International International Business MachinesBusiness Machines

By Robert MuthBy Robert Muth

Real-World CaseReal-World Case

Pg. 597Pg. 597

AGENDAAGENDA

Case SummaryCase Summary IBM OutletsIBM Outlets Conversion to E-BusinessConversion to E-Business Strategy to ConversionStrategy to Conversion Success FactorsSuccess Factors Future TrendsFuture Trends ConclusionConclusion

Case SummaryCase Summary

IBM has been a strong force in the IBM has been a strong force in the Computer Hardware Industry since the Computer Hardware Industry since the 1940’s despite increased competition1940’s despite increased competition

IBM changed to an E-Business strategy in IBM changed to an E-Business strategy in 19991999

IBMIBM website website

Case Summary (cont. 1)Case Summary (cont. 1)

To carry out the transformation, IBM created To carry out the transformation, IBM created the Enterprise Web Management branchthe Enterprise Web Management branch

EWM goalsEWM goals– To lead IBM’s strategic transformationTo lead IBM’s strategic transformation– Help IBM’s business units become more Help IBM’s business units become more

internet suaveinternet suave– Establish the strategy of IBM’s internet siteEstablish the strategy of IBM’s internet site– Record information created by the websiteRecord information created by the website

Case Summary (cont. 2)Case Summary (cont. 2)

The TransitionThe Transition– Simplification of internal business processesSimplification of internal business processes– Streamlining of processesStreamlining of processes– Increased efficiencyIncreased efficiency– Results returned a profit for IBMResults returned a profit for IBM– Now collaborates with suppliers, online Now collaborates with suppliers, online

purchasing, and knowledge/management based purchasing, and knowledge/management based applicationsapplications

– Reduced cost and improved purchasingReduced cost and improved purchasing

IBM OutletsIBM Outlets

Hardware: servers, storage, printing Hardware: servers, storage, printing systems, retail store solutions systems, retail store solutions

Software: connect OS’s, business Software: connect OS’s, business procedures, and applications seamlesslyprocedures, and applications seamlessly

Services: comprehensive IT services to Services: comprehensive IT services to reduce costs, increase productivity, and reduce costs, increase productivity, and assert competitive advantagesassert competitive advantages

Financing: provider of financing and Financing: provider of financing and management servicesmanagement services

IBM Outlets (cont. 1)IBM Outlets (cont. 1)

Research: creating innovative technologies Research: creating innovative technologies with leading-edge solutionswith leading-edge solutions

Technology: develop, market, and deliver Technology: develop, market, and deliver leading chip technologies/servicesleading chip technologies/services

Pre-TransitionPre-Transition

Procedural ConversionsProcedural Conversions Smoothing out business processesSmoothing out business processes

– A simpler procedure is quicker and more A simpler procedure is quicker and more efficient, both qualities are needed for efficient, both qualities are needed for successful E-Businesssuccessful E-Business

Transformation-InitiationTransformation-Initiation

IBM started moving toward being a IBM started moving toward being a comprehensive E-Businesscomprehensive E-Business

Carried out online business transactions Carried out online business transactions through:through:– InternetInternet– IntranetIntranet– ExtranetExtranet

With suppliers, Business Partner Network, With suppliers, Business Partner Network, and employeesand employees

Transformation-FormulationTransformation-Formulation

Strategy to fund only E-Commerce projects Strategy to fund only E-Commerce projects that promised high Return on Investmentthat promised high Return on Investment

Investing in many projects increases Investing in many projects increases chances of success in comparison to only chances of success in comparison to only investing in one low-risk projectinvesting in one low-risk project

Transformation-ImplementationTransformation-Implementation

Carried out by the Enterprise Web Carried out by the Enterprise Web Management branchManagement branch

EWM aided in converting the different EWM aided in converting the different business units to Internet using domainsbusiness units to Internet using domains

Success FactorsSuccess Factors

Investing in multiple projects/areasInvesting in multiple projects/areas By doing so, increased chances of successBy doing so, increased chances of success Previous and still existing brick-and-mortar Previous and still existing brick-and-mortar

business to base the extension of E-business to base the extension of E-Commerce off ofCommerce off of

IBM’s FutureIBM’s Future

Continue to become more heavily involved Continue to become more heavily involved in E-Commercein E-Commerce

The process of the conversion has improved The process of the conversion has improved speed and efficiency of the companyspeed and efficiency of the company

Process has also increased profitsProcess has also increased profits

Industry TrendIndustry Trend

Computer Hardware continues to increase Computer Hardware continues to increase in importancein importance

IBM holds a large customer base and has IBM holds a large customer base and has high customer loyalty within the industryhigh customer loyalty within the industry

IBM’s flexibility continues to gain value IBM’s flexibility continues to gain value within the industrywithin the industry

Main competition is DellMain competition is Dell Second strongest competitor is Apple, with Second strongest competitor is Apple, with

less than ¼ the market cap as IBMless than ¼ the market cap as IBM

ConclusionConclusion

IBM will remain a major competitor in the IBM will remain a major competitor in the Computer Hardware IndustryComputer Hardware Industry

IBM will continue to adapt to the changing IBM will continue to adapt to the changing global environmentglobal environment

IBM could try to embrace change a little IBM could try to embrace change a little more readily, rather than waiting for others more readily, rather than waiting for others to do it firstto do it first