Master in Economics and Political Science – Universita’ degli Studi di Milano
IBM Journey towards the Future
Giovanni Linzi
General Manager Sales IBM Italy
agenda
About me ........
2011 IBM Annual Report snapshots
IBM Transformation Journey
IBM 2015 Roadmap
About me ….
Born in 1955
Joined IBM in 1980
1980
…………………….
1997
EMEA T&T Services Executive
1998
EMEA GM T&T Industry - London
1999
WW GM CGP Industry - Paris
2000
EMEA Business Innovation Services VP, Distribution Sector - Paris
2001
Region South Business Consulting Services VP - Milan
2004
Region South System and Technology Group VP
2007
Managing Director Unicredit Group Integrated Account
2010
General Manager Sales IBM Italy
The Global CEO Study 2010: Standouts (*) capitalize on complexity in three
ways
The fourth biennial CEO study, building on
insights and findings over the last 6 years
1,541 CEO face to face interviews
(*) Standouts means Company with significant economic performance in the short term and in the medium long term
2011 IBM Annual Report
2011 IBM Annual Report
2011 IBM Annual Report
IBM operations in more than 170
countries
Integration of major global
enteprice functions allowed more
than 6B$ in enterprise productivity
savings in 5 years
2011 IBM Annual Report
Primary drivers for growth
Gross profit margins
expansion, as result of shift to
higher value segments
Improved productivity across
the Enterprise
2011 IBM Annual Report
IBM Transformation Journey - 100 years of IBM
Pioneering the science
of information
Reinventing the
modern corporation
Making the world
work better
How to capture the
opportunity of
enterprise computing
How to build a new kind
of organisation and
sustain it over time
How to apply technology
to transform companies,
industries, societies
IBM Transformation Journey: we started several years ago…
Focus Areas
• Keeping company together & stabilizing business
• Bringing massive decentralization under control (e.g.,
128 CIOs to 1; 70 ad agencies to 1)
• From country to global brand P&L statements
• Move to integrated solutions
• Dramatic growth in services
“I think the greatest challenge facing
the company is … to adapt our
strategy, structure and culture to a
world of constant change. I can’t
promise this journey will be easy or
fast… the steps we will take will be bold
strides.”
Lou Gerstner, 1993
1993
1995
1997
Phase One
Gerstner era (’93 thru 2002)
1999
2001
2003
2005
2007
2009
2011
“The crisis in our financial markets has
jolted us awake to the realities and
dangers of highly complex global systems.
But in truth, the first decade of the 21st
century has been a series of wake-up calls
with a single subject: the reality of global
integration.”
Sam Palmisano, Nov. 6, 2008
1993
1995
1997
1999
2001
Focus Areas
…an ongoing journey
2003
•Shift to high-value solutions
•Move to Values-based culture
•Lowering center of gravity for decisionmaking
•Becoming premier globally integrated
enterprise
•Maintain focus and execute in a radically
shifting market
•A Smarter Planet
2005
2007
2009
Phase Two
Phase Three
Palmisano era
Rometty era
(‘03 thru present)
(starting in 2012)
2011
The shift to a Globally Integrated Enterprise
GIE: Global Shared Services as internal efficiency improvement and external
offering
 IBM has driven continuous improvement through structured approaches, shared GIE principles, governance and cross
Shared Service measurement of process maturity
Sharing and
Partnering
2002
2006
2010
Globally
Integrating
Making
Things
Smarter
Established consistent set
of processes, measures,
systems and governance
• Established global function
owners accountable for
meeting productivity goals
Pursue opportunities to:
• Instrument
• Interconnect
• Make intelligent

Shared Services reduced spending by $4B over the
last four years

Supply chain averaging $3-5B in savings every year
for the last six years

Each Shared Service driving ongoing efficiency &
effectiveness:
– Finance E/R reduced from 3% to 1%
– Real Estate improved E/R by 50%
– HR HC Ratio to Employee: improved from 1:122 to
1:169
“We no longer have to replicate IBM from floor to ceiling in every country. We are optimizing key operations in the right places in
the world – eliminating redundancies and excess overhead – and integrating those operations horizontally and globally. …This is
about doing the right tasks, with the right skills, in the right places.” - Sam Palmisano, May 20, 2005 Analyst Meeting
IBM became a Globally Integrated Enterprise, leveraging its scale to
capture new growth.
We shifted our operating model to become a Globally Integrated Enterprise that
optimizes its supply chain, production and demand management to capture new
opportunities.
Major Employee Sites
Customer Fulfillment
Manufacturing
Employee Service Centers
IBM Research Centers
IBM Internal Data Centers
A Globally Integrated Enterprise is an open, modular organization that is integrated into the fabric of
the networked economy and operates under a business model that makes economic sense in the new
global landscape.
IBM organization and Governance – Strategy to Execute
IBM Organization At a Glance
Geographies
Business Units
North America
Sales & Distribution
(S&D)
Northeast Europe
Global Technology
Services (GTS)
IBM Leadership Governance
Sectors
Operating Team
Public
Day-to-day marketplace execution
Communications
Strategy Team
Financial Services
Southwest Europe
Software Group
(SWG)
Technology Team
Distribution
Japan
Systems &
Technology Group
(STG)
Industrial
Growth Markets
Global Business
Services (GBS)
General Business
Integrated
Supply
Chain
IBM’s strategic direction and emerging
business opportunities
Near- and long-term emerging technologies,
technical developments and issues
Performance Team
Accountable for business performance &
results. Develop cross-unit strategies.
Integration and Values Team (I&VT)
Globally Integrated Shared Services
HR
Real Estate
IT
Finance
Legal
Marketing/
Comm
Sales
Operations
Integrate IBM’s enterprise-wide capabilities,
and align and communicate strategies and
values
Business Model, Operating Model and Workforce Transformation
Remixed our portfolio toward services,
software, and integrated solutions…
 Exited commoditized businesses:
– PCs
– Hard disk drives
– Printing Systems
 Strengthened position in:
–
–
–
–
–
Business Consulting
Service-Oriented Architecture
Information on demand
Virtualization
Open, modular systems
 Acquired over 60 companies in last 5 years
– to complement and scale our portfolio of products and
offerings
18
Shift in geographic mix…
 2010 revenue:
– 23% Asia Pacific
– 34% Europe, Middle East, Africa
– 43% Americas
Strong Performance in 2010…
IBM 2010 financial roadmap
$11.00
2010
Retirement-Related
Future Acquisitions &
Growth Initiatives
Share Repurchases
2006
$1.00
Margin Expansion
$0.75
$6.06
Historical Revenue Growth
Contributing to margin expansion by globally
integrating:
Service Delivery
Support Functions
Supply Chain
EPS
IBM 2010 EPS Roadmap
IBM 2010 EPS Roadmap
IBM’s Roadmap to 2015
Business Model, Operating Model and Workforce Transformation
Contribute to margin
expansion by
globally integrating:
•Service Delivery
•Support Functions
•Supply Chain
•Shift to faster
growing business mix
•Leverage on
acquisitions
• Software
contributes
about half of our segment
profit
• Growth initiatives deliver
$20B in revenue growth
• Growth markets revenue
approaches 30% of IBM
total
• Enterprise productivity
delivers $8B in gross
savings
• IBM generates $100B in
free cash flow, returning
70% to shareholders
IBM’s Roadmap to 2015
Business Model, Operating Model and Workforce Transformation
Contribute to margin
expansion by
globally integrating:
•Service Delivery
•Support Functions
•Supply Chain
Shift to faster growing
business mix
Leverage on acquisitions
• Smarter Planet: Approximately 400 recent client
engagements illustrate reach
• Business Analytics: Grows to ~$16B business by
2015 –
• Cloud: Grows to ~$7B business of which ~$3B is
incremental
• Growth Markets: contributes ~50% of IBM’s growth
over the roadmap
IBM values
 Dedication to every client’s success
 Innovation that matters – for our
company and for the world
 Trust and personal responsibility in
all relationships
T-Shaped competences
Business and Management
Organizational Change & Learning
Business Anthropology
Economics and Social Sciences
Math and Operations Research
Computer Science & Info. Systems
Industrial and Systems Engineering
Science and Engineering
 People and
competences have
to be aligned with
IBM focus on client
 There is the need of
T-shaped persons
(deeper and wider
competences)
Leading the transition to a smarter planet
Our world is becoming
INSTRUMENTED
Our world is becoming
INTERCONNECTED
Virtually all processes and ways of working are becoming
INTELLIGENT
Today, IBM is helping our clients to change the way the world literally works
– and to make the planet not just smaller and “flatter,” but smarter. IBM is
applying its expertise, global scope and creativity to build the backbone of
21st century industries and public institutions.
General Manager Sales, Italy
giovanni_linzi@it.ibm.com
Complexity as the “New Normal”
Volatility, uncertainty and risk
Continued cost pressures
New regulatory regimes
New Stress on global interdependencies
Industry restructuring and
consolidation
Markets & business models change
Technology
Complexity as the “New Normal”
Volatility, uncertainty and risk
Continued cost pressures
New regulatory regimes
New Stress on global interdependencies
Industry restructuring and
consolidation
Markets & business models change
Technology
In 2001, there were 60 million
transistors for every human on
the planet ...
… today there are 1 billion
transistors per human…
… each costing 1/10 millionth of
a cent.
Complexity as the “New Normal”
Volatility, uncertainty and risk
Continued cost pressures
New regulatory regimes
New Stress on global interdependencies
Industry restructuring and
consolidation
Markets & business models change
Technology
There are 4 billion mobile phone
subscribers worldwide…
That’s more than one phone for
every two people on the planet
Complexity as the “New Normal”
Volatility, uncertainty and risk
Continued cost pressures
New regulatory regimes
New Stress on global interdependencies
Industry restructuring and
consolidation
Markets & business models change
Technology
In 2005 there were 1.3 billion RFID
tags in circulation…
… today there are 33 billion.
Complexity as the “New Normal”
2 billion people will be on the
Web by 2011 ...
Volatility, uncertainty and risk
Continued cost pressures
New regulatory regimes
New Stress on global interdependencies
Industry restructuring and
consolidation
Markets & business models change
Technology
… and a trillion connected
objects – cars, appliances,
cameras, roadways, pipelines –
comprising the "Internet of
Things."
Our world is becoming
Smarter Planet
INSTRUMENTED
Our world is becoming
INTERCONNECTED
Virtually all things, processes and ways
of working are becoming
INTELLIGENT
Our vision is to bring a new level of smart to how the
world works — how every person, business,
organization, government, natural system, and manmade system interacts.
Each interaction represents a chance to do
something better, more efficiently, more productively.
But more than that, as the systems of the planet
become smart, we have a chance to open up
meaningful new possibilities for progress.
The World is Getting Smarter: because it must
40-70 percent of the electrical energy is lost due to
inefficiencies in the grid.
In one small business district in Los Angeles alone, cars
burned 47,000 gallons of gasoline just looking for parking.
Consumer products and retail industries lose about $40
billion annually due to inefficient supply chains.
In a world where 820 million people are undernourished,
$48 billion worth of the food is thrown away each year in
the US.
Our healthcare “system ” can’t link from diagnosis to drug
discovery, providers, insurers, employers and patients.
Financial markets spread risk but can’t track it; this has
led to undermined confidence and uncertainty.
Building a smarter planet together
Smart traffic
systems
Intelligent
Smart food
oil field
systems
technologies
Smart water Smart supply
mgmt
chains
Smart
countries
Smart
healthcare
Smart energy
grids
Smart retail
Smart
weather
Smart
regions
Smart cities