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Master in Economics and Political Science – Universita’ degli Studi di Milano. IBM Journey towards the Future Giovanni Linzi General Manager Sales IBM Italy. agenda. About me ........ 2011 IBM Annual Report snapshots IBM Transformation Journey IBM 2015 Roadmap. About me …. 1980……………………. - PowerPoint PPT Presentation
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IBM Journey towards the Future
Giovanni LinziGeneral Manager Sales IBM Italy
Master in Economics and Political Science – Universita’ degli Studi di Milano
agenda
About me ........
2011 IBM Annual Report snapshots
IBM Transformation Journey
IBM 2015 Roadmap
About me ….
1980 …………………….
1997 EMEA T&T Services Executive
1998 EMEA GM T&T Industry - London
1999 WW GM CGP Industry - Paris
2000 EMEA Business Innovation Services VP, Distribution Sector - Paris
2001 Region South Business Consulting Services VP - Milan
2004 Region South System and Technology Group VP
2007 Managing Director Unicredit Group Integrated Account
2010 General Manager Sales IBM Italy
Born in 1955
Joined IBM in 1980
The Global CEO Study 2010: Standouts (*) capitalize on complexity in three ways
The fourth biennial CEO study, building on insights and findings over the last 6 years
1,541 CEO face to face interviews
(*) Standouts means Company with significant economic performance in the short term and in the medium long term
2011 IBM Annual Report
2011 IBM Annual Report
IBM operations in more than 170 countries
Integration of major global enteprice functions allowed more than 6B$ in enterprise productivity savings in 5 years
2011 IBM Annual Report
Primary drivers for growth
Gross profit margins expansion, as result of shift to higher value segments
Improved productivity across the Enterprise
2011 IBM Annual Report
2011 IBM Annual Report
Reinventing the Reinventing the modern corporationmodern corporation
Pioneering the science Pioneering the science of informationof information
Making the world Making the world work betterwork better
How to capture the opportunity of
enterprise computing
How to build a new kind of organisation and sustain it over time
How to apply technology to transform companies,
industries, societies
IBM Transformation Journey - 100 years of IBM
Phase OneGerstner era (’93 thru 2002)
• Keeping company together & stabilizing business
• Bringing massive decentralization under control (e.g., 128 CIOs to 1; 70 ad agencies to 1)
• From country to global brand P&L statements
• Move to integrated solutions
• Dramatic growth in services
“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 be bold strides.”
Lou Gerstner, 1993
Fo
cu
s A
rea
s
IBM Transformation Journey: we started several years ago…
1993 1995 1997 1999 2001 2003 2005 2007 20112009
Phase TwoPalmisano era (‘03 thru present)
…an ongoing journey•Shift to high-value solutions•Move to Values-based culture•Lowering center of gravity for decision-
making•Becoming premier globally integrated
enterprise•Maintain focus and execute in a radically
shifting market•A Smarter Planet
“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, Nov. 6, 2008
Fo
cu
s A
rea
s
1993 1995 1997 1999 2001 2003 2005 2007 20112009
Phase ThreeRometty era (starting in 2012)
The shift to a Globally Integrated Enterprise
Shared Services reduced spending by $4B over the last four years
Supply chain averaging $3-5B in savings every year for the last six years
Each Shared Service driving ongoing efficiency & effectiveness:
– Finance E/R reduced from 3% to 1%
– Real Estate improved E/R by 50%
– HR HC Ratio to Employee: improved from 1:122 to 1:169
GIE: Global Shared Services as internal efficiency improvement and external offering
Sharing and Partnering
Globally Integrating
Making Things Smarter
2002
2006
2010
Established consistent set of processes, measures, systems and governance
•Established global function owners accountable for meeting productivity goals
Pursue opportunities to:• Instrument• Interconnect• Make intelligent
“We no longer have to replicate IBM from floor to ceiling in every country. We are optimizing key operations in the right places in the world – eliminating redundancies and excess overhead – and integrating those operations horizontally and globally. …This is
about doing the right tasks, with the right skills, in the right places.” - Sam Palmisano, May 20, 2005 Analyst Meeting
IBM has driven continuous improvement through structured approaches, shared GIE principles, governance and cross Shared Service measurement of process maturity
Major Employee Sites
Customer Fulfillment
Manufacturing
Employee Service Centers
IBM Research Centers
IBM Internal Data Centers
IBM became a Globally Integrated Enterprise, leveraging its scale to capture new growth.
We shifted our operating model to become a Globally Integrated Enterprise that optimizes its supply chain, production and demand management to capture new opportunities.
A Globally Integrated Enterprise is an open, modular organization that is integrated into the fabric of the networked economy and operates under a business model that makes economic sense in the new
global landscape.
Systems & Technology Group
(STG)
Global Business Services (GBS)
Software Group (SWG)
Global Technology Services (GTS)
Sales & Distribution (S&D)
Business Units
Globally Integrated Shared Services
Geographies
North America
Northeast Europe
Southwest Europe
Japan
Sectors
IBM Organization At a Glance IBM Leadership Governance
Strategy TeamStrategy Team
IBM’s strategic direction and emerging business opportunities
Technology TeamTechnology Team
Near- and long-term emerging technologies, technical developments and issues
Integration and Values Team (I&VT)Integrate IBM’s enterprise-wide capabilities, and align and communicate strategies and
values
Performance TeamAccountable for business performance &
results. Develop cross-unit strategies.
Distribution
Industrial
Financial Services
Communications
Public
General BusinessGrowth Markets
Operating TeamOperating Team
Day-to-day marketplace execution
HR Real Estate IT Finance Legal Marketing/Comm
Sales Operations
Integrated Supply Chain
IBM organization and Governance – Strategy to Execute
18
Remixed our portfolio toward services, software, and integrated solutions…
Business Model, Operating Model and Workforce Transformation
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 – to complement and scale our portfolio of products and
offerings
Shift in geographic mix… 2010 revenue:
– 23% Asia Pacific – 34% Europe, Middle East, Africa– 43% Americas
Strong Performance in 2010…
IBM 2010 financial roadmap
Historical Revenue Growth
Margin Expansion
Share Repurchases
Retirement-Related
Future Acquisitions & Growth Initiatives
2006
2010
Contributing to margin expansion by globally integrating:
$6.06
$0.75
$1.00
EPS
Service Delivery
Support Functions
Supply Chain
$11.00
IBM 2010 EPS Roadmap
IBM 2010 EPS Roadmap
IBM’s Roadmap to 2015
Business Model, Operating Model and Workforce Transformation
•Shift to faster growing business mix
•Leverage on acquisitions
Contribute to margin expansion byglobally integrating:•Service Delivery•Support Functions•Supply Chain
• Software contributes about half of our segment profit
• Growth initiatives deliver $20B in revenue growth
• Growth markets revenue approaches 30% of IBM total
• Enterprise productivity delivers $8B in gross savings
• IBM generates $100B in free cash flow, returning 70% to shareholders
IBM’s Roadmap to 2015
Business Model, Operating Model and Workforce Transformation
Shift to faster growing business mix
Leverage on acquisitions
Contribute to margin expansion by
globally integrating:•Service Delivery
•Support Functions•Supply Chain
• Smarter PlanetSmarter Planet: Approximately 400 recent client engagements illustrate reach
• Business AnalyticsBusiness Analytics: Grows to ~$16B business by 2015 –
• Cloud: Grows to ~$7B business of which ~$3B is incremental
• Growth Markets: contributes ~50% of IBM’s growth over the roadmap
IBM values
Dedication to every client’s success
Innovation that matters – for our company and for the world
Trust and personal responsibility in all relationships
Business and
Managem
ent
Science and
Engineering
Econom
ics and Social
Sciences
Math and O
perations R
esearch
Com
puter Science &
Info. S
ystems
Industrial and System
s E
ngineering
Business
Anthropology
Organizational C
hange &
Learning
T-Shaped competences
People and competences have to be aligned with IBM focus on client
There is the need of T-shaped persons (deeper and wider competences)
Today, IBM is helping our clients to change the way the world literally works – and to make the planet not just smaller and “flatter,” but smarter. IBM is applying its expertise, global scope and creativity to build the backbone of 21st century industries and public institutions.
Our world is becoming
INSTRUMENTEDOur world is becoming
INTERCONNECTEDVirtually all processes and ways of working are becoming
INTELLIGENT
Leading the transition to a smarter planet
General Manager Sales, Italy
Complexity as the “New Normal”
Volatility, uncertainty and risk
Continued cost pressures
New regulatory regimes
New Stress on global inter-dependencies
Industry restructuring and consolidation
Markets & business models change
Technology
Complexity as the “New Normal”
Volatility, uncertainty and risk
Continued cost pressures
New regulatory regimes
New Stress on global inter-dependencies
Industry restructuring and consolidation
Markets & business models change
Technology
In 2001, there were 60 million transistors for every human on the planet ...
… today there are 1 billion transistors per human…
… each costing 1/10 millionth of a cent.
Complexity as the “New Normal”
Volatility, uncertainty and risk
Continued cost pressures
New regulatory regimes
New Stress on global inter-dependencies
Industry restructuring and consolidation
Markets & business models change
Technology
There are 4 billion mobile phone subscribers worldwide…
That’s more than one phone for every two people on the planet
Complexity as the “New Normal”
Volatility, uncertainty and risk
Continued cost pressures
New regulatory regimes
New Stress on global inter-dependencies
Industry restructuring and consolidation
Markets & business models change
Technology In 2005 there were 1.3 billion RFID tags in circulation…
… today there are 33 billion.
Complexity as the “New Normal”
2 billion people will be on the Web by 2011 ...
… and a trillion connected objects – cars, appliances, cameras, roadways, pipelines – comprising the "Internet of Things."
Volatility, uncertainty and risk
Continued cost pressures
New regulatory regimes
New Stress on global inter-dependencies
Industry restructuring and consolidation
Markets & business models change
Technology
Our world is becoming
INSTRUMENTED
Our world is becoming
INTERCONNECTED
Virtually all things, processes and waysof working are becoming
INTELLIGENT
Our vision is to bring a new level of smart to how the world works — how every person, business, organization, government, natural system, and man-made system interacts.
Each interaction represents a chance to do something better, more efficiently, more productively.
But more than that, as the systems of the planet become smart, we have a chance to open up meaningful new possibilities for progress.
Smarter Planet
The World is Getting Smarter: because it must
40-70 percent of the electrical energy is lost due to inefficiencies in the grid.
In one small business district in Los Angeles alone, cars burned 47,000 gallons of gasoline just looking for parking.
Consumer products and retail industries lose about $40 billion annually due to inefficient supply chains.
In a world where 820 million people are undernourished, $48 billion worth of the food is thrown away each year in the US.
Our healthcare “system ” can’t link from diagnosis to drug discovery, providers, insurers, employers and patients.
Financial markets spread risk but can’t track it; this has led to undermined confidence and uncertainty.
Building a smarter planet together
Smart trafficsystems
Smart water mgmt
Smart energygrids
Smarthealthcare
Smart foodsystems
Intelligentoil field
technologies
Smart regions
Smart weather
Smart countries
Smart supply chains
Smart cities
Smart retail