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IBM Smarter Commerce - A Strategic Analysis
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Transcript of IBM Smarter Commerce - A Strategic Analysis
SMARTER COMMERCE
Integrated Value Chain Solutions
in the Age of the Customer
Madhuranath R
OVERVIEW
COMPANY PROFILE
About IBM
V-M-V of IBM
Smarter Commerce
Target Market
Value Proposition
STRATEGIC ANALYSIS PEST Analysis
5-Forces Analysis
Strategic Maps
Industry Success Factors
Competency Matrix
Triangle Model
FUTURE GROWTH Potential Market
Strategic Maps
Competency Matrix
STAR FRAMEWORK Visual Representation
Framework Description
Framework Explained
COMPANY
PROFILE
About IBM
History
Founded in 1911 as CTR
Renamed in 1924 as IBM
Operates in 170 countries
Business
Technology Solutions
Business Consulting
IT Services & Others
Rankings
Forbes Global #31,revenue
Fortune #1, leadership
Fortune #5, most admired
Leadership
Virginia Rometty – CEO
Sam Palmisano - Chairman
14 Board of Directors
Brand Equity
Market Cap - $227 Billion
Global #2 Best Brand
Global #1 Green Company
Financials
$107 Billion – Revenue
$16.3 Billion – Net Income
$18.5 Billion – Returns
VISION
Solutions for a small planet
MISSION
At IBM, we strive to lead in the invention, development and manufacture of
the industry's most advanced information technologies, including computer
systems, software, storage systems and microelectronics.
We translate these advanced technologies into value for our customers
through our professional solutions, services & consulting businesses worldwide
VALUES Dedication to every client’s success
Innovation that matters – for our company and the world
Trust and personal responsibility in all relationships
About SMARTER COMMERCE
IBM’s Enterprise Marketing Management division leads Smarter Commerce
Integrated lifecycle approach to Commerce for total customer-centricity
Improves how firms connect with marketers, suppliers, partners, customers, web sites and even social networks
Delivers value via Customer Insight & Customer-centric Value Chain Realignment throughout the lifecycle phases of Buy, Market, Sell, Service
Brings together IBM’s core technologies & product portfolio
TECHNOLOGIES PRODUCTS
Integration – Supply Chain Planning & Execution WebSphere, Sterling Commerce
Advanced Analytics Unica, Coremetrics
Cloud Computing Cognos
Social Networking IBM Collaboration Suite
Cross-Channel Commerce Sterling Commerce, iLog
TARGET MARKET
Smarter Commerce solutions are applicable to most industries like –
But within a given industry Smarter Commerce targets specific businesses
E.g. Primary Target Market of Smarter Commerce for Retail comprises –
• B2B Retailers
• B2C Retailers
• Online Retailers
Banking & Insurance Government
Communications Healthcare
Energy Oil & Gas
Education Retail
Food Transportation Systems
VALUE PROPOSITION
STRATEGIC
ANALYSIS
PEST ANALYSIS
POLITICAL
• China is the manufacturing hub for half of all products in world
• Global political sentiment against China is a potential risk
ECONOMIC
• Global Recession is driving down margins across industries
• Global Retail Supply Chain inefficiencies waste $15 Trillion
SOCIAL
• Increased consumers’ access to information empowers them
• Current generation of consumer shares experiences and info quickly and with more people
TECHNOLOGICAL
• Tech provides more ways for consumers to connect to retailer
• Social networks have empowered consumers with an increased transparency & power of WOM
5-FORCES ANALYSIS
Competitive
Rivalry
Threat of
New Entrant
Bargaining Power of
Suppliers
Threat of Substitute
Bargaining Power of
Customer
Conclusion Smarter Commerce Industry is ATTRACTIVE MEDIUM
MEDIUM
LOW LOW LOW
5-Forces Analysis • New entrants cannot create
Smarter Commerce solutions
• Suppliers of solutions are companies acquired by IBM
• Substitutes are only partial solutions as of now
• Customers in Retail Industry need novel solutions to maintain competitiveness
• Rivalry is non-existent as Smarter Commerce is a new industry introduced by IBM
STRATEGIC MAP SOLUTION CAPABILITY
0
2
4
0 1.5 3
CO
NSU
TIN
G C
APA
BIL
ITIE
S
LOW
LOW
HIGH
HIG
H
RANGE OF SOLUTIONS
IBM
Oracle SAP Accenture
Conclusion: Offering a broader range of solutions is as important as providing Smarter Commerce Consulting. BUT only offering both gives maximum market share.
STRATEGIC MAP SOLUTION COMPATIBILITY
0
2
4
0 1.5 3
PR
OP
RIE
TAR
Y S
OLU
TIO
NS
LOW
LOW
HIGH
HIG
H
IBM
Oracle
SAP
Accenture
Conclusion: Ability to integrate proprietary with other solutions provides business value as perceived by customer. Proprietary + Integrated Solutions is the name of game.
I N T E G R A T E D S O L U T I O N S
STRATEGIC MAP BUSINESS MODEL
0
2
4
0 1.5 3
INN
OV
AT
ION
LOW
LOW
HIGH
HIG
H
IBM
Oracle
SAP
Accenture
Conclusion: Building partnerships to serve more customers is as important as constant innovation. These two factors contribute to strengthening of the business model
P A R T N E R S H I P S
STRATEGIC MAP BRAND EQUITY
0
2
4
0 1.5 3
CU
STO
MER
SER
VIC
E
LOW
LOW
HIGH
HIG
H
IBM
Oracle SAP
Accenture
Conclusion: Building partnerships to serve more customers is more important than just possessing Proprietary Solutions or Patents. Having both gives greater market share.
M A R K E T I N G
INDUSTRY SUCCESS FACTORS
CRITICAL SUCCESS FACTORS
Solution Capability Smarter Commerce Consulting
Integrated & Proprietary Solns
Business Model Partnerships & Outsourcing
Continuous Innovation
Brand Equity Marketing & Advertising
Customer Service Excellence
THRESHOLD FACTORS
IT Services Application Development
Maintenance Services
Performance Scalability
Delivered Quality
Price Cost of Solution Deployment
Cost of Consulting
COMPETENCY MATRIX
Conclusion: Comprehensive Solution Capabilities, Innovative Business Model and Brand Equity are the Key Success Factors to compete in Smarter Commerce Industry.
KEY SUCCESS FACTORS Weight IBM Oracle SAP Accenture Others
Solution Capabilities 50% 9.7 6.2 5.6 4.3Smarter Commerce Consulting 20% 10 5 5 4
Proprietary Solutions 15% 10 7 8 2
Integration Capabilities 15% 9 7 4 7
Business Model 25% 9.6 7.0 4.2 2.0
Partnerships & Outsourcing 10% 9 7 3 2
Continuous Innovation 15% 10 7 5 2
Brand Equity 25% 10.0 6.0 4.4 4.0Marketing & Advertising 15% 10 6 4 4
Customer Service Excellence 10% 10 6 5 4
Total Weight 100% 9.8 6.4 5.0 3.7Market Share 100% 37% 20% 15% 10% 18%
KSF MATRIX INTERPRETATION
• Smarter Commerce Consulting capability is the single most important KSF in Smarter Commerce Solutions Industry
• Solution Capabilities + Marketing = 65% weightage
These two factors contribute to IBM’s market leadership
• Smarter Commerce brings together several technologies/ solutions and thus straddles several strategic groups
• Competitors of IBM Smarter Commerce offer partial solutions & thus have low market shares corresponding to their segments
TRIANGLE FRAMEWORK
Competencies Analytics solutions like
Coremetrics & Unica WebSphere middleware
is an integration platform Value Chain Integration
Solutions with iLog & Sterling Commerce
IBM Smarter Commerce provides analytics powered integrated solutions for improving efficiencies and margins by delivering business outcomes
throughout the lifecycle phases of the commerce Value Chain Smarter Commerce Consulting leverages analytics to help derive customer
insight to identify new revenue streams for customers
Value Proposition
KSF Smarter Commerce
Consulting
Proprietary Solutions
Integration Capabilities
Continuous Innovation
FUTURE GROWTH
SMARTER COMMERCE – 2020
MARKET PROJECTIONS
• Smarter Commerce Solutions market will be worth $70 billion as per the projections of IBM Enterprise Marketing Management
• IBM will be the leader with more than 50% market share
• Smarter Commerce spans business consulting, technology solutions and IT services to give IBM 360° earnings potential
• IBM leverages partnerships with ISV or IBM Service Vendors to service customers in the SME segment as well which increases the brand equity and dominance of IBM in Smarter Commerce
STRATEGIC MAP FIRST-MOVER ADVANTAGE
0
2
4
0 1.5 3
CU
STO
MIZ
ED S
OLU
TIO
NS
LOW
LOW
HIGH
HIG
H
IBM
Oracle
SAP
Accenture
Conclusion: As a first-mover IBM gains unmatched implementation experience and builds customized solutions which raises the entry barrier for potential competition.
IMPLEMENTATION EXPERIENCE
STRATEGIC MAP BUSINESS MODEL
0
2
4
0 1.5 3
INN
OV
AT
ION
LOW
LOW
HIGH
HIG
H
IBM
Oracle SAP
Accenture
Conclusion: Building partnerships to serve more customers is as important as constant innovation. These two factors contribute to strengthening of the business model
P A R T N E R S H I P S
STRATEGIC MAP BRAND EQUITY
0
2
4
0 1.5 3
CU
STO
MER
SER
VIC
E
LOW
LOW
HIGH
HIG
H
IBM
Oracle SAP
Accenture
Conclusion: Building partnerships to serve more customers is more important than just possessing Proprietary Solutions or Patents. Having both gives greater market share.
M A R K E T I N G
INDUSTRY SUCCESS FACTORS
CRITICAL SUCCESS FACTORS
Implementation Experience
Implementation Experience
Customized Solutions
Business Model Partnerships & Outsourcing
Continuous Innovation
Brand Equity Marketing & Advertising
Customer Service Excellence
THRESHOLD FACTORS
IT Services Application Development
Maintenance Services
Performance Scalability
Delivered Quality
Price Cost of Solution Deployment
Cost of Consulting
COMPETENCY MATRIX
Conclusion: Comprehensive Solution Capabilities, Implementation Experience and Brand are the Key Success Factors to compete in Smarter Commerce Industry.
KEY SUCCESS FACTORS Weight IBM Oracle SAP Accenture Others
Solution Capabilities 45% 9.7 2.9 2.6 2.3Implementation Experience 25% 10 2 2 2
Customized Solutions 10% 10 4 3 2
Integration Capabilities 10% 9 3 3 3
Business Model 25% 9.6 4.0 3.6 2.0
Partnerships & Outsourcing 10% 9 4 3 2
Continuous Innovation 15% 10 4 4 2
Brand Equity 30% 10.0 5.6 4.4 4.0Marketing & Advertising 20% 10 6 4 4
Customer Service Excellence 10% 10 5 5 4
Total Weight 100% 9.8 3.9 3.3 2.7Market Share 100% 59% 15% 11% 7% 8%
KSF MATRIX INTERPRETATION
• Proven Implementation Experience will be the most important KSF in Smarter Commerce Solutions Industry by year 2020
• Solution Capabilities + Marketing = 75% weightage
These two factors contribute to IBM’s continued dominance
• Smarter Commerce will become an independent industry and solution in its own right and new competitors will try to copy it
• Competitors from current partial solution segments will no longer be relevant and will be left out of the market game
STAR
FRAMEWORK
Strategy Tracing Analysis Recommendation
Framework for Strategic Planning
FRAMEWORK DESCRIPTION
• PURPOSE : To ensure Strategic Alignment in analysis and planning from Vision to Value Innovation
• REQUIRED : Awareness of basic Strategy Frameworks
• OUTCOME : Derive the Value Innovation for the organization
• COMPONENTS – Foundational Triangle: Vision-Mission-Values of the organization
– Framework Triangle : KSF-SWOT-ERRC analysis of the industry
– Tactical Priority Axis : Priority of attributes in Tactical Planning
– Strategic Priority Axis : Priority of activities in Strategic Planning
FRAMEWORK EXPLAINED
• Foundational Triangle / Guiding Triangle – Vision and Values form the foundation of a strategic plan and ultimately support the
Mission which has the highest priority in terms of planning action for the short term
• Framework Triangle / Analysis Triangle / Recommendation Triangle – KSF & SWOT are analysis frameworks which help in identifying the success factors and
opportunities which help to derive the Value Innovation using the ERRC framework
• Tactical Priority Axis – The attributes of Vision and Values have a lower priority during tactical planning. But
that does not mean short term / tactical planning will ignore them completely as ultimately the Mission planning is done with the Values and Vision inputs as the basis.
• Strategic Priority Axis – The activities of KSF and SWOT analysis have a lower priority during strategic planning.
This is because KSF and SWOT are usually done in retrospect and do not need innovation. Whereas ERRC analysis is future focused and needs innovative thinking to arrive at Value Innovation strategies that will create a Blue Ocean for the company. However, KSF & SWOT are the analyses which provide inputs for ERRC analysis.
THANK
Y U