05/03/2023

This paper is my opinion only and does not speak for IBM

in an offi

cial manner

1

Cloud and Software as a Service (SaaS): Let’s have a business conversation as to why this is inevitable

LUIS CARRASCO-CORTESIBM COGNITIVE PROCESS TRANSFORMATION LEADER, CANADA AND CARIBBEAN.ALL OPINIONS ARE MY OWN

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

2Why this paper in the first place? Why do I feel this is critical information to share?

I have been an industry insider observing the rise of cloud for more than seven years

What started as an interesting curiosity, has grown to be the preeminent force that will change business models

This is far too important to let this discussion be only about technology, led only by technologists

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

3Cloud will be the way all software is delivered… Eventually... Why? Seen from a software supply side:

Whether right or wrong, investors are awarding much higher multiples to cloud based software companies than subscription based companies.

Valuations are the biggest driver of supply behaviour

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

4Some observers argue that stock valuations are a bubble…

Frankly I can’t disagree: There are many cloud companies that will probably implode just like in the .com bubble of 2000

What is not up for debate however, is that after the 2000 implosion, the Internet established itself as the preeminent economic enabler

Media, Publishing and Music industry executives, would probably firmly agree with the statement above.

Bubble or no bubble, this is the age of the Cloud and SaaS computing.

05/03/2023

5The economics of cloud in one picture

These are the additional costs with on-premise softwareWhat is not described is the time & cash flow dimension… It can take weeks to months to get operational in this model

Subscription fee is usually priced by the user and unlike on-premise, you can switch it off Configuration is a one time fee

This paper is my opinion only and does not speak for IBM in an official manner

24 to 48 hours to be operational!

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

6It is time to discuss Cloud from a business perspective, with business people

Ultimately the decision to exploit cloud resides with the top executive leadership of the organization…

And this is a senior executive / board level decision because the consequences impact the business model

Michael Porter tells us that in strategy, choosing NOT to do something is more important that saying Yes

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

7So let’s view just a few aspects of what are the likely impacts of choosing to say NO to cloud:

First off, the firm is exposed to significant competitive pressures: Cloud based competitors can disrupt not just your business, but

potentially your whole industry Athenahealth, Square, Cargomatic, RocketLawyer, Ceres Imaging, Drone

Deploy, UBER, Lyft, Lending Club, Airbnb, Zillow, Amazon, YouTube, FinTech, Doctor on Demand, SalesForce.com … are all cloud based competitors… and the list grows daily.

… and they are disruptors of established models.

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

8So let’s view just a few aspects of what are the likely impacts of choosing to say NO to cloud:

Second is a lack of very fast innovation capability: Cloud based companies can experiment and fail quickly because

they are not saddled with as many fixed costs If a business model fails, they toss it and move to the next idea…

failing is cheap and thus painless And they do it fast! They can turn on capabilities in 24 to 48 hours.

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

9So let’s view just a few aspects of what are the likely impacts of choosing to say NO to cloud:

Third is lack of ability to scale operations without limits, with limited risks: As you grow and take on new clients, which drive more demand on your

systems, your cloud based competitors merely consume more resources, which they turn on instantly

This means they are only paying more when additional revenues are coming in… thus protecting cash flow…

And when a market disappears, they merely turn the capability off…

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

10By the way, is this to be interpreted as 100% cloud? NO… The cloud for enterprises is ***hybrid***

You probably have far too many strategic investments in on-premise IT systems of records

Cloud must coexist and integrate seamlessly to your internal systems

This is not a binary either/or proposition

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

11Let me share some examples that make all of this real

In the following slides I share how cloud has changed IBM’s business model…

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

12The Cognitive Era, powered by the Watson Computer happens only in the cloud

Do you need to buy a Watson Computer to jump into the Cognitive Business era? NO!

Every capability of the Watson Computer is an Application Programming Interface (API) you use from the IBM Bluemix Cloud

This democratization of IT further ignites massive competition, even for small companies

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

13Democratizing IT to everyone has fundamental impacts on the economy

In the 1960’s to 2000’s companies had to buy capital to enable IT capabilities and hire very specialized staff to handle IT operations.. And it was expensive at first

This meant that the biggest companies were the only ones that could adopt the technology at first, and created significant barriers to entry for others

In an age of cloud, any company can acquire state of the art capabilities and create new businesses from scratch

This is why I say cloud will only accelerate competition… and disrupt established business models… Creativity and intelligence is how one competes today…

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

14Let me give you an example from my area of expertise: Cloud based Process Technology

Blueworks Live is up and running within 5 minutes of you first signing up and you are building full processes within 1 to 2 days

BPM on Cloud is up and running within 48 hours, and you can subscribe using a concurrent user model for a low monthly fee.

ODM on Cloud is the same from an uptime and subscription cost perspective.

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

15Concurrent User model is the secret to value… An example

IBM has 450,000 employees BUT no more than 3,500 use the travel system at any one time

Question: Do you buy 450,000 Named users or 3,500 Concurrent users? Correct answer = 3,500 Concurrent users What matters is how many are logged into the system at once! This creates massive savings for most organizations

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

16Please see this conversation starter video

This is a journey and we have a point of view that just might benefit you greatly

We are here to help.

05/03/2023

17Where can I get more information?

Click on these links to see how this technology could help you run your operations

IBM Decision Manager on Cloud

IBM Business Process Manager on Cloud

Blueworks Live Process Discovery and Modelling PlatformThis paper is my opinion only and does not speak for IBM in an official manner

05/03/2023This paper is my opinion only and does not speak for IBM in an official manner

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Thank you