1. Industry Analyst TeleconferenceMarch 10, 2011--Material in this presentation is under embargo until March 14, 2011--Smarter CommerceRedefining the value chain in the age of the customer 2011 IBM Corporation

2. 2Hosts for Today Craig Hayman, General Manager, Industry Solutions IBM Software Solutions Group Dan Hirschbuehler, Global Leader, Application Innovation Services IBM Global Business Services 2011 IBM Corporation 3. 3 Todays News: IBM Smarter CommerceRecent Acquisitions Position IBM as the Only Solutions Provider Integrating All Elements of the Commerce Lifecycle Spanning Buying, Marketing, Selling and Service IBM Expands Global Business Services With New Smarter Commerce Services, Software Adding a new services practice with more than aSmarter Commercethousand dedicated experts $2.5 billion in commerce-related acquisitions & newConsulting & Servicessoftware investments since 2010 Software Integrated & globalized product offerings New Cloud analytics including an IBM Coremetrics Systems & Technology offering to measure and optimize social presence in such social media properties such as Facebook and Research Twitter. IBM will also deliver software solutions that allowSmarter Commerce is a unique approach that companies to deliver relevant and consistent messagesincreases the value companies generate for across all sales and marketing channels - from the web their customers, partners and shareholders in a to email to stores to call centers.rapidly changing digital world. It is designed to A Smarter Commerce University dedicated to on-help companies better integrate and moreramping business partners and new hires effectively manage their value chain, includingbuy, market, sell, and service processes to put Communicating overall smarter commerce trendthe customer at the center of decisions andstory and IT solution need in the marketactions leading to greater customer loyalty, 2011 IBM Corporationrevenue / margin growth and agility. 4. 4 We have entered the age of the empowered customer Customers now haveSocial networkingCustomerThis is changing the unlimited access to and mobile expectations of entire way products information and can commerce haveservice, price andare sourced, instantly share it with dramatically changed delivery is soaring.manufactured and the world the dynamic betweendistributedand buyer and seller.making businessmore complex thanever.95 million75%$93 billionNumber of tweets sent via Percentage of people Amount in sales missedTwitter each daywho believe companiesdue to out of stockdont tell the truth ininventoryadvertisements 2011 IBM Corporation 5. 5 These disruptive forces ripple from the customer through the enterprise and across entire industries Individuals"The consumer is using new channels to The connected consumer perceive value, and associated pricing The networked workforce implications. The empowered citizenConsumer Products CEO, United States Enterprises "Profits will shift away from analog Evolved business models distribution to digital distribution; we Optimized digital operations will see increased margins in digital Connected enterprise distribution and increased international distribution.Media and Entertainment CEO, United States Industries Value migration Disintermediation of clients by smaller Value chain redefinition niche players (such as mobile players) is Fragmentationcause for concern.Financial Markets CEO, Canada Source: IBV Analysis 2011 IBM Corporation 6. 6 Power has shifted to the customer compressing margins Successful companies are transforming their approach to commerce Understanding and anticipating customerAn internationalbehavior and needs based on customertransportationinsights across all channelscompany reducedpartner integrationtime. Adapting sourcing and procurement based95%on customer demand and optimize supplierA leading provider ofinteractions across extended value chains teaching, learningand researchsolutions grew direct- Marketing, selling and fulfilling the right to-consumercommerce revenues.product and service at the right price, time 70%and placeA US-based nationalcommunications Servicing customers flawlessly, predictingservice providerboosted ROI byand driving customer loyaltyreducing customerchurn. 376% 2011 IBM Corporation 7. 7At IBM, we call the path forward: Smarter CommerceSmarter Commerce is astrategic approach thatIt maximizes the insightIt capitalizes on social andplaces the customer at the generated through customermobile commerce.center of your businessinteractions.operations It synchronizes your entire value chain to deliver consistent and It drives growth by enhancing,predictable outcomes . extending, and redefining the value you provide.Customer It improves collaboration It increases margins by and visibility for your boosting efficiency at everycustomers & partners. stage of the commerce cycle 2011 IBM Corporation 8. 8Smarter Commerce focuses on three dimensions centered around thecustomerCustomer InsightCustomer Value Strategy In todays world of In turn, you must re- instant business, you think how yourneed deep insights, in customers definereal-time that you canvalue, and theturn into immediatechanges you must action make to your valuechain so you can Customer & Partnerdeliver exactly whatEngagement your customers want Customer - profitablyYou need an approach that allows you to more effectively Connect, Collaborate, Conduct increasing the value companies generate Commerce and Create afor their customers and partners in a rapidly differentiated customerchanging digital worldexperience. 2011 IBM Corporation 9. 9Smarter Commerce can help transformevery phase of the commerce cycle Buy MarketDrive intelligent, Create adaptive and Strategy Insightpersonalized and optimized relevant offersextended supplywith unified cross-chains based onBuyMarket channel marketing customer demand Sourcing, controllingTargeted and and procurement of personalizedgoods and servicesmarketing across allcustomer interactions CustomerService SellServicing Selling and fulfillmentSellServicecustomer needs of products and EnableAnticipateacross allservices acrossinteraction all channels customers and behavior and channels partners todeliver flawlessbuy any offer customer servicefrom any supplier across allacross any channels channel Engagement 2011 IBM Corporation 10. 10 IBMs integrated portfolio for Smarter CommerceVALUE CHAIN STRATEGY AND SERVICES Innovation and business valueMarket and customer mgmt Operating and Organization Models Innovating and aligning business models toAligning sales, marketing and operations Designing operations, supply chain and thedrive value to the customer to engage with customers organization model to deliver customer value CORE BUSINESS SOLUTIONSCore Business ProcessesBuyMarketSell Service Trading Partner Mgmt Predictive Analytics/Modeling B2B / B2C Cross-channel Delivery & Service Supplier Management Behavioral Segmentation commerce Scheduling Supply Chain Visibility Cross-channel Campaign Mgmt Distributed Order Orchestration Customer Self Service Logistics Management Search Optimization, Ad Fulfillment and Supply Chain Enablement Inventory OptimizationTargeting Optimization Reverse Logistics Marketing Resource Mgmt Mobile Commerce Case Management Retail Store Advanced Analytics Store analytics | Purchase analytics | Consumer loyalty | Predictive and prescriptive | Social Analytics | Master data managementWorkload Optimized Systems (Z-Enterprise, Power, X, Storage and Systems Software) focused on agility, integration and automation to drive relevant business outcomes 2011 IBM Corporation 11. 11 Solution Scenario Planning, coordinating & executing marketing campaigns to stimulate commerce demand Manage Marketing across Multiple Interaction Channels Cross-channel marketing strategy is defined and planned using Unica Coremetrics is used to track consumer actions, and make relevant recommendations The e-commerce web site and order capture is provided by WebSphere Commerce Customer experience with responsive interaction is guaranteed by workload optimized systemsOptimize display and search results with Coremetrics AdTarget and Coremetrics SearchMarketing messages and campaigns are defined andplanned using Unica CampaignWeb MobileRetailInsights from Storesocial media, Systemsthird partyStorewebsites,purchase Deliver custom landing pages with targetedhistory ,etc messages and promotions via WebSphere Generate demand with Unica eMessage Commerce Precision Marketing(email creation, delivery, trackingCapture responses and refine11 2011 IBM Corporation 12. 12 Solution Scenario Leveraging supply chain intelligence to shift inventory & execute regional promotions Offer regional product promotions and optimize inventory location ILOG is used to optimize the logistics network Network details are deployed into the Sterling Transportation Management System Sterling Supply Chain Visibility monitors flow of inventory vs. annual norms WebSphere Commerce leverages this intelligence to issue custom regional promotions Sterling OR Regional promotion to Warm winter insell Denver inventory faster is Denver resultsdelivered via WebSphere in excess snowSupply Chain Commerce Precision Visibility Marketing blower inventory meanwhile, a coldspell in Boston is causing back ordersdue to lack of Trigger an inventory movement of snowinventory blowers from Denver to Boston lLOG Logistics Network Optimization Capture results for future supply and inventory 2011 IBM Corporation 13. 13 What is unique about IBMs Smarter Commerce? ComprehensiveIntegrated Optimizes the Integrated analytics complete commerce Integrated focused lifecycleSuppliers industry solutions Leading software, services and infrastructure Customers IBM Smarter PartnersCommerceOutcome Driven Flexible and Open Measureable business Flexible deployment outcomesInfluencers Modular offerings and Outcomes tailored to 13 flexible consumption business domains 2011 IBM Corporation 14. 14IBM Smarter Commerce: Making it Real INVESTMENTSoftware: $2.5+ billion investment in best of breed buy-market-sell software since 2010Services: Global Business Services expanding its consulting and solutions capabilitiesfor commerce with a new practice RESEARCHIBM Research Innovation: 3000 researchers , including in the areas of customerinsight, financial management, social business and supply chainINNOVATION Business Analytics & Optimization: 14 billion in analytics focused acquisitions. The BAO practice has 8,000+ dedicated business consultants with industry expertise Smarter Computing: Over 25,000 hardware and 25,000 software developers. IBM is investing in Workload Optimized Systems to help companies manage the needs driven by commerce applicationsEDUCATION Enabling our Ecosystem: An IBM Smarter Commerce University dedicated to on-ramping business partners, new hires and consultants 2011 IBM Corporation 15. 15 What does Smarter Commerce mean to these clients? Staples ING Bank Crocs For Staples, a $24B retailer, For ING Bank, serving over 85M For Crocs, a $700M Smarter Commerce meanscustomers, Smarter Commercemanufacturer, Smarter transforming the customer means transforming their Commerce means transforming experience across all marketing so personalizedtheir fulfillment operations and interaction channels by product offers can be deliveredsupply chain so internet delivering a personalized across multiple channels in real customer orders are filled with buying experience for overtime resulting in 20M increase100% accuracy through their 10,000 B2C and B2B customersin corporate earnings, 35% network of suppliers at the in 27 countries reduction in marketing costs,lowest cost and shorter cycle times 2011 IBM Corporation 16. 16 2011 IBM Corporation 17. 17 Integration across best-of-breed products to deliver industry focused solutionsVALUE CHAIN STRATEGY AND SERVICESCORE BUSINESS SOLUTIONS Core business processesBuy MarketSellServiceSourcing and procuring goodsSelling and fulfillment of products Servicing customer needs acrossDeveloping, delivering, andand materials required tomeasuring relevant and consistent and services across multiple all interaction channels to drive deliver products and services tomessages across multiple channelschannels to drive salesrepeat sales and enhance lifetime meet customer demandto drive demand value of a customerSterling Commerce Sterling CommerceSterling Commerce Cross-Channel Order Capture, Cart Warehouse Management Distributed Order Management Delivery & service Scheduling and Catalog Transportation Management Warehouse Management Reverse Logistics Customer-centric Shopping Experience Supply Chain Visibility B2C/B2B Storefronts Transportation Management Sterling CollaborationCoremetrics Supply Chain Visibility SterlingIBM Case ManagerNetwork/B2B Services Digital Analytics Collaboration Network/B2B Services Case Design, Run-time, AnalyticsRetail Store Solutions Behavioral Segmentation Collaboration Retail POS Solutions Search Optimization, Ad Rules & Events Self-Service Portal/KioskTargeting, and Real-time POS ApplicationsILOG Supply ChainWebsiteRecommendations Network OptimizationILOG Supply Chain Transportation Optimization Product Optimization Unica Inventory OptimizationSterling Commerce Cross-channel Cross Channel Order Campaign MgmtManagement Real-time Decisioning, Configuration Event Detection, and Pricing Contact Optimization Multi-vendor catalog Operations Mgmt QuotingAdvanced analyticsStore analytics | Purchase analytics | Consumer loyalty | Predictive and prescriptive | Social Analytics | Master data managementWorkload Optimized Systems(Z-Enterprise, Power, X, Storage and Systems Software)PureScale Application Smart AnalyticsSystemsSystem focused on agility, integration and automation to drive relevant business outcomes BPM Suite 2011 IBM Corporation 18. 18 Solution Scenario A unified, cross-channel shopping experience Provide a consistent view of a consumers order across multiple interaction channels Coremetrics is used to track consumer actions, and make relevant recommendations The e-commerce web site and order capture is provided by WebSphere Commerce Sterling Order Management maintains a consistent view of the consumers order The POS from Retail Store Systems integrates with the entire systemPhones the call center orConsumer is shown a engages online to change Visits the store to pickupweb ad for a new TV.the order from delivery to the TV, views the orderAd content selected bypickup. Process powered by via the IBM RSS POSCoremetrics.Sterling Order Management Consumer completes the purchase using WebSphere Commerce Unica prompts the POS to recommend an offer on new speakersDecides to extendand local installationthe order, from aservices sold!mobile device Capture responses and refine 2011 IBM Corporation 19. 19 Staples enables customers to shop seamlessly across all channelsChallenge Support a personalized, customer-centric experience for B2C customers Support multiple B2B customers buying under multiple contracts, with buyers that have differing levels of purchase authoritySolution Single IBM commerce platform handles both B2B and B2C 10,000+ buying organizations each see contract- specific pricing and policiesCustomer ProfileResultsStaples sells office supplies, technology, furniture and business Automated support for diverse policies, contracts,services to consumers and buyer roles on a single platformbusinesses in 27 countries around the Over $1Billion (70%) of total B2B sales world. driven through site 2011 IBM Corporation 20. 20 ING Bank coordinating marketing outreach to consumersChallenge Multiple bank brands, driving 60 million pieces of direct maileach year, were merged into one Campaign management process was disconnected, costlyand involved too many stakeholders Marketing costs were increasing while response rates weredecliningSolution Unified cross-channel solution controls marketing via direct mail, email, web, call center and branches No marketing silos: a centralized customer intelligence team has the tools to plan and execute multichannel marketingCustomer Profile campaignsResultsING offers banking, investments, life insurance and retirement services to over 20 million increase in corporate earnings attributed to85 million private, corporate and increased marketing effectiveness institutional clients in more than 40 Annual direct mail costs reduced by 35% countries. Campaign cycle time reduced to maximum of 4 weeks 2011 IBM Corporation 21. 21 Dal-tile delivers perfect order orchestration Challenge A sales center could only see what they had available in could only see what they had available in their A sales center their individual store Existing system was costing them time and individual store moneysystem was costing them time and money due to its Existing due to its inflexibility inflexibility Manage all of the customer needs through a single salesthe customer needs through a single sales Manage all of center center Solution IBM Sterling Order Management reduced IBM Sterling Order Management reduced order fulfillment order fulfillment costs by efficiently costs by efficiently orchestrating order and service orchestrating order and service fulfillment fulfillment Flexibility for future growth required to meetto meet Flexibility for future growth required changing changing customer demands customer demandsCustomer Profile ResultsDal-tile designs, manufacturers, and Stores can capture and modify orders through a singledistributes ceramic, porcelain, glass, metal, system for all delivery methods including home delivery, and natural stone tile products to the in-store pickup, and plant deliveryconstruction and development,architecture, and do-it-yourself markets. Enables Dal-Tile to keep inventory at a minimum and reduce their inventory costs 2011 IBM Corporation 22. 22 SXC health solutions enables secure information exchangeChallenge Due to the amount of information being sent to all aspects of the pharmaceutical supply chain, SXC must have a secure and reliable system for data exchangeSolution IBM Sterling Business Integration Suite Process provides visibility allowing SXC to check all attributes of their files and exchange data securelyCustomer ProfileResultsSXC is a key player in the pharmacy Comprehensive integration serving as their supply chain, providing eligibility, hub for inbound and outbound dataenrollment, payment, claims andreporting data. Secure and reliable exchange of data 2011 IBM Corporation