information management: our own journey fiona capstick vice president, geography integration, ibm...
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Information Management: Our Own Journey
Fiona CapstickVice President, Geography Integration, IBM Office of the CIO
Topics
IBM Transformation Journey
Becoming a Globally Integrated Enterprise
Smarter Enterprise Information Strategy
New Intelligence
Smart Work
Lessons Learned
Phase OneGerstner era (’93 - 2002)
1993 1995 1997 1999 2001 2003 2005 2007
• Keep company together
• Centralize operations
• Move to integrated solutions
• Grow services business
IBM’s transformation: An ongoing journey – Phase 1
“I think the greatest challenge facing the company is … to adapt our strategy, structure and culture to a world of constant change. I can’t promise this journey will be easy or fast … the steps we will take will not be pussyfooting but bold strides.” -- Lou Gerstner, 1993
2009
Fo
cus
Are
as
1993 1995 1997 1999 2001 2003 2005 2007
Phase TwoPalmisano era (‘03 - present)
• Shift to high-value solutions
• Lower center of gravity for decision-making
• Become a globally integrated enterprise
• A Smarter Planet
IBM’s transformation: An ongoing journey – Phase 2
“The crisis in our financial markets has jolted us awake to the realities and dangers of highly complex global systems. But in truth, the first decade of the 21st century has been a series of wake-up calls with a single subject: the reality of global integration.” -- Sam Palmisano, 2008
2009
Fo
cus
Are
as
Business Model, Operating Model and Workforce Transformation
Remixed our portfolio toward services, software and integrated solutions… Exited commoditized businesses
– PCs– Hard disk drives– Printing Systems
Strengthened position in:– Business Consulting– Service-Oriented Architecture– Information on demand– Virtualization– Open, modular systems
Acquired over 60 companies in last 5 years
– Complement and scale our portfolio of products and offerings
Shift in geographic mix…
57%
21%
21%
2008 Segment Revenue
Mix
49%
35%
16%
2003 Segment Revenue
Mix
2008 revenue– 21% Asia Pacific– 37% Europe, Middle East, Africa– 42% Americas
Hardware & Financing
Software
Services
71% of employees outside US– 84K in India, 60K increase in 5 years– 16K in China, 10K increase in 5 years
IBM’s ongoing transformation journey
Record Performance in 2008– $103.6B revenue, up 5%– $16.7B pre-tax earnings, up 15%
– $8.93 earnings per share, up 24%– Strong performance in services, software and growth markets$4
$10
$16
2000 2001 2002 2003 2004 2005 2006 2007 2008
$2
$6
$10
Pre-tax income
Free Cash Flow
EPS
EP
S
Pre
Tax
Inc
ome
& F
ree
Cas
h F
low
($B
)
Revenue ($B)
Global CultureGlobal Culture
Global Support Functions
Global Support Functions
Global MarketplaceGlobal Marketplace
IBM is undergoing a long-term transition from a multinational company to a Globally Integrated Enterprise, impacting most aspects of the organization
Create culture that reflects IBM global presence and priorities
Instill values that promote global collaboration
Capture opportunity of global marketplace
Leverage IBM’s scale and expertise to optimize growth
Serve needs of global clients
Take advantage of global sources for high-quality skills
Rationalize support functions for greater efficiency
Create flexibility to quickly manage change in marketplace
Our framework for transformation
Culture and LeadershipBusiness Process
Information Technology
Simplification Collaboration
Integration
IBM’s transformation experience
Information Technology
Integration
Why?
Benefits
Requirement to drive down “run” costs of internal IT – key factor in meeting IBM’s productivity targets
Need for integrated enterprise data center model that is flexible, effective, efficient & responsive
Increased threats to global infrastructure and employee IT security
What we did
Moved from distributed, fragmented, labor-intensive IT environment to centrally-governed enterprise model
Centralized CIO role
Embraced open standards and SOA approach
Greatly reduced internal application portfolio and limited customization
IBM as Smarter Enterprise
IBM: Becoming a Smarter Enterprise – Information Strategy
Centralization: 128 CIOs => 1, 155 data centers => 5, 16,000 applications to 4,700
Virtualization: 1000+ servers – projected 80% energy cost savings & 85% floor space reduction
Global Delivery Centers: 80% AS, 60% SD
$1.5B in IT savings over past four years; IT E/R reduced by 1.7 pts
ResultsHow we did it
Centralized operations; continuing to radically simplify
Closely link business transformation & IT function to optimize ROI on technology
Capitalized on open standards and virtualization
Leveraged SOA to enable integration & faster development
Established a comprehensive approach to cyber security
IBM: Becoming a Smarter Enterprise – Information Strategy
IBM as Smarter Enterprise
Why? Need to transform client information into
insights that improve sales performance
Need to improve sales productivity by aligning resources with opportunities
Sprawling client records an obstacle to customer service and delivery of client value
Lack of integration and unique measurement systems
What we did Collaborated across IBM to develop
advanced analytics to sales issues– OnTARGET prospecting tool to identify
clients with highest propensity to buy
– Market Alignment Program (MAP) to ensure that resources shift to growth areas
Created trusted source for client information
Created common ledger, data definitions, finance planning system
IBM As Smarter Enterprise: New Intelligence
IBM as Smarter Enterprise
Analytic tools identified nearly $8B in incremental revenue opportunity worldwide in 2008
OnTARGET tool identified nearly 100K new sales leads in 2008
MAP analysis identified 3700 top opportunity accounts for next three years
360-degree view of client = better insights, better service, better value delivery
ImpactHow we did it Worked with business units to
ensure relevance, buy-in and ownership of new sales tools
Consolidated nearly 10 million client records into single trusted source
Systematically transformed IBM finance:
– Common processes, data and systems for accounting, auditing, pricing, etc
– CFO portal integrated more than 80 back-end systems
IBM Becoming a Smarter Enterprise: New Intelligence
IBM as Smarter Enterprise
Why? What we did
Took “outside-in” approach to address critical client and employee pain points, focusing first on client-facing teams
Established Enterprise Process Framework with owners for 12 processes
Launched enterprise-wide effort to provide common global processes, based on SAP
Created globally integrated support functions
Developed intranet into robust social networking platform
IBM As Smarter Enterprise: Smart Work
Complexity of processes a major source of frustration
Siloed processes inconsistent with globally integrated enterprise
Vertically-aligned support functions incompatible with global integration
Need for collaboration and innovation in a globally diverse workforce of 400,000
Sub-optimized enterprise returns on transformation investments
IBM as Smarter Enterprise
Lean Sigma projects drove $100M cost benefit in 2008
Improved client-facing processes reduced cycle time on automated special bids by 75%
Shared Services reduced spending by $3B over the last three years
Web 2.0 fueling collaboration:
– 120K employees participate in Technology Adoption Program
– 66K BlogCentral users; 27K wikis
– 150K in InnovationJam 2008
– Instant messaging: 2M per day
ImpactHow we did it Drove horizontal, end-to-end
process improvements; put senior leaders in charge of key processes
Developed professionals with business process skills, including Lean Sigma black belts
Simplified and standardized processes across IBM
Implemented Shared Services Council for common approach to identify opportunities
Developed Technology Adoption Program to spur development & early adoption of Web 2.0 technologies
IBM Becoming a Smarter Enterprise: Smart Work
IBM as Smarter Enterprise
The lessons we learned
Change must be driven from the top
The vision is key
– It is important to track ‘journey’ milestones
Transformation is a way of life
Flexibility is critical
– The business changes along the way
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