Transforming IBM Through Business Processes

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Transforming IBM Through Business Processes

• John Bendas
• Director
• Strategic Business Applications
• IBM

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IBM Today
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IBM...Circa 1992

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Strategic Imperatives in 1993

• Clear the logjams
• Inefficient cost structure
• Slow development cycles
• Bureaucracy, redundancy and inflexibility
• Go to market as One IBM -- an integrated, global
  organization
• Make it easier to do business with us
• Transform IBM into a smarter, faster organization

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IBM Where We Were

• 400,000 employees in 1985
• 160 countries
• 20 disparate business units
• 5,000 HW products, 20,000 SW offerings
• Redundant processes, IT systems

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A New Organization
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IBM Today

• Worlds largest information technology company
• 1998 revenue 81.7 billion
• Does business in 164 countries
• 291,000 employees
• 28 manufacturing facilities in Americas,
  Europe,Australia, Far East
• Research labs in 8 locations in 6 countries
• in US, China, Japan, India, Israel, Switzerland
• Development labs all over the globe
• 8 in Europe, 1 Austria, 3 France, 1 Germany, 1
  Italy, 2 UK

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Our Transformation Blueprint

• 1994-95 Process Design
• Cost reduction
• Commonality
• Benchmarking
• 1996-97 Process Deployment
• Consistency
• Globalization
• 1998 Process IT Integration
• e-business transformation
• Processes, IT and Web integration

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IBM's Core Processes
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Results Procurement
Before
Now
Before
Now
30 Days
1 Day
30 Days
1 Day
Purchase order processing time
6 - 12 Months
6 - 12 Months
30 Days
30 Days
Contract cycle time
Average length of contracts
40 Pages
6 Pages
40 Pages
6 Pages
Less than 2
Less than 2
30
30
Rate of "maverick buying"
More than 85
More than 85
40
40
Savings 4.2B
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Results Integrated Supply Chain
Before
Now
Before
Now
45 Days
20 Days
45 Days
20 Days
Supply/demand planning time
More than 80
More than 80
Pull replenishment
- 0 -
- 0 -
On-time delivery
30 - 60
77 - 95
30 - 60
77 - 95
27 - 44 Days
2 - 23 Days
Cycle time Order entry to delivery
27 - 44 Days
2 - 23 Days
- 0 -
- 0 -
Rapid response revenue
1B
1B
Savings 1.7B
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Results of IBM's Reengineering

• Time to market... 75 faster
• On-time delivery... 95 of the time
• Customer satisfaction... up 5.5 points

Savings 9.5B Investment 2.7B
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Plan for Success
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Managing for Results

• Roles and responsibilities
• Strategic focus
• Operations process
• Measurement and evaluation
• Compensation
• Communications

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Organizing for Transformation Management
Strategy, Architecture and Standards
Technology Deployment
IBM Global Services
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Business Process Executive

• Responsible for complete, end-to-end business
  process
• Manages development and deployment projects
• Owns worldwide budget
• Accountable for benefits realization

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Business Information Executive

• Responsible for the use of information within a
  business group
• Coordinates the deployment of processes within a
  business group
• Owns requirements integration and change
  management for the business group
• Accountable for business processes, IT
  investments, and end-user satisfaction with
  business processes

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Business Transformation CIO Office

• Responsible for leading e-business transformation
  through
• Global process strategies
• Global Web-enablement
• Global IT strategies and infrastructure
• Manages worldwide process and IT budgets
• Manages outsourcing relationship
• Aligns investments with corporate strategies
• Accountable for IBM'stransformation to an
  e-business

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Business Transformation Management Structure
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Operations Process

• Same process used for product development
• Based on cross functional teaming concepts
• Disciplined approach to project management

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Operations Process - Roll Call
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Measurement Evaluation
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Compensation

• Individual assessment
• Personal Business Commitments
• Annual performance evaluation
• Variable Pay impact

• Organization assessment
• Targets set annually
• Quarterly assessment - progress to target
• Final assessment influences compensation pool

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Communications

• IBM is the premier e-business
• Walks the talk
• Helps "me" work,
• sell, learn
• Easier to do business with
• Dynamic, innovative admired
• Close alignment with external strategy and
  campaign
• New focus on showcasing the IBM story

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Satisfaction Impact
2
2.2
2.4
Customer Satisfaction Score
Help Desk Effectiveness
2.6
2.8
3
Source 1998 Global IT End-User Survey
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Business-to-Business e-commerce Takes Off
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The Next Generation is the "Net Generation"
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A New Economic Age
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The e-business Cycle
Transform
Leverage
core business
knowledge and
processes
information
Build
Run
new
a scalable,
applications
available, safe
environment
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The e-business Cycle
Transform
Leverage
core business
knowledge and
processes
information
Build
Run
new
a scalable,
applications
available, safe
environment
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e-enabling the Core Processes
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The e-business Cycle
Transform
Leverage
core business
knowledge and
processes
information
Build
Run
new
a scalable,
applications
available, safe
environment
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IBM's e-business Environment
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The e-business Cycle
Transform
Leverage
core business
knowledge and
processes
information
Build
Run
new
a scalable,
applications
available, safe
environment
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e-commerce

• Extend business model on Internet
• Indirect direct
• Extranets Internet
• 35 fold revenue growth in 1998
• Easier to do business with

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e-procurement

• Reengineered internal procurement process
• Tools to reduce supplier prices/costs
• Strategic sourcing of services
• 600M in Web-based purchasing in December, 1998

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e-care for Customers

• Helping customers "help themselves"
• Self-service access to product support info,
  downloads
• 14M self-service transactions in 1998, saving
  300M
• 24-hour response
• on e-mail
• Higher customer satisfaction

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e-care for Business Partners

• Web-enablement of IBM Global PartnerInfo
• Integration of PartnerInfo with PartnerCommerce
• Rapid response
• Online financing
• Online marketing support
• Higher Business Partner satisfaction

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e-care for Influencers

• Web delivery of information to key influencers
• Enhance external access to IBM website
• Improved ease of use

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e-care for Employees

• Distance learning knowledge management
• 30 of internal education in 1999 via distance
  learning
• Notes, intellectual capital management
• IBM MyNews

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Lessons from IBM's Transformation

• Maintain top-level commitment and involvement
• Align management systems to match transformation
  progress
• Start small . . . expand rapidly
• Focus on core capabilities . . . outsource others
• Don't underestimate the need for and the power of
  communications

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• John Bendas
• bendasj_at_us.ibm.com