Continuous Transformation at IBM:

Addressing Disruption from New Technologies

Group # 2

Arindom Ayan Boruah VLMP 11/6

Narayandutt Pandey VLMP 11/20
Nishant Srivastav VLMP 11/25
Saptarshi Biswas VLMP 11/34
 Introduction

Integrated service and

solution in 1993

Incorporated in 1911 Enterprise Process

Framework in 2006
 Challenges
1990 to 2014 this time period was turbulent for IBM.A slow response
to market changes led to a near death in experience in the 1990.

400,000 175
employees countries

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 1993-2003
1993

Louis Gerstner Jr. became CEO of IBM.

Previously IBM was making Losses. For FY13 it made a loss of $8 billion and
also loss previous 3 years.

He made changes in the organization.

1. Centralization of P&L account.

2. Product sales to integrated solutions and services.
Result:

Net earning rebounded to $3 billion.

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2003-2012
2003
Samuel Sam Palmisano became CEO

He made Strategy to raise EPS from $6 to $11.

After achieving on the year 2010 he targeted EPS to raise

$20 by 2010.

IBM VISION CHANGES GROW revenue and profit by

divesting low margin commodity technologies and services.
Investing in higher margin innovation (cloud, analytics,
mobile and social technologies and process are the key
element.

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2012- onward
2012

Verginia Rometty became CEO

Grew Profit at annual rate 3.6%

Invested in Higher margin innovations .

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 The Transformation
Product to Integrated Solution

Integrated solutions are the most valuable things

we can provide our clients. We sell many things, but TECHNOLOGY
why do you come to IBM? We do not just sell you a
piece of Hardware and someone else a piece of
IBM aOffering
software and someone else provides service. The
power lies in bringing those things together.
SOFTWARE
-Kari Barbar
VP,Global Integrated Enterprise Enablement

PRODUCT

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SERVICE
 IBM and Analytics Services
o 2008 : Cognos ( business intelligence software)

o 2009 : Acquired SPSS (statistics software)

Launched Watson computer system based on artificial

intelligence for cognitive computing

IBM and Mobile services

While
In 2007IBM was not offering Mobile devices but was active in delivering
IBM hadsolutions,
mobile introduced its examples
Some connections Social development
Application In July 2014
Network platform to facilitate collaboration. IBM with Apple developed more than
Supporting functions
Mobile Device are Social
management andNetworking,
mobile application development 100 end-to-end mobile solutions
Team Spaces, forums, micro blogging and including new mobile apps that are
Network
shared infrastructure
document storesmanagement
which integrated with Enterprise ready.
enterprise applications as well as Emails ,
Mobile security
Calendars and Directories
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 IBM and Cloud Services
o June 2013 : Acquired SoftLayer ( Infrastructure as a service provider)

o Attributes of SoftLayer The Challenge you have to overcome is to help

Data center service via cloud customers understand that this very standardization
Highly automated environment still fulfills the need of their specific
Self service fashion business and that they can do everything that they
Strict adherence to standardization do today with their own customized environment .

o These attributes helped SoftLayer to ramp up data center in 30-45 days and run 100,000 server
Francisco Romero
with 750 employees
o Challenges with IBM
Not inline with IBMs customization approach for enterprise customer
Not able to convince large enterprise customers adopt new approach of standardization
Will cannibalize some of its traditional mainframe hardware.
o Results after acquisition
SoftLayer annual growth rate : 86% ( six to seven times more than it did as independent
company)
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 IBM and its ICT journey
Challenges within IBM
Working as Collection of mini IBMs
Country specific business processes
Processes not standardized across IBM
IBM addresses country specific requirement
Vertical Function View
o Result
Expensive
Lack of coordination in case of global customer
Difficulties in providing integrated solutions
o Introduction of Global Integrated Enterprise (GIE)
Standardization of basic process
Created 15 global processes as part of enterprise process framework(EPF)

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 IBMs EPF

PROCESSES

Operating Enabling Supporting

Six Process Four Process Five Process
Client Facing Enablers of operating process Foundational
( generating product/services, generating ( strategic planning, ( HR, IT processes)
sales order) procurement)

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 Operating Client Facing
Driving Revenue for IBM (eg. Generating products/Services, bringing them to market, generating sales order.)

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 Enabling Enables Client Facing

Not Directly Client facing , but important enablers of Operating Process (eg. Strategic Planning, Procurement)

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 Supporting
Processes Necessary to run IBM as Enterprise (eg. HR, IT Processes)

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 IBMs
Enterprise
Process
Framework
(EPF)

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 Different levels of Enterprise Processes

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 1.0 Idea to Market

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 3.0 Opportunity to Order

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 5.0 Support

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 9.0 Procure to Pay

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 Problem faced by IBM - implementing EPF
o Total number of countries : 175

o Diverse businesses across different Business/Geography

o As a result only 80% standardization of process

o EPF matrix required individuals at the customer interface had to do integration work

EPF MATRIX.

Bussiness/geography Bussiness/geography Bussiness/geography Bussiness/geography

vertical 1 vertical 2 vertical 3 vertical 4

Process 1
Process 2
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Process 3
 Result of EPF

Increased Efficiency

Standardization of process across all

Deviation allowed only if adds value to customer

Reduction in IBMs application portfolio ( application reduced to 3800 from 16000)

Helped in integration across IBM ( strengthened by Social media Tool)

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 Social media As a tool for integration
Challenges

Large number of workforce 400,000 in 175 country.

Less experienced employees >= 50% tenure less than 5 years.
Collaboration become difficult.

SOLUTIONs

Concept of Social Business to connect with the employee worldwide.

Used tools like CONNECTIONS, to solve the problems of client world wide using global resources.
Used internal tools such as FACES, EXPERT LOCATOR, name finder, face recognition and auto
complete while typing.
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 Social media As a tool for integration cont.
SOLUTIONs cont

Increased interruptions were overcome by integrating new tools by replacing existing format of communication.
Integrate CONNECTIONS into all work applications , and heuristics of NOT to REPLY ALL, reduced the email
load by 90% (Mailing only to relevant people).
Trained employees through Social Coach and Social Ambassador.

RESULTS

Greater global Integration.

Improved customer satisfaction and experience.
Best solution through expert situated globally.
NOTE:- unable to measure the Impact.

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 Analytics as a tool for Global Integration
Challenges
Consistent decision making i.e. person driven to Data driven driven.

Solution
Creation of 8 employee team to guide others to use analytics in their own projects
Creation of Recommendation engine for Coverage Optimization with Profitability.

Impact
Reduced attrition rate using analytics in high attrition countries like India and China .
Profitability of relationship calculated and resources were deployed to enhance the business and revenue
generation per sales person.

Concerns
Personal conflicts
Data quality issue.
Adoption at very ground level of employees.

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 Institutionalizing Continuous Transformation
Management
IBM has been transforming from 20 Years, Starting form L Gerstners global P&L statement to G Romettys
focus on cloud, Analytics, mobile and social.

IBM has established an Enterprise Transformation Unit as a part of its corporate DNA.

They have employed a permanent team for Enterprise Transformation Unit.

The teams were responsible for

1. enterprise process simplification

2. Sales Transformation

3. Global Workforce Transformation

4. Business Analytics Transformation

5. Social Transformation
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 Acquisitions
IBM was aggressively pursuing acquisitions that would allow the company to enter a new market
segment.

IBM has developed an Risk Assessment model that was applied to every M&A transaction

The model was a part of a process covering the whole M&A life cycle

The tool supported by workflow management management tool included checklist, templates and
social tools such as wiki.

Every new deal meant that IBM was acquiring not just new technology, but also new processes,
capabilities and cultures.

The Soft Layer Acquisition exhibited the deep impact accusations could have on IBM.

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 The Growth and Profitability
Leaders in IBM believe that the success is due to the ability to deliver new technologies as part of
integrated solutions that addressed the constantly changing technology needs of its customers.

IBM has adopted CAMSS

Cloud

Analytics

Mobile

Social

Security
IBMs performance and ability to transform in order to address those opportunities impressed the
star investors like Warren Buffett.
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 ISMAC
IoT Not Used.

in 2007 introduced social networking platform to facilitate collaboration .with

Social facility such as social networking ,team spaces, forums, wikis, microblogging
and shared document stored.

Mobility solution like mobile device management and mobile application

Mobile development, as well as mobile infrastructure management and mobile security
services.

Analytics Cognitive computing were used, As a Tool for global integration.

Cloud they acquired soft layer, a cloud computing company.

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 IBM at EICTA 3D Space
SCOPE

2008 TARGETED EPS ACHIEVED $8.93

3RD 2010 TARGETED EPS ACHIEVED $11.67
2006 EFOR 2015 EPS TARGET $20
TARGETED EPS
$6 TO $11
2ND

1ST

CENTRALIZED HYBRID DECENTRALIZED

MM2 CONTROL

MM3
1994
REPORTED NET
EARNING OF $3
BN
MM1

1993
MM0 REPORTED NET
LOSS OF $8 BN

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IMPLIMENTED IMPACT

IBM INTERNAL SOCIAL MEDIA FOOTPRINT - IBM

PROPROVIDE SOCIAL PLATFORM INWHICH EMPLOYEE HAD MORE THAN 400K EMPLOYEES ACROSS 175
COULD ENGAGE. COUNTRIES .MOST OF THEM WORKED OUTSIDE
THE COMPANY.SO IT BECAME VERY EASY TO
COMMUNICATE AMONG THEM.

STANDARDIZATION OF PROCESS.
IT APPLICATION REDUCED FROOM 16000 TO 3800
APPS.

DATA ANALYTICS TOOLS ARE USED

REDUCED EMPLOYEE ATTRITION RATEWHICH WAS
VERY HIGH.

STARTED USING CLOUD REDUCE THE SALES OPPORTUNITY TIME FROM

THREE MONTHS TO AN HOUR.
 IBM P
SERVER TTECHNOLOGY

WEBSPHERE 2014 IBM OFFERING

MIDDLEWARE INTEGRATED
SOFTWARE SOLUTION

SSOFTWARE SERVICES

AS IBM PROVIDING INTEGRATED SOLUTION THEY

ARE ABLE TO SOLD IBM P SERVER ALONG WITH
WEBSPHERE MIDDLEWARE SOFTWARE

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 IBMs Roadmap 2015 Targets

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 Financial Performance Over Time

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 Financial Performance By Segment

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 net income COGS
18000 60000

16000 58000

14000 56000

12000 54000
10000
52000
8000
50000
6000
48000
4000
46000
2000 2005 2006 2007 2008 2009 2010 2011 2012 2013
0
2005 2006 2007 2008 2009 2010 2011 2012 2013

GROSS INCOME
60000

50000

40000

30000

20000

10000

0
2005 2006 2007 2008 2009 2010 2011 2012 2013
 THANK YOU

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