© Copyright IBM Corporation 2008 Global CEO Study | May 20081 IBM Global CEO Study The Enterprise...

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© Copyright IBM Corporation 2008 Global CEO Study | May 2008 1 IBM Global CEO Study The Enterprise of the Future 15 th May 2008,

Transcript of © Copyright IBM Corporation 2008 Global CEO Study | May 20081 IBM Global CEO Study The Enterprise...

© Copyright IBM Corporation 2008Global CEO Study | May 20081

IBM Global CEO Study

The Enterprise of the Future

15th May 2008,

© Copyright IBM Corporation 2008Global CEO Study | May 20082

ANALYSIS

Quantitative and Qualitative

Respondents’ current behavior, investment patterns

and future intent Choices made by financial outperformers Multivariate analysis to identify clusters of responses Selective case studies of companies that excel in

specific areas

IntroductionCEO Study 2008: The Enterprise of the Future Takes Shape

SCOPE & APPROACH

1130 CEOs and Public Sector Leaders

One-hour interviews using a structured questionnaire

78% Private and 22% Public Sector

Representative sample across 32 industries

33% Asia, 36% EMEA, 31% Americas

80% Established and 20% Emerging Economies

SCOPE & APPROACH ANALYSIS

© Copyright IBM Corporation 2008Global CEO Study | May 20083

The collective wisdom of these CEOs has led us to the five core traits of the Enterprise of the Future

1

Hungry for change

2

Innovative beyond customer imagination

3

Globally integrated

4

Disruptive by nature

5

Genuine, not just generous

Core Traits of the Enterprise of the Future

© Copyright IBM Corporation 2008Global CEO Study | May 20084

The Enterprise of the Future is …

Hungry for Change

© Copyright IBM Corporation 2008Global CEO Study | May 20085

The Enterprise of the Future is Hungry for Change

In two years the gap between the ability to manage change and the challenge ahead has tripled

The number of companies reporting limited or no success has surged 60%

Outperforming organizations are significantly better than their peers at successfully navigating change

More CEOs than ever before – 8 in 10 – anticipate turbulent change, and plan bold moves in response

Source: IBM Global CEO Study 2008; n (2006) = 709, n (2008) = 1104

ExpectedChange

Past ChangeSuccess

* Difference or ‘gap’ between expected level of change needed and past success in managing change

ExpectedChange

Past ChangeSuccess

2006 2008

Expected Change

No/limited Change

Moderate Change

Substantial Change

No/limited Success

Moderate Success

Successful

Past Change Success

22%CHANGE GAP*8

%CHANGE GAP*

6%11%

83%

19%

20%

61%

13%

22%

65%

12%

31%

57%

© Copyright IBM Corporation 2008Global CEO Study | May 20086

ABB, through a series of transformation initiatives is now well-positioned for the future as an organization hungry for change

Switzerland-based ABB repositioned itself as a global leader in power and automation technology by driving a succession of enterprise-wide change programs and focusing on its strengths

• In 2007, ABB’s net income increased to a record US$3.8 billion

Launched Step Change Program in 2003• To improve productivity and cut costs• Resulting in annual savings of more than US$900 million

Launched One Simple ABB Change Program in 2005• To reduce organizational complexity• Establishing common, global processes for support functions

ABB’s change program success factors• Broad portfolio of initiatives designed to deliver specific business and financialobjectives• Programs driven by Global Executive Committee with regional accountability

ABB: Engineering enterprise-wide change

Do you manage change as a structured program and measure change management effectiveness?

Do you manage change as a structured program and measure change management effectiveness?

© Copyright IBM Corporation 2008Global CEO Study | May 20087

The Enterprise of the Future is …

Innovative Beyond Customer Imagination

© Copyright IBM Corporation 2008Global CEO Study | May 20088

The Enterprise of the Future is Innovative Beyond Customer Imagination

CEOs accelerate investments directed at informed and collaborative customers – up 22% in 3 years – while outperforming organizations plan a 36% increase

CEOs focused on informed customers place new operational capabilities, increased transparency and new customer segments at the top of agenda

Three-quarters of CEOs view increasingly demanding customers not as a threat, but as opportunity to differentiate

Investment past 3years

Investment next 3years

22%INCREASE

16.7%20.4%

“We’ve been surprised by the impact that just a few consumers can have with their blog

entries.”

Ron Hurlbut, CEO, Attune Foods

Investment* in informed and collaborative customers

Source: IBM Global CEO Study 2008, n = 609; * Total investments: all asset investments + all investments in R&D, marketing and sales

© Copyright IBM Corporation 2008Global CEO Study | May 20089

When customer preferences shift, are you the first to understand and act on this or do your competitors react more quickly?

When customer preferences shift, are you the first to understand and act on this or do your competitors react more quickly?

Nintendo is well-positioned for the future – an organization innovative beyond customer imagination

To regain its leadership position, Nintendo leveraged the loyalty and expertise of its core customer segment

• Established online community of experienced and loyal gamers called “Sages”

• Offering incentives in return for customer information and community contributions

• Gaining valuable insights into market needs and preferences

Nintendo successfully connected with two new customer groups• New customer groups included women and older men• Influencing everything from game offerings to new product design• Regaining market leadership with 44% market share after a low of 22% in

the mid-2000s

Nintendo: Building market share through customer collaboration

© Copyright IBM Corporation 2008Global CEO Study | May 200810

The Enterprise of the Future is …

Globally Integrated

© Copyright IBM Corporation 2008Global CEO Study | May 200811

The vast majority of CEOs aggressively move toward global integration – and radically reconfigure business designs

Partner extensively

Globalize brands/products

Drive multiple cultures

Optimize operations globally

Deeply change mix of capabilities, knowledge

and assets

Grow through mergers & acquisitions

Do everything in-house

Localize brands/products

Strive for one culture

Optimize operations locally

Grow organically

32%

35%

33%

32%

34%

Defend your coreActively enter new markets 37%

Maintain current mix of capabilities, knowledge and assets

Source: IBM Global CEO Study 2008; private sector responses

Equally Important

•57%

•55%

•43%

•40%

•39%

•24%

•30%

•32%

•35%

•37%

•33%

•32%

•50%

•34%

•10%

•11%

•20%

•27%

•29%

•26%

•36%

© Copyright IBM Corporation 2008Global CEO Study | May 200812

Cluster analysis* revealed four common approaches toward global integration

Blended Thinkers

17%

Extensive Globalizers

31%

Globalizers 33%

Localizers 19%

Source: IBM Global CEO Study 2008; * see appendix for details of cluster analysis

29%

32%33%

39%

17%

12%

21%

17%

Underperformers* Outperformers*

Extensive Globalizers Globalizers

Blended Thinkers Localizers

© Copyright IBM Corporation 2008Global CEO Study | May 200813

IBM is a textbook example of the “Globally Integrated Enterprise”

Networks 31 1

Procurement 300 Centers 3 Centers

Product Development Separate/Non-standard Integrated Product Development

Research Centers Individual & Specialized 8 Integrated Teams

IBM PAST IBM CURRENT

Marketing Hundreds of Individual Programs 1 Global Framework

Sales Local/Multiple Processes 1 Standard Global Sales Process

IT 155 Data Centers/16,000 Apps 10 Data Centers/4,757 Apps

Supply Chain Multiple & Local Integrated & Global

Finance Local/Multi/Non-integrated Integrated & Better Bus. Controls

HR Local Systems/Skills Definitions Global Plan/Standardized Skills

© Copyright IBM Corporation 2008Global CEO Study | May 200814

Li & Fung is well-positioned for the future – a globally integrated organization

Hong Kong-based Li & Fung Limited sources from virtually anywhere in the world and builds customized solutions for its retail customers

Network of 10,000 suppliers and staff in 40 different countries Orchestrating the supply chain for customers without owning any piece of it

Li & Fung steadily moved up the value chain Changing its capability and asset mix to provide more sophisticated and profitable

services

Li & Fung is able to be both locally relevant and globally optimized Established a significant onshore presence in the US to provide product design and

brand development services Acquisitions are key to grow market share in target geographic markets

Li & Fung is growing through global integration Revenue CAGR 1992 to 2006 of over 22%

Li & Fung Limited: Growth through global integration

Are you effectively integrating differentiating capabilities, knowledge and assets from around the world into networked centers of excellence?

Are you effectively integrating differentiating capabilities, knowledge and assets from around the world into networked centers of excellence?

© Copyright IBM Corporation 2008Global CEO Study | May 200815

The Enterprise of the Future is …

Disruptive by Nature

© Copyright IBM Corporation 2008Global CEO Study | May 200816

The Enterprise of the Future is Disruptive by Nature

More than 2 in 5 pursue business models that are more externally collaborative

More than 1 in 5 pursue an even more disruptive path: redefining their markets, moving into or creating wholly new industries

More outperformers (28%) choose the most difficult transformation - disrupting industries - and more (49%) choose collaborative business models

More than two-thirds of CEOs strongly focused on the most sustainable form of innovation – business model transformation

24%20% 19%

50%

13% 13%

24%

37%

EnterpriseModel

RevenueModel

IndustryModel

MultipleTypes

Established Economy

Emerging Economy

Focus on Business Model Innovation by Type

© Copyright IBM Corporation 2008Global CEO Study | May 200817

Eli Lilly is well-positioned for the future – an organization disruptive by nature

U.S. pharmaceutical maker Eli Lilly and Company is constantly evolving its business model

• Bringing new medicines to market faster through integrated partner network

In 2001 Lilly launched open marketplace for innovation – InnoCentive• Marketplace for scientific challenges with members from 175 countries • Best solutions can earn financial awards up to US$1 million• Lilly has spun off InnoCentive while retaining partial ownership

Lilly established Fully Integrated Pharmaceutical Network (FIPNet)• Pioneering risk-sharing relationships with partners to develop new compounds

Lilly’s collaborative business models offer several benefits• Reducing costs, increasing development capacity, accelerating drug

development process and better leveraging own and partner’s assets• Revenue CAGR 2002 to 2007 of over 11%

Eli Lilly: Building pipeline through collaborative business models

Are you able to create space for entrepreneurs and innovative business models while continuing to drive performance today?

Are you able to create space for entrepreneurs and innovative business models while continuing to drive performance today?

© Copyright IBM Corporation 2008Global CEO Study | May 200818

The Enterprise of the Future is …

Genuine, not just Generous

© Copyright IBM Corporation 2008Global CEO Study | May 200819

The Enterprise of the Future is Genuine, Not Just Generous

Since 2004 three forces of change consistently rose on CEOs’ agendas; all are linked to corporate social responsibility (CSR)

CEOs plan their largest increase in customer investment to meet CSR expectations

CSR-focused CEOs put developing new products and services at the top of their agenda

CEOs view of increasing customer expectations of CSR

“The consumers’ concept of quality will no longer be measured by only the physical

attributes of a product – it will extend to the process of how the product is made, including

product safety, environmental and social responsibility compliance.”

Victor Fung, Chairman, Li & Fung

Faced with rising customer expectations of corporate social responsibility, more than two-thirds take a positive view, and plan to innovate

Negative impact 12%

No impact

20% Positive impact

68%

© Copyright IBM Corporation 2008Global CEO Study | May 200820

Marks & Spencer is well-positioned for the future – an organization genuine, not just generous

To meet growing corporate social responsibility expectations, British retailer Marks & Spencer (M&S) has embarked on a £200-million, five-year plan

• Impacting almost every aspect of its operations• Engaging customers in solving issues (e.g., giving shopper bags “for

life”)

M&S established online supplier exchange• Connecting the thousands of factories, farms and fisheries that

supply its products• To simultaneously improve efficiency and sustainability

M&S has proven it is possible to do well while doing good• Operating profit CAGR of over 14% over past five years

Marks & Spencer: Serious about social responsibility

Are you offering employees and value chain partners the opportunity to personally make a difference?

Are you offering employees and value chain partners the opportunity to personally make a difference?

© Copyright IBM Corporation 2008Global CEO Study | May 200821

Are Indian companies asking themselves the right set of questions to evolve as a successful enterprise of the future?

Do you manage change as a structured program, measure change

management effectiveness and have visionary challengers

When customer preferences shift, are you the first to understand and act on

this or do your competitors react more quickly?

Are you effectively integrating differentiating capabilities, knowledge and

assets from around the world into networked centers of excellence?

Are you able to create space for innovative business models while

continuing to drive performance today?

Are you offering employees the opportunity to personally make a difference?

HUNGRY FORCHANGE

GLOBALLYINTEGRATED

DISRUPTIVE BY NATURE

GENUINE, NOT JUST GENEROUS

INNOVATIVE BEYONDCUSTOMERIMAGINATION

Building the Enterprise of the Future

© Copyright IBM Corporation 2008Global CEO Study | May 200822

Are You Building Your Enterprise of the Future?

Ad hoc and reactive change

Customer intelligence

Exploring global opportunities

Exploring Business Model Innovation opportunities

Regulatory compliance

Project driven change

Customer information transparency

Driving specific global initiatives

Experimenting with BMI

Strategic philanthropy

Change portfolio and program

Two-way customer interaction

Building global capabilities systematically

Implementing BMI initiatives

Values based self-regulation

Anticipating and proactive change

Customer collaborative development

Global centers of excellence

Multiple BMI strategies

Efficiency through CSR

Change becomes the strategy

Expanding customer aspirations

Global enterprise innovation

Radical and pervasive BMI

CSR as growth platform

HUNGRY FORCHANGE

GLOBALLYINTEGRATED

DISRUPTIVE BY NATURE

GENUINE, NOT JUST GENEROUS

INNOVATIVE BEYONDCUSTOMERIMAGINATION

Building the Enterprise of the Future

© Copyright IBM Corporation 2008Global CEO Study | May 200823

IBM Global CEO Study

Building the Enterprise of the Future Realizing greater business value from Application Portfolios

15th May 2008,

© Copyright IBM Corporation 2008Global CEO Study | May 200824

IBM Application Services can help you adopt the characteristics of the Enterprise of the Future and become an Outperformer

1 Hungry for change The Enterprise of the Future is capable of changing quickly and successfully. Instead of merely responding to trends, it shapes and leads them. Market and industry shifts are a chance to move ahead of the competition.

IBM is a leader in designing, developing and managing applications that enable our clients to drive change and demonstrate industry leadership

2 Innovative Beyond Customer Imagination The Enterprise of the Future surpasses the expectations of increasingly demanding customers. Deep collaborative relationships allow it to surprise customers with innovations that make both its customers and its own business more successful.

IBM’s continuous alignment model speeds adoption of truly collaborative capabilities

3 Globally Integrated The Enterprise of the Future is integrating to take advantage of today’s global economy. Its business is strategically designed to access the best capabilities, knowledge and assets from wherever they reside in the world and apply them wherever required in the world.

IBM has more global experience and investment in global capabilities and skills than any other systems integrator or application outsourcing firm

4 Disruptive By Nature The Enterprise of the Future radically challenges its business model, disrupting the basis of competition. It shifts the value proposition, overturns traditional delivery approaches and, as soon as opportunities arise, reinvents itself and its entire industry.

IBM best practices draw upon experience with a wide range of industry business models and delivery approaches to deliver business model and industry innovation with application services

© Copyright IBM Corporation 2008Global CEO Study | May 200825

Outperformers who are adopting characteristics of the Enterprise of the Future focus on innovating their enterprise and industry models, while underperformers on innovating their revenue model

Underperformers* Outperformers*

Revenue ModelInnovation

Industry ModelInnovation

Enterprise ModelInnovation

Source: IBM Global CEO Study 2008; * Performance based on industry comparisons within survey sample of absolute profit margin (average of 2003 and 2006) n (underperformers) =120, n (outperformers) =109

“For us, enterprise model innovation is primarily about having the right business model to enter other markets and secure new capabilities.”Andrew Brandler, CEO, CLP Holdings Limited

22%

28%

49%

36%

44%

20%

© Copyright IBM Corporation 2008Global CEO Study | May 200826

Change Needed Past ChangeSuccess

Although CEOs are more confident about managing change, the gap between their capability and the challenge ahead is growing

The Change Gap* Triples

* Difference or ‘gap’ between expected level of change needed and past success in managing change

“We have seen more change in the last ten years than in the previous 90.”Ad J. Scheepbouwer, CEO, KPN Telecom

Change Needed Past ChangeSuccess

2006 2008

Source: IBM Global CEO Study 2008; n (2006) = 709, n (2008) = 1104

Change Needed

No/limited Change

Moderate Change

Substantial Change

No/limited Success

Moderate Success

Successful

Past Change Success

22%CHANGE GAP*8%

CHANGE GAP*

6%

11%

83%

19%

20%

61%

13%

22%

65%

12%

31%

57%

© Copyright IBM Corporation 2008Global CEO Study | May 200827

Many companies today face significant challenges in unlocking business value and innovation from their application portfolios to drive change

Support Growth and Productivity

Build and deploy new products, services, processes

Inhibitors Expensive to develop and deploy

changes into existing applications Slow in time-to-market of new

products and services Limited sources of capital

Clients tell us: "We need to reduce costs, increase productivity and support business growth, but…. “

Reduce Costs and Optimize Applications

Decrease fixed costs, increase variable costs

Inhibitors High fixed application maintenance costs

as proportion of application development Application maintenance spend not

aligned to business needs

High fixed Infrastructure

cost

© Copyright IBM Corporation 2008Global CEO Study | May 200828

Business Model & Underlying Processes

Changes in business model or processes require an optimized application strategy, yet many organizations struggle to tame complexity and extract business value from application portfolios

• Changes in business model or process layers are enabled by the application portfolio

• Applications enable new business opportunities

• Application landscape and architecture provides cost savings that can be invested in projects that drive innovation and growth

Application landscape grows in complexity and becomes a patchwork of initiatives that are not aligned with business strategy.

Pace and quality of application development slows time-to-market

Over time majority of application spend goes therefore into maintenance starving strategic new development of funding

Resource management and ability to quickly source new skills becomes barrier to change

Desired State Typical Reality Which Means…

• Business model change is delayed

• New products are delayed or poorly deployed

• Competitive positioning suffers

• Top and bottom line growth are delayed

• Mistakes are more likely, with regulatory or public consequences

• Ability to integrate acquired companies is impaired

• Economies of scale and synergy benefits are not realized

Infrastructure & Operating

Environment

© Copyright IBM Corporation 2008Global CEO Study | May 200829

IBM Application Services delivers leading application design, development and management capabilities that directly support clients’ business strategies and desire to innovate and manage change

Client Priorities

Financial Analytics

HR /WorkforceAnalytics

SupplyChain

Analytics

CustomerAnalytics

StrategicAnalytics

Capabilities

Custom & PackageApplication

Development

ApplicationManagement

Complex Systems

Integration

Delivery Excellence

Industry Expertise

Change &

Innovation

Innovation Unlocked by Technology

Managing Change

New customers & new

markets

Global Integration

As the leading provider of consulting, systems integration and application services, IBM

has unrivalled experience optimizing our clients

application investments and aligning them with business

requirements.

Operational Efficiency

© Copyright IBM Corporation 2008Global CEO Study | May 200830

IBM end-to-end application lifecycle services offer extensive business and IT value that increase competitiveness

Co

st

Go-live IBMDesign-Build-Manage

Services

Time

Design and build (implementation) Management

Self-support

Go-live design,build and self-support

IBM Design-Build-Manage Services

25 to 40 percent per year of implementation cost

18 to 25 percent per year of implementation cost

10 to 15 percent faster and

20 to 30 percent lower cost

We can help you optimize your application environmentBusiness value to you Speeds collaboration and

innovation in your industry End-to-end capability

(business strategy throughIT operations)

Integrated consulting and application services

Security and business continuity expertise

Business and IT innovation Lower total cost of ownership

IT value to you Scale and global support Application porting expertise Integration testing and

performance testing New technologies (e.g.,

service-oriented architecture, Web services)

Proven complex program capability

Application performance modeling

© Copyright IBM Corporation 2008Global CEO Study | May 200831

IBM Application Services can help you adopt the characteristics of the Enterprise of the Future and become an Outperformer

1 Hungry for change The Enterprise of the Future is capable of changing quickly and successfully. Instead of merely responding to trends, it shapes and leads them. Market and industry shifts are a chance to move ahead of the competition.

IBM is a leader in designing, developing and managing applications that enable our clients to drive change and demonstrate industry leadership

2 Innovative Beyond Customer Imagination The Enterprise of the Future surpasses the expectations of increasingly demanding customers. Deep collaborative relationships allow it to surprise customers with innovations that make both its customers and its own business more successful.

IBM’s continuous alignment model speeds adoption of truly collaborative capabilities

3 Globally Integrated The Enterprise of the Future is integrating to take advantage of today’s global economy. Its business is strategically designed to access the best capabilities, knowledge and assets from wherever they reside in the world and apply them wherever required in the world.

IBM has more global experience and investment in global capabilities and skills than any other systems integrator or application outsourcing firm

4 Disruptive By Nature The Enterprise of the Future radically challenges its business model, disrupting the basis of competition. It shifts the value proposition, overturns traditional delivery approaches and, as soon as opportunities arise, reinvents itself and its entire industry.

IBM best practices draw upon experience with a wide range of business models and delivery approaches to deliver business model and industry innovation with application services

© Copyright IBM Corporation 2008Global CEO Study | May 200832

IBM can help clients accelerate change by optimizing their application portfolio and aligning it more strongly to business priorities

Strategy

Tactics

Execution

ConsumerRelationship

CustomerRelationship

Manufacturing Supply Chain &Distribution

BusinessAdministration

Category/Brand Strategy

Brand P&L Management

Matching Supply and Demand

Marketing Development & Effectiveness

Product Ideation

Marketing Execution

Product Directory

Category/Brand Planning

Assessing Customer Satisfaction

Customer Insights

Account Management

Value-Added Services

Customer Account Servicing

Retail Marketing Execution

Customer Directory

Manufacturing Strategy

Supplier Relationship Management

Production and Materials Planning

Manufacturing Oversight

Supplier Control

Make Products

Plant Inventory Management

Manufacturing Procurement

Assemble/Pkg. Products

Distribution Oversight

Distribution Center Operations

Transportation Resources

En route Inventory Management

In-bound Logistics

Corporate Strategy

Alliance Management

Line of Business Planning

Business Performance Management

External Market Analysis

Organization and Process Design

Legal and Regulatory Compliance

Treasury and Risk Management

Facilities and Equipment Management

IT Systems and Operations

HR Administration

Customer Relationship Strategy

Customer Relationship Planning

Supply Chain Strategy

Supply Chain Planning

Out-bound Logistics

Accounting and GL

Indirect Procurement

Corporate Planning

Concept/Product Testing

Product Development

Product Management

Consumer ServiceIn-store Inventory Mgmt

Category/Brand Strategy

Brand P&L Management

Matching Supply and Demand

Marketing Development & Effectiveness

Product Ideation

Marketing Execution

Product Directory

Category/Brand Planning

Assessing Customer Satisfaction

Customer Insights

Account Management

Value-Added Services

Customer Account Servicing

Retail Marketing Execution

Customer Directory

Manufacturing Strategy

Supplier Relationship Management

Production and Materials Planning

Manufacturing Oversight

Supplier Control

Make Products

Plant Inventory Management

Manufacturing Procurement

Assemble/Pkg. Products

Distribution Oversight

Distribution Center Operations

Transportation Resources

En route Inventory Management

In-bound Logistics

Corporate Strategy

Alliance Management

Line of Business Planning

Business Performance Management

External Market Analysis

Organization and Process Design

Legal and Regulatory Compliance

Treasury and Risk Management

Facilities and Equipment Management

IT Systems and Operations

HR Administration

Customer Relationship Strategy

Customer Relationship Planning

Supply Chain Strategy

Supply Chain Planning

Out-bound Logistics

Accounting and GL

Indirect Procurement

Corporate Planning

Concept/Product Testing

Product Development

Product Management

Consumer ServiceIn-store Inventory Mgmt

Current Application Portfolio

Component Business Model™

Which applications support which processes?

Do I have the flexibility to support and drive change?

What are my priorities?Which processes are strategic?

Which are core (differentiating)?

Desired End State

Service delivery aligned with budget and business priorities

Costs aligned to business or IT usage metrics

Alignment of business and IT Right-sized application

portfolios aligned with business processes that can be reconfigured for business model innovation

© Copyright IBM Corporation 2008Global CEO Study | May 200833

Additional investment freed up for strategic business initiatives

Application Management Budget Today

Cost savings

20-40%

Time to Market

25-50%

End User Productivity

+30-50%

Business Results Achieved

New solutions

Enhancements of existing applications

End user support

Application maintenance

Application maintenance

New solutions

End user support

Application Management Budget Tomorrow

New application enhancements

Enhancements of existing applications

IBM Application Services frees up funds from supporting applications that may be used for new solutions and to enable the level of change that companies are hungry for

© Copyright IBM Corporation 2008Global CEO Study | May 200834

1 Hungry for change The Enterprise of the Future is capable of changing quickly and successfully. Instead of merely responding to trends, it shapes and leads them. Market and industry shifts are a chance to move ahead of the competition.

IBM is a leader in designing, developing and managing flexible applications that enable our clients to drive change and demonstrate industry leadership

2 Innovative Beyond Customer Imagination The Enterprise of the Future surpasses the expectations of increasingly demanding customers. Deep collaborative relationships allow it to surprise customers with innovations that make both its customers and its own business more successful.

IBM’s continuous alignment model speeds adoption of truly collaborative capabilities

3 Globally Integrated The Enterprise of the Future is integrating to take advantage of today’s global economy. Its business is strategically designed to access the best capabilities, knowledge and assets from wherever they reside in the world and apply them wherever required in the world.

IBM has more global experience and investment in global capabilities and skills than any other systems integrator or application outsourcing firm

4 Disruptive By Nature The Enterprise of the Future radically challenges its business model, disrupting the basis of competition. It shifts the value proposition, overturns traditional delivery approaches and, as soon as opportunities arise, reinvents itself and its entire industry.

IBM best practices draw upon experience with a wide range of industry business models and delivery approaches to deliver business model and industry innovation with application services

IBM Application Services can help you adopt the characteristics of the Enterprise of the Future and become an Outperformer

© Copyright IBM Corporation 2008Global CEO Study | May 200835

IBM Application Services’ approach is an end-to-end process for continuous alignment to support business priorities and customer collaboration

OptimizationOptimize application

management using efficient methods and metrics-based pricing

• Help increase delivery efficiency and quality• Help reduce costs

Growth and Innovation

Transform business applications, leveraging new

technology

• Help enable flexibility to support business growth

• Help speed time to value•Helps speed innovation and

customer collaboration

Business ProductivityAlign applications to business priorities to help increase business

productivity and effectiveness

Align

TransformManage

Continuous alignment

Self-funded via savings

© Copyright IBM Corporation 2008Global CEO Study | May 200836

1 Hungry for change The Enterprise of the Future is capable of changing quickly and successfully. Instead of merely responding to trends, it shapes and leads them. Market and industry shifts are a chance to move ahead of the competition.

IBM is a leader in designing, developing and managing flexible applications that enable our clients to drive change and demonstrate industry leadership

2 Innovative Beyond Customer Imagination The Enterprise of the Future surpasses the expectations of increasingly demanding customers. Deep collaborative relationships allow it to surprise customers with innovations that make both its customers and its own business more successful.

IBM’s continuous alignment model speeds adoption of truly collaborative capabilities

3 Globally Integrated The Enterprise of the Future is integrating to take advantage of today’s global economy. Its business is strategically designed to access the best capabilities, knowledge and assets from wherever they reside in the world and apply them wherever required in the world.

IBM has more global experience and investment in global capabilities and skills than any other systems integrator or application outsourcing firm

4 Disruptive By Nature The Enterprise of the Future radically challenges its business model, disrupting the basis of competition. It shifts the value proposition, overturns traditional delivery approaches and, as soon as opportunities arise, reinvents itself and its entire industry.

IBM best practices draw upon experience with a wide range of industry business models and delivery approaches to deliver business model and industry innovation with application services

IBM Application Services can help you adopt the characteristics of the Enterprise of the Future and become an Outperformer

© Copyright IBM Corporation 2008Global CEO Study | May 200837

The IBM strategic global delivery and support capability keeps your applications up and running regardless of worldwide events and extends well beyond India to China, the Americas and Europe.

IBM’s scale of global delivery provides the flexibility to access skills from multiple global locations and thus mitigate risk

Strategic growth locations for IBM Application Management Services global delivery

Regional Global Delivery Centers

AS Worldwide

>Eight strategic delivery centers

>742 Major Accounts

>93,000 professionals

>50 Countries

AS Worldwide

>Eight strategic delivery centers

>742 Major Accounts

>93,000 professionals

>50 Countries

© Copyright IBM Corporation 2008Global CEO Study | May 200838

Application Services establishes the ability to easily scale projects and support resources dynamically to drive business model innovation

Adjust your resources to handle dynamic cycles, new projects and unforeseen events.

The IBM global resource model provides the skills you need, when and where you need them.

Resources on demand

Time

Cli

en

t c

ap

ac

ity

ne

ed IBM resourcing capability

Project and peak support demands

Routine support

• More than 93,000 global professionals distributed around the world with regional and global experience

• Industry expertise• Certified, best-of breed technical and business skills

© Copyright IBM Corporation 2008Global CEO Study | May 200839

1 Hungry for change The Enterprise of the Future is capable of changing quickly and successfully. Instead of merely responding to trends, it shapes and leads them. Market and industry shifts are a chance to move ahead of the competition.

IBM is a leader in designing, developing and managing flexible applications that enable our clients to drive change and demonstrate industry leadership

2 Innovative Beyond Customer Imagination The Enterprise of the Future surpasses the expectations of increasingly demanding customers. Deep collaborative relationships allow it to surprise customers with innovations that make both its customers and its own business more successful.

IBM’s continuous alignment model speeds adoption of truly collaborative capabilities

3 Globally Integrated The Enterprise of the Future is integrating to take advantage of today’s global economy. Its business is strategically designed to access the best capabilities, knowledge and assets from wherever they reside in the world and apply them wherever required in the world.

IBM has more global experience and investment in global capabilities and skills than any other systems integrator or application outsourcing firm

4 Disruptive By Nature The Enterprise of the Future radically challenges its business model, disrupting the basis of competition. It shifts the value proposition, overturns traditional delivery approaches and, as soon as opportunities arise, reinvents itself and its entire industry.

IBM best practices draw upon experience with a wide range of industry business models and delivery approaches to deliver business model and industry innovation with application services

IBM Application Services can help you adopt the characteristics of the Enterprise of the Future and become an Outperformer

© Copyright IBM Corporation 2008Global CEO Study | May 200840

IBM’s application services delivery blends best-of-breed, industry expertise with technical methodologies and best practices to help you innovate your business model

Industry Expertise

Aerospace Automotive Chemical & Petroleum Electronics Industrial Products

Banking Financial Markets Insurance

Education Defense Government Healthcare Postal

CPG Life Sciences/Pharma Retail Travel & Transportation

Energy & Utilities Media & Entertainment Telecommunications

Key Technical Competencies

Complex Systems IntegrationComplex Systems Integration

Package ApplicationsPackage Applications

Enterprise ArchitectureEnterprise Architecture

TestingTesting

ModernizationModernization

Interactive ServicesInteractive Services

© Copyright IBM Corporation 2008Global CEO Study | May 200841

1 Hungry for change The Enterprise of the Future is capable of changing quickly and successfully. Instead of merely responding to trends, it shapes and leads them. Market and industry shifts are a chance to move ahead of the competition.

IBM is a leader in designing, developing and managing flexible applications that enable our clients to drive change and demonstrate industry leadership

2 Innovative Beyond Customer Imagination The Enterprise of the Future surpasses the expectations of increasingly demanding customers. Deep collaborative relationships allow it to surprise customers with innovations that make both its customers and its own business more successful.

IBM’s continuous alignment model speeds adoption of truly collaborative capabilities

3 Globally Integrated The Enterprise of the Future is integrating to take advantage of today’s global economy. Its business is strategically designed to access the best capabilities, knowledge and assets from wherever they reside in the world and apply them wherever required in the world.

IBM has more global experience and investment in global capabilities and skills than any other systems integrator or application outsourcing firm

4 Disruptive By Nature The Enterprise of the Future radically challenges its business model, disrupting the basis of competition. It shifts the value proposition, overturns traditional delivery approaches and, as soon as opportunities arise, reinvents itself and its entire industry.

IBM best practices draw upon experience with a wide range of industry business models and delivery approaches to deliver business model and industry innovation with application services

IBM Application Services can help you adopt the characteristics of the Enterprise of the Future and become an Outperformer

“How do I get started in optimizing my application

portfolio and moving closer to becoming an Enterprise of the

Future?

© Copyright IBM Corporation 2008Global CEO Study | May 200842

Typical client options IBM Application Services Value focus

Design, develop or manage my application portfolio with me or for me

Business Innovation

Alignment with Business Requirements

Close Skill Gaps

Increase IT Staff Productivity

Reduce Cost

Improve Risk Management

Increase Quality

Leverage Existing Assets

Get help with specific application initiatives or projects

Collaborate with IBM - transform your IT organization to a high-performance unit through targeted transformation strategies and hands-on staff mentoring

Outsource everything – Improve organizational capability by leveraging IBM accountability and expertise

Modernize Applications – Leverage existing assets

Flexible entry points

Utilize specific skills – off-shore or on-shore under your direction to design, develop, test, manage or support applications

Clients can evolve their enterprise and industry models by choosing an Application Services entry point that helps bridge the innovation gap

Leverage IBM skills

Address a Problem - Let us help you with a critical or troubled project

Deliver on SLAs - Improve quality of service, flexibility and scalability

© Copyright IBM Corporation 2008Global CEO Study | May 200843

Collaborate with a trusted partner to drive enterprise and industry innovation to become an Enterprise of the Future

• Services to address your needs for future growth and competitiveness

• Continuous development, alignment, transformation and management to innovate your enterprise and industry models

• A secure environment and accountability for reduced business risk

• A global delivery model to support capacity aligned to business needs

• Application management to reduce the cost of doing business

IBM Application Services wants to be your service partner providing:

Let us discuss where to go from here…

© Copyright IBM Corporation 2008Global CEO Study | May 200844

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