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GlobalServices©2004IBMCorporation2019/10/17OnDemandandITOutsourcingThe2004ChinaOutsourcingSummitSept15-16,2004Beijing,ChinaIBMGlobalServicesGlobalServices©2003IBMCorporation©2004IBMCorporation22019/10/17Anondemandbusinessisanenterprisewhosebusinessprocesses—integratedend-to-endacrossthecompanyandwithkeypartners,suppliersandcustomers—canrespondwithspeedtoanycustomerdemand,marketopportunityorexternalthreat.OnDemandBusiness:MorethanJustGettingBetterGlobalServices©2003IBMCorporation©2004IBMCorporation32019/10/17TraditionalTheInternetOnDemandStructuredCalculationsDataProcessingTransactionsOpenStandardsConnectivityFlexibilitySimplicityModularComponentseasilydefinedandmanipulatedDynamicdefinitionandoperationsTheEmergingOnDemandComputingModelGlobalServices©2003IBMCorporation©2004IBMCorporation42019/10/17WhydoGCGclientsneedtotransform?Aclient’smarket-increasingcustomizationofproductsanddeliveryleadtodemandforfasterinnovationGlobalizationhasintensifiedcompetition–fromwithinandoutsidetheregiondemandforcostreductiontoensurecompetitivenessIncreasedscrutinyofbusinesspracticesandethicsalongwithregulatoryissuesleadtonewdataandintegrationchallengesIndustryconsolidationleadtoincreasingfocusoncompany-widetransformationEmergingtechnologiestriggerintegrationacrossvaluechainsIncreasingrelianceoninformationtechnology,buttightbudgetsGlobalServices©2003IBMCorporation©2004IBMCorporation52019/10/17OnDemandBusinessDesignsDeliverSignificantResultsSonyChinaPCOutsourcingCLIENT’SBUSINESSISSUES:Lackofproperresourcestosupportits34branchesLargecapitalinvestmentbecomesaburdenIBM’SSOLUTION:Assetsownershipandmanagementtransfer/outsourcetoIBMSOleverageBlueExpress'countrywidecoveragetoprovidePCrelatedservicessuchas:PCrefreshment,upgrade,maintenance,viruscheck,remoteandon-sitesupport,etc.CLIENT’SBENEFITS:Customer’scapitalinvestmentbecomesmonthlyexpense.Thisflexiblecoststructureenablescustomertoreduceriskandrespondquicklytothefuturechange.Customers'PCconfigurationandservicestandardizedunderIBM’scommittedservicelevel.Customer'sITstaffswillfocusonitscorebusinessGlobalServices©2003IBMCorporation©2004IBMCorporation62019/10/17WhatisOutsourcing?Outsourcingtakesplacewhenanorganizationtransferstheownershipofabusinessprocessorfunctiontoasupplier.“Inoutsourcing,thebuyerdoesnotinstructthesupplierhowtoperformitstaskbut,instead,focusesoncommunicatingwhatresultsitwantstobuy.Itleavestheprocessofaccomplishingthoseresultstothesupplier.”-TheOutsourcingExchangeGlobalServices©2003IBMCorporation©2004IBMCorporation72019/10/17CLIENTBUSINESSPERFORMANCEBEFOREANDAFTEROUTSOURCING:PROFITABILITYPerformanceRelativetoIndustry(instandarddeviationsfromindustrymean)-0.3-0.10.10.30.50.70.91.1EPSRevenueEPSTrendCompanyperformance(relativetoindustry)priortotheoutsourcingengagementCompanyperformance(relativetoindustry)ina2-3yearperiodaftertheoutsourcingengagementTheImpactofOutsourcing:Earlyanalysisinthenewstudyshowssignificantimprovementsinclientprofitabilityina2-3yearperiodafterthestartoftheoutsourcingengagement…IBMResearchDivisionanalysisofpublicfinancialdata80globalcompaniesGlobalServices©2003IBMCorporation©2004IBMCorporation82019/10/17KeystoaSuccessfulOutsourcingRelationshipAsuccessfuloutsourcingrelationshipfocuseson:SettingclearexpectationsfortherelationshipattheoutsetEstablishingappropriategovernanceprotocolstoguidejointactionthatcandeliveronthepromiseoftherelationshipRecognizingtheneedtoadjusttherelationshipovertimeSharedriskandreturnMeetingservicelevelexpectations--notjustSLAsContractflexibility--theabilitytochangethescaleandcontentofwhatisbeingdeliveredasthebusinessenvironmentchangesInnovationandTransformationtoanOnDemandbusinessGlobalServices©2003IBMCorporation©2004IBMCorporation92019/10/17OptimizeIndividualDataCentersScaleviaconsolidationsCommonprocessesStandardizationReducecost,streamlineoperationsScaleviaresourcevirtualizationAutonomicmanagementCreatesubstantialnewvalueAlwaysoninfrastructureResources,processandtechnologyondemandCommoditizedcomponentsReconfigurevalueofITapplicationsandservicesSkillsleverageReducecostsPresentFutureImplementOnDemandComputingLeverageGridTechnologiesConsolidateDeliveryCentersProductivity/BusinessValuePastOnDemandOutsourcingandITInfrastructureAnaturalpartofthecomputingevolution:fromcentersofautomationtochangingthefundamentalsofindustriesandmarketsGlobalServices©2003IBMCorporation©2004IBMCorporation102019/10/17SuppliersCustomersAnenterprisewhosebusinessprocesses–integratedend-to-endacrossthecompanyandwithkeypartners,suppliersandcustomers–canrespondwithspeedtoanycustomerdemand,marketopportunityorexternalthreat.OndemandservicesallowbusinessprocessestosenseandrespondtomeetbusinessobjectivesOfferingsEnterpriseBusinessProcessesParts&ServicesVirtualizedInfrastructure–Servers,Storage,Network…PolicyBasedManagementOverallVisionGlobalServices©2003IBMCorporation©2004IBMCorporation112019/10/17ERPAutomatedprovisioningbasedonresourcepoolinganddynamicallocationCapacityondemandBetteruseofresourcesSpeedReducedcostITreflects