e-business@IBM: Fusion of Business and IT SIM New...
Transcript of e-business@IBM: Fusion of Business and IT SIM New...
e-business@IBM: Fusion of Business and ITSIM New York ChapterSeptember 9, 2002
Cathy LasserCathy LasserVice PresidentVice President
Service Provider Operations and B2B InitiativesService Provider Operations and B2B InitiativesBT/CIOBT/CIO
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Agenda
State of e-business
IBM's Transformation
Governance of Transformation
e-business@IBM
Architecture, Infrastructure and IT Efficiencies
Lessons Learned
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Buzz on e-business still shows significant value to be captured
The efficiencies to be gained from collaborative design and supply chain coordination are
still in their infancy. – Forrester
Web merchants that set more modest growth goals in the first place... generally fared better
than their "growth at any cost" counterparts.
– New York Times
Selling to consumers online still makes sense. What didn't
make sense were business models that didn't reflect a
plan for profitability. – InfoWorld
Something surprising has emerged from the ashes of the Internet bust. A few dot-coms are actually making money.
– Wall Street Journal
The bubble of e-Marketplace euphoria popped sooner than expected, although
this should surprise no one... A return to sound business principles
and the resetting of realistic expectations means that the B2B
market can expand more rationally.– Gartner
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e-business is just "plain old business" enabled by Internet technologies
The maximum benefits of e-business come from integrating Internet technologies into your core processes, opening up opportunities to link employees, customers, suppliers and distributors anytime, anywhere, driving revenue and profitability
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Expectations are increasing
The demand for coordination across value chains, functions, markets and geographies will continue to accelerate, and it will be impossible to respond to this challenge without driving new ways of thinking through corporate ranks.
– IDC
CIOs expressed continued significant pressure to constrain spending increases while simultaneously investing to introduce innovative, customer facing and revenue-generating functionality in an increasingly networked environment.
– Morgan Stanley
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So is the "pain"
Aligning IT with global business objectives
Measuring IT value
Evaluating complex trade-offs
Pet projects
Searching for an alignment process that is simple, logical, repeatable and proven
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Top IT Priorities
Source: Merrill Lynch, 2002
ERP Implementation
Security / Disaster Recovery
CRM
Application Integration
Storage
e-Commerce
How to get more value
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1984 1992
"The IBM Era Is Over ... what was once one of the world's more vaunted high-tech companies has been reduced to the role of a follower, frequently responding slowly and ineffectively to the major technological forces reshaping the industry." - The New York Times, Dec. 16, 1992
When Lou Gerstner arrived at IBM, the company was on the verge of dissolution
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24 independent 24 independent business unitsbusiness units
Redundant Redundant processesprocesses
Disconnected Disconnected information information systemssystems
$B
'85 '93 '01-20
0
40
80
120
Market ValueMarket Value
RevenueRevenue
ProfitProfit
160
200
The IBM Journey
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IBM has undergone a major financial, competitive and cultural transformation
Restructuring began with a fundamental examination of everything IBM was doing and the processes by which the enterprise was being run
Serious self-assessment looked at:cost structurecompetitiveness of our productsstrategic directionbasic value proposition to our customers
Answered core questions:Where to concentrate resourcesWhere to investWhere to disinvestWhere to put energy in order to lead markets
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FocusOur unique competitive advantage was our ability to serve our customers
GlobalizationTo be truly global required IBM to organize around customer groups
Competitive BenchmarkingNeed to quantify what it will take to be the best
Key characteristics of IBM's restructuring
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Key characteristics of IBM's restructuring (cont'd)
ReengineeringInternal information infrastructure had to be completely reengineered
worldwide databasesmarketing systemsfinancial systemsfulfillment systemsmanufacturing systemscustomer care systems
Cultural ChangeObsession with the marketplaceSpeed of executionTeamwork is critical
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Transformation is hard work
"You must have an institutional commitment to stay with this program over multiple years. And understand the hard part isn't getting started. The hard part is seeing the changes through until you've achieved whatever objectives you set. . ."
"This isn't just a matter of reassembling companies, assets and industries. Any truly serious, meaningful restructuring begins with a fundamental examination of everything you do. . .and the processes by which you run your enterprise."
– Lou Gerstner
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Driving cultural change is difficult but possible
Customer focused
Breakthrough thinking
Drive to achieve
Teamwork
Team leadership
Decisive execution
Straight talk
Organizational capability
Internally focused
Inflexible
Entitlement
Internal Competition
Turf-protecting
Bureaucracy
Good news only
Redundancy
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Speed
Passion for the Business
Sustain
M
omentum
Mobilize
ToE
xecu
teFocusto Win
Cus
to
mers
CompetitionFocus to win
Customer insightBreakthrough thinkingDrive to achieve
Mobilize to executeTeam leadershipStraight talkTeamworkDecisiveness
Sustain momentum Building organization capabilityCoachingPersonal dedication
The corePassion for the business
Building and retaining strong leadership is key
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Today, IBM CIO governs the transformation of core processes
Customers Suppliers
Employees
Integrated Product Development
Integrated Supply Chain
Procurement Production Fulfillment
Human Resources Finance
Market Planning
Customer Relationship Management
Stakeholders
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Customer Facing
(SVP of Sales)
Supplier Facing (SVP of
Manufacturing)
Enterprise Information (CFO)
Value Chain Boundaries
Value Chain Owners (Business Unit GMs)
CRMDemand /
Supply Planning
Sales Procure
Distributed S/W
OEM H/W
Configured H/W
Financing
Services
Entitled S/W
Part-numbered H/W
Business Policies and Rules
Customers Suppliers
We shifted our focus from process commonality to value chain optimization with an emphasis on end-to-end integration
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MarketPlanning
SupplyChain/
OfferingDelivery
SalesDemandGeneration
Product/OfferingDevelop.
MarketPlanning
SupplyChain/
OfferingDelivery
SalesDemandGeneration
Product/OfferingDevelop.
Value Chains
SuppliersCustomers
MarketPlanning
Post-Sales
Support
SupplyChain/
OfferingDelivery
SalesProduct/OfferingDevelop.
DemandGen.
Value chain model allows for customization while still fostering the "One IBM" for customers and suppliers
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Global Services is our "contractual" transformation partner for implementation and operations
BT/CIO sets strategyGlobal Services executes
BT/CIO sets measurementsGlobal Services tracks achievement
BT/CIO aligns priorities, appraisal and pay
Global Services' prioritiesThought implementation leadership in e-businessBusiness value and reduced costImproved service delivery quality to enhance productivity and job satisfaction
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Desired State
Initiatives
Strategic Priorities
Budget
IBM's approach to e-business investments identifies priorities and transformation initiatives
Identify priorities for enterprise, business unit
Identify e-business capability to support process changes - gap analysis
Identify re-engineering actions
Prioritize initiatives
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e-business@IBM: Key Investments and Returns
SuppliersCustomers
Employees
Stakeholders
Customer-facing Processes
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ibm.com
CRM-Siebel
e-Care
Total Order Management
B2B
Real-time use of information
We are simplifying and integrating customer-facing processes
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Revenue$12 Billion in 2001, up 41% YTY14% of IBM's global S&D sales, up 4 points YTY
On-line shopping and purchasing experience14,000 products and services available online60% of "CallMe’s" converted to sales vs. 36% for inbound calls
The role of ibm.com is to develop e-relationships with customers
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Customer Relations
+7,600 Siebel seats in 35 countries+7,600 Siebel seats in 35 countries
Call center productivity up 26%Call center productivity up 26%
Telesales 40% less than face-to-faceTelesales 40% less than face-to-face
Portfolio fulfillment apps reduced by 36%Portfolio fulfillment apps reduced by 36%
Fulfillment
Response time cut from 20 minutesResponse time cut from 20 minutes
Almost 70% of orders are "touchless"Almost 70% of orders are "touchless"
IBM's Results: Operational Efficiencies
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SuppliersCustomers
Employees
Stakeholders
Supplier-facing Processes
e-business@IBM: Key Investments and Returns
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e-Design
Demand supply planning
Strong participation in standards: RosettaNet / UDDI
e-Procurement and supplier management
We are simplifying and integrating supplier facing processes
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Delivery cost / revenue reduced by 22%Delivery cost / revenue reduced by 22%
Integrated Supply Chain
On-time delivery improved to 95% from 30%On-time delivery improved to 95% from 30%
Procurement
33,000 suppliers33,000 suppliers
95% of goods and services95% of goods and services
$405M in savings in 2001$405M in savings in 2001
Order-to-delivery cycle time improved by 46%Order-to-delivery cycle time improved by 46%
IBM's Results: Operational Efficiencies
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SuppliersCustomers
Employees
Stakeholders
Employee-facing Processes
e-business@IBM: Key Investments and Returns
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We are simplifying and integrating employee-facing processes using our intranet as the foundation
HR
e-Learning
Lotus Notes and Domino
Knowledge Management
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e-Learning
Benefits of distance learning have significant impact
26%26%
1999
Total Education Days 1.7M1.7M
Cost Avoidance $200M$200M
36%36%
2000
2.6M2.6M
$350M$350M
43%43%
2001
2.8M2.8M
$395M$395M
Total Distance Learning Days 442K442K 953K953K 1,236K1,236K
48%48%
YTDQ202
1.0M1.0M
$163M$163M
494K494K
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SuppliersCustomers
Employees
Stakeholders
Financial Benefits of Transformation
e-business@IBM: Overall Transformation Results
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We continue to gain financial benefits of transformation
e-Procurement
1999
Sales Via the Web
Service Transactions Via the Web
e-Learning
2000 20011998
$27B$27B$7B$7B
$3B$3B $15B$15B
14M14M 42M42M
26%26%N/AN/A
$43B$43B
$23B$23B
100M100M
36%36%
$40B$40B
$27B$27B
121M121M
43%43%
YTDQ202
$17B$17B
$11.5B$11.5B
63M63M
48%48%
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Financial benefits of transformation contribute to bottom line
e-Procurement
1999
e-Support for Customers
Distance Learning
2000 20011998
$272M$272M$240M$240M
$300M$300M $750M$750M
N/AN/A $200M$200M
$377M$377M
$1.5B$1.5B
$350M$350M
$405M$405M
$1.4B$1.4B
$395M$395M
Cost Avoidance 1998 - Q202
YTDQ102
$171M$171M
$683M$683M
$163M$163M
$7.2B$7.2B
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Architecture, Infrastructure and IT Efficiencies
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Leverage strategic assets to:Enable rapid decisions Establish clear accountability Enable exploitation of information and knowledgeOptimize the infrastructure to support shared services
“Deliver an agile, global, standard information infrastructure for our employees, customers, suppliers and shareholders”
The benefits of change ...
Resulting in:Responsive changes to marketplace and customer needsImproving competitiveness & fueling of growthHigher returns on investmentsCustomer confidence
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Before155 data centers
31 separate, private networks
Hundreds of client configurations
16,000 applications
Now12 data centers
One integrated, global network
Four standard configurations
5,670 applications
Streamlining infrastructure reduced cost and improved performance
Application and infrastructure standardsEnterprise development and deployment processPortfolio managementTelecommunications globalizationStandard client configurations
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Cutting costs and investing result in a more efficient and functional environment
Cost Reduction 1997 to 1H02Service delivery costs declined 17.2%
Volumes, headcount, process deployment and e-business
Service delivery cost / headcount declined 24.2%$14K/HC to $10.7K/HC
ReinvestmentReengineeringY2K readinesse-business
Improved Service LevelsBandwidth: 2-3x/yearInternet response: 11 sec - < 3 secIntranet response: 11 sec - < 1 secNotes seats: 150K - > 380KNotes availability: 99.2% - > 99.8%
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Customer Data
ShipperProduction
Partner
Inventory
Supplier Advertiser
SAP SAPIBM
i2Ariba
Siebel
Connected Customers
Connected Employees
Catalog
Internal and external integration is achieved using both IBM and partner products
Savings support transition to architecture best-suited for virtual company
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Global Web Architecture is based on a multi-tiered model
Employees
Web Traffic ExpressTivoli Network Dispatcher
File Transfer Protocol
WebSphere Application WebSphere Commerce
Lotus Domino
Tivoli SecurewayCisco firewalls
Distributed File System
IBM HTTP Server(Apache)
MiddlewareMiddleware
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Where to Begin?
Install a governance model suited to your company's culture
Infrastructure optimization
e-Procurement
e-Learning
Corporate functions (HR, Finance...)
Customer Relationship Management
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We learned important lessons
e-business payoff is real
Web forces a holistic, customer-centric strategy
Integration is hard
Outsource for speed and business value
Invest in your IT architecture and infrastructure
Proactive leadership is required for cultural change
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Cathy LasserCathy [email protected]@us.ibm.com
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