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Agenda

Office of the Chairman, EMEA Brendan Dineen Director of Marketing and Communications, EMEA CIM Event – Portsmouth University – Wednesday 20 May, 2009. Agenda. 1. IBM : Who we are 2. Strategy : Our transformation 3. Marketing : How we align 4. The Future : Where we are going

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Agenda

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  1. Office of the Chairman, EMEABrendan Dineen Director of Marketing and Communications, EMEACIM Event – Portsmouth University – Wednesday 20 May, 2009

  2. Agenda 1. IBM : Who we are • 2. Strategy : Our transformation • 3. Marketing : How we align • 4. The Future : Where we are going • 5. Summary : Some closing thoughts

  3. IBM Locations Mobile Employees IBM has a workforce of over 350,000+ employees…. of which almost 50% are mobile • 350K+ employees • 200K+ contractors • 170 countries • 2,000 locations • 50% < 5 years experience

  4. Revenue $103.6B Pre-Tax Profit $16.7B 170 Countries Global Presence 398,455 Employees Services, Software, Hardware, Research and Financing Business Segments Helping clients succeed in delivering business value by becoming more innovative, efficient and competitive through the use of business insight and information technology (IT) solutions, and providing long-term value to shareholders Business Model IBM at a Glance: Year End 2008“ …. in 2008 revenue exceeded $ 100b.”

  5. IBM at a Glance: Y/E 2008

  6. Our Transformation Journey started in 1993 … 1992 = # 3 • In 1993 IBM was on the brink of break-up • Stock was at 20 year low • $8.1bn Loss posted • Too complex: 25,000 products • Not customer or marketplace focused 1993 = # 284 Interbrand Ranking

  7. IBM’s Transformation: An Ongoing Journey • 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 not be pussyfooting but bold strides.” -- Lou Gerstner, 1993 Focus Areas 1993 1995 1997 1999 2001 2003 2005 2007 2009 Phase One Gerstner era (’93 thru 2002)

  8. 1993 1995 1997 1999 2001 2003 2005 2007 IBM’s Transformation: An Ongoing Journey • Shift to high-value solutions • Move to Values-based culture • Lowering center of gravity for decision-making • Becoming premier globally integrated enterprise • Maintain focus and execute in a radically shifting market • A Smarter Planet “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 Focus Areas 2009 Phase Two Palmisano era (‘03 thru present)

  9. Agenda 1. IBM : Who we are • 2. Strategy : Our transformation • 3. Marketing : How we align • 4. The Future : Where we are going • 5. Summary : Some closing thoughts

  10. Implications for Aligning Marketing • Foundation from which to build • Reputation • Relationships • Internal and External Values-based Culture • Engaged employees globally in Values Jam to refresh our Values • Conducted World Jam with employees to collaborate on solutions for growth, innovation and bringing the Values to life • Implemented 32 top-rated ideas • Employee Values Survey conducted annually to measure progress in operating and behaving consistently with our Values What we’ve done

  11. The Values of IBMers Dedication to every client’s success Innovation that matters – for our company and for the world Trust and personal responsibility in all relationships

  12. Mergers & Acquisitions Implications for Aligning Marketing What we did • Over past 5 years, invested nearly $16B in acquiring more than 70 companies • Continued to divest low growth, low margin, commoditizing product lines • Acquired new technology AND complementary business models and channels to create new revenue • Integrating brands, values, people • Complex Channel Marketing

  13. Client Value Focus What we’ve done Implications for Aligning Marketing • Integrate our messaging • Industry Specific • Focuses on the client e.g. not mass mail • Always demonstrate value to the client • Deployed Client Value Method to improve end-to-end client experience • Recognized distinct types of client buying behaviors • Integrated process from solution design through delivery • Increased industry orientation to serve the client’s agenda • Enhanced industry-focused skills and capabilities • Aligned market-facing teams around an industry

  14. Established and periodically refreshed a core set of leadership competencies for all IBMers Pervasive use of competencies for development, succession planning and selection Defined a new Leadership Framework emphasizing business results and employees’ experience Leadership Competencies Client Partnering Embracing Challenge Earning Trust Enabling Performance and Growth Developing IBM People and Communities Passion for IBM’s Future Strategic Risk Taking Informed Judgment Thinking Horizontally Collaborative Influence Transformational Leadership What we’ve done Implications for Marketing Alignment • Increased Client Focus • Increased accountability

  15. Agenda 1. IBM : Who we are • 2. Strategy : Our transformation • 3. Marketing : How we align • 4. The Future : Where we are going • 5. Summary : Some closing thoughts

  16. Hardware Software Services IndustriesSub-Industries Revenue ClientsLarge and Small Reputation Relationships Positions - Cxx It continues to be a complex environment

  17. We achieve marketing alignment using a Leadership Blueprint Market Intelligence Market Management Marketing Communications Offering and Program Planning Offering and Program Execution Strategy and planning 2.0 Assist GM to develop and manage strategy and positioning 5.0 Execute Marketing Program 3.0 Develop and create products and Solutions offerings and select RTM 1.0 Identify Marketplace Insights 4.0 Develop and Manage Marketing Programs 6.0 Enable Channels Marketing Operations Metrics and Feedback Loop 7.0 Measure Results and Process

  18. … then we track – and adjust – using web based tools • Global Marketing Metrics Portal (GMMP): • WW Point of access for all Marketing reports around Revenue, ROI and Influence metrics • Available to all Marketers using intranet ID • Simple to use • Supported by IBM Help and extensive online documentation: • Marketing Scorecard • A pre-built report set providing a simplified view of commonly viewed data. • Detailed reports • Objectives for performance on KPIs • Ability to drill up/down • Flexible, trending, spreadsheet, presentations • Diagnostic metrics

  19. … and compare our performance relative to the market …

  20. Agenda 1. IBM : Who we are • 2. Strategy : Our transformation • 3. Marketing : How we align • 4. The Future : Where we are going • 5. Summary : Some closing thoughts

  21. Building a Smarter Planet

  22. What is happening to our planet ?“ 2008… a snapshot of climate and natural disasters…” Intense low Pressure “Emma” $ 2 b damage Cold weather In the “Stans” 1,000 dead Earthquake in Sichuan Province 70,000 dead 5 m homeless $ 85b damage Earthquake in Pakistan 300 dead In the past 12 years… 10 have been the warmest recorded Cyclone Myanmar 135,000 dead 1 m homeless 6 Tropical Cyclones Hit the US $ 10 b damage Floods in India 635 dead Typhoon Fengshen 557 dead 2008 was the 4th highest year recorded for hurricanes & storms “ …. our planet has climate issues…”

  23. What is happening to our planet ?“ 2008… terrorist related incidents ….” April 120 dead 564 injured January 147 dead 484 injured February 421 dead 817 injured March 66 dead 131 injured August 292 dead 616 injured May 131 dead 509 injured June 177 dead 418 injured July 252 dead 1032 injured TOTAL 2008 3.046 dead 8,156 injured December 132 dead 391 injured September 321 dead 979 injured October 583 dead 1426 injured November 404 dead 789 injured “ …. our planet has security issues…”

  24. What is happening to our planet ?“ 2008 … business – globally…” “ …. our planet has business issues…”

  25. What is happening to our planet ?“ and as a planet we find ourselves ….. as businesses, countries and citizens in a situation….” “ When the rate of change outside … …. exceeds the rate of change inside ………… the end is in sight.” Jack Welch, Former CEO of General Electric

  26. What can we do about it ?“ …something meaningful is happening…” “Every human being, company, organization, city, nation, natural system and man-made system is becoming interconnected, instrumented and intelligent.This is leading to new savings and efficiency—but perhaps as important, new possibilities for progress.” The world is flatter. Because it can. Because it must. Because we want it to. The world is smaller. The world is getting smarter. 26

  27. An estimated 2 billion people will be on the Web by 2011 ... … and a trillion connected objects – cars, appliances, cameras, roadways, pipelines – comprising the "Internet of Things." Mobile phones

  28. One billion camera phones were sold in 2007, up from 450 million in 2006 … 3G devices growing 30% p.a. Instrumented

  29. In 2005 there were 1.3 billion RFID tags in circulation… … by 2010 there will be 33 billion. Intelligent

  30. Worldwide mobile telephone subscriptions reached 3.3 billion in 2007 and should reach 4 billion by the end of 2008. In the fourth quarter of 2007, in the USA, texts exceeded voice calls for the first time. camera phones

  31. In 2001, there were 60 million transistors for every human on the planet ... … by 2010 there will be 1 billion per human… … each costing 1/10 millionth of a cent. RFID

  32. What can we do about it ? “…. with one trillion things connected to the internet ….. and one billion transistors for each person on the planet… it means we can now build…. “ Smart traffic systems Smart retail Smart energy grids Smart food systems Smart healthcare Smart oil Smart supply chains Smart countries Smart weather Smart regions Smart water management Smart cities …. some examples ..

  33. Smarter Infrastructure Building or renewing a bridge today means making sure the bridge can tell us, over its lifetime, how it’s feeling…

  34. Smarter Grids Malta is creating one of the most advanced smart power grids, and building smarter water and waste management systems.

  35. Smarter Food Tracking A food tracking solution (this one the first of its kind in the Nordics) uses RFID to track and trace meat and poultry from the farm, through the supply chain, to supermarket shelves. traffic

  36. Smarter Traffic Brisbane, London, Singapore and Stockholm are deploying smarter traffic systems. At least 20 other cities have active bids to do the same. Stockholm has seen approximately 20 percent less traffic, a 12 percent drop in emissions and a reported 40,000 additional daily users of public transportation. Law enf

  37. Smarter Law Enforcement Cities are digitizing their law enforcement practices and deploying smarter surveillance systems … … for example, using audio sensors to direct cameras to locate gunshots, determine the caliber of gun fired and pinpoint its exact location, to aid in dispatch. fire

  38. Hardware Software Services IndustriesSub-Industries Revenue ClientsLarge and Small Reputation Relationships Positions - Cxx … and we are working on this right now..

  39. Agenda 1. IBM : Who we are • 2. Strategy : Our transformation • 3. Marketing : How we align • 4. The Future : Where we are going • 5. Summary : Some closing thoughts

  40. 3 x Closing Thoughts 1. Values • 2. Strategy • 3. Metrics dineenb@uk.ibm.com

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