agenda� Welcome: Claude Samson, Quebec Leader -

Financial Management, GBS Canada

� The IBM Finance Transformation Story: Judith Purves, CFO and Vice President Finance & Operations, GTS Canada

� Building a Smarter Planet: Bernard Roy, GBS Quebec Regional Leader

Building a smarter planet to optimize

cost, improve services and reduce risks

BUILDING ASMARTER PLANET

The IBM Finance Transformation Story

Judith PurvesCFO and VP Finance & OperationsIBM Global Technology Services Canada

3

Global Market Forces are Impacting Us All

Emerging MarketsGlobal Competition

Volatile Energy Costs

New CustomerDemands

Access to Capital & Credit Crunch

Excess of Information

Number one challenge: people not spending, deferring decisions

We asked Canadian CFOs what this means to them

>70%Focusing on process improvements within the next six months.

Increased Visibility drives

Innovation

55%Key focus short-term cost savings (either #1 or 2 priority)

•33% as #1 priority

58%Key focus to drive long-term savings (either #1 or 2 priority)

Clients are pulling several levers to reduce costs, risk and improve operating model efficiency

SAVINGSPOTENTIAL

OUTSOURCING

PROCESSES 5-15%

� 15-23%

� 25-35%

� 20-40%

� 20-30%

� 20-35%

� 4-8%

20-35%

AREAS FOR IMPROVEMENT

� Eliminate work steps

� Streamline remaining work

� Reorganize work

� Assign work to right level

� Realize economies of scale

� IT infrastructure� Applications

� CRM

� HR

� F&A

� Procurement of indirect spend

� Optimize labor rates with offshoring

� Establish shared service centers

� Focus on Core processes – outsource other

� Global Enterprise model

� Consolidation, virtualization, automation

� Optimized infrastructure and shared services

� Self service technology

� Move to variable cost model

� Energy efficiency

5-30%

OPERATING MODEL

TECHNOLOGY

Why?

� IBM Finance was highly decentralized – a maze of systems

� 14K finance employees was 2 times competition

� High percent of time spent on administrative tasks

� Lack of integration and unique measurement systems led to inconsistent data

� Finance function viewed as low value add

What we’ve done

Drove 3-prong approach to finance transformation: process, technology and operating model

–Standardized processes & controls

–Created common ledger, data definitions, & WW planning system

–Created global centers of excellence

–Focused on supplying headlights to the business

–Implemented shared services

Focused the organization

–Established strong executive teaming / support

–Set clear measurable targets

–Developed comprehensive communication strategy

Finance IBM has pulled all of these levers in a major Finance Transformation program, achieving significant measurable and qualitative improvements

How we did it

Evolution of our Finance processes …

� Focused on the basics (’94 – ’98)

– Standard / Common Process

– Automation

– Functional Best Practices

– Financial Reporting

� Integrated the Enterprise (’98 – ’02)

– Shared Services

– Web Enablement

– Core Competency

– Decision Support

� Moved to globalization (’02 – present)

– Process Outsourcing /Global COEs

– Technology Exploitation

– Rationalized ERP

– Information On Demand

How we did it …

Financial data centers 67 6

Key applications 143 44

Days for accounting close 18 7

Estimated Finance operations expense* 2.1b 1.2B

Estimated Finance ops exp / revenue* 3.3% 1.3%

� Optimized global capability

– Increased use of global support from 12% in’05 to 40% in ’08

� Shift to higher value work

– Increased decision support work from 30% in ’94 to 70% in ’07

� Lowered expenses

– Lowered expense to revenue share from 3% in ’94 to 1% in ‘ 07

Impact

Financial data centers 67 6

Key applications 145 44

Days for accounting close 18 7

Estimated Finance operations expense $2.1B $1.2B

Estimated Finance ops exp / revenue* 3.3% 1.3%

Results

Reinvestment is key: reduce costs, and use the money you save to fund new initiatives for market leadership

IT s

pendin

g

Operations support

Operations maintenance

New solutions

Application enhancements

Strategic change capacity

Cost ofoperations

Operations maintenance

Operations support

New solutions

Application enhancements

Liberated funding for direct

saving or transformational

investment

100%Today Target

An effective transformation requires:

� Unrelenting focus on the customer

� Strong Executive support/teaming between CFO and CIO

� Clear targets and measurable objectives

� Balanced approach across all dimensions with a focus on our clients, quality and cost of delivery:

– Business Design and Processes

– IT Operating Environment

– Organization and Cultural Change

� Continuous effort – need to dedicate resources

� Change Management and comprehensive communication

Key lessons learned

Transformation is a continuous process

Economic uncertainty is just one of a number of factors driving unprecedented change.

The world is about to get a whole lot smarter.

BUILDING ASMARTER PLANET

Bernard Roy

President and Chief Executive Officer, LGS Group Inc., an

IBM Company

Quebec Regional Leader, IBM Global Business Services

BUILDING ASMARTER PLANET

agenda

� Why do we need a new approach?

� IBM’s strategy: A Smarter Planet

� How IBM accompanies its customers

Intro – Show and Tell video 50% of Canada’s personal

Greenhouse gases results

from passenger road

transportation.

Traffic congestion and fuel consumption costs Canada’s 9 major urban areas between $2.3 and $3.7 billion per year.

Because it must

Health-care spending is expected to grow faster than Canada's economy, outpacing inflation and population growth.

If the Energy Grid in Canada was just 5% more efficient, it would be like permanently eliminating the fuel and greenhouse gas emissions from 4 million cars.

Weather-related events inflicted $1 trillion in damage from1980 to 2003.

Energy and environment in Canada

� 75% of Canadians place great importance on the environment� Survey -2008 Ipsos Reid –

� Energy costs can account for up to 33% of a company’s IT budget� -Government du Canada-

� One third of Canadians say they have recommended a green product to someone they know; 28% have decided not to buy the products of acompany with a bad reputation on environmental matters

� -TNS Canadian Facts-

� 140,000 tonnes of waste from electronic products went into Canadian landfill sites in 2007; 40 millions tonnes dumped worldwide

� -Environment Canada-

� In IBM’s 2007 world survey of executives, 79% of Canadian CEOs see positive benefits from corporate social responsibility obligations

Smarter oil fields Smarter traffic Smarter energy

Because we want it to

Smarter water management

Smarter food supply

Smarter architecture Smarter disease prevention

Smarter healthcare

“There is no reason to undertake projects simply for the sake of activity. Rather than simply stimulate, let’s seize this opportunity to transform our infrastructure and economy… to create more and better jobs… and to develop new and more valuable skills.”

Sam PalmisanoChairman & CEO IBM

We must move past today’s challenges to seize tomorrow’s opportunities.

The importance of investing in a Smarter world has caught the attention

of governments and businesses around the world.

agenda

� Why do we need a new approach?

� IBM’s strategy: A Smarter Planet

� How IBM accompanies its customers

Smarter Planet

INTERCONNECTED INTELLIGENTINSTRUMENTED

Thinking and acting in new ways to make our systems more efficient, productive and responsive.

People, Companies, institutions, industries, Man-made systems, nature’s systems

19

SmartWork

SmartWork

Green & Beyond

Green & Beyond

New Intelligence

New Intelligence

How can we work

smarter supported

by flexible and

dynamic

processes

modeled for the

new way people

buy, live & work?

How can we take

advantage of the

wealth of

information

available in real

time from a

multitude of

sources to make

more intelligent

choices?

“Data is exploding and it’s in silos”

“New business & process demands ”

“Our resources are limited”

I Need InsightI Need Insight I Need to Work Smart

I Need to Work Smart

I Need Efficiency

I Need Efficiency

Dynamic Infrastructure

Dynamic Infrastructure

How do we create

an infrastructure

that drives down

cost, is intelligent

and secure, and is

just as dynamic as

today’s business

climate ?

“My infrastructure is inflexible and costly”

I need to respond quickly

I need to respond quickly

How do we drive

greater efficiencies,

compete more

effectively, and

respond more quickly

by taking action now

on energy, the

environment, and

sustainability?

19

Let’s build a smarter planetTo make sense of this new world we must consider four critical questions

agenda

� Why do we need a new approach?

� IBM’s strategy: A Smarter Planet

� How IBM accompanies its customers

IBM’s Think magazine publishes a special issue on IBM’s environmental and energy programs

1992IBM, founder member of the Energy Star program

Working together todevelop solutions…

Between 1990 and 2006, thanks to its conservation programs, IBM has reduced or avoided CO2 emissions equivalent to 45% of 1990 levels.

1990

1976

T.J. Watson Jr. Introduces first IBM corporate environmental protection policy

IBM product management program set up

19911971

1990-200745%

Think devotes an entire issue to environmental actions. Start of annual report on IBM’s environmental actions.

1994World network for materials recovery, reuse and recycling set up

2005Global

Innovation Outlook 2.0

�Smart public services network

�Smart transport program

�Big Green project

2007

1997

IBM: tradition and leadership on the environment

1989IBM offers its 1st product

take-back program

IBM, 1st multinational to be ISO 14001 certified worldwide for its environmental management

1987-200795%Hazardous waste reduced compared with 1987: a pollution prevention measure

98% 2007

2006

IBMers talk about innovations for a smarter planet in Jams. IBM invests $20 million

- Big Green Innov.- Smart public serv. network

Quantity of products and waste

processed by IBM (end of life

programs) and reused or recycled

IBM congratulated by Hydro-Québec for its energy

conservation initiatives2007

Recognition in Canada

IBM Canada, no. 1 corporate citizen for leadership in energy and

environment 2008 IBM Toronto software

lab2008

Bromont plant wins International Technology Award

for its Enerstat project2007

IBM laboratory, facilities at 3600 / 3500 Steeles Avenue,

Markham, ON2007 - 2008

IBM Canada named Employer of the Year for its leadership in

employee mobility and teleworkprograms

2007

Toronto software lab certified by Wildlife Habitat

Council2002 - 2008

Bromont microelectronics plant awarded certificate (level 3) from Recyc-Québec 2003 - 2008

IBM’s Bromont plant has adopted an environmental policy that focuses on responsible energy use, continuous improvement of the waste management system, conservation of natural resources and energy, and surpassing government regulated environmental standards.

The plant’s key initiatives have allowed them to:

– Achieve a recycling rate of 94 per cent by introducing organic composting and installing recycling stations in manufacturing areas

– Conserve energy at a rate of more than 6 per cent

– Reduce carbon dioxide emissions by more than 50 per cent since 1998

– Achieve more than 4 per cent water conservation over the last 5 years

SMARTER IBM FACILITIESGreen & BeyondGreen & Beyond

It works! The figures speak for themselves...

Saved

98.9 % of electronic waste and 85 % of non-hazardous wastesent to landfill

98.9 % of electronic waste and 85 % of non-hazardous wastesent to landfill

Avoided

$4.2 million on energy bill over 5 years$4.2 million on energy bill over 5 years

2,236 fluorescent bulbs2,236 fluorescent bulbsRecycled

CO2 emissions by 40% / savings of $250 millionCO2 emissions by 40% / savings of $250 millionReduced

Data centres (155 – 7); web hosting centres (80 – 5); Networks (31 – 1); applications (15,000 – 4,700) … in 10 years

Data centres (155 – 7); web hosting centres (80 – 5); Networks (31 – 1); applications (15,000 – 4,700) … in 10 years

Regrouped

IBM Canada

IBM worldwide

Green team of 1,000 energy efficiency specialistsGreen team of 1,000 energy efficiency specialistsCreated

Our commitment continues…

… show leadership in environmental and energy matters in all our activities: operation, design and use of our products.

…Conserve energy and protect the climate:

– Energy conservation– Use energy from renewable sources– Reduce PFC emissions from semiconductor manufacturing– Help employees become more eco-responsible– Improve the efficiency of our logistical operations

… Help Canadian businesses to design their own energy and environment strategies

IBM and Province of Manitoba, along with 16 supply chain partners, participate in project to build system that give food a digital passport …tracing its journey before it ends up in the consumers’ shopping carts.

Using information technology, the system keeps track of all products from farm to fork, helping to ensure the quality and safety of consumer goods and that consumers – locally and across the country …feel more confident in the products they consume.

SMARTER SUPPLY CHAIN

New IntelligenceNew Intelligence

“With IBM's assistance,

we have vastly increased

our ability to exploit the

knowledge of the human

genome in the way we

understand and treat

pediatric illnesses.”

Dr. Daniel Sinnett, head

of the Oncogenetic

Research, Sainte-Justine

Hospital Research

Centre

Smart WorkSmart WorkSMARTER HEALTHCARE

Using the St. Justine Hospital’s electronic health records solution as a Starting point, IBM created a technology and process framework that could perform all of the updating, validation, security and patient authorization functions necessary to use the valuable data.

In addition to medical data drawn from hospital records, the solution incorporates genotypic data drawn from patient tissue samples. Lastly, IBM created a powerful, flexible and easy-to-use interface through which researchers could analyze or query the data.

Expected 90 percent reduction in time required to gather research Cohorts Expected 75 percent reduction in administrative costs associated with data gathering and validation, which Sainte-Justine can channel into more research efforts Faster development of new treatments for complex pediatric diseases

A smarter planet empowers organizations to do more with less.

28

Stockholm, Sweden: An intelligent toll system in the city center resulted in 20% less traffic, 40% lower emissions and 40,000 additional users of the public transportation system.

Green and Beyond

London, UK: IBM modernising, expanding and managing the second generation congestion charging system, integrating on-board and roadside equipment.

�IBM is working with the Government of Malta to build the world’s first national smart utility grid. This includes replacing a quarter-million conventional electric meters with Smart meters and upgrading its water system where it can be monitored and managed remotely.

�Customers will be able to use the Internet to track their utility usage in real time, chose the best plan and pre-pay services.

�Malta is the first country to green its national grid –serving as a test case for whether integrating smart technologies into both electricity and water systems can help mitigate the increasing effects of global warming on the island

SMARTER UTILITY GRIDGreen & Beyond Green & Beyond

Why?

Benefits

� The ISC is accountable for $40 billion, or roughly 50 percent, of IBM’s total cost and expense

� ISC was a fragmented cost center and not mission critical

� Distributed and hard-wired to business units

� Pockets of integration in functional silos but no enterprise-wide common processes

� Established online links to suppliers,partners and clients, cutting processing time for average PO from a month to less than a day

� 95% of business partner orders now “touchless”

� Manage entire ISC – from procurement and logistics to strategy and planning -- on a global basis (moved procurement HQ from Westchester to Shenzhen, China)

� Consolidated transaction processing in global delivery centers in Malaysia, Bratislava, Spain and Brazil

" IBM has been on the forefront of globalizing the supply chain...I think the interesting thing is the strategic implications. For IBM it says we are shifting, yet again, from being a traditional manufacturing business, to a solutions business.”

- Kevin O’Marah, AMR Research

" IBM has been on the forefront of globalizing the supply chain...I think the interesting thing is the strategic implications. For IBM it says we are shifting, yet again, from being a traditional manufacturing business, to a solutions business.”

- Kevin O’Marah, AMR Research

IBM’s Smarter Supply Chain

What we’ve done

Supply Chain

Procurement Fulfillment Logistics Manufacturing

Integrated Globally

Automate

Optimize

Process Technology Global Capabilities

Integrate

Dynamic Infrastructure

Dynamic Infrastructure

� Driving EPS growth for 23 straight quarters

� Averaging $3-5B in savings every year for the last five years

� A 5-point improvement in margins since 2003

� Improving sales force productivity; now spending 38% more time with clients

� Turning orders 32% faster and improving client satisfaction

ImpactHow we’ve done it

� Tied ISC together with shared measurements to support end-to-end operation

� Focused on client satisfaction along with operational results

� Leveraged global scale – nearly 20K employees at 100 locations in 62 countries, speak 80 languages, 31K suppliers connected online

� In 2005, introduced world’s first supply-chain business transformation outsourcing capability

� Applied supply chain principles to services business

ISCIntegrated Supply Chain Dynamic

Infrastructure

Dynamic Infrastructure

A smarter planet enables organizations to solve the problem before the problem.

Yansha: Dynamic supply chain management and enterprise resource planning cut order lead time from 2.5 days to 4.5 hours and improved order acknowledgement from 80% to 99%.

Moosejaw Mountaineering: Created a seamless, interactive community shopping experience across the Web, stores and mobile devices to enhance customer loyalty and advocacy.

Dynamic Infrastructure

What smart things are happeningin your industry today?

Where are the greatestopportunities for progress?

Where can you remove costs and reinvest to have the innovative/competitive edge?

Thank you!