Fusion of Business and IT SIM New York Chapter September 9, 2002

Transcription

1 Fusion of Business and IT SIM New York Chapter September 9, 2002 Cathy Lasser Vice President Service Provider Operations and B2B Initiatives BT/CIO 1 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

2 Agenda State of e-business IBM's Transformation Governance of Transformation Architecture, Infrastructure and IT Efficiencies Lessons Learned 2 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

3 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 Something surprising has emerged from the ashes of the Internet bust. A few dot-coms are actually making money. Wall Street Journal 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 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 Selling to consumers online still makes sense. What didn't make sense were business models that didn't reflect a plan for profitability. InfoWorld 3 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

4 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 4 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

5 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 5 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

6 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 6 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

7 Top IT Priorities ERP Implementation Security / Disaster Recovery CRM Application Integration Storage e-commerce How to get more value Source: Merrill Lynch, IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

8 IBM's Transformation 8 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

9 When Lou Gerstner arrived at IBM, the company was on the verge of dissolution "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, IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

10 The IBM Journey $B Market Value Revenue Profit '85 '93 '01 24 independent business units Redundant processes Disconnected information systems 10 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

11 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 structure competitiveness of our products strategic direction basic value proposition to our customers Answered core questions: Where to concentrate resources Where to invest Where to disinvest Where to put energy in order to lead markets 11 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

12 Key characteristics of IBM's restructuring Focus Our unique competitive advantage was our ability to serve our customers Globalization To be truly global required IBM to organize around customer groups Competitive Benchmarking Need to quantify what it will take to be the best 12 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

13 Key characteristics of IBM's restructuring (cont'd) Reengineering Internal information infrastructure had to be completely reengineered worldwide databases marketing systems financial systems fulfillment systems manufacturing systems customer care systems Cultural Change Obsession with the marketplace Speed of execution Teamwork is critical 13 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

14 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 14 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

15 Driving cultural change is difficult but possible Internally focused Inflexible Entitlement Internal Competition Turf-protecting Bureaucracy Good news only Redundancy Customer focused Breakthrough thinking Drive to achieve Teamwork Team leadership Decisive execution Straight talk Organizational capability 15 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

16 To Building and retaining strong leadership is key Focus to win Customer insight Breakthrough thinking Drive to achieve Mobilize to execute Team leadership Straight talk Teamwork Decisiveness Sustain momentum Building organization capability Coaching Personal dedication The core Passion for the business Focus to Win Sustain Momentum Customers Passion for the Business Speed Competition Execute Mobilize 16 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

17 Governance of Transformation 17 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

18 Today, IBM CIO governs the transformation of core processes Stakeholders Market Planning Integrated Product Development Integrated Supply Chain Customers Procurement Production Fulfillment Customer Relationship Management Suppliers Human Resources Finance Employees 18 IBM Transformation Story for SIM PRZ 09/12/02 8:55 AM

19 We shifted our focus from process commonality to value chain optimization with an emphasis on end-to-end integration Business Policies and Rules Value Chain Boundaries Customer Facing (SVP of Sales) Value Chain Owners (Business Unit GMs) Part-numbered H/W Supplier Facing (SVP of Manufacturing) Configured H/W Customers CRM Sales OEM H/W Distributed S/W Entitled S/W Services Demand / Supply Planning Procure Suppliers Financing Enterprise Information (CFO) 19 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

20 Value chain model allows for customization while still fostering the "One IBM" for customers and suppliers Value Chains Customers Market Planning Product/ Offering Demand Sales Supply Chain/ Post- Sales Support Gen. Offering Develop. Supply Product/ Delivery Market Demand Chain/ Offering Sales Planning Supply Product/ Generation Offering Market Develop. Demand Chain/ Offering Sales Delivery Planning Generation Offering Develop. Delivery Suppliers 20 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

21 Global Services is our "contractual" transformation partner for implementation and operations BT/CIO sets strategy Global Services executes BT/CIO sets measurements Global Services tracks achievement BT/CIO aligns priorities, appraisal and pay Global Services' priorities Thought implementation leadership in e-business Business value and reduced cost Improved service delivery quality to enhance productivity and job satisfaction 21 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

22 IBM's approach to e-business investments identifies priorities and transformation initiatives Strategic Priorities Identify priorities for enterprise, business unit Desired State Identify e-business capability to support process changes - gap analysis Initiatives Identify re-engineering actions Budget Prioritize initiatives 22 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

23 23 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

24 Key Investments and Returns Stakeholders Customers Customer-facing Processes Suppliers Employees 24 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

25 We are simplifying and integrating customer-facing processes ibm.com CRM-Siebel e-care Total Order Management B2B Real-time use of information 25 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

26 The role of ibm.com is to develop e-relationships with customers Revenue $12 Billion in 2001, up 41% YTY 14% of IBM's global S&D sales, up 4 points YTY On-line shopping and purchasing experience 14,000 products and services available online 60% of "CallMe s" converted to sales vs. 36% for inbound calls 26 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

27 IBM's Results: Operational Efficiencies Customer Relations +7,600 Siebel seats in 35 countries Call center productivity up 26% Telesales 40% less than face-to-face Fulfillment Response time cut from 20 minutes Almost 70% of orders are "touchless" Portfolio fulfillment apps reduced by 36% 27 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

28 Key Investments and Returns Stakeholders Customers Supplier-facing Processes Suppliers Employees 28 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

29 We are simplifying and integrating supplier facing processes e-design Demand supply planning Strong participation in standards: RosettaNet / UDDI e-procurement and supplier management 29 IBM Transformation Story for SIM PRZ 09/12/02 8:56 AM

30 IBM's Results: Operational Efficiencies Integrated Supply Chain Delivery cost / revenue reduced by 22% On-time delivery improved to 95% from 30% Order-to-delivery cycle time improved by 46% Procurement 95% of goods and services 33,000 suppliers $405M in savings in IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

31 Key Investments and Returns Stakeholders Customers Employee-facing Processes Suppliers Employees 31 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

32 We are simplifying and integrating employee-facing processes using our intranet as the foundation HR e-learning Lotus Notes and Domino Knowledge Management 32 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

33 Benefits of distance learning have significant impact YTD Q202 Total Education Days 1.7M 2.6M 2.8M 1.0M Total Distance Learning Days 442K 953K 1,236K 494K e-learning 26% 36% 43% 48% Cost Avoidance $200M $350M $395M $163M 33 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

34 Overall Transformation Results Stakeholders Customers Financial Benefits of Transformation Suppliers Employees 34 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

35 We continue to gain financial benefits of transformation YTD Q202 Sales Via the Web $3B $15B $23B $27B $11.5B Service Transactions Via the Web 14M 42M 100M 121M 63M e-procurement $7B $27B $43B $40B $17B e-learning N/A 26% 36% 43% 48% 35 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

36 Financial benefits of transformation contribute to bottom line YTD Q102 e-support for Customers $300M $750M $1.5B $1.4B $683M Distance Learning N/A $200M $350M $395M $163M e-procurement $240M $272M $377M $405M $171M Cost Avoidance Q202 $7.2B 36 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

37 Architecture, Infrastructure and IT Efficiencies 37 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

38 The benefits of change... Leverage strategic assets to: Enable rapid decisions Establish clear accountability Enable exploitation of information and knowledge Optimize the infrastructure to support shared services Resulting in: Responsive changes to marketplace and customer needs Improving competitiveness & fueling of growth Higher returns on investments Customer confidence Deliver an agile, global, standard information infrastructure for our employees, customers, suppliers and shareholders 38 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

39 Streamlining infrastructure reduced cost and improved performance Application and infrastructure standards Enterprise development and deployment process Portfolio management Telecommunications globalization Standard client configurations Before 155 data centers 31 separate, private networks Hundreds of client configurations 16,000 applications Now 12 data centers One integrated, global network Four standard configurations 5,670 applications 39 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

40 Cutting costs and investing result in a more efficient and functional environment Cost Reduction 1997 to 1H02 Service 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 Reinvestment Reengineering Y2K readiness e-business Improved Service Levels Bandwidth: 2-3x/year Internet response: 11 sec - < 3 sec Intranet response: 11 sec - < 1 sec Notes seats: 150K - > 380K Notes availability: 99.2% - > 99.8% 40 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

41 Savings support transition to architecture best-suited for virtual company Internal and external integration is achieved using both IBM and partner products Supplier i2 Ariba Customer Data Advertiser Siebel Connected Customers Inventory Connected Employees SAP Catalog SAP IBM Production Partner Shipper 41 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

42 Global Web Architecture is based on a multi-tiered model Web Traffic Express Tivoli Network Dispatcher File Transfer Protocol Middleware Tivoli Secureway Cisco firewalls Distributed File System Employees IBM HTTP Server (Apache) WebSphere Application WebSphere Commerce Lotus Domino 42 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

43 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 43 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

44 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 44 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM

45 Cathy Lasser 45 IBM Transformation Story for SIM PRZ 09/12/02 8:57 AM