ibm global business services © copyright ibm corporation 2007 ankit agrawal october 25 th, 2007...

IBM Global Business Services

© Copyright IBM Corporation 2007

Ankit AgrawalOctober 25th, 2007

Strategic Challenges for Hi-Tech Firms

Global Business Services


Challenges for small businesses and start-ups

Financing

Marketing

Small product and service portfolio

Retention of intellectual property

High competition

Easy target for acquisition

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Financing

Short performance histories Small-scale operations Weak access to supply and distribution markets Long development times Uncertain growth rates Low survival rates No collateral

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Current Challenges for businesses

the need to improve, constantly; customer service

the need to optimize operations

dealing with the myriad of regulations that are around the world, and regulatory compliance is a growing issue

managing risk in the business

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5 reasons why hi-tech start-ups and SMEs fail

5. Poor financial control

4. Inability to market product or services effectively

3. Mistaken estimate of market demand for product or service

2. Lack of management ability

1. Inadequate planning of the business

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Small Business Failures

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Source: “The Business Planning Guide”, David H. Bangs



Hi-tech market

A high tech market is considered as:

- Set of actual or potential customers

- For a given set of products of services

- Who have a common set of needs or wants and,

- Who reference each other when making a buying decision

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Unfortunately, people intuitively understand every part of this except for the last point which is key to successful hi-tech marketing.



Hi-tech Marketing Model

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InnovatorsEarly

AdoptersEarly

MajorityLate

Majority Laggards

Techies Visionaries Pragmatists Conservatives Luddites

Geoffrey A Moore. Crossing the Chasm.

Early Market Mainstream Market

2.5%13.5%

34% 34%

16%



Hi-tech Marketing Model

Innovators- Pursue new technology products aggressively

Early adopters- Buy into new concepts early, but are not like technologists - They are driven by a business goal and not a technology goal

Early Majority- One-third of the main technology adoption cycle and winning their business is key to the

success of hi-tech marketing

Late Majority- Although this constitutes another one-thirds of the buying market, as the product matures

the profit margin decreases along with the selling costs with all the R&D costs amortized

Laggards- Rather not have anything to do with a technology and would only buy a product when it is

embedded so deep into another product that they remain oblivious to its existence. E.g. microprocessor as part of a breaking systems

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The Technology Adoption Life Cycle

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InnovatorsEarly

AdoptersEarly

MajorityLate

Majority Laggards

Techies Visionaries Pragmatists Conservatives Luddites

The Chasm

Geoffrey A Moore. Crossing the Chasm.



Strategic Management

Is crucial to building a successful business.

Involves developing a game plan to guide a company as it strives to accomplish its mission, goals, objectives, and to keep it on its desired course.

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IBM e-business On Demand Solutions



What is e-business?

EB = EC + BI + CRM + SCM + ERP

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Where, EC = e-commerceBI = business intelligenceCRM = customer relationship managementSCM = supply chain managementERP = enterprise resource planning



E-business contd.

EC - uses digital technologies to enable buying/selling BI - collecting primary/secondary information CRM - strategy to satisfy customers and build long-lasting

relationships; high interaction with customers SCM – delivery of products efficiently and effectively; high interaction

with distributors ERP – optimize business processes and lowering costs

- Order entry and purchasing- Invoicing and inventory control

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E-business On-demand

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Source: Adapted from the Gartner Group.

2nd generation of e-business



E-business On Demand: More than Just Getting Better

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IBM’s value proposition

More money Follow the money Beat synergies Fill performance gap

Higher motivation Retention of right people Clarity of purpose

Lower risk Ready for day 1 IBM team capability

and experience

Faster Radical prioritisation Expert / goal directed

project management

Right business model Customer focus Value driven Right sourcing



Some of IBM’s list of clients

FINANCIAL SERVICES (ZFS)

GEC AL S T H O MGEC AL S T H O MGEC AL S T H O M



IBM’s vision is to drive strategy development at the business and technology intersection…where innovation happens

Business Strategy Driven by Technology

Insights

Bain

IBM

AT Kearney

Unique Positioning at the Intersection of Business and Technology

Business Strategy

Plan Plan & Implement

BCG

E-Business Strategy Firms

DiamondCluster

BAH

McKinsey

ACN

Deloitte

Key – Global Strategy Revenue:

Large>1bn

Medium500m – 1bn

Small>500m

Source: Kennedy Information 2004, Showing 2003 Global Strategy Revenue.



Key Client Questions

Examples of issues we have resolved

Helping clients respond to these tough questions

Design of strategies and business models that take advantage of new and emerging technologies

Integrated business and technology to drive value and growth

Strategy formulation that integrates execution planning into the strategy formulation process

Identification of organizational/cultural/ leadership barriers to strategy implementation

Creation of alignment and synergies around critical actions for success

Setting the strategic innovation agenda

Risk identification and development plans for growth into new markets and geographies

Viability of new ventures and business models

Planning for rapid product/service launches

Growing and maximizing profitability across existing customer segments

Leveraging pricing Strategy for revenue growth

How to grow and innovate?

Design of new business and operating models based on differentiation and areas of core competencies

Definition of roles in an environment increasingly characterized by value nets / ecosystems

How to develop new Business &

Operating Models?

How to integrate technology and

execution into the strategy?



Porter’s Competitive Strategy

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Broad Target

Narrow Target

Lower Cost Differentiation

Competitive Scope

Competitive Advantage



Issues facing SMEs

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These three characteristics pose challenges for SMEs operators

1. Corporate and Business Strategy

2. Business and organization structure

3. Operations 4. Marketing



1. Corporate and Business Strategy

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• No clear direction and strategy

• Inadequate planning process

• Lack of capability to identify what are the key drivers

• Unaware of risk

• Assist in strategic and business planning preparation and provide strategic and businessplan development training

• Identify value driver andbusiness opportunity

• Provide guideline for risk management

• Run business more systemically

• Able to compete strategically

• Understand the key value driver

• Manage resource more efficiently



2. Business and organization structure

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• Unorganized business and organization structure

• Rely too much on oneperson/small group of people

• Assist in designing business structure taking into account finance and IT perspectives

• Assist in developingorganization structure

• Ensure effectivecommunication, co-ordination and integration of effort across departments

• Improve decision making process



3. Operations

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• Asymmetric informationbetween front and back offices

• Outdated technology

• Low labor productivity

• Inconsistent product quality

• Insufficient skill development

• Assist in identifying keyoperational value drivers

• Advice on business process improvement

• IT implementation

• Enhance manage and control capability

• Manage cost more efficiently

• Improve day to day operations

• Synchronize information across departments



4. Marketing

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• Overlook the importance of marketing strategy

• Limited marketing budget which in turn hampering competitiveposition

• Lack of channel of distribution

• Export incapability

• Incorporate marketing strategy into business planning process

• Enhance SMEs’ bargaining power through capital enhancement such as:- strategic investors- loan from financial institution

• Able to reach target group

• Obtain higher revenue



E-business On Demand is a journey

E-business on demand does not happen overnight

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On DemandEnterprise IntegrationAccess

Access Publish Transact Integrate Internally

Adapt DynamicallyIntegrate Externally



Future Opportunities

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Thank You

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