American Society for Quality – April Six Sigma Meeting April 27 th , 2010

1. American Society for Quality – April Six Sigma Meeting April 27th, 2010 E2E Sourcing Model: Project Champion - Heather Busch Master Black Belts - L. Erik Anderson, Kyle Kovac Black Belt - Jason Mudd

2. Agenda • Process Innovation Team • Process Innovation Team Engagement Model • IBM Transformation Principles • Case Study: E2e Sourcing Model Black Belt Project Lessons Learned

3. Process Innovation Team • Business Values • (Gained From Process Innovation Projects) • Improve Critical to Customer Processes • Drive Cost / Workload savings • Drive the use of ongoing Process Metrics • - to monitor & develop continuous improvement • Drive Lean Six Sigma into the DNA of the operations • - Employ a structured methodology to enable a culture change toward fact-based and process driven decision making • Provide an Independent E2E view Vision: LSS will be integrated into the fabric of ISC/STG, resulting in a standardized approach for problem-solving, fact-based decision making, and a process driven culture. Mission: To deploy LSS across ISC/STG, providing incremental business value through the application of a “structured” process evaluation to specific business problems 2009 2005 2006 2007 2008 • Established in 3Q as a pilot team • Sponsored by Bob Moffat • 1st year of “Production” • Team expanded to 14 members globally • Expanded work in ISC • Savings = $13.5M • Team expanded to 54 members WW • Production expanded • Savings= $84.4M • PI Pilot expansion • Education established • Management System established • Proof-of-concept • Expanded into STG support • Steady production • Savings =$333.6M CONCEPT DEVELOPMENT IMPLEMENTATION GROWTH 3

4. Agenda • Process Innovation Team • Process Innovation Team Engagement Model • IBM Transformation Principles • Case Study: E2e Sourcing Model Black Belt Project Highlights

5. PI Team Engagement Model Project Request PI Website CF/ITD Proc/BTO/Mfg GOPS Other Enterprise Focal Point Focal Point Focal Point Focal Point Focal Point • Productivity Challenges • Specific Business Problems • Establish Metric Systems • Improve Critical Customer Processes • Reduce cost and improve efficiency • LSS Education & Deployment Project Evaluation • Work with Executive/Sponsor to understand • Strategic goals • Business problem & Scope • Objectives of the project/initiative and linkage to strategy • Evaluate LSS compatibility - process related, data driven, unknown solutions • Need for LSS education/deployment (GB/YB) vs. pin pointed problem resolution (BB) MBB RECOGNIZE PHASE Project Prioritization Importance to Customer Strategic Value Impact on other Processes Savings Investment Feasibility/Complexity of Project Strategy Financials Project Pipeline

6. PI Team Engagement Model - Education Team Structure Yellow Belt Green Belt Black Belt Training Knowledge Experience GB GB BB GB GB YB YB SME

7. PI Team Engagement Model - Projects Green Belt Projects Black Belt Projects Specific Scope Broader Scope Faster Results Slower Results Smaller Benefits Larger Benefits IBM Lean Six Sigma 2-Pronged Approach • Specific Scope • Single Process or Geo • Drives Lean Six Sigma into the DNA of the Org. • 4 – 6 Months Duration • Benefits > $50K • Broad Scope • Cross-Geo • Cross-Org • Impact large number of people • 9-12 Month Duration • Benefits > $200K

8. Agenda • Process Innovation Team • Process Innovation Team Engagement Model • IBM Transformation Principles • Case Study: E2e Sourcing Model Black Belt Project Lessons Learned

9. IBM Initiative Deployment Success Factors 3. Strategic Alignment & Project Selection Achieving scalable results requires a well thought out and proven framework The transformation architecture is key to providing an enduring flow of benefits Integrating Data Systems & Strategy 1. Committed Leadership Strategic focus 2. Customer Focus & Requirements 4. Full Time Resourcing & Organization 5. Business Process Framework Analyze / Explore Improve / Develop Control / Implement Project Methods Define Measure Supporting Infrastructure 9. Capabilities, Learning & Knowledge 6. Integrated Approach to Change 10. Deployment Management 8. Performance Management 7. Benefits & Tracking Rigour Factors based upon IBM’s Lean Sigma research and experience 1996 – 2005

10. LSS Enterprise Management Program StrategyIntegration Rewards & Recognition Training & Staffing Committed Leadership Measurements & Metrics Governance & Communication Process Management “Must Haves” For A Successful LSS Enterprise Management Program • To be successful all factors: • Must be aligned and fully-integrated • Must be tailored to uniqueness of each organization • “Committed Leadership” is THE central factor in implementation for any successful program R E S U L T S

11. LSS Maturity Model Assessment

12. Agenda • Process Innovation Team • Process Innovation Team Engagement Model • IBM Transformation Principles • Case Study: E2e Sourcing Model Black Belt Project Lessons Learned

13. E2e Sourcing Model Project Lessons Learned • Manage Time Zones • Manage SMEs • Manage Implementation Owners • Establish Interview processes & protocol • Data Collection & Analysis can be time consuming…It is important to identify key measures up front & begin measurement as soon as possible • Measure & Improve Phases were the most challenging phase due to time, details, and coordination required • Decided on process mapping software up front • Understand the limitations of the mapping software • Establish agreed upon definitions of value, non-value, and waste prior to analyze • Scope management e.g. break up E2E process mapping projects into smaller components • Involve the IT team often and early i.e. if you know that there will be IT impacts on the project • Review and re-review the model often as a team b/c the model will reveal additional improvement opportunities over time

14. Questions? Jason Mudd Jasonmud@us.ibm.com (919) 486-2884