This action might not be possible to undo. Are you sure you want to continue?
Business Policy Company Analysis - IBM
Presented by: Abhishek Bagga Poornima Choudhary Bhawani Shankar Das Rahul Atrishi Parijat Sinha
Flow of presentation
INDUSTRY ANALYSIS – Market Size (Growth Rate trends) – Industry Potential – Untapped Potential – Concentration of Competitors – Suppliers/New entrants/Complementers/Substitutes – Buyers Need – Government presence in Industry – Industry Standards – Degree of integration
The IT Industry
Global IT Industry
Global IT Industry
Indian IT Industry
Indian IT Industry
Software Exports (Rs.Crore)
Growth of IT Industry and Share in GDP
Growth in Exports
Destination of Exports by Region and Country
IT Exports and Forex Reserves (US$billion)
SWOT – Indian IT Industry
India’s key strength is the availability of a large pool of English speaking and technically qualified professionals at low costs…
…but, cumbersome legal and bureaucratic procedures may hamper India’s prospects in the global IT industry
While opportunities have evolved due to increased outsourcing and offshoring by companies…
…development of other low cost regions for off-shoring can act as a threat to the Indian IT and ITES industries
Initiatives by Government in IT sector
E-Governance is the use of Information Technology and Communication Technologies to improve efficiency, convenience, accessibility and transparency in Government.
National e-Governance Plan
A National e-Governance Plan (NEGP) has earlier been drawn which seeks to implement a number of Mission Mode Projects (MMPs) at the Centre, State and integrated service levels so as to create a citizencentric and business-centric environment for governance
State Wide Area Network
The Cabinet Committee on Economic Affairs (CCEA) has approved the scheme for establishing State Wide Area Networks (SWANs) across the country in 29 States/ 6 UTs at a total outlay of Rs.3, 334 crore with Central Assistance component of Rs. 2,005 crore over a period of five years
A number of steps have been taken to meet the challenge of zero duty regime in 2005 under the Information Technology Agreement (ITA-1). Tariffs on raw materials, parts, other inputs and capital goods have been rationalized to make domestic manufacturing viable and competitive.
Firing the growth of the domestic IT market: the key factors
Matters had to be viewed in a non-IT way to enable the delivery of
technology across the length and breadth of the country. transform India into an IT-centric economy. markets.
Government and industry had to work together and take risks to IT products and services needed to be created especially for the rural Innovative business models needed to be adopted to increase IT
deployment within organizations
IT absorption among SMEs had to be improved through special,
affordable, product, service and delivery solutions
IT has to be harnessed for the broader aspects of community service
(social work) to narrow the digital, gender and rural-urban divides
What is IBM?
An innovator? A sales force? A collection of vertically integrated A global brand? A blue-chip stock? A turnaround story? A really big company? All of the above…
multibillion-dollar global businesses?
The IBM Company
IBM focuses on the high-value intersection of business insight and technological innovation for enterprise clients.
Incorporated in 1911 as the Computing-Tabulating-Recording Company (C-T-R) In 1924, C-T-R became International Business Machines Corporation 1910s-60s:
– From punch-card tabulating machines to room-sized calculators to mainframe computing systems for large enterprises – Changed the nature of accounting, calculation, and basic back-office business processes
– IBM product line broadens from mainframes to minicomputers and personal computers – Applications move beyond back-office enterprise to departmental operations and personal productivity
– With the Internet and open standards, the network computing model is embraced and advanced – Coined “e-business” to describe how network computing can transform core business functions and transactions
The world’s largest information technology company The 9th largest corporation in the U.S. Year end 2003, IBM reported:
– $89.1 billion in revenue – $7.6 billion in net income – More than 319,000 employees worldwide – More than 670,000 stockholders of record
A Global Company
Corporate headquarters: Armonk, NY Serving clients in 160 countries worldwide More than 60 percent of revenue generated outside the United States
Leading in the world’s rapidly emerging markets…
Samuel J. Palmisano
Chairman, President and CEO
Board of Directors
Samuel J. Palmisano Cathleen Black
Chairman, President and CEO, IBM President, Hearst Magazines
John B. Slaughter
Kenneth I. Chenault Carlos Ghosn
Chairman and CEO, American Express Co. Co-Chairman, President and CEO Nissan Motor Co. Ltd.
President and CEO, National Action Council for Minorities in Engineering, Inc.
Joan E. Spero
President, Doris Duke Charitable Foundation
Nannerl O. Keohane Charles F. Knight Lucio A. Noto
Managing Partner Midstream Partners LLC
President, Duke University Chairman of the Board, Emerson Electric Co.
Chairman of the Board, President & CEO, Eli Lilly and Co.
Charles M. Vest
Lorenzo H. Zambrano
Chairman and CEO CEMEX, S.A. de C.V.
The IT Industry: Eras of Computing
Back Office Automation; Transaction Processing
0 1960 1970 1980 1990 2000
Source: U.S. Department of Commerce, Sept. 2000 2000/2001/1H02 Estimates 30
IBM and the IT Industry Today
High-value, innovation, integration
High-volume, undifferentiated products or services
Moving into Areas of Higher Value
• Business Process Transformation Services • Business Consulting Services • Life Sciences • Strategic Outsourcing
• Engineering & Technology Services • Custom Logic • Power
• Middleware • HighPerformance Servers/Storage Systems
On Demand: A Path to Growth
s Bu ine
Operating Environment ENTRY
sse ce s
Flexible Financial & Delivery Offerings
Services Financing Hardware Software Technology Research
Financing Hardware Software Technology Research
World’s largest business and technology services provider
$42.6 billion in revenue More than 175,000 employees
Transform their business into an on demand enterprise Capitalize on IT to improve business performance Manage IT, HR, accounting and other operations and resources of their business
Principal lines of business:
Business Consulting Services Integrated Technology Services Strategic Outsourcing Services Application Management Services e-business Hosting Services
World’s leading provider of financing and asset management
services to companies selling or acquiring IT More than $35 billion in assets in 2003 Operations in more than 40 countries
Hardware Software Technology Research
Offers flexible leasing and financing solutions to clients and
business partners Client Financing Channel Financing Global Asset Recovery Services
#1 server vendor in the world Offers the broadest range of servers in the industry
Software Technology Research
Mainframes Integrated application servers UNIX systems Intel processor-based servers Opteron processor-based servers Blade servers
Strong supporter of open standards
More than 6300 clients running Linux
Most comprehensive spectrum of storage offerings for companies of all
sizes Disk, Tape, Open Management Software, Database, Services and Financing
Software Technology Research
Complete solutions for today’s critical storage needs
Regulatory Compliance, Global Disaster Recovery, Tiered storage management/ILM, Optimized Storage Networks
Largest review share gains and highest year-to-year revenue growth of top
five external disk vendors in 2003 (IDC) Enterprise Storage Server installed in 74 percent of Fortune 100 IBM beat HP to become #1 in tape storage factory revenue, according to Gartner
Creating foundation for Information on Demand
SAN File System, SAN Volume Controller for Virtualization, Policy-based management and provisioning tools
#1 Storage Services provider in the industry
ThinkVantage Technologies, ThinkPad notebook PC’s, ThinkCentre desktop PC’s, displays, accessories, and service offerings More than 20 million ThinkPads sold; world’s best-selling notebook brand
Software Technology Research Printers, print management software, consulting, systems integration, supplies, service and support #1 in transaction statements; 100 billion pages printed annually
Retail Store Solutions
Point-of-sale systems, kiosks and peripheral devices #1 worldwide in point-of-sale systems for retailing Clients include 60 of the world’s top 100 retailers
Develops, markets and supports a diverse set of software
Services Financing Hardware
Provides foundation for the world’s critical business
World’s second largest software provider
$14.3 billion in revenue More than 38,000 employees
Largest supplier of Internet infrastructure software –
Systems integration and transaction processing Data management Collaboration and “dynamic workplaces” Systems management and security Software development tools
Services Financing Hardware Software
Delivers leadership technologies for IBM systems
Provides microprocessors and custom chips to keep IBM the leader in server and storage systems
Maintains a strategic OEM business for scale, innovation
and profit Supplies chip products to leading original equipment manufacturers to generate revenue and to fund development and manufacturing investment
Technology focus segments
Power technology and products (Power PC) Custom Chips (Application-Specific Integrated Circuits – ASICs) Foundry manufacturing Engineering and Technology Services
Services Financing Hardware Software Technology
World’s largest IT research organization
Over 3,000 scientists and engineers 8 research laboratories and 24 development laboratories worldwide
Produces historic accomplishments that lead in innovation
Drove development and advances in the relational database, DRAM, storage technology and fractal geometry Contributes to IBM’s 11 years of patent leadership, yielding more than 25,000 U.S. patents Boasts numerous awards, including 5 Nobel Laureates, 5 National Medals of Technology, 4 National Medals of Science, and membership in high-profile technical organizations Launched premiere research consulting unit, On Demand Innovation Services, creating new services practices for clients
Services Hardware Software
Percent of IBM’s Total Revenue in 2003
16% 3% 1%
32% Financing Enterprise Investments/Other 48%
Source: 2003 IBM Annual Report 43
One-chart diagram of the various IBM divisions
Porter’s five forces diagram
Threat of New Entrants
Bargaining Power of Suppliers
Bargaining Power of Buyers
Threat of Substitutes
Value addition at different levels
Value addition from thinking for the customer Skills in Industry & Technology Directions
Value addition from evaluating and integrating solution Value addition from one stop shop Business and Solutioning Skills
Value addition from reduction of Management Risks Technology & Project Management Skills
Value addition from ability to ramp up Technology Skills
Framework for Delivering Customer-Focused Experiences
Competitive Advantages: • Reputation based on principles and values • Longstanding affinity with institutions and participants • Information about our markets and customers
Law & Compliance Finance Actuarial and Facilities
Customer Experiences: • Solutions/ offerings tailored to meet clients’ needs • Interactions characterized by trust, respect and objectivity • Performance consistent with expectations
Strategy & Implementation
Source: TIAACREF Strategy Presentation
SWOT of IBM India
Brand name Domain knowledge Relationships with clients Conservatism- (suits banks) Solutions driven deals Pricing Long Response Time Marketing Delivery
Geographical know-how of Parent Company Talented Pool Growing Domestic Market
Competition Dynamic Market Place
Brand Name Biggest strength which opens door to almost all organizations Its sheer size and the fact that we are leaders across several categories worldwide is a major positive Tremendous domain expertise and capabilities They are in a position to be advisors to clients- not mere sellers Strong relationships with clients who are already using IBM products (i.e. installed base) and makes them manage to get the deal in spite of higher prices
S T R E N G T H S
Relationships with clients
Suits bank (especially the Public sector banks) because they also like paperwork Confident that IBM is doing its homework since IBM
Solutions driven deals Strong in Solution driven deals, where IBM works partners, packages.
Pricing A problem, especially in services and PCs Price its products and services very highly
W E A K N E S S
Long Response Time
Their time to respond is very high They often ask customer to delay negotiation because they have not yet worked out their best price While IBM has very good products, it rarely market them Services – and in particular consulting has been not marketed well Not aggressive in marketing Very poor in delivery of products Sometimes when the partner has decided not to supply services to the client and the customer is left on hold.
Opportunity O P P O R T U N I T Y
Geographical know-how of Parent Company
Under-penetrated regions such as Canada, Germany, France, Japan, Korea are big potential markets are better known by the parent company Under penetrated verticals –telecom services, retail Healthcare are taken care of by IBM Global Services India has one of the largest pool of technically qualified people with low wages
The number of IT professionals in India reached 520,000 by 2002 A large proportion of Indian graduates are proficient in English ideally suited to the growth of ITES industry
Growing Domestic Market
A CAGR of about 30% in total market Government allowing FDI and taking initiatives to help IT sector to grow
T H R E A T S
Competition from companies which have large human capital and qiute agile. Cost effective small players which offer lower prices.
Dynamic Market Place
India presently is a very large market small to very large IT players are present here. Price variations are more and hence negotiations at fixed corporate price which IBM offers
Three major dimensions
IGS America IGS Asia-Pacific (AP) IGS Europe, Middle East, Asia (EMEA)
– Media, entertainment, telecommunication
– Retail, travel, transportation
– Banking, Financial markets and insurance industries
– Automotive, electronics, aerospace and defence
– Healthcare and education industries, government
– Small and Medium Business comprises companies form many different industries that have more than 1000 employees
Application Management Services (AMS) Business Consulting Services (BCS) e-business Services (e-BHS) Integrated Technology Services (ITS) Networking Services (NS) Strategic Outsourcing (SO)
IBM Strategic Group line of business (today)
IGS sector (future)
Selector (client facing)
Focus on market and manage P & L within region
Focus on business models, Offerings, competencies and tools
Focus on skill capacity and capability
Define industry or SMB market dynamics Understand business line Strategy (for example targets and value proposition) Develop capacity solutionsrequirements defined by sectors line;business lines. business Ensure skill industry based or that pull from multipleglobally and customize Ensure centers andor industry Optimize business modeland tools for the businesswith client delivery preferences. offerings competencies discipline and consistency for sector pools for efficiencies, in line line Develop Manage sector or industry portfolio of as Deliver services with excellence can tailor,solution and offerings solutions. Develop offerings that sectors sell and closerequired, by industry Manage client relationships, opportunities
What value and opportunity does IGS offer its people ?
IBM is consistently highly ranked as an employer of choice
in surveys and recognized for its integrity, innovation and leadership in defining the industry agenda.
Recognized for the of its leadership programs, IGS offers
cultivation of leadership potential, as well as a variety of opportunity to lead.
By working together as a team, IGS employees can deliver
distinctive value to client.
At IGS, employees engaged in a product that break new
ground and provide them with a challenge to grow.
Individuals who contribute to a job well done are rewarded
and recognized when IBM succeed.
What is the Strategic intent ?
IBM’s Strategic intent is:
To grow revenue and profit by creating real business value for our clients
– anticipating and exceeding our clients’ expectations. Our hallmark will be delivering the value we promise.
Who competes with IGS
Commodities plays Hybrid approach Major competitors Dell ACS WIpro CSC Capgemini HP EDS Infosys Accenture Unisys General Electric UPS Value plays
Value proposition for clients Industry leadership through Hybrid offerings that Industry leadership through Cost Control, standardization Incorporate some cost control Value creation and new Offerings asset optimization And some value creation investment IGS Strengths Extensive Business partner Ecosystem Global presence Flexible Universal Mgmt Infrastructure (UMI) ON Demand Leadership Financial stability Cost competitiveness Global delivery competency Portfolio scale and scope Breadth of offerings Depth of IT skills Financing capabilities Business and IT fusion
A key source of competitive differentiation in ON Demand business is IBM’s full equation. It is the ability to understand the business of the clients, help them shape their ON Demand Business strategies and integrate the broad array of technology and services to unleash new business value for them. To solve a client’s problem they bring together capabilities and expertise of the entire IBM company – IBM Global Services, Systems and Technology Group, IBM Research, Personal Systems Group, Sales and Distribution, Software group and IBM Business Partners. The values lies in the integration of these assets.
BETTER, FASTER EXECUTION
MORE ACCOUNTABILITY FOR RESULTS
LASTING ECONOMIC VALUE FOR CLIENTS
Service Market Environment
Together SMB sector, public sector and financial services sector account for almost threefourth of the total market opportunity growth.
Industrial, 15.3, 11%
Distribution, 11.1, 8%
Communications, 8.4, 6% Computer Services Industry, 4.3, 3%
Financial Services, 19.6, 13%
Home, 0.3, 0.2%
Public, 28, 19%
SMB, 58.4, 40%
The company has steadily shifted its business mix toward more profitable, innovation based segments
Divesture of the PC business in May 2005 Erosion of sales by about 4% in Q1’05 Demand for middleware software strong Microelectronics segment performing well due to demand for chips Services signings rose Signed contracts worth $11.4 billion (Q1)
Source: Thomson Financials, Bloomberg, WSJ
Refreshed product lines should boost sales and deter margin pressures Divestiture of the unprofitable PC business helping margins Faster growth of less profitable products Cost cutting efforts initiated last year helping to increase profitability.
Revenues to remain range bound due to macro-economic pressures Entering into faster growing areas Aims to grow in emerging countries Building towards small to mid-sized business market Targets cost cutting measures
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.