SMARTER COMMERCE

Integrated Value Chain Solutions

in the Age of the Customer

Madhuranath R

OVERVIEW

COMPANY PROFILE

About IBM

V-M-V of IBM

Smarter Commerce

Target Market

Value Proposition

STRATEGIC ANALYSIS PEST Analysis

5-Forces Analysis

Strategic Maps

Industry Success Factors

Competency Matrix

Triangle Model

FUTURE GROWTH Potential Market

Strategic Maps

Competency Matrix

STAR FRAMEWORK Visual Representation

Framework Description

Framework Explained

COMPANY

PROFILE

About IBM

History

Founded in 1911 as CTR

Renamed in 1924 as IBM

Operates in 170 countries

Business

Technology Solutions

Business Consulting

IT Services & Others

Rankings

Forbes Global #31,revenue

Fortune #1, leadership

Fortune #5, most admired

Leadership

Virginia Rometty – CEO

Sam Palmisano - Chairman

14 Board of Directors

Brand Equity

Market Cap - $227 Billion

Global #2 Best Brand

Global #1 Green Company

Financials

$107 Billion – Revenue

$16.3 Billion – Net Income

$18.5 Billion – Returns

VISION

Solutions for a small planet

MISSION

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 & consulting businesses worldwide

VALUES Dedication to every client’s success

Innovation that matters – for our company and the world

Trust and personal responsibility in all relationships

About SMARTER COMMERCE

IBM’s Enterprise Marketing Management division leads Smarter Commerce

Integrated lifecycle approach to Commerce for total customer-centricity

Improves how firms connect with marketers, suppliers, partners, customers, web sites and even social networks

Delivers value via Customer Insight & Customer-centric Value Chain Realignment throughout the lifecycle phases of Buy, Market, Sell, Service

Brings together IBM’s core technologies & product portfolio

TECHNOLOGIES PRODUCTS

Integration – Supply Chain Planning & Execution WebSphere, Sterling Commerce

Advanced Analytics Unica, Coremetrics

Cloud Computing Cognos

Social Networking IBM Collaboration Suite

Cross-Channel Commerce Sterling Commerce, iLog

TARGET MARKET

Smarter Commerce solutions are applicable to most industries like –

But within a given industry Smarter Commerce targets specific businesses

E.g. Primary Target Market of Smarter Commerce for Retail comprises –

• B2B Retailers

• B2C Retailers

• Online Retailers

Banking & Insurance Government

Communications Healthcare

Energy Oil & Gas

Education Retail

Food Transportation Systems

VALUE PROPOSITION

STRATEGIC

ANALYSIS

PEST ANALYSIS

POLITICAL

• China is the manufacturing hub for half of all products in world

• Global political sentiment against China is a potential risk

ECONOMIC

• Global Recession is driving down margins across industries

• Global Retail Supply Chain inefficiencies waste $15 Trillion

SOCIAL

• Increased consumers’ access to information empowers them

• Current generation of consumer shares experiences and info quickly and with more people

TECHNOLOGICAL

• Tech provides more ways for consumers to connect to retailer

• Social networks have empowered consumers with an increased transparency & power of WOM

5-FORCES ANALYSIS

Competitive

Rivalry

Threat of

New Entrant

Bargaining Power of

Suppliers

Threat of Substitute

Bargaining Power of

Customer

Conclusion Smarter Commerce Industry is ATTRACTIVE MEDIUM

MEDIUM

LOW LOW LOW

5-Forces Analysis • New entrants cannot create

Smarter Commerce solutions

• Suppliers of solutions are companies acquired by IBM

• Substitutes are only partial solutions as of now

• Customers in Retail Industry need novel solutions to maintain competitiveness

• Rivalry is non-existent as Smarter Commerce is a new industry introduced by IBM

STRATEGIC MAP SOLUTION CAPABILITY

0

2

4

0 1.5 3

CO

NSU

TIN

G C

APA

BIL

ITIE

S

LOW

LOW

HIGH

HIG

H

RANGE OF SOLUTIONS

IBM

Oracle SAP Accenture

Conclusion: Offering a broader range of solutions is as important as providing Smarter Commerce Consulting. BUT only offering both gives maximum market share.

STRATEGIC MAP SOLUTION COMPATIBILITY

0

2

4

0 1.5 3

PR

OP

RIE

TAR

Y S

OLU

TIO

NS

LOW

LOW

HIGH

HIG

H

IBM

Oracle

SAP

Accenture

Conclusion: Ability to integrate proprietary with other solutions provides business value as perceived by customer. Proprietary + Integrated Solutions is the name of game.

I N T E G R A T E D S O L U T I O N S

STRATEGIC MAP BUSINESS MODEL

0

2

4

0 1.5 3

INN

OV

AT

ION

LOW

LOW

HIGH

HIG

H

IBM

Oracle

SAP

Accenture

Conclusion: Building partnerships to serve more customers is as important as constant innovation. These two factors contribute to strengthening of the business model

P A R T N E R S H I P S

STRATEGIC MAP BRAND EQUITY

0

2

4

0 1.5 3

CU

STO

MER

SER

VIC

E

LOW

LOW

HIGH

HIG

H

IBM

Oracle SAP

Accenture

Conclusion: Building partnerships to serve more customers is more important than just possessing Proprietary Solutions or Patents. Having both gives greater market share.

M A R K E T I N G

INDUSTRY SUCCESS FACTORS

CRITICAL SUCCESS FACTORS

Solution Capability Smarter Commerce Consulting

Integrated & Proprietary Solns

Business Model Partnerships & Outsourcing

Continuous Innovation

Brand Equity Marketing & Advertising

Customer Service Excellence

THRESHOLD FACTORS

IT Services Application Development

Maintenance Services

Performance Scalability

Delivered Quality

Price Cost of Solution Deployment

Cost of Consulting

COMPETENCY MATRIX

Conclusion: Comprehensive Solution Capabilities, Innovative Business Model and Brand Equity are the Key Success Factors to compete in Smarter Commerce Industry.

KEY SUCCESS FACTORS Weight IBM Oracle SAP Accenture Others

Solution Capabilities 50% 9.7 6.2 5.6 4.3Smarter Commerce Consulting 20% 10 5 5 4

Proprietary Solutions 15% 10 7 8 2

Integration Capabilities 15% 9 7 4 7

Business Model 25% 9.6 7.0 4.2 2.0

Partnerships & Outsourcing 10% 9 7 3 2

Continuous Innovation 15% 10 7 5 2

Brand Equity 25% 10.0 6.0 4.4 4.0Marketing & Advertising 15% 10 6 4 4

Customer Service Excellence 10% 10 6 5 4

Total Weight 100% 9.8 6.4 5.0 3.7Market Share 100% 37% 20% 15% 10% 18%

KSF MATRIX INTERPRETATION

• Smarter Commerce Consulting capability is the single most important KSF in Smarter Commerce Solutions Industry

• Solution Capabilities + Marketing = 65% weightage

These two factors contribute to IBM’s market leadership

• Smarter Commerce brings together several technologies/ solutions and thus straddles several strategic groups

• Competitors of IBM Smarter Commerce offer partial solutions & thus have low market shares corresponding to their segments

TRIANGLE FRAMEWORK

Competencies Analytics solutions like

Coremetrics & Unica WebSphere middleware

is an integration platform Value Chain Integration

Solutions with iLog & Sterling Commerce

IBM Smarter Commerce provides analytics powered integrated solutions for improving efficiencies and margins by delivering business outcomes

throughout the lifecycle phases of the commerce Value Chain Smarter Commerce Consulting leverages analytics to help derive customer

insight to identify new revenue streams for customers

Value Proposition

KSF Smarter Commerce

Consulting

Proprietary Solutions

Integration Capabilities

Continuous Innovation

FUTURE GROWTH

SMARTER COMMERCE – 2020

MARKET PROJECTIONS

• Smarter Commerce Solutions market will be worth $70 billion as per the projections of IBM Enterprise Marketing Management

• IBM will be the leader with more than 50% market share

• Smarter Commerce spans business consulting, technology solutions and IT services to give IBM 360° earnings potential

• IBM leverages partnerships with ISV or IBM Service Vendors to service customers in the SME segment as well which increases the brand equity and dominance of IBM in Smarter Commerce

STRATEGIC MAP FIRST-MOVER ADVANTAGE

0

2

4

0 1.5 3

CU

STO

MIZ

ED S

OLU

TIO

NS

LOW

LOW

HIGH

HIG

H

IBM

Oracle

SAP

Accenture

Conclusion: As a first-mover IBM gains unmatched implementation experience and builds customized solutions which raises the entry barrier for potential competition.

IMPLEMENTATION EXPERIENCE

STRATEGIC MAP BUSINESS MODEL

0

2

4

0 1.5 3

INN

OV

AT

ION

LOW

LOW

HIGH

HIG

H

IBM

Oracle SAP

Accenture

Conclusion: Building partnerships to serve more customers is as important as constant innovation. These two factors contribute to strengthening of the business model

P A R T N E R S H I P S

STRATEGIC MAP BRAND EQUITY

0

2

4

0 1.5 3

CU

STO

MER

SER

VIC

E

LOW

LOW

HIGH

HIG

H

IBM

Oracle SAP

Accenture

Conclusion: Building partnerships to serve more customers is more important than just possessing Proprietary Solutions or Patents. Having both gives greater market share.

M A R K E T I N G

INDUSTRY SUCCESS FACTORS

CRITICAL SUCCESS FACTORS

Implementation Experience

Implementation Experience

Customized Solutions

Business Model Partnerships & Outsourcing

Continuous Innovation

Brand Equity Marketing & Advertising

Customer Service Excellence

THRESHOLD FACTORS

IT Services Application Development

Maintenance Services

Performance Scalability

Delivered Quality

Price Cost of Solution Deployment

Cost of Consulting

COMPETENCY MATRIX

Conclusion: Comprehensive Solution Capabilities, Implementation Experience and Brand are the Key Success Factors to compete in Smarter Commerce Industry.

KEY SUCCESS FACTORS Weight IBM Oracle SAP Accenture Others

Solution Capabilities 45% 9.7 2.9 2.6 2.3Implementation Experience 25% 10 2 2 2

Customized Solutions 10% 10 4 3 2

Integration Capabilities 10% 9 3 3 3

Business Model 25% 9.6 4.0 3.6 2.0

Partnerships & Outsourcing 10% 9 4 3 2

Continuous Innovation 15% 10 4 4 2

Brand Equity 30% 10.0 5.6 4.4 4.0Marketing & Advertising 20% 10 6 4 4

Customer Service Excellence 10% 10 5 5 4

Total Weight 100% 9.8 3.9 3.3 2.7Market Share 100% 59% 15% 11% 7% 8%

KSF MATRIX INTERPRETATION

• Proven Implementation Experience will be the most important KSF in Smarter Commerce Solutions Industry by year 2020

• Solution Capabilities + Marketing = 75% weightage

These two factors contribute to IBM’s continued dominance

• Smarter Commerce will become an independent industry and solution in its own right and new competitors will try to copy it

• Competitors from current partial solution segments will no longer be relevant and will be left out of the market game

STAR

FRAMEWORK

Strategy Tracing Analysis Recommendation

Framework for Strategic Planning

FRAMEWORK DESCRIPTION

• PURPOSE : To ensure Strategic Alignment in analysis and planning from Vision to Value Innovation

• REQUIRED : Awareness of basic Strategy Frameworks

• OUTCOME : Derive the Value Innovation for the organization

• COMPONENTS – Foundational Triangle: Vision-Mission-Values of the organization

– Framework Triangle : KSF-SWOT-ERRC analysis of the industry

– Tactical Priority Axis : Priority of attributes in Tactical Planning

– Strategic Priority Axis : Priority of activities in Strategic Planning

FRAMEWORK EXPLAINED

• Foundational Triangle / Guiding Triangle – Vision and Values form the foundation of a strategic plan and ultimately support the

Mission which has the highest priority in terms of planning action for the short term

• Framework Triangle / Analysis Triangle / Recommendation Triangle – KSF & SWOT are analysis frameworks which help in identifying the success factors and

opportunities which help to derive the Value Innovation using the ERRC framework

• Tactical Priority Axis – The attributes of Vision and Values have a lower priority during tactical planning. But

that does not mean short term / tactical planning will ignore them completely as ultimately the Mission planning is done with the Values and Vision inputs as the basis.

• Strategic Priority Axis – The activities of KSF and SWOT analysis have a lower priority during strategic planning.

This is because KSF and SWOT are usually done in retrospect and do not need innovation. Whereas ERRC analysis is future focused and needs innovative thinking to arrive at Value Innovation strategies that will create a Blue Ocean for the company. However, KSF & SWOT are the analyses which provide inputs for ERRC analysis.

THANK

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