Srikrishna Jammi Venkata Aka. JV: Global Strategic Management SU ID: 389561872

Srikrishna Jammi Venkata aka.
JV
Global Strategic Management
SU ID: 389561872
Creating and Sustaining Competitive Advantage: Infosys and IBM 2
Prepared by
Srikrishna J.Venkata
SU ID: 389561872
BUA 690
For
Dr. Dennis Gillen
Chair of Management Department
Syracuse University
12/02/08
TABLE OF CONTENTS
Executive Summary ........................................................................................................................... 5
Introduction............................................................................................................................................ 6
Section 1 .................................................................................................................................................. 7
Innovating with Business Models ........................................................................................... 7
Section 2 .................................................................................................................................................. 8
The Indian IT Industry .................................................................................................................. 8
Infosys Technologies Ltd. ........................................................................................................ 10
Global Delivery Model (GDM) .......................................................................................................... 13
Internationalization ............................................................................................................................. 16
Organization Structure ........................................................................................................................ 18
The Knowledge “Supply Chain” at Infosys ........................................................................................ 20
Section 3 ................................................................................................................................................ 26
International Business Machines Corporation (IBM) ................................................. 26
Integrated Supply Chain (ISC) ............................................................................................................ 30
Research and Development ................................................................................................................. 37
On-Demand Innovation Services ........................................................................................................ 41
Acquisition Strategy............................................................................................................................ 41
Section 4 ................................................................................................................................................ 43
Conclusion ........................................................................................................................................ 43
Appendix 1 – Indian IT Industry ...................................................................................................... 45
Appendix 2 – Infosys Timeline ........................................................................................................ 46
Appendix 3 – Infosys’ service lines.................................................................................................. 47
Appendix 4 – GDM Value Chain ..................................................................................................... 48
Appendix 5 – Infosys Structure ........................................................................................................ 48
Appendix 6 – Reasons for a front-back structure ............................................................................. 49
Appendix 7 – IBM’s Business Lines ................................................................................................ 49
Appendix 8 – ISC Value Chain ........................................................................................................ 52
Appendix 9 – Metrics used by the ISC ............................................................................................. 53
Appendix 10 – IT planning at the ISC ............................................................................................. 54
Appendix 11 – IBM’s portfolio of projects ..................................................................................... 55
Appendix 12 – IBM’s IT & BTMS.................................................................................................. 55
Appendix 13 – IBM’s revenue drivers before and after ISC ........................................................... 56
References............................................................................................................................................ 57
Executive Summary
T he global IT industry has been shrinking due to increased connectivity over the past
decade and this has led companies to constantly innovate through their business models to
maintain revenues and retain customers. Infosys and IBM are two examples of companies that
have innovated disruptively to maintain their edge.
Infosys has used the Global Delivery Model to great effect in keeping projects on schedule and
reducing the time taken for a project. Employees across the globe interact with each other
constantly and the project is continually worked upon by personnel across the globe across
various time-zones. This reduces the project duration and enhances client satisfaction. Also the
company’s Knowledge Management system has allowed it to share and transfer best practices in
order to avoid re-inventing the wheel for future projects.
IBM, looking to capitalize on its capabilities, has integrated all its activities into one supply
chain in order to provide the client with a single packaged solution instead of multiple supply
chains to deal with. The client-facing functions are grouped together under one reporting line in
order to reduce costs and increase productivity. Also the company’s network of R&D labs allows
it to remain constantly in touch with the client and deliver solutions that are tailored to the
client’s needs.
Both these companies have realigned their communication channels to better serve the client.
They have opted to optimize the usage of their current resources and capabilities rather than
invest in new ones.

Introduction
M ost children have been told the fable of David and Goliath. The fantasy of the meek
standing up to the mighty and challenging status quo has been morphed, interpreted
and applied in many different contexts. The global Information Technology (IT) scene is no
different. In today’s global competitive environment, companies often find themselves in a
position wherein they are competing not only with their local rivals but also with international
players who are entering into the local market. To meet and beat such competition, globally-
recognized capabilities would have to be developed in order to tap into resources available across
the globe. To examine how an Indian start-up grew, gained a sustainable competitive advantage
and carved a niche for itself in the global IT scene, I have focused on Infosys Technologies Ltd.
(Infosys). This is an Indian IT company that was founded in 1981 with a capital of just $2501 and
grew to become a $4bn company in 20072.
Also to identify strategies for effective transfer of competitive advantage across verticals, I have
chosen IBM as an ideal example. IBM, which in the 80’s and 90’s was a computer manufacturer
then shifted to the services industry through the consulting field. IBM has, over the years, been
able to transfer capabilities and brand equity across business functions very effectively.
Both these companies have been successful in protecting their respective competitive advantage
and have shown signs of constant evolution. “Change” is used to describe a process done
differently or an offering that has been altered. “Evolution” is how these companies shifted
across business models while sticking to their core competency.

Section 1
Innovating with Business Models3
A
majority of the executives surveyed by EIU say that in the near future companies would
have to innovate in terms of delivery and not only in terms of the service or product to
increase revenues. The Internet has played a major role in removing links in the supply chain and
this has caused a large number of companies to look towards alliances and partnerships to
optimize their delivery channels. Fareed Zakaria in his book “The Post American World” says
that the BRIC* countries are emerging fast as global players given their low-cost and high-
quality human capital. These countries, in my opinion, are slowly moving from providing
services that are supplementary, to those that are complementary and finally could possibly act
as substitutes. The IT industry is a typical example of this.
One of the IT industry’s main competitive challenges is to constantly capture, communicate and
analyze information that pertains to client behavior. This is done to anticipate the demand that
can be expected. Infosys and IBM have both changed their business models in order to be more
flexible and responsive to changes on the demand side.
IBM especially has changed its business model to deepen ties with its existing customers by
increasing its focus on adding value to the client. The emergence of the Indian IT firms has
neutralized the West’s advantage in labor quality and now the competition lies in business model
innovation rather than on the actual service itself.
*
Brazil, Russia, India and China
Section 2
The Indian IT Industry
A
ccording to a Gartner research study on countries that lead business-process-outsourcing
services, India has been ranked on top ahead of 30 countries on various criteria like
language, government support, labor pool, infrastructure, educational system, cost, political and
economic environment, cultural compatibility, global and legal maturity, and data and
intellectual property, security and privacy4.
According to the Indian organization, National Association of Software and Service Companies
(Nasscom), the revenue of the IT sector has risen from 1.2% of the GDP in FY 1998 to 5.5% of
the GDP in FY 20085. The industry has boasted a phenomenal growth rate of 30% per year over
the last ten years6. This growth rate has mostly been facilitated by the increasing cost of labor in
the Western countries and the emergence of highly capable IT companies in India including
Infosys, TCS and Wipro. The Indian Government expects the exports turnover to touch $80bn by
2011, maintaining the growth rate of 30%7.
One of the major innovations of the Indian IT industry has been to base methodologies used in
the service industry on those used in the manufacturing industry8. The establishing of a credible
human supply-chain has been attributed to this effect9. Also India is a country that places a
strong emphasis on education and the idea of continuous learning. Today, the Indian firms
outnumber the US firms in terms of meeting internationally acceptable service standards 10. This
is because Indian firms have to be better than the Western firms to win business, says Girish
Paranjpe, the head of Wipro’s outsourcing arm11.

The Indian IT industry also holds a lot of promise for foreign companies to make direct
investments. For instance Capgemini, Europe’s largest consulting and computer services firm is
gradually moving its internal support services to India, Intel is looking to invest $1bn to partner
with domestic and other international firms to product light weight laptops and Yahoo Inc! is
partnering with an Indian conglomerate to produce the fourth fast supercomputer in the world12.
Figure 1
Referring to Fig.113, it can be seen that India is perfectly positioned to capitalize on the trend of
the global outsourcing phenomenon. India’s most valuable resource is, arguably, its skilled work
force. India has the second largest pool of English-speaking science professionals in the world,
second only to the US14. It is estimated that India has over 4 million technical professionals and
1,832 educational institutions that can train an additional software professionals every year15.
As can be noticed from Appendix 1, a large number of professionals from other disciplines enter
the IT industry each year. The Western firms pay in dollars while the Indian professionals are
paid in Rupees. The then outgoing Nasscom president, Kiran Karnik, termed it a “low risk, high
margin” business model. Companies are bolstering their employee headcount, with less emphasis
on productivity, as a direct result of the belief that increasing headcount is positively correlated
with increased revenues16.
Infosys Technologies Ltd.
“Who else has such a global supply chain today? Of course: Al Qaeda.
Indeed, these are the two basic responses to globalization: Infosys and Al
Qaeda.” – New York Times, Origin of Species, March 24th 2004
I nfosys was founded in 1981 by seven software engineers (Refer Appendix 2). It established
its first office in the US in 1987. In the 90’s, its principle source of revenue was customized
software development and dedicated offshore development centers. In the mid 1990’s the
company had grown fast enough to draw a sizeable portion of its revenue from fixed-price and
fixed time-frame projects17.
The company went public in 1993 and began to establish development centers across India in
1995. From then on the company began to internationalize further and opened offices in various
locations including Netherlands and Singapore18. In 2002, the company promoted Progeon, a
business process management venture. Infosys held a majority stake in Progeon and attracted a
$20 MM investment from Citigroup Investments19. Progeon has for long been an important cog
in the Infosys wheel. For instance British Telecom, one of the world’s leading providers of
telecommunication services, chose Progeon as its preferred supplier to avail Business-Process-

Outsourcing (BPO) services from in India20. In 2006, Infosys purchased Citi’s stake (23%) in
Progeon in an all-cash deal amounting to $115.3 MM21.
In 2004, Infosys continued its global expansion strategy and established “Infosys Consulting”
(ICI) as a wholly owned subsidiary in Texas, USA. Infosys began to focus on consulting services
as a significant revenue stream and added this vertical to its global delivery model to ensure the
presence of “high-end consulting capabilities”22 (Refer Appendix 3 for service lines)
Infosys intends to build its business and improve its revenue stream through scalability – the
process of altering an innovation, designed for one context, to be applicable in different scenarios
and functions. The company has narrowed down its priorities and has designed a “six-pronged
differentiation strategy” to grow23:
Combine
business
processes
Combine
technology
and Experiment
transactions with GDM*
into one
service
Growth
Optimizing
alliances Promote a
with new model
technology for sourcing
companies
Apply
GDM*
across
verticals
Figure 2 *Global Delivery Model

To ensure the continued success of “scaling up”24, Infosys has to encourage its employees to
maintain a mindset to challenge routine processes and keep experimenting with practices to
deliver services effectively.
"We see ourselves as people who are leading the change of an entire
industry," Infosys Chief Executive Nandan Nilekani said. "We have
invented a new business model. People have to respond to this now.”25-
John Boudreau, Mercury News, Part III: Infosys believes its new model for
global business, 12/5/06
The above statement by Mr. Nandan
Nilekani, the Co-Chairman of Infosys,
further emphasizes the importance
placed by the company on constant
innovation and change. The top
management of Infosys makes sure
that it is involved in the ideation
process amongst the workforce. Each
year, a group of nine top-performing
individuals are selected to participate
in the eight yearly top management
council meetings to present and
promote their ideas26. Employees are

Figure 3
also given the tools to innovate.
Technical employees are given access to a variety of training programs and are required to obtain
certifications if they wish to climb the corporate ladder27. Managers, on the other hand, are
required to put forth a minimum of two innovations a year if they wish to maintain the size of
their departmental budget28. But Infosys, with its 90,000+ employees (Refer Figure 329), has to
have an efficient system to ensure that these innovations or best practices are administered
throughout the organization. The company does so through its effective Knowledge Management
(KM) system that forms a part of its famed Global Delivery Model.
Global Delivery Model (GDM)
“The future of outsourcing is to take the work from any part of the world
and do it in any part of the world.”30 - Ashok Vemuri, senior vice president,
Infosys.
major factor in Infosys’ operational excellence has been the successful implementation
A of the Global Delivery Model. To understand this model at a high level, the company
initiates a project, breaks it down into manageable modules and assigns different modules to
development center across the world31. This model has a reasonably scalable infrastructure and
hands the company that ability to execute projects at simultaneously at client sites and at
development centers during every hour of the day. This optimizes the cost structure by giving the
management enough leeway and flexibility to assign modules to centers where they can be
completed with highest quality and low cost32.
Referring to Figure 2, applying the GDM across different verticals is one of Infosys’
differentiation strategies. The consulting function for instance applies the GDM in 1:1:3 ratios
for optimizing time and cost33. In this setup, for every consultant from Infosys Consulting (ICI)
who is working for a client onsite, an additional resource from Infosys Technologies would be
provided onsite and three dedicated resources would support these two personnel from an
offshore development center34. This means that ICI could move up to 60% of the work required
for a particular consulting assignment to an offshore center as opposed to 20% that is currently
being achieved by the top consulting firms35. If successful, this model could save the clients up
to 40% of their existing costs36.
The cost structure of Infosys is very flexible in that 30% of the offshore costs are variable. If the
number of assignments, onsite, requires fewer dedicated resources then the employees are
allowed to shift back to India. Currently Infosys has about 20,000 employees, onsite and of these
5,500 are permanently stationed at their offices. Therefore the company has 14,500 people who
can return to India if the situation calls for it. The 30% of the offshore salaries that is variable
accounts for around 15% of the total revenues. This gives the company a certain amount of
flexibility to work with if revenues are on a downward trend37.
Referring to Table 138, the activities that are carried out on the client side are the actual design of
the solution. For example, the onsite resources, the consultant and the developer, meet the client
and design an initial prototype of the proposed solution during the day. During the night this data
At client site At global development centers
Project activities Project activities

Analysis and planning Project management
High-level design Detailed design
User interface design Coding
Project coordination Testing
Onsite Testing Documentation
Implementation
Post-implementation support Post-implementation support
Rapid reaction support Bug fixes
Warranty support
Maintenance
Table 1
is provided to the offshore development teams that produce a rudimentary output of the design
(Refer Appendix 4). This is again provided to the client by the onsite resources during the day.
This way the time taken to complete the project is kept at a bare minimum. As a result over 93%
of the projects are delivered on time as opposed to the industry average of 30% 39 and the
employee utilization rate is up to 74.3% which could increase up to 80% when the training cycle
for new employees is complete40. This business model is similar to the “smiley curve”41 that is
mentioned by Fareed Zakaria in his book “The Post-American World”. Zakaria talks about the
curve of the smile on the smiley cartoon.
Onsite Onsite
operations operations
Offsite operations
Figure 4
According to him, the beginning of the smile (the top left of the curve in Figure 4) represents the
idea generation and high level design that is done when a project is started. In this context it is
the actual design of the solution. Zakaria says that these activities are carried out by the
American (or any other western) company itself on its premises as they involve intellectual
capital. Infosys in this case applies the same model but within its own service line. Slowly the
curve dips down and at the bottom of the curve come the countries like India and China (offshore
development centers in this case) that execute various outsourced activities like manufacturing,
coding, testing, development and assembly. Then as the curve begins to rise again to complete
the “smile”, the processes related to distribution, marketing, retail sales and service contracts42
are again handled by the American firm. With Infosys, these are activities like implementation
and final presentations to the client. The stakes and scope for differentiation strategies are
highest at the beginning and end of the “smile” and cost-cutting measures are take precedence
for activities at the bottom of the curve.
Internationalization
Jay R.Galbraith in his book “Designing the Global Corporation” talks about the levels of
internationalization of a firm. He says that there are five possible levels into which a firm could
be placed when expanding into a foreign market.
Level Role of Advantages

Mode Organizational capabilities
subsidiary transferred
I Seller Export All types from home  Intl. product development
country  Intl. brand management
II Local Partnerships Resource advantages  Same as above +
Partner of partner  International partnering
III Start-up Foreign Firm-specific  Same as above +
Operations advantages  Home country resource advantages
IV Implementer Foreign Firm-specific  Same as above +
Operations advantages  Cross-unit integration
Contributor Foreign Firm-specific  Same as above +
V
/ Leader Operations advantages  Mgmt. of distributed headquarters
Table 2
Referring to Table 243, different capabilities (highlighted in yellow) have to be acquired to
successfully establish a company in the next level. Galbraith says that a typical Level III firm is
“a national company with an international, or geographical, division”44 while a Level IV firm is
one that has acquired the capabilities to give more responsibility to the subsidiaries. Coordination
amongst the subsidiaries to form a multidimensional network is the core activity performed at
this level and the central role of this network is to implement strategies decided upon in the home
country. Managerial skills have to be developed to ensure that these cross-border subsidiaries are
in sync with each other. This is an aspect that Infosys has pioneered in order to be effective with
the GDM. Infosys, though it has a majority of its assets in its home country, operates with the
capabilities of a Level IV organization. It routinely breaks down projects and assigns it to
different units across the globe to achieve a 24X7 support system. This way various units have to
be in contact with each other to receive/provide updates on the stages of the particular project.
To achieve a sustainable competitive advantage, Infosys is currently working towards becoming
a Level V organization through its efforts in training executives to become increasingly aware of
culture differences. In short, the company is training people to lead across borders45. West-
trained executives from around the world are often brought to India to learn the corporate culture
and then are deployed back to the offshore development centers. This is because these executives
allow the company to enjoy a significant degree of competitiveness and flexibility in terms of
human capital management.
The key role, according to Nandan Nilekani, that these executives face is to design and
implement a scalable business model that can work across different geographic locations.
Finally, he says that they would have to work with teams from those particular countries to
actually implement these models. This hands a certain degree of authority to the country units in
deciding their model of operation.

Organization Structure
I
nfosys has opted to change its organization structure in order to be more flexible in meeting
both customer demands and competition. A high level depiction of a portion of the
reorganized structure is depicted in Figure 546
(For a more detailed diagram, refer Appendix

CEO
5). Infosys has realigned its business units to
COO CFO
broaden its customer base and strengthen its
current portfolio through scale benefits47. Six
Industry Business Units (IBU’s) were formed
and are colored green in the figure.
Additionally, there were two IBU’s that were
primarily concentrated on geographic
locations like the India business unit and
New Growth Engines. Represented in the IBU HBU Client
blue color are the Horizontal Business Units Figure 5
(HBU’s) that included the service lines like Infrastructure Management services and Systems
Integration.
The company has restructured its sales, marketing and business development units to have an
increased focus on specific countries and industries. This enables it to customize service
offerings to client needs48. Galbraith says that such a type of organization structure in which
there exists a seemingly dual structure, in which both halves are multifunctional units, is called a
Front-Back structure49. One half is organized around the customer and can be focused either on a
country unit or on an industry. Infosys’ structure is similar to that adopted by Citibank50. Six of
the eight front half units are structured around an industry while the other two are focused on
countries. One of the two country units focuses primarily on India and the other looks to expand
in various markets including Canada, South America and Australia51. The European business has
been split amongst the various industry verticals52. The back half, meanwhile, is organized
around the service lines and caters to the customer units while it achieves global economies of
scale53. Various consulting and solution provider groups have been structured to liaise and serve
the entire customer base54.
The front-back model often segregates the flow of operations in such a way that there is a clear
separation in the value chain (Refer Appendix 4). The value chain for the GDM highlights that
the front end interacts with the customer and is more designed to be sensitive to customers’
needs. But in the offshore development center, the back end is more inclined to be sensitive to
cost structure. This definition of priority in the value chain is a highlight of the organization
structure as it adds to the effectiveness of the Global Delivery Model in that the time-to-market
of the solution is vastly reduced through an able communications link
It is an important issue on which end is given importance when it comes to P&L. Both these
units can be organized 1) as distinct profit and cost centers, 2) by giving priority to one of the
ends or 3) using a balanced approach wherein both ends are given equal rights to the P&L55.
Galbraith says that there are a number of factors that lead to a multi-product/service company to
choose the front-back structure (Refer Appendix 6)56. Two factors that are in favor of Infosys’
Global Delivery Model are the customers’ need for solutions and the intent of forming a sourcing
partnership. These two factors when coupled with the company’s cost/time advantages gained
through the front-back organization structure hand it a sustainable competitive advantage.

The Knowledge “Supply Chain”57 at Infosys
K nowledge Management (KM) can be described as the process in which a company
reviews, gathers, organizes and distributes the “knowledge” that it possesses in the form
of documents, practices and people skills58. In a company like Infosys that has grown at such a
rapid pace since the 90’s, it is of utmost importance to formally maintain an updated database of
the “knowledge” that is being employed across the organization. The Education and Research
(E&R) department in Infosys is responsible for creating and developing a KM initiative59.
Focus on Education
The department, today, has amongst its varied functions, the responsibility of training new and
existing employees in technical and managerial concepts. Infosys is a company that spends
around 5% of its annual revenue on education and learning initiatives60. The state-of-art “Global
Education Center” that Infosys established in Mysore, India is testimony to this61. The company
can train 12,000 employees here and can accommodate an additional 3000 if the situation calls
for it62.
The E&R department began its task be cultivating an environment that fostered knowledge
exchange and a desire to continuous upgrade one’s repertoire of skills. The Infosys top
management, solely through its focus on upcoming youngsters and innovative mindsets, was able
to encourage an attitude of active participation. Infosys looked to maintain a high level of
productivity, quality and efficiency amongst the batches of employees that it recruited 63. The
company believed that each batch of new employees can start their work on a higher point on the
learning curve than the earlier batch given the sharing and administering of best practices and
knowledge.
Networking
Infosys had grown so large that a convenient protocol for sharing and understanding knowledge
was increasingly difficult to design and implement. Jay R.Galbraith in “Designing the Global
Corporation” talks about the importance of networking amongst the employees of an
organization especially if the organization operates across different geographic locations.
HIGH
5 MATRIX
FORMAL
4 COORDINATOR COORDINATION DECISION AMOUNT COST /
MAKING OF
3 FORMAL TEAM DIFFICULTY
POWER COORDIN
2 FORMAL COMMUNICATION INFORMAL ATION
COORDINATION
1 INFORMAL COMMUNICATION
INTERPERSONAL NETWORKS
LOW
Figure 6
Figure 564 is a representation of the formation and formalization of interpersonal networks in an
organization. The first two stages are those in which the employees either formally or informally
communicate with each other but these correspondences are not overseen by the management.
These are considered to be relatively cheap and easy to instill, as employees with similar
interests are bound to participate. But when the management looks to regulate correspondences
to ensure more efficient takeaways or if a more specific outcome is desired, it begins to
coordinate amongst those participating in the forum65.

Infosys realized that though it was either in stages 1 or 2, it needed a more officially recognized
initiative to fully endorse the knowledge management mindset. The KM initiative was started in
1999 with six core points in mind66,
1. KM should be handled by the education department: To make sure that the
implementation of the KM system was uniform across the organization, Infosys opted to
hand the responsibility to the education department, which was distinct from its main
business lines. Moreover, the department was given a significant degree of power by
establishing a “steering”67 committee, which had directors and unit heads in its membership.
2. Increased ownership and accountability through a decentralized system: Infosys began
to follow the strategy of “viral marketing” of this initiative amongst its employees. The
responsibility of promoting it was handed to the individual teams who worked with the
central KM team. A network of “KM promoters”68 was used in each team to ensure
maximum participation.
3. Staggered implementation across business units: It was decided to roll out this initiative in
phases. At first, the research units were invited to participate. The next phases were the
involvement of the support functions, the technical functions and then the non-technical
functions like marketing and customer-service.
4. Content: The content gathered through the KM initiative was considered to be more
important than the add-on features in the initial stages. Once content was tailored to and
accepted by the target audiences, other add-ons were in the pipeline to maximize
participation.
5. Voluntary participation: Infosys felt that it was strategically important not to force the
employees to participate in and contribute to the initiatives. However, participants did have
the incentive of being rewarded points for providing a knowledge asset (K-Asset) or a
review/quality rating. These employees would then be ranked on the points that they score
and finally recognized on a public forum such as the KM portal. Eventually, Infosys opted to
make participation mandatory and concentrated on providing more awards and recognition
for the efforts of the employees.
6. In-sourcing the development of the system: Infosys had contacted various vendors to
design and develop the KM system including the portal, communication lines and database.
But none of them had been able to meet Infosys’ requirements in terms of applying the
system across different functions. Also the system had to be integrated with a number of
enterprise information systems that were used to automate many business processes. For
these reasons, Infosys elected to in-source the development of the KM solution.
Anatomy of a KM structure69
Figure 770 represents the KM system that was designed and implemented by Infosys. The KM
portal is the principal interface for the users (i.e. employees) with the KM database. The People
Knowledge Map is likened to a directory of contacts for employees to get in touch with experts
on a certain field within the company. Knowledge Exchange and K-Mail are communication
avenues for submitting and reviewing K-assets.

Users
Unified Interface through Knowledge Portal
Knowledge Knowledge People KM

K-Mail Knowledge
Exchange Repositories Tools
Map
Shared Taxonomy: the organizational knowledge backbone
Corporate Database and Enterprise Information Systems
Computing, networking and telecommunication infrastructure
Figure 7
As can be inferred, the company has taken a hands-on approach to regulating the participation
and communication in the system. Initially, according to Galbraith’s framework, Infosys was in
stages 1 & 2 when employees took it onto themselves to form interest groups and meet either in
person or through other media. But with the application of this system, Infosys has set a clear
protocol for indicating and sharing skills and ideas. Infosys has shifted to stage 4 of interpersonal
networking systems. Galbraith says that implementing the coordinator’s role is expensive as
dedicated human resources are required to integrate the work (contributions in this case) of
people across functions and geographic zones71. But this cost can be translated into a more
globally integrated organization with multi-dimensional capabilities that arise out of the
improved communications links. In this case, the coordinator is the E&R department that
oversees the KM system. Also the K-Mail, an email system, and Knowledge Exchange, a
collection of media for discussion including message boards, blogs and debates, represent the
cost involved in formally establishing this system.
Various metrics have been put forth to analyze and measure the utility and benefits of these
knowledge exchanges. Figure 872 shows the effect of the re-use of best practices on productivity
of a sample of 40 software development projects.
Figure 8
Referring to Figure 8, as knowledge and best practices from previous projects are documented
and re-used in future projects, the productivity increases as a factor of the re-use statistic.
To conclude, Infosys has opted to maximize the use of its resources and capabilities across the
globe rather than manage stand-alone centers. The GDM and the KM system are tools that hand
Infosys a competitive advantage that cannot be replicated by competitors without the appropriate
organizational culture and structure.

Section 3
International Business Machines Corporation (IBM)
BM’s history can be traced back to the Computing Tabulating Recording Corporation
I (CTR)73, which was incorporated in Binghamton, New York in 1911. In 1924, the CTR
Corporation changed its name to International Business Machines Corporation (IBM) 74. IBM has
been a front-runner in introducing technology, like computers and Land-Area-Networks to the
market. For instance, in 1981, IBM created a sea change in the market by introducing the
Personal Computer75 and in 1985, introduced the “token ring Land Area Network (LAN)” 76 that
allowed multiple users to access a common platform to share information. In 1992, IBM
introduced the ThinkPad notebook computer and in the ensuing year reported a loss of $5bn77.
To recover from that loss, IBM made significant changes to its business model, shifting its focus
from components and hardware to software and services78.
IBM’s Mission Statement reads,
"At IBM, we strive to lead in the invention, development and manufacture

of the industry's most advanced information technologies, including
computer systems, software, storage systems and microelectronics. We
translate these advanced technologies into value for our customers through
our professional solutions, services and consulting businesses
worldwide."79
Staying true to its mission statement IBM has not diverted from its core competency of
innovation and product development. In 2006, it was ranked the 10th most innovative company in
the world by BusinessWeek and Boston Consulting Group80. Moreover it is the world’s largest
patent holder at 40,000 patents81. IBM has, recently, started opening up its technology to its
clients and partners82. In November 2006, IBM funded the creation of Open Invention Network,
a company whose principal business is to acquire patents and offer them royalty-free to promote
open-source movement83. The company feels that though it creates a bigger market for its
competitors in this process, it also stands to gain by claiming a significant portion of this
extended market.
Business Model and Areas of Business
IBM’s business model has been crafted to operate on two different levels: 1) creating value for
its clients by being more innovative and effective by using business insight and technology
solutions84 and 2) maximizing shareholder value85.
This business model has been developed over the years through strategic investments in
capabilities and technologies that have high-growth and long-term prospects86. The company’s
strategy is to focus on high-growth, high-value segments of the IT industry87. Its global
capabilities include services, software, hardware, fundamental research and financing88. This mix
of business and capabilities has been specifically constructed to provide valuable insights to the
client. IBM has exited from businesses like personal computers and hard disk drives as these
were products that were becoming commodities89.
Appendix 790 refers to the areas of business that IBM operates in. IT services and software
coupled with form a significant part of IBM’s business. IBM operates in five principal segments:
global technology services, global business services, systems and technology group, software
and global financing91. The global technology services and global group services are organized
as one common Global Services Group92. Contracts, in IBM, are called signings93 and last from
one to over ten years. These are the management’s initial estimate of the value a client’s
commitment to the Global Services Group. This segment provides business insight, technology
solutions and other suppliers’ products to clients. A major chunk of these services are actually
outsourced to IBM. The company capitalizes on its industry and business-process services to
provide incremental value to the clients. The systems and technology group handles projects that
require advanced computing and storage capabilities94 while the software division works in the
middleware and operating systems software field. Middleware is software that connects different
parts within the same application or a series of applications95. IBM has released middleware for
vertical industries. These include Banking, Insurance and Finance and were aimed at integrating
solutions and business insights to address specific concerns in projects in vertical markets96. The
global financing group consists of three service lines: client financing, commercial financing and
remarketing97. Client financing involves lease and loan financing to internal clients. The term is
generally two to seven years. Commercial financing involves short term inventory and accounts
receivable financing for dealers and re-marketers of IT products. Remarketing is leasing or
selling used equipment to new and old clients98.
Recent Performance
IBM’s business model has aided it in moving away from a commoditizing product line into a
high-growth service-line. In 2007, IBM was rated by Gartner Inc. as the worldwide market share
leader in application development99 based on total software revenue. This was the sixth
consecutive year that IBM achieved this feat. Gartner Inc. reported that IBM’s market share was
25.2%, which was more than twice the market share of its nearest competitor100. Dr.Danny
Sabbah, IBM Rational’s† general manager, says that this success can be attributed to the
company’s cross-platform strategy and end-to-end software portfolio101.
†
IBM Rational is a subsidiary of IBM that makes tools for software developers. The execution of the deal with
Rational is heralded as a commendable post-merger integration for the company.
In terms of revenue growth (Refer figure 9102, IBM has experienced strong growth uniformly
across the globe. The revenue grew by 26% in the BRIC countries alone.
Figure 9
As an, arguably, direct result of the above events, IBM has posted its highest ever EPS and Cash
from Operations (Refer Figure 10 & Figure 11). IBM’s Integrated Supply Chain (ISC) has
contributed to IBM’s geographic growth103.
Figure 10 Figure 11
Integrated Supply Chain (ISC)
n October 20th 2002, IBM’s CEO, Sam Palmisano announced a new strategy for the
O company – “On Demand Business”. He looked to reorganize IBM in such a way that it is
more responsive and flexible104. IBM’s supply chain, the
backbone of its operations (Refer Inset), had to be altered

IBM’s supply chain:
to be able to respond to customers’ requests for a
• Handles 78,000 products with
millions of configurations.
complete in-house solutions service. A few major • Liaises with 33,000 suppliers and
45,000 business partners.
• Procures an excess of 2 billion
issues105 prompted the management to reorganize the
components an year.
• Oversees the operations of 16
supply chain including, manufacturing plants in 10
countries.
• Records more than 80,000 import
entries a year.
1. Increased cost structure due to poor governance • Transports 2.2 billion pounds of
products per year, including 50
a. Duplicate spending and redundant inventory. million spare parts.
b. 30 different supply chains existed within the
company’s business lines with little synergy.
2. Inflexibility of functional silos.
a. IBM was unable to cope up with demand fluctuations and supply shifts.
b. Supply planning and demand forecasting were under different functions.
3. Ineffective human resource management.
a. Sub-optimized “labor supply chain”106 in IBM’s labor intensive business lines.
4. Ineffective marketing force as a result.
a. IBM’s sales force spent 20% of its time coordinating activities across multiple brands
rather than focusing on closing “solution” deals107.
b. IBM lost $250 MM a day as a result of sales outstanding.

In 2003, Palmisano appointed Bob Moffat, who was then heading the Personal Systems Group
(PSG) to head the Integrated Supply Chain (ISC) Group. The ISC was expanded to include
activities that required direct interaction with the client and encompassed 19,000 employees
across 56 countries (Refer Figure 11108 for re-organized structure)
Figure 11
The client-facing functions were brought into a single reporting line and this facilitated
horizontal interaction within the hierarchy. This structure has been based on the transnational
model of organization.
Transnational Model109
This management design emphasizes on management processes and the culture within the
organization. In this model, four types of managerial roles are recognized:

1. Global Business Managers: act as strategists, handle assets and leverage competencies.
2. Country Managers: are responsible for identifying local opportunities and threats.
3. Functional Managers: are specialists, who handle new developments and best practices.
4. Corporate Managers: are overall organizational leaders and hone talent.
There are several key features of this organizational model110:
1. Being a part of a network, lines of businesses are interdependent.

2. No dimension such as global, functional or geographical dominates.
3. A set of operating systems that work together closely.
4. Good interpersonal relationships.
5. Decision-making involves the participation of global and functional managers in
subsidiary boards.
6. Commendable corporate values to extract the end value.
7. A culture that promotes teamwork and knowledge sharing.
HIGH
CENTRAL
INTEGRATION Centralized Transnational
Matrix
LOW
Decentralized
LOW LOCAL AUTONOMY HIGH
Figure 12
Figure 12111 represents the organization structure of a typical transnational company. In addition
to working with the central hub, the cross-border units also work with each other. Jay
R.Galbraith in his book “Designing the Global Corporation” speaks about levels of
internationalization (Refer Table 2) and IBM’s current structure of requiring participation and,
more importantly, synchronization across units applies the same principle (Refer Appendix 8).
ISC Objectives – Sam Palmisano
The ISC initiative had four major objectives112,
Drive focus, quality, flexibility and cost control: IBM decided to outsource non-core functions
and concentrate on its core competency to achieve what was called “Economies of Expertise”.
To adapt to fluctuations in the market and raise the bar on productivity, IBM would differentiate
itself in terms of process delivery.
Roll out IBM’s strategic processes across the globe: IBM looked to achieve synergy amongst
its cross-border units and integrated all functional silos into a single supply chain to deliver end-
to-end processes to the customer.
Extend Supply Chain principles to IBM’s labor-based businesses: to cost-effectively meet
growing services demand, ISC looked to address IBM’s “labor-based” supply chain’s
performance, to forecast, assess and fulfill the resource needs of these service-based businesses.
Provide Industry leading solutions integration and deliver capability: to meet its clients’
needs and expectations, ISC had revamped IBM’s 92-year old supply chain, which used to be
based on producing and shipping hardware, into one that is more integrated and cohesive ot
provide fully packaged solutions.

Insights on ISC from Bob Moffat
Insight No. 1: Cultural transformation succeeds when leaders walk the walk.
Realizing that the senior managers had operated in the

Moffat, at this time, was both
functional or regional systems for a long period of time, the head of the ISC and the
Moffat placed an emphasis on them setting the example by PSG (Personal Systems
Group) team. He asked his
embracing and evangelizing the ISC initiative. In 2003, 400
team to procure LCD screens
supply-chain executives were chosen as ISC’s evangelists to from a particular vendor
spread this new mind-set throughout the company. 22 middle though this would lead to
higher costs. But overall this
level managers were then chosen as strategy champions to
benefited IBM in terms of
impart the four objectives of ISC to at least 2000 managers in Economies of Scope.
the ISC. These 22 champions held workshops for the
managers on how overall value to the customer was more important than an individual unit’s
P&L. Also the system was designed such that when the operational priorities were shifted, the
units had to respond in time and maintain their contribution to customer satisfaction.
Insight No. 2: CEO backing and trust are keys to sustained cross-unit integration.
The CEO, Sam Palmisano, wanted the ISC to meet both IBM’s objectives and the Lines of
Business’ (LOB) objectives. LOB leaders were initially reluctant to give up their control over
their supply chain but were convinced when the ISC maintained their procurement and delivery
for an year and saved up to $250 MM in cash each day for IBM as a whole113. The CEO then
proceeded to create more visibility for the ISC. He asked Moffat to report on the ISC’s
performance in the 2003 Annual Report and the CFO, Mark Loughridge, kept the Wall Street
Journal updated on the top-line and bottom-line performance of the ISC based on the six
performance metrics (Refer Appendix 9).
Insight No. 3: Customer focus must permeate end-to-end supply chain processes.
A vast majority (92%) of the supply chain professionals at IBM considered cost cutting to be
their top priority while 54% aimed at improving customer satisfaction. But IBM estimated that
for each unit increase in customer satisfaction, it could grow by $3bn 114. ISC began to speed up
the customer facing activities through standardization and automation. Also it worked with the
R&D department to develop a system wherein 95% of spare parts would be delivered to a
customer within a 2-4 hour window. This is a commendable achievement considering it ships
around 50 million parts an year115.
ISC also created a number of cross-brand processes in order to identify skills and capabilities
within these units and also integrate them into an increasingly cohesive unit. The LOB leaders’
inputs were considered when designing the system but actual control was not handed to them as
it would lead to bureaucracy in the system. Instead, these leaders were in charge of the execution
of the process. For example, Barbara Martin, VP of Customer Fulfillment, was in charge of
proposal-to-contract-closeout process. This cut across a number of LOB’s like sales,
manufacturing, finance and procurement116.
Insight No. 4: Employees must be measured and rewarded for end-to-end efforts.
IBM, in order to keep this change in culture sustainable, changed its “siloed”117 performance
metrics to an overarching one. Employees are rewarded based on how much they contribute to
the overall performance of the ISC. This fosters cross-functional collaboration like for instance,
logistics personnel would be required to work with R&D to design “shipment-friendly”118

products. Moreover IBM required its leaders to develop a “T-shaped” skill-set – including cross-
disciplinary skills and demonstrated leadership.
Insight No. 5: Technology deployment must be backed by sound IT governance.
It was noted that only 41% of the projects yielded positive ROI119. The reason was determined to
be ineffective IT governance. To overcome this, IBM has made ISC as the cornerstone of all
enterprise activities. These activities are all IT-enabled by the creation of an “On-Demand CIO”.
A governance group oversees all IT-enabled activities and relies on IBM’s Business
Transformation Management System (BTMS) to plan, develop and manage all IT-enabled
initiatives (Refer Appendix 10)120.
Performance of the ISC121
Drive focus, quality, flexibility and cost control: Since its inception, ISC has saved IBM up to
$20bn or $ 27 MM a day. Efficiency of the processes has also been vastly increased. For
instance, the order imbalances in the Personal Computing Division were corrected within three
weeks as opposed to the few months it would have normally taken. Also the operating leverage
of the company reduced considerably with its variable cost increasing to about 90% of the total
cost structure122.This led to a greater flexibility in the model and also ability to accommodate
change in the processes.
Roll out IBM’s strategic processes across the globe: ISC, by interlinking activities across
divisions, was able to create 38.6% extra time for its sales executives to spend with its clients.
Also the sales division is now able to work with the R&D department to create more shipping-
friendly products.
Extend Supply Chain principles to IBM’s labor-based businesses: IBM has moved from a
capital-intensive hardware business to a labor-intensive service business and these service
professionals account for 75% of its costs. ISC has helped BIM’s service-based businesses to
save up to $3bn within the first two years of its inception.
Provide Industry leading solutions integration and deliver capability: To improve IBM’s
integrated solutions division, a common solutions framework extending over three different
brand (solution development, solution sales execution and solution delivery) was established. In
addition to this a new governance structure was established to oversee and regulate the activities
across these three lines of business.
Research and Development
“Sustainable competitive advantage has never come only from productivity

or inventiveness. Today more than ever, the premium comes from the fusion
of invention and insight into how to transform how things are done. Real
innovation is about more than the simple creation and launching of new
products. It is also about how services are delivered, how business processes
are integrated, how companies and institutions are managed, how knowledge
is transferred, how public policies are formulated -- and how enterprises,
communities, and societies participate in and benefit from it all."123 – Sam
Palmisano, CEO, IBM
A
key advantage that IBM has over its competitors is its strength in innovation. Initially
IBM was closed in its innovation practices. It did not allow any of its intellectual capital
to flow outside the company. But after the company was put at a disadvantage by the “personal
computer” revolution, it decided to be more open in its innovation practices124. For instance, the
Blue Gene, IBM’s supercomputer, was developed at a high cost and then was open for people
around the world to use. Complex problems were submitted for the computer to solve and the
most challenging among these were selected by IBM’s researchers. IBM feels that the business
environment has become too fast and networked to look for answers only from the internal
sources like employees125 (Refer Appendix 11 for IBM’s portfolio of projects). By integrating
their research function to a great degree with their business functions, IBM is able to better serve
the customers126. After establishing the ISC Group, researchers spent about 25% of their time
with the customer as opposed to 3% to 4% of their time during the mid - 90’s127. Moreover the
research scientists who are working on On-Demand-Innovation-Services (ODIS) are committed
to spend about 50% of their time with the customers128.
Locations
IBM has eight research laboratories across the world – 3 in the USA and 1 each in China, India,
Israel, Japan and Switzerland129. Philippe Lasserre in his book “Global Strategic Management”
says that there are both benefits and constraints to globalizing the R&D 130. The benefits include
proximity to market, access to clusters of knowledge creation, opportunities to leverage learning
and access to low-cost and good quality human resources131. Fareed Zakaria in his book “The
Post-American World” says that China and India are emerging as competitive players in the
global market in terms of providing intellectually capable human resources. The latter especially
has trained its graduates in the common business language of English – an advantage that it
wields over China with great effect.
Figure 13132 refers to the evolution of global R&D activities. According to Philippe Lasserre, a
major constraint of globalizing R&D is facing the loss of critical mass133. As the research
laboratories are spread across the globe, it often becomes difficult to mobilize resources beyond
a certain point for a single laboratory.

Central Central Research

R&D R&D Lab Local
Lab Lab Adaptation
Centers of
Excellence
Figure 13
So in this case, Lasserre says that when a project has technology that is completely different
from others, centers of excellence134 could be established to handle them. These centers of
excellence have resources that are concentrated in them to handle a certain type of technology.
IBM seems to be following the same framework and has established “innovation centers” 135 in
Dublin and Ireland. It has also announced plans to establish similar centers in Finland, Norway,
Switzerland and Denmark. This initiative is too better serve its clients in Europe in terms of
providing customized hands-on solutions. When a client contacts an innovation center in Europe,
the center assesses if it is fully equipped to address the client’s needs. If it is not, then the client
is redirected to another innovation center that is equipped to do so136.
John Kelly took over as the director of IBM Research in the latter half of 2007137. He set out to
enhance the productivity of IBM Research as well as prepare for the future. At the time, several
different projects were being executed at IBM Research labs across the globe.
Low
Self-Contained Parallel Projects
Project
Communication
among researchers
located at different
sites
Integrated Project
High
Single Multiple
Location
Figure 14
Referring to Figure 14138, IBM’s research projects initially were self-contained projects that did
not require a lot of interaction amongst researchers at different locations across the globe. But
John Kelly restructured IBM’s portfolio of projects and decided to adopt a high-risk high-reward
strategy. He looked to invest a sum of $100 MM in four areas of research while reducing
resources on the other research areas139. This required labs across the globe to interact more than
they usually did with each other.

Also to further tap into external resources, he introduced the concept of “collaboratories”140
wherein IBM tapped into resources within universities to design solutions for industry-specific
issues.
On-Demand Innovation Services141
O
n-Demand Innovation Services is a joint initiative of IBM Research and Business
Consulting Services (BCS) is a client-facing service that helps them to make their
processes more efficient and maximize profitability.
In a move to bring IBM’s research labs closer to the client, the ODIS was formed. The ODIS is
invited to participate in an engagement when the BCS require research capabilities to solve a
complex business issue. This way IBM’s innovations are transformed and used as client
solutions. To gain an advantage on time, ODIS researchers often look for potential solutions
amongst the 29,021 patents that IBM has filed for over the last 12 years. If the solution is found,
it is implemented. But if it is not found then the technology is developed from scratch. The
biggest value that clients derive from this initiative is that they have access to both the research
expertise of IBM Research and the BCS’ vertical and regional knowledge.
Acquisition Strategy
I BM has also leveraged its position with a compelling acquisition strategy. It believes that
when a company offers a complementary product that it is not currently offering, that is
when a technology gap is filled in high-growth segments, it looks to acquire the company to
leverage its infrastructure142. But it does not adopt a hostile approach when acquiring companies.
IBM feels that the company being acquired should also value being a part of a huge technology
company as it would then have access to the extensive resources and partner network of IBM’s.
IBM has about 15,000 sales personnel who would be able to work with the acquired company143.
To maximize the benefits of acquiring a company, IBM does not lay-off any employee from the
acquired company but rather adds employees to it so as to strengthen it further144. Also it makes
it a point to reassure the customers of the acquired company that the service/product would only
be receiving more attention and investment.
Mohammad Ali, VP of Business Development and Strategy, says that generally only 30% of the
acquisitions usually are on target but the percentage for IBM is much higher as it has been able
to develop a core competency in putting operations and processes in place after an acquisition145.
For IBM, it is imperative to focus on the outcome of acquisitions than on the acquisitions
itself146.
Section 4
Conclusion
Some Americans have become acutely conscious of the changing world.

American business is increasingly aware of the shifts taking place around
the world and is responding to them rapidly and unsentimentally. Large
U.S.-based multinationals almost uniformly report that their growth now
relies on penetrating new foreign markets. – Fareed Zakaria, The Post-
American World, Pg.45
A
s Fareed Zakaria has noted, global IT firms have realized that penetrating foreign
markets takes precedence over maintaining competitive advantages in relatively few
markets. Infosys relies on its Global Delivery Model (GDM) to attract new customers while IBM
used its Integrated Supply Chain (ISC) to retain customers. In both cases, there has not been any
influx of new talent to grow organically but only a realignment of human resources. Effective
communication between different divisions is at the heart of both these strategies.
Infosys has restructured its hierarchy to capitalize more on its GDM to remain the disruptive
force in the fast emerging Indian IT scene. Business has become so competitive that even a 12
hour break in business during the night has become unacceptable. To achieve its competitive
advantage, Infosys has simply ensured that human capital across the world is at its highest level
of utilization not only in terms of productivity but also on terms of inter-personnel relations. The
GDM allows on-site consultants to talk to their off-shore co-workers to optimize the use of the
working hours on another part of the globe.
IBM, on the other hand, has gone a step further and integrated all the units into a single supply
chain to ensure proper communications between the divisions. It draws its competitive advantage
primarily through the Economies of “Expertise” and the Economies of Scope achieved through
the tightly integrated ISC. Another source of advantage for IBM is its well distributed network of
R&D labs.
These companies have not invested a lot more in resources or capabilities solely for organic
growth. They realigned the communication channels to optimize cycle-time of processes and
provide a more complete solution package to the clients.

Appendix 1 – Indian IT Industry
INDIAN IT SECTOR: LABOR SUPPLY147
(in '000s) 2003-04 2004-05 2005-06E 2006-07E
No. of Engineering
215 348 348 382
Graduates
No. of IT (Computer
Science, Electronics, 141 181 181 193
Telecom) professionals
No. of IT professionals
80 103 103 109
entering the workforce
No. of non-IT engineers

40 40 40 40
entering the workforce
No. of graduates (other

disciplines) entering the IT 30 30 30 30
workforce
Total fresh IT labor supply 150 173 173 180

Appendix 2 – Infosys Timeline
•Infosys crosses revenues of US$ $ 4.18 billion. Employees

2008 grow to over 90,000+
•Kris Gopalakrishnan, COO, takes over as CEO. Nandan M.

2007 Nilekani is appointed Co-Chairman of the Board of Directors
•N. R. Narayana Murthy retires. Continues as Chairman and

2006 Chief Mentor of Infosys
•Records the largest international equity offering of US$ 1

2005 billion from India.
•Selected to the Global MAKE Hall of Fame
•Infosys Consulting Inc. is launched

2004 •Revenues reach US$ 1 billion
•Nandan Nilekani takes over as CEO

2002 •Launches Progeon, offering business process outsourcing
services.
•N. R. Narayana Murthy is rated among Time Magazine/CNN's 25

2001 most influential businessmen in the world.
•Infosys is rated as the Best Employer by Business World/Hewitt.
•Infosys becomes the 21st company in the world to achieve a

1999 CMM Level 5 certification.
•Infosys Business Consulting Services is launched.
•Opens first European office in the UK and Global

1995 Development Centers at Toronto and Mangalore. Sets up e-
Business practice.
1993 •Goes public.
1987 •Opens first international office in Boston, US.
•Infosys is established by N. R. Narayana Murthy and six

1981 engineers in Pune, India, with an initial capital of US$ 250.
•Signs up its first client, Data Basics Corporation, in New York.
Appendix 3 – Infosys’ service lines
CORPORATE
PRODUCT MODULAR BANKING PACKAGED INFRASTRUCTURE SYSTEMS
OTHERS PERFORMANCE
ENGINEERING SOLUTION APPLICATION SERVICES SERVICES INTEGRATION
MANAGEMENT
Additional product Customer relationship Application Architecture
Finacle Consulting Balanced scorecard
services management management services
Offshore product Business
Application development Enterprise application Datacenter Business Corporate strategic
development intelligence and
and maintenance: integration services process planning
center data warehousing
Product consulting
Enterprise resource Outsourcing Enterprise content CPM technology
and professional Application development Desktop services
planning services management implementation
services
Performance
Product design and Supply chain Infrastructure and engineering Enterprise
Application maintenance Data architecture
development management ITIL consulting and information portal
enhancement
Product lifecycle Application re- Human capital Mainframe Discovery and

Enterprise mobility
management engineering management operations solution design
Integrated
Application portfolio management
Product sustenance Network services Enterprise security
management processes and
methods
Testing and Identity Strategy execution
Platform services Service desk
automation management framework
Technology
Migration and re-
architecture and
hosting
design
Appendix 4 – GDM Value Chain
Appendix 5 – Infosys Structure
CEO
DIRECTOR AND DIRECTOR AND CORPORATE

COO CFO
HEAD – DELIVERY HEAD – QUALITY PLANNING AND
EXCELLENCE AND BUSINESS
PRODUCTIVITY ASSURANCE
IBU - COMMUNICATIONS MEDIA HBU – ENTERPRISE SOLUTIONS

AND ENTERTAINMENT
BRITISH DAIMLER
TELECOM CHRYSLER
IBU - MANUFACTURING HBU - CONSULTING SOLUTIONS
IBU - BANKING AND CAPITAL MARKETS HBU - INFRASTRUCTURE MANAGEMENT

SERVICES
IBU – INSURANCE, HEALTHCARE & HBU - PRODUCT ENGINEERING AND

LIFE SCIENCES VALIDATION SERVICES
IBU - RETAIL, CONSUMER PRODUCT HBU - SYSTEMS INTEGRATION

GOODS AND LOGISTICS
IBU - ENERGY, UTILITIES & SERVICES
IBU – NEW GROWTH ENGINES
IBU – INDIA BUSINESS UNIT

Appendix 6 – Reasons for a front-back structure
1 Customers can buy all products.
2 Customers want a single point of contact.
3 Customers want a sourcing partnership.
4 Customers want solution and systems, not components and products.
5 Opportunities exist for cross-selling and bundling.
6 Value-added is becoming increasingly customer-specific.
7 Advantage can be gained through superior knowledge about customers and

customer segments.
Appendix 7 – IBM’s Business Lines
Refer to the table on the next page showcasing the lines of business that IBM provides
services in.
PC and Printing Business Systems and Point-of-Sale

Software Semiconductors Workstations Storage IT Services
solutions Consulting Servers solutions
Information Printing solutions Customer

AMD processor- BladeCenter Applications on
management from InfoPrint relationship ASIC solutions POS systems Disk storage systems
based servers workstation demand
software Solutions management
Think Pads and

Think Centers from Financial Custom design Self-service (kiosks, Hard Business continuity
Lotus software BladeCenter IntelliStation Pro
Lenovo Management services self checkout) drives/Microdrives and resiliency
Human capital IntelliStation Peripherals Network attached

Operating systems Foundry solutions Cluster systems End user services
Management POWER (printers, displays) storage
Software, systems
Product lifecycle Supply chain Intel-processor Workstation Storage area
Power architecture management and Hosting
management management based servers accessories network
middleware
Small-medium
Integrated
Rational software Strategy and change Manufacturing Linux servers business POS and Storage software
communication
kiosk systems
Design libraries and Tape storage IT strategy and

Storage software Power Systems
intellectual property systems architecture
Maintenance and
Tivoli software Packaging services System i (i Series)
technical support
PC and Printing Business Systems and Point-of-Sale

Software Semiconductors Workstations Storage IT Services
solutions Consulting Servers solutions
WebSphere
System p (p series) Middleware services
software
System Z
Outsourcing
(Mainframe)
Security and
System x (x series)
privacy
UNIX servers x86

servers for Server services
Windows and Linux
Service-oriented
architecture
Services for mid-

market business
Site and facilities

services
Storage and data
Training
Service-oriented
architecture
Appendix 8 – ISC Value Chain
Personal Servers Storage Software Technology Global Global

Computing Services Financing
Market Planning
Integrated Product Development
Integrated Supply Chain
Procurement
Fulfillment
Customer Relationship Management
Strategy, Architecture, Standards and Technology Deployment
IBM Global Services
Source: Source: http://www.alphasummiteurope.org/uploads/ASE06_GinzburgDrIris-

Appendix 9 – Metrics used by the ISC
(Source: Navi Radjou, IBM transforms its supply chain to drive growth, Forrester Research, Pg.8)
Appendix 10 – IT planning at the ISC
Source: Navi Radjou, IBM transforms its supply chain to drive growth, Forrester Research, Pg.10
Appendix 11 – IBM’s portfolio of projects
Generally
Available
Maturity of
Technology
Cutting Edge
IBM – Led Innovation Involvement of External-Led Innovation

External Partners
Source: http://www.alphasummiteurope.org/uploads/ASE06_GinzburgDrIris-
Appendix 12 – IBM’s IT & BTMS
Source: Navi Radjou, IBM transforms its supply chain to drive growth, Forrester Research, Pg.11
Appendix 13 – IBM’s revenue drivers before and after ISC
1993
Other Hardware Software Services
The pie-charts indicate the shift in the

49% 27%
revenue drivers for IBM. Services played a
7% 17%
relatively minor role in 1993 when IBM had a
high operating leverage. But in 2005, IBM
shifted from being a hardware manufacturer
2005 to a service-provider. This increased the
Other Hardware Software Services variable costs and the flexibility in the
model. Services then comprised 54% of

17%
54% IBM’s revenue.
28%
1%
Source: IBM’s on-demand transformation, Robert E.Luby, 2005
References
1
http://www.infosys.com/about/what-we-do/default.asp
2
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Srikrishna Jammi Venkata aka.

Global Strategic Management

Dr. Dennis Gillen

Chair of Management Department

Executive Summary ........................................................................................................................... 5

Innovating with Business Models ........................................................................................... 7

The Indian IT Industry .................................................................................................................. 8

Infosys Technologies Ltd. ........................................................................................................ 10

Global Delivery Model (GDM) .......................................................................................................... 13

Organization Structure ........................................................................................................................ 18

The Knowledge “Supply Chain” at Infosys ........................................................................................ 20

International Business Machines Corporation (IBM) ................................................. 26

Integrated Supply Chain (ISC) ............................................................................................................ 30

Research and Development ................................................................................................................. 37

On-Demand Innovation Services ........................................................................................................ 41

Appendix 1 – Indian IT Industry ...................................................................................................... 45

Appendix 2 – Infosys Timeline ........................................................................................................ 46

Appendix 3 – Infosys’ service lines.................................................................................................. 47

Appendix 4 – GDM Value Chain ..................................................................................................... 48

Appendix 5 – Infosys Structure ........................................................................................................ 48

Appendix 6 – Reasons for a front-back structure ............................................................................. 49

Appendix 7 – IBM’s Business Lines ................................................................................................ 49

Appendix 8 – ISC Value Chain ........................................................................................................ 52

Appendix 9 – Metrics used by the ISC ............................................................................................. 53

Appendix 10 – IT planning at the ISC ............................................................................................. 54

Appendix 11 – IBM’s portfolio of projects ..................................................................................... 55

Appendix 12 – IBM’s IT & BTMS.................................................................................................. 55

Appendix 13 – IBM’s revenue drivers before and after ISC ........................................................... 56

have innovated disruptively to maintain their edge.

order to avoid re-inventing the wheel for future projects.

invest in new ones.

different. In today’s global competitive environment, companies often find themselves in a

grew to become a $4bn company in 20072.

across business models while sticking to their core competency.

as substitutes. The IT industry is a typical example of this.

flexible and responsive to changes on the demand side.

innovation rather than on the actual service itself.

intellectual property, security and privacy4.

2011, maintaining the growth rate of 30%7.

Paranjpe, the head of Wipro’s outsourcing arm11.

with increased revenues16.

Infosys Technologies Ltd.

fixed time-frame projects17.

telecommunication services, chose Progeon as its preferred supplier to avail Business-Process-

Progeon in an all-cash deal amounting to $115.3 MM21.

presence of “high-end consulting capabilities”22 (Refer Appendix 3 for service lines)

differentiation strategy” to grow23:

Figure 2 *Global Delivery Model

deliver services effectively.

The above statement by Mr. Nandan

Nilekani, the Co-Chairman of Infosys,

further emphasizes the importance

placed by the company on constant

innovation and change. The top

management of Infosys makes sure

that it is involved in the ideation

process amongst the workforce. Each

year, a group of nine top-performing

individuals are selected to participate

in the eight yearly top management

council meetings to present and

promote their ideas26. Employees are

Global Delivery Model (GDM)