Enterprise Productivity Initiatives Charts (pdf, 0.5 MB)

Enterprise Productivity Initiatives
Linda Sanford
Senior Vice President
Enterprise Transformation
Enterprise Productivity Initiatives
ƒ Progress to date - $4.7B
– $4.2B spending reduction in the Shared Services over past four years
– $500M in process transformation in 2009
– Shifted emphasis to value delivered
ƒ Next generation transformation
–
–
–
–
$8B in productivity benefits over next 5 years
Shared Services
End-to-End Process Transformation
Integrated Operations
ƒ New capabilities and technologies drive performance
– Business Analytics and Optimization
– Cloud Computing
Transformation Maturation
The “Smarter” phase of our transformation is beginning
2002
Sharing & partnering
2006
Globally integrating
ƒ Consistent set of
processes worldwide
2010
Making things smarter
ƒ Leverage best practices
ƒ Standardize and reduce
waste
ƒ Right skills, right
place, right cost
ƒ Governance and
performance discipline
ƒ Rationalize support
functions for greater
efficiency
ƒ Radically simplify
processes
ƒ Instrumented, interconnected,
intelligent
ƒ Enable growth and productivity
ƒ Optimize the whole system
Progress to Date
Shared Services Spend ($B)
20
16.3
15
14.8
13.8
13.3
Productivity improvements of
$4.7B have been achieved over
the last 4 years
12.1
10
ƒ $4.2B spending reduction
in Shared Services from
2005 through 2009
5
0
2005
2.0
2006
2007
2008
2009
YtY Shared Services Savings and
Process-Related Productivity ($B)
$4.7B
1.5
0.5
$0.5B
1.2
$4.2B
ƒ $500M productivity
improvement in end-to-end
process transformation
1.0
1.5
0.5
1.0
0.5
0.0
2006
2007
2008
2009
Shared Services
Process Redesign
Operating Leverage
$78B
Applying transformation principles to all of IBM’s spending
to drive $8B in productivity benefits over the next 5 years
Shared
Services
$2.4B
End-to-End
Process
Transformation
$2.5B
$16B
$12B
Integrated Operations
$3.1B
2005
2009
Shared Service
Spending
2009
Total Cost
and Expense
ƒ Continuous improvement
ƒ Radical simplification
ƒ Integrate operations across units
Shared Services Continuous Improvement
Continuous improvement driven by optimization
and innovation will yield $2.4B in savings through 2015
ƒ Focus on high-value advisory
activities
Efficiency
Globally
integrating
Effectiveness
Growth
Making
things
smarter
Greatness
ƒ Locate work to where it can
best be performed
ƒ Leverage business analytics
ƒ Radically simplify
Information
Technology
Global Sales
Operations
Integrated Supply
Chain
Finance
Human Resources
Marketing &
Communications
Legal
Real Estate
Operations
Shared Services Continuous Improvement
Continuous improvement driven by optimization
and innovation will yield $2.4B in savings through 2015
ƒ Increase the financial planning work performed
in Centers
ƒ Focus
on highof
value advisory
ExcellenceEfficiency
by 25%
activities
Making processes
ƒ IncreaseEffectiveness
the number of globalized
from 53%
ƒ Locate
worktoto80%
where it can
Globally
things
best be
performed
integrating
GrowthBuilding capabilities
ƒ Leverage Smarter
to reduce
energy
usage by 18%
smarter
from 2011 through 2015
ƒ Leverage business analytics
Greatness
ƒ Sunset 900 applications through enterprise-wide
SAP simplify
deployment
ƒ Radically
Information
Technology
Global Sales
Operations
Integrated Supply
Chain
Finance
Human Resources
Marketing &
Communications
Legal
Real Estate
Operations
Globally Integrated Support Processes
Continued focus on horizontal process transformation and radical
simplification will contribute $2.5B in productivity through 2015
Shared Shared Shared Shared Business Business Business Business
Service Service Service Service
Unit
Unit
Unit
Unit
Integrating Globally
Serving Local Client Needs
Hardware Product Management Transformation
Incentives
ƒ Achieve $250M in savings through 2015
ƒ Enable productivity by reducing product
portfolio and design complexity
ƒ Reduced feature and options by 35%
and systems portfolio by 40%
Order-to-Cash
Opportunity-to-Order
Service Labor Management Transformation
Service Product Management Transformation
Business Partner Enablement
ƒ Deliver $470M of benefit over the next
five years
ƒ Sales support tasks moved to Sales
Transaction Hub
ƒ Decrease seller time spent on pre-sales
support tasks from nearly 20% to 10%
Integrated Operations
Integrate related operations across all of IBM’s $78B
of spending to drive $3.1B in productivity through 2015
$78B
ƒ Draws on significant
synergies in our
worldwide process,
skills, and assets to
drive integration
ƒ Reduces complexity
through smarter
technology
ƒ Places greater
emphasis on moving
the right services
through the right
delivery channels
Call Centers
ƒ Deploy best practices across
centers for world-class operations
R&D
Sales
BU
Operations
Shared
Services
ƒ Optimize global capacity across 255
sites and 60k agents
Business Operations
ƒ Standardize to 6 roles across 4
business units
ƒ Increase leverage by shifting work
to MBPS
Client Centers
ƒ Build a network of centers that truly
look, sound, think and perform as
one, integrated IBM
Total Cost
and Expense
ƒ Unify IBM's 124 centers to respond to
shifts in client behavior
Business Analytics and Optimization (BAO)
The application of business analytics to enterprise
performance will allow better and faster business decisions
Enterprise Transformation
9. 6
13 .5
GF A/R + Others
A cqui siti on
Buyback
FCF (Ops)
X </= $4,386
5%
2.5
X </= $4,778
67%
4.4
(0. 1)
0.0
(0. 1)
Mean = $4,694M
1.4
(1 .5)
6. 2
2.0
(0. 1) (1.5)
Development
13%
2.9
(0 .5)
(0.7)
Sales
Management
21. 7
2 3%
0. 3
(0.6 )
0. 0
(0.6 )
12.3
Risk
Management
2.8
2.9
17.5
37 %
3.3
3. 5
0.3
Term Debt (New - Maturity)
4.3
2. 7
1 4.9
0.8
(2.8 )
0.2
(3.0 )
Change in CP Balance
GF A/R + Others
6. 8
2.3
13.7
42 %
1.0
12 .9
15
Dividend
TermDebt (New - Maturity)
(0.7)
Acquisition
2. 6
Buyback
FCF (Ops)
A cquisi tion
B uyback
GF A/R + Others
FCF (Ops)
TermDebt (New - Maturity)
Change in CPBalance
Dividend
GF A/R + Others
Term Debt (New - Maturity)
Di vidend
Acquisition
Buyback
7.6
12 .3
Di vidend
Core Debt
Net Income
Total Equity
Core Debt to Cap 49%
CP
0. 5
Available GCF
IB M C ash
Change in CP Balance
25
20
Change in CP Balance
Planning &
Forecasting
FCF (Ops)
HR Resource Manufacturing
Management
(1 .5)
(4.1)
1 .0
(5.1)
(0 .7)
(2.0)
(1.9 )
(0. 2) 1 2.0
0 .0
(1. 9)
(0.7)
(0 .0) (2.0)
0 .0
2
(0.3 )
10.0
$B
10. 0
10
5
4Q'08
1Q'0 5
2 Q'0 5 3 Q'0 5 4 Q'0 5
1Q '0 6
2 Q'0 6 3 Q'0 6 4 Q'0 6
1Q'0 7
2 Q'0 7 3 Q'0 7 4 Q'0 7
1Q '0 8
2 Q'0 8 3 Q '0 8 4 Q'0 8
1Q'09
2Q'09
3Q'09
4Q'09
Pension Equi ty Impact
1Q '0 9
ROA May 31 -$3.0B
51%
44%
V alu e s in 1 0^ -3
0
1 5%
2 8%
D ebt M atur ity P ro fi l e by Qu arter next 5 ye ars
40
60%
3,5 00
T e r m D e bt M a t ur it y
P ro fil e a s of M a y '0 9
2,90 0
3,0 00
2,5 00
2,0 00
35
40%
30%
20%
10%
5
0
0%
1Q'05 2Q'05 3Q'05 4Q'05 1Q'06 2Q'06 3Q'06 4Q'06 1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09
1 ,24 2
1,0 42
1,00 0 1,0 05
50%
Term Debt
1,0 00
5 10
500
5 00
6, 000
3 21
21
0
0
0
1
64
0
0
0
0
1 38
0
3Q 10 4Q 10 1 Q 11 2 Q 11 3Q 1 1 4Q 11 1 Q 12 2 Q 1 2 3 Q 1 2 4Q 1 2 1Q 1 3 2Q 13 3 Q 13 4 Q 1 3 1 Q 1 4 2Q 1 4 3 Q 14 4Q 14 1Q 15 2Q 15
5, 000
4, 000
$Mi llio n
Bank Debt
Average % (CP+Bank Debt):~25%
% Of Debt In CP & Bank Debt
15
10
CP Plus Bank Debt / Total Debt (%)
Debt ($B)
1 ,47 0
1,5 00
CP
30
25
20
U SD
U SD IGC
E UR
JPY
C HF
3, 000
2, 000
1, 000
20 09
C u rre nc y
U SD
US D IG C
EU R
JP Y
C HF
T o tal
20 09
6 51
4, 53 1
0
0
0
5, 18 2
20 10
2 010
33
0
1 ,3 84
51 0
0
1 ,9 27
201 1
201 1
1, 67 5
0
830
0
321
2, 82 6
2012
20 12
1 ,4 00
1 ,5 00
0
0
0
2 ,9 00
2013
2 01 3
2, 003
0
0
5 10
0
2, 513
2014
20 14
0
64
1 ,03 8
204
0
1 ,30 6
20 15
2 015
0
0
0
0
13 8
13 8
2 01 6
201 6
0
0
0
0
0
0
2017
20 17
3 ,0 00
0
0
0
0
3 ,0 00
2018
2 018
1,6 00
0
0
0
0
1,6 00
2019
20 19
7 50
0
0
0
0
7 50
20 20
2 020
0
0
0
0
0
0
202 1
202 1
0
0
0
0
0
0
20 22
20 22
0
0
0
0
0
0
2023
2 023
0
0
0
0
0
0
2024
202 4
0
0
0
0
0
0
LIQUIDITY ANALYSIS / CASH - DEBT < 3 MONTHS
Total Debt
$35
T o tal
15 , 093
6, 095
3, 252
1, 225
4 58
26 , 123
0.5
June 4, 2009
$20
3%
$15
$10
1Q08
Actual
2Q08
3Q08
7.3
1.5
2.0
7.0
1.2
2.0
10.6
1.0
2.3
12.9
0.6
2.7
8.7
0.7
2.7
6.2
1.1
2.6
6.8
0.1
2.9
8.0
1.7
3.2
8.2
1.1
2.9
7.3
1.6
3.1
5.3
1.7
3.0
6.0
1.0
3.0
10. 8
10. 2
13.8
16.1
12.0
9.8
9.8
12.9
12.3
12.0
10.0
10.0
2.7
3.1
3.4
4.6
0.4
2.3
1.4
2.0
1.8
1.2
0.2
1.7
0.8
4.8
1.6
3.4
0.3
1.5
2.2
0.3
1.6
1Q07
Actual
2Q07 3Q07
4Q07
Actual
4Q08
Actual
1Q09
2Q09
Projected
3Q09 4Q09
Cash
5%
4%
Percentage (%)
Total Debt ($B)
($B)
Intere st Expense as a % (QoQ)
3M Li bor (Q oQ)
$30
$25
1
>202 4
>20 24
3 ,9 82
0
0
0
0
3 ,9 82
6%
$40
1.5
0
US
TC + IIG
Others Countries
Total WW Cash
Debt < 3 Months
US
TC + IIG
Others Countries
Total WW Debt
5.7
0.0
2.7
8. 3
4.9
0.0
2.2
7. 1
2.9
2.0
2.4
3.9
2.8
2.3
2.9
2.6
2.2
7.3
9.0
9.1
7.3
7.7
5.2
3.2
7.2
5.2
4.1
US
TC + IIG
1.6
1.5
2.1
1.2
7.6
(1.0)
8.9
(2.2)
6.0
(2.4)
1.6
0.8
3.8
(2.5)
6.6
(0.3)
7.0
0.9
6.5
(3.2)
1.9
1.4
3.8
0.7
Others Countries
(0.6)
(0.2)
(0.2)
0.4
(0.6)
0.2
0.7
1.4
1.2
1.5
1.5
1.4
2. 5
3. 1
6.5
7.1
2.9
2.6
2.1
7.7
9.1
4.8
4.8
5.9
0
2%
1%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2001
Matching engine
aligns staff to
open project
positions
Real-time data
analysis
identifies
defects and
improves yields
4.2
Liquidity < 3 Months
$5
$0
2002
2003
2004
2005
2006
2007
2008
2009
World wide
Pipeline
analysis helps
predict and
optimize
performance
4.45
4.7
4.95
5.2
Revenue ($B)
Linkage and
analysis across
data sources
enables
compliance and
lowers risk
Deployment of
sellers to best
opportunities
improved
through
optimization
Simulation of
future
investment
performance
enables higher
portfolio returns
Business Analytics and Optimization (BAO)
The application of business analytics to enterprise
performance will allow better and faster business decisions
Enterprise Transformation
HR
Risk
Planning
HR Resource
Resource Manufacturing
Risk
Planning &
&
Manufacturing
Resource
Analytics
Hub
Management
Management
Forecasting
Management
Management
Forecasting
Sales
Sales
Management
Management
GF A/R + Others
A cqui siti on
Buyback
FCF (Ops)
13%
2.9
2.0
(0. 1) (1.5)
(0. 1)
0.0
(0. 1)
X </= $4,778
67%
Mean = $4,694M
1.4
(1 .5)
6. 2
(0 .5)
(0.7)
X </= $4,386
5%
4.4
21. 7
2 3%
0. 3
(0.6 )
0. 0
(0.6 )
12.3
2.5
2.8
2.9
17.5
37 %
3.3
3. 5
0.3
Term Debt (New - Maturity)
4.3
2. 7
1 4.9
0.8
(2.8 )
0.2
(3.0 )
Change in CP Balance
GF A/R + Others
6. 8
2.3
13.7
42 %
1.0
12 .9
15
Dividend
TermDebt (New - Maturity)
(0.7)
Acquisition
2. 6
Buyback
FCF (Ops)
A cquisi tion
B uyback
GF A/R + Others
FCF (Ops)
TermDebt (New - Maturity)
Change in CPBalance
Dividend
GF A/R + Others
Term Debt (New - Maturity)
Di vidend
Acquisition
Change in CP Balance
7.6
12 .3
Di vidend
9. 6
13 .5
Core Debt to Cap 49%
CP
0. 5
Available GCF
IB M C ash
Change in CP Balance
Core Debt
Net Income
Total Equity
Buyback
FCF (Ops)
ƒ Integrated, granular view of resource data to
support fact-based decisions
25
20
Development
Development
(1 .5)
(4.1)
1 .0
(5.1)
(0 .7)
(2.0)
(1.9 )
(0. 2) 1 2.0
0 .0
(1. 9)
(0.7)
(0 .0) (2.0)
0 .0
2
(0.3 )
10.0
$B
10. 0
10
5
4Q'08
1Q'09
2Q'09
3Q'09
4Q'09
Pension Equi ty Impact
1Q'05 2Q'05 3Q'05 4Q'05 1Q '06 2Q'06 3Q'06 4Q'06 1Q'07 2Q'07 3Q'07 4Q'07 1Q '08 2Q'08 3Q '08 4Q'08 1Q '09
ROA May 31 -$3.0B
51%
44%
1 5%
2 8%
D ebt M atur ity P ro fi l e by Qu arter next 5 ye ars
60%
3,5 00
T e r m D e bt M a t ur it y
P ro fil e a s of M a y '0 9
2,90 0
3,0 00
2,5 00
2,0 00
40%
30%
20%
10%
5
0
0%
1Q'05 2Q'05 3Q'05 4Q'05 1Q'06 2Q'06 3Q'06 4Q'06 1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09
1 ,24 2
1,0 42
1,00 0 1,0 05
50%
Term Debt
1,0 00
5 10
500
5 00
6, 000
3 21
21
0
0
0
1
64
0
0
0
0
1 38
0
3Q 10 4Q 10 1 Q 11 2 Q 11 3Q 1 1 4Q 11 1 Q 12 2 Q 1 2 3 Q 1 2 4Q 1 2 1Q 1 3 2Q 13 3 Q 13 4 Q 1 3 1 Q 1 4 2Q 1 4 3 Q 14 4Q 14 1Q 15 2Q 15
5, 000
4, 000
$Mi llio n
Bank Debt
Average % (CP+Bank Debt):~25%
% Of Debt In CP & Bank Debt
15
10
CP Plus Bank Debt / Total Debt (%)
Debt ($B)
1 ,47 0
1,5 00
CP
30
25
20
U SD
U SD IGC
E UR
JPY
C HF
3, 000
2, 000
1, 000
20 09
C u rre nc y
U SD
US D IG C
EU R
JP Y
C HF
T o tal
20 09
6 51
4, 53 1
0
0
0
5, 18 2
20 10
2 010
33
0
1 ,3 84
51 0
0
1 ,9 27
201 1
201 1
1, 67 5
0
830
0
321
2, 82 6
2012
20 12
1 ,4 00
1 ,5 00
0
0
0
2 ,9 00
2013
2 01 3
2, 003
0
0
5 10
0
2, 513
2014
20 14
0
64
1 ,03 8
204
0
1 ,30 6
20 15
2 015
0
0
0
0
13 8
13 8
2 01 6
201 6
0
0
0
0
0
0
2017
20 17
3 ,0 00
0
0
0
0
3 ,0 00
2018
2 018
1,6 00
0
0
0
0
1,6 00
2019
20 19
7 50
0
0
0
0
7 50
20 20
2 020
0
0
0
0
0
0
202 1
202 1
0
0
0
0
0
0
20 22
20 22
0
0
0
0
0
0
2023
2 023
0
0
0
0
0
0
2024
202 4
0
0
0
0
0
0
LIQUIDITY ANALYSIS / CASH - DEBT < 3 MONTHS
Total Debt
$35
$20
3%
$15
$10
1
>202 4
>20 24
3 ,9 82
0
0
0
0
3 ,9 82
T o tal
15 , 093
6, 095
3, 252
1, 225
4 58
26 , 123
June 4, 2009
1Q08
Actual
2Q08
3Q08
7.3
1.5
2.0
7.0
1.2
2.0
10.6
1.0
2.3
12.9
0.6
2.7
8.7
0.7
2.7
6.2
1.1
2.6
6.8
0.1
2.9
8.0
1.7
3.2
8.2
1.1
2.9
7.3
1.6
3.1
5.3
1.7
3.0
6.0
1.0
3.0
10. 8
10. 2
13.8
16.1
12.0
9.8
9.8
12.9
12.3
12.0
10.0
10.0
2.7
3.1
3.4
4.6
0.4
2.3
1.4
2.0
1.8
1.2
0.2
1.7
0.8
4.8
1.6
3.4
0.3
1.5
2.2
0.3
1.6
1Q07
Actual
2Q07 3Q07
4Q07
Actual
4Q08
Actual
1Q09
2Q09
0.5
Projected
3Q09 4Q09
Cash
5%
4%
Percentage (%)
Total Debt ($B)
($B)
Intere st Expense as a % (QoQ)
3M Li bor (Q oQ)
$30
$25
1.5
0
6%
$40
V alu e s in 1 0^ -3
0
40
35
US
TC + IIG
Others Countries
Total WW Cash
Debt < 3 Months
US
TC + IIG
Others Countries
Total WW Debt
5.7
0.0
2.7
8. 3
4.9
0.0
2.2
7. 1
2.9
2.0
2.4
3.9
2.8
2.3
2.9
2.6
2.2
7.3
9.0
9.1
7.3
7.7
5.2
3.2
7.2
5.2
4.1
US
TC + IIG
1.6
1.5
2.1
1.2
7.6
(1.0)
8.9
(2.2)
6.0
(2.4)
1.6
0.8
3.8
(2.5)
6.6
(0.3)
7.0
0.9
6.5
(3.2)
1.9
1.4
3.8
0.7
Others Countries
(0.6)
(0.2)
(0.2)
0.4
(0.6)
0.2
0.7
1.4
1.2
1.5
1.5
1.4
2. 5
3. 1
6.5
7.1
2.9
2.6
2.1
7.7
9.1
4.8
4.8
5.9
0
2%
Liquidity < 3 Months
$5
$0
1%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2001
Matching engine
aligns staff to
open project
positions
2002
2003
2004
2005
2006
2007
2008
2009
World wide
4.2
ƒ Increased GBS utilization by 18% over the last 4
4.45
4.7
4.95
5.2
Revenue ($B)
Real-time data
Linkage and
Simulation of
Pipeline
Deployment of
years
through
a
global
alignment
of
resource
analysis
analysis across
future
analysis helps
sellers to best
supply
and
demand
identifies
data sources
investment
predict and
opportunities
defects and
enables
performance
optimize
improved
ƒ
Improved
project-based
PTI
performance
improves yields
performance
compliance and
enables higher
through
lowers risk
optimization
portfolio returns
Cloud
IBM’s internal Cloud implementation moves resources to more
cost effective platforms while enhancing the work environment
Analytics
Collaboration Development
and Test
Blue Insight
LotusLive
109,000 users
growing to
200,000
75% of all
web
conferencing
CIO Dev/Test
Cloud
Desktop
Storage
Business
Services
Workplace
Cloud
Network
Storage Cloud
Production
Cloud
Up to 40%
savings in
storage costs
1,000
applications
identified
1200 users in
Time to build a
development & China Dev Lab,
pilots with
test environment
another 1000
from 1 week to
1-2 hours
users in
process
Enterprise Productivity Initiatives Summary
$78B
$16B
$12B
2005
2009
2009
Shared Service
Total Cost
Spending
and Expense
Shared
Services
$2.4B
End-to-end
Process
Transformation
$2.5B
Integrated
Operations
$3.1B
ƒ Apply the proven principles of the
Globally Integrated Enterprise to all of
IBM’s spending
ƒ Beginning the Smarter phase of our
transformation -- uses a rich, new set
of technologies and capabilities to
reduce spending, improve productivity
and enable revenue growth
ƒ Already achieved $4.7B of productivity
improvements over the last 4 years
ƒ Confident in ability to further improve
productivity by $8B from 2011 through
2015
Certain comments made in the presentation may be characterized as forward looking under
the Private Securities Litigation Reform Act of 1995. Those statements involve a number of
factors that could cause actual results to differ materially. Additional information concerning
these factors is contained in the Company's filings with the SEC. Copies are available from
the SEC, from the IBM web site, or from IBM Investor Relations. Any forward-looking
statement made during this event or in these presentation materials speaks only as of the
date on which it is made. The Company assumes no obligation to update or revise any
forward-looking statements.
These charts and the associated remarks and comments are integrally related, and are
intended to be presented and understood together.
In an effort to provide additional and useful information regarding the Company’s financial
results and other financial information as determined by generally accepted accounting
principles (GAAP), certain materials presented during this event include non-GAAP
information. The rationale for management’s use of this non-GAAP information, the
reconciliation of that information to GAAP, and other related information is included in
supplementary materials entitled “Non-GAAP Supplementary Materials” that are posted on
the Company’s investor relations web site at
http://www.ibm.com/investor/events/investor0510/. The Non-GAAP Supplementary
Materials are also included as Attachment II to the Company’s Form 8-K dated May 12,
2010.
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