Transcript IBM’s Transformation – Services & Software

IBM’s Transformation to a Services
Company and the Growth of Digital Trade
Michael DiPaula-Coyle
IBM Governmental Programs
© 2013 IBM Corporation
IBM: A Globally Integrated Technology and
Consulting Company
 Founded in 1911 and now operating in 170 countries, IBM
develops and sells software and systems hardware and a
broad range of infrastructure, cloud and consulting services.
 IBM serves clients in sectors as diverse as manufacturing,
banking and financial services, insurance,
telecommunications, retail, utilities, and express delivery.
 While still a major manufacturer of ICT hardware, IBM has
repositioned itself as the world’s largest, IT services
company.
© 2013 IBM Corporation
IBM Business, IT and Outsourcing Services and
Solutions
 Application lifecycle management
 Enterprise marketing management
 Asset management
 Enterprise modernization Enterprise
resource planning
 Application infrastructure
 Big data and analytics
 Business process management
 Business Analytics
 Cloud computing
 Commerce
 Complex and embedded systems
 Connectivity and integration
 Data management
 Data warehousing
 Energy and Environment
 Enterprise content management
 Expert integrated systems
 IT Infrastructure services
 Procurement
 Product lifecycle management
 Security
 Service oriented architecture (SOA)
 Smarter computing
 Social collaboration
 Unified communications
 Virtualization
 Web experience
© 2013 IBM Corporation
IBM’s Transformation – Services & Software
IBM Worldwide Revenue - Percentage by Segment
70
64%
Services & software now account for
80% of IBM’s revenue
60
Hardware
56%
40
Software revenue exceeded
hardware revenue in 2008
Services
30
20
10
0
Services revenue exceeded
hardware revenue in 2001
16%
14%
6%
Software
24%
17%
3%
Other
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
Percent
50
Year
Source: IBM Financial Reports
© 2013 IBM Corporation
IBM’s Transformation – Services & Software
IBM Worldwide Revenue - Percentage by Segment
90
80%
80
70
64%
Services & Software
Services and software revenue
exceeded hardware revenue in 1998
50
40
31%
30
Hardware
17%
20
10
6%
Other
3%
0
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
Percent
60
Year
Source: IBM Financial Reports
© 2013 IBM Corporation
Wider Global Trends: Economic and Labor Changes: U.S.
Employment (2010)
Manufacturing and
Construction
12.4%
Agriculture: 1.5%
78.8%
Services
© 2013 IBM Corporation
IBM is a Microcosm of the Global IT industry
 IBM’s transformation reflects wider trends in the
global IT industry over the past two decades.
 IT companies are moving away for traditional
hardware to focus on IT software and services.
 The most competitive IT companies are able to
provide integrated, end-to-end solutions across all
industry sectors.
 Hardware, software and services are more
integrated now than ever before.
© 2013 IBM Corporation
This Transformation is Driving the Growth of Digital
Trade
 Services increasingly being delivered electronically via the
internet and other networks: fueling the growth of “Digital
Trade”.
 16 million internet users in 1995; Today there are more than
2.4 billion.
 McKinsey Global Institute calculated that 75% of economic
benefits of the Internet accrue to traditional industries.
 In majority of OECD countries, more than 95% of companies
already use the Internet: “As the Internet evolves to become
basic infrastructure and adoption saturates, the Internet
economy will become increasingly indistinguishable from
the overall economy.”
© 2013 IBM Corporation
Evidence of Growing Role of the Internet in the Global
Economy
 Electronically Delivered Services: Knowledge- or contentbased services are increasingly digitized and delivered
electronically via the Internet or other networks (e.g. ICT
services, professional services, video services, online gaming,
music streaming).
 Digital Products: Content can be digitized for online delivery
(software, music, movies, books, video programming, financial
analysis, architectural schematics).
 E-Commerce in Physical Goods: Trade in physical goods
facilitated by the Internet or private networks.
 Operations of Global Companies: Global ICT Networks are
now critical to operations of global companies across all sectors.
© 2013 IBM Corporation
Potential Barriers to Digital Trade
 Cross-Border data restrictions
 Local Server requirements
 Market Access Restrictions for hardware, software
and services
 Regulations (behind-the-border barriers)
 Technical Barriers to Trade in ICT Products and
Services
© 2013 IBM Corporation
21st Century Trade Agreements Must Reflect New Trade
Realities
 The WTO’s General Agreement on Trade in Services (GATS) was negotiated before the
Internet was commercialized and does not adequately address digital trade.
 New Agreements are now focusing on this critical area:
Non-Binding
– U.S.-Korea Free Trade Agreement: Both parties will “endeavor to refrain from imposing or
maintaining unnecessary barriers to electronic information flows across borders.”
– U.S.-EU and U.S.-Japan Trade Principles for ICT Services
– OECD Principles for Internet Policy-Making
Seeking Binding Commitments
– Trans-Pacific Partnership: Negotiators are seeking to include binding trade obligations
related to digital trade and cross-border data flows.
– TISA: TISA will be a critical benchmark for protecting and fostering the growth of digital
trade.
– TTIP: Will a U.S.-EU Agreement adequately protect and foster the growth of Transatlantic
Digital Trade?
© 2013 IBM Corporation