37

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Torchbearers are leveraging innovative business
models; governments are embracing “open” models
Open
(ecosystem)
Platform
Business model types (currently using)
GovernmentGlobal Torchbearers

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… and whether launching a new business model or
product offering, Torchbearers prefer to be first
Preference to reach the market first
GovernmentGlobal Torchbearers

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How to be first, or best
Investigate unfamiliar territory
Look to unrelated industries and organizations for completely new and different ideas
Go offline to test for the best
Set up an innovation center outside the current organization structure
Create – and capture – the moment
Once you’ve decided to launch a new business model, product or service, move fast

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Industry convergence – redefining boundaries
Prepare for the new digital competition
Create a panoramic perspective
Be first, be best, or be nowhere
Enabling economic vitality
Agenda
©2015 IBM Corporation41

42. ©2015 IBM Corporation42
The public sector must create business environments
that enable the private sector to thrive
Source: Improving economic competitiveness and vitality: A smarter approach to economic development. IBM Institute for Business Value. October 2013.

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Key takeaways to enable economic vitality
 Understand your clients’ value chains and keep your finger on the pulse
 Collaborate with private sector leaders to better understand their needs
 Ensure your education ecosystem is coordinated and agile
 Embrace open data initiatives to encourage and enable innovation

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What’s next?

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We invite you to continue the conversation
ibm.com/csuitestudy
©2015 IBM Corporation45
Redefining
Boundaries
Insights from IBM’s Global C-suite Study