NEIOT GLC08session-finalversion

Winning Together, Driving Success
David Cornick
Vice President, Channels
Northeast Europe
IBM BUSINESS PARTNER LEADERSHIP CONFERENCE
Welcome to
Los Angeles
© 2007 IBM Corporation

What we’ll cover this morning
 IBM’s growth strategy & you – Mike Rhodin

 Growth in General Business – Marcelo Lema
 Channel implications – David Cornick
Followed by
 Buffet lunch
 Opening session of Leadership Conference

IBM’s Growth Strategy & You
Mike Rhodin
General Manager
Northeast Europe
Several years ago, we saw change coming
Changes in Changes Changes

Information in Client Needs in World Markets
Technology
A new computing Integration and The rising tide

architecture innovation of globalization

We made important strategic decisions
1. To focus on 2. To deliver 3. To become

open integration the premier
technologies and innovation Globally
and high-value to clients Integrated
solutions Enterprise

We remixed our businesses
IBM PRE-TAX INCOME
2003 2007
Hardware & Hardware &
Financing Financing
Software 25% Software 23%
34% 40%
Services 41% Services 37%

We globally integrated IBM
2007 Revenue by
Geographic Region
21%
Asia Pacific
36%
Europe, Middle East
and Africa
43%
Americas

Today IBM is a Higher-performing Enterprise
Record Profit
Record Earnings Per Share
Margins Earnings Per Share
(From continuing operations)
50 GROSS PROFIT
41.9 42.2 8 7.13
40.1 *
40 36.9 36.5 36.9
6.06
6
4.91
30 4.39
3.76
PRETAX INCOME 4
20 13.4 14.6 14.7
11.1 2.43
10.6
7.2 2
10
0 0
'02 '03 '04 '05 '06 '07 '02 '03 '04 '05 '06 '07
Source: IBM - *without Printer Gain


Our new Long-term financial objectives
2010 Earnings per Share Roadmap

12%-15% CGR
11
Key Drivers
 Revenue growth
18%
 Margin expansion
14%–16%
EPS CGR  Share repurchases
(2006-2010)
6.06 7.18 10
 Growth initiatives and
future acquisitions
 Productivity savings
06 07 08 09 10

Our value proposition differentiates us
The IBM Difference
Financial Strength & Flexibility

We are able to invest in future sources of growth
Primary Uses of Cash over

the Past Five Years
Returned to
Shareholders
$53 billion
Reinvested $83 Billion
Share repurchases
$30 billion and Dividends
Acquisition and
Capital Expenditures
…while continuing to invest in R&D – more than $29 billion over the past five
years

2008

Growth in General Business
Marcelo Lema
Vice President, General Business
IBM North East Europe
Agenda
 General Business Market Opportunity

 Coverage Model, Today and Tomorrow
 Enhancing our Large Enterprise Model
 Dedicated Mid-Market Focus
 Partners are critical for General Business

Medium Business is growing fastest, where

solutions are key to growth
2008 General Business Opportunity Business and Infrastructure Solutions are 72%
$75B, 5.0% YtY Growth of mid-market spend (growing 8.8% in 2008)
Large Enterprise $21B

(1000+ employees) 35,000 Ent
Growth 4.0% Business Solutions
$21.2B
(growing 8.1%)
Medium Business (100 – $31B

999 employees)
500,000 Enterprises
Growth 5.5%
Other
Point Products,
Non-IBM
Small Business $23B* Solutions
Infrastructure
(1-99 employees) Millions of Enterprises Solutions
$9.9B
Growth 5.4% (declining yty) $4.7B,
(growing 12.1%)
Source: GMV1H08 GB organizational view @IBM Plan Rates (GBLE at 25% of total LE). SMV2H07 Overlap Removed
Served History @ Actual / Forecast @ Constant Currency Source: SMV 2H07
*excludes SB non-maintenance services

Capture addressable market opportunity with

Industry Ecosystems
Specific Industy / country level: one example
IT channel landscape Healthcare Ecosystems in Switzerland
Business Consulting / Business Business
Infrastructure Strategy Influencer Application Process Implementer

Infrastructure Operation
Product Most important  Consulting SI`s  SAP (IS-Healthcare)  Mummert Consulting  IBM (Vol. Reseller)  IBM
Solution market player

 Regional SI`s
 H&S Consulting
 Nexus (iSoft, Torex)
 Qualidoc
 Novo BC
 Cobra
 HP, FSC, HDS, Sun
 EMC
 Swisscom IT Serv.
 T-Systems
 CSB St. Gallen  MCS Parametrix  Bedag  Siemens  Abraxas
 H-Net  Erne Consulting  Logicare  GE  EDS
 Baer Consulting  Datamed  Docubase  Philips  Die Post
 Uni Research  Elca  Agfa
 Bluecare  Pharmatic  Kodak
ISV Core applications • Patient Administration Systems
How
• Departmental Systems, Clinical Data Warehousing
• Medical Document Management

• Storage of Electronic Patient Record
Hybrid Cross topics ERP (HR, FI/CO), BI, BW
product/ IBM competences -

actual
Business process and process management – TCO – Standardization - Virtualization server /storage - Systems management,
services Workflow, Open source and Linux - Integration (frontend / backend) – RFID – WLAN - Security Solutions - ILM archive
Core
GBS  GTS  SWG  STG
SI IBM`s revenue Medium Low Medium High High
BP
potential
Services Resale
Technology
Business
Products
Solution
 Clarity of IBM versus Partner landscape and market opportunity

 Focus on key growth GB industies with commited resouces
 Investment in focused marketing engine
To drive growth in all segments, two distinct

business models are defined
Large Enterprise Characteristics
 1000+ employees
 New IT spending at least $500K
 Complex infrastructure needs
Co  High integration & software potential
mp
 Prefer FTF coverage (IBM / Partner)
e tit
Focus
ive
Mid-Market Characteristics
 Typically 100-1,000 employees
Primary  New external IT spend of $200K+
 Solution focused – business &
infrastructure
Prospects  Look to local SI Partner as their
integrator

General Business Coverage Model, Today and

Tomorrow
2007 2008
LEPF
Focus
Focus Competitive TSR
Co
TSR TSR
Competitive
mp
Large Enterprise Enterprise TSR
et i t
i ve
Focus
Co
Focus
mp
eti
Primary Mid-Market Competitive

t iv
e
iTSR iTSR
Primary Primary MMPF
iTSR
Primary
Mid-Market MM
Activation Activation Prospects TSR
Prospects
iTSR iTSR Prospects
Critical Partner role * OI: +38% OO: +55% to +74%
* Example: Business Partner STG pipeline as % of total STG pipeline - 2Q08

Three key plays to drive growth in GB in 2008
Accelerate growth in Emerging

2 Strengthen GB LE focus 1 Countries
(South Africa & Russia)
Grow Competitive Accounts
Co
Optimize Focus coverage on high
mp
value clients
e tit
Em
Focus
ive
e rg
3 Establish a dedicated
ing
Mid-Market business model
Co
Primary
un
tri e
Establish a dedicated MM model
s
Tele, Partner & Marketing
Activation Prospects
coverage mix
Solution focused, Partner led OO
(1)100% of Emerging Countries Overlays LE & MM Growth

Growth Play #1: Accelerate Growth in Emerging

Countries
 Geography Expansion:
– Tier 2 cities in Russia FY’08 Revenue Growth
– Expansion South Africa
 Industry Focus: Industry- Russia 29%
skilled, cross-brand teams
 Triple Play: Expand GBS Mid-
market play with ISVs South Africa 26%
 Express Advantage: Continue
rollout including portfolio, local
advertising, customer service

Growth Play #2: Driving Double Digit Growth in

Large Enterprise
Focus Segment Growth Drivers:
Focus Accounts  Fewer Accounts / Territory Sales Rep
 Solutions-oriented client focus
3822 accounts  Increase Seller focus
Co e
 Increase industry specialization

mp
 Industry aligned Territories & TSR Industry

e t it
Focus Specialization
iv
 Stronger services and solution selling skills
Competitive Territory Growth Drivers:

Competitive Territory
 Improve common view of competitive accounts
Co
between GB and Brands (alignment)

9577 accounts
mp
 Increase Seller focus

etit
 Increase industry specialization

Focus
ive

Growth Play #3: Dedicated Mid-Market Model
Primary Segment Growth Drivers:

Primary Accounts  Differentiated buying behaviour
Primary  Role of SI and RSI
20,044 accounts  Improve Partner Coverage
 Leverage alignment of Brand HC in 2008
Prospects
 Improve our lead creation & passing process
 Increase industry & solution specialization
Prospects Territory Prospects Territory Growth Drivers:

Primary  Leverage the Midmarket Program Framework
120,000 prospects  Improve infrastructure and point product offerings
engine through the Integrated Volume teams
Prospects  Leverage Express Advantage announcements &
Midmarket offerings
 Improve our channel capacity in the Midmarket
 Increase PiTSR productivity

Mid-Market Framework Investment to

Drive Demand
Decision
Point Infrastructure
Business Solution
360o Execution
Product Solution
IBM EXPRESS ADVANTAGE
Audience Interactive
Outbound
Loyalty Telemarketing
CEO / CFO
1. Business
Solutions
MM
LOB Events Customers Direct
Mail
om ll
C ta
2. Infrastructure
p
4. Ins
CIO / IT
Partner
3.
Solutions
Co-Mkg PR
IT
Buyer 5. Volume
Concierge Enablement &
BP /
Influencers 6. Market to BPs & Influencers Communications
 Express Advantage delivers Mid-Market  Fully drive 360 Marketing Approach

Value Proposition (advertising in select cities)
 40% yty increase in win revenue  Customized Web Portals for channel
 Partner Co-marketing enablement
 Mid-Market Sales plays aligned

Investment in City-Level Advertising

NEON Sales Plays the essential guide

for Partners
Essential guide to key

 Country specific sales priorities and messages
 Individual products and solutions Sales Plays
 Partner programs and tools
 Product sales programs and incentive
Key Partner programs & tools Products Sales & Incentive Solutions Sales Plays

Territory Business & Quarterly Planning
Education Education Education Education

Territory Calls Calls Calls Calls
Update
Business
TBP
Plan
Quarterly Quarterly Quarterly Quarterly

Action Wk -8/-6 Action Wk -8/-6 Action Wk -8/-6 Action Wk -8/-6
plan plan plan plan
Account
Plans Sales Play Sales Play Sales Play
Brand Brand Brand
Recipes Recipes Recipes
Performance Performance Performance

Workshops Workshops Workshops
Jan Apr July Oct Dec
 Earlier recognition of opportunity, execution and performance gaps

 Improved alignment of extended Territory Team under TM leadership
 Leverage of core assets by Territories (e.g. Brand Recipes, Neon Sales plays)
 Actions driven at Territory level (rather than IOT/IMT top down)
Partners are critical for General Business
1. Enhance your business performance
2. Boost your profitability with programs

In
3. Generate more leads collaboration
with Business
Partners
4. Increase your sales
5. Grow revenue through new partnerships
6. Partner Program that supports your success

Channel Implications
David Cornick
Vice President, Channels
Northeast Europe

The trends seen in the wider market are changing

the dynamics of the indirect channel
Buyer behaviour
Changing
business
Consolidation
models
Competition
Source : IDC, Canalys, IBM MI

Confidence remains high - despite negative

messages from some quarters
In revenue terms, how do you think your business will perform this quarter
(January to March) compared with the same quarter one year ago?
Up by 20% or more 24%
Up 10–19% 21%
Up by less than 10% 36%
12% No growth
3% Down by less than 10% Overall positive: 81%
Overall neutral: 12%

2% Down by 10–19%
Overall negative: 7%
2% Down by 20% or more

Source: Canalys EMEA Converged Channel Panel, April 2008 (101 respondents) © canalys.com ltd

The IBM Strategy at Work:

How have we been doing over the last 2 years
Northeast Europe BPO Revenue Growth (YTY)
13.5%
12.50%
10.9% 10.6%
9.6%
8.8%
7.6%
4.4%
-0.7%
1Q06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 1Q08

The IBM Portfolio via the channel continues to evolve

with increased Software and Services contribution
1Q08 54% 25% 21%

Hardware
Software
Services
1Q06 66% 21% 13%
0% 20% 40% 60% 80% 100%
Enterprise
GB
General Business 1Q08 51% 49%
continues to be
~50% of channels
1Q06 53% 47%
business
0% 25% 50% 75% 100%

Our Channel Strategy
 Grow faster than the market & gain share
 Increase revenue & share in General Business especially in

mid-market
 Build effective & expanded ecosystems with our partners for

mutual growth & enhanced coverage
 Continue the focus on making IBM easier to do business with

Four key elements to the strategy
Segmentation Teaming
Enablement Investment

A segmented approach to growth Segment Team
Enable Invest
 Market segmentation and buying behaviour

– Integrated Accounts
– Aligned Accounts
– General Business and Mid-market Accounts
– Emerging Markets
 Partner Segmentation & Solution Plays

– CSI
– ISVs
– Volume Products

Solutions Market is key in our Growth Segment Team

Strategy
Enable Invest
480
383
361
340
360 316
295
272
M$ 240
213 218 222

202 207 210
120
Solutions Point product

0
2005 2006 2007 2008 2009 2010
Source – IBM Market Intelligence

Teaming across a broader spectrum Segment Team
Enable Invest
 Ecosystem development through

– Building value nets at industry & territory level
– Enabling partners to expand reach & coverage
– Working closer with all players: CSIs, ISVs, VARs, SPs
 Creating opportunity for our partners in the market through

– Industry segmentation & focus
– Co-marketing investments
– Lead Passing – quicker passing to right partner first time
– Go To Market (GTM) clarity

PartnerWorld Value Net Connections – Segment Team
An integrated approach to building

client solutions Enable Invest
 Partner matching
Extensive profiling identifies complementary
Partners based on skills & business objectives
 Solution design & joint-business planning support

Assistance with planning & facilitation of solution
design
 Go-to-market execution
Provides support for channel development &
demand generation activities

GTM clarity around how clients buy Segment Team
Enable Invest
Further Segmentation Trusted Technology

Value For Money Partnership Player
of our client sets Supplier
Core Customers (Top 200, Where incumbent Reseller IBM or IBM and/or ISV, IBM or IBM and/or ISV,
“Be Bold” & “Do More”) in place then Reseller Integrator (CSI/RSI) leads, Integrator (CSI/RSI) leads, if
leads with IBM assistance Reseller assists with customer requests then
technical and logistics Reseller assists with
support technical and logistics
support
Non Core Customers Reseller leads, IBM may Reseller to lead and/or ISV, ISV and/or Integrator
(Optimise) OI but Reseller should Integrator (CSI/RSI), IBM (CSI/RSI) leads, Reseller
manage in “destacked” assistance if significant opp and /or IBM assists
manner
Non Core Customers Reseller leads, IBM may ISV and/or Integrator ISV and/or Integrator
(Examine) assist if significant (CSI/RSI) leads with Reseller (CSI/RSI) leads, IBM assists
winback opportunity assistance, IBM assistance if if significant opp
significant opp
LE Customers in BS Reseller leads, IBM may IBM or Reseller leads with ISV and/or Integrator
OI but Reseller should ISV and/or (CSI/RSI) leads, IBM assists
manage in “destacked” Integrator(CSI/RSI) if significant opp
manner
Mid Market Reseller leads, IBM may Reseller leads with ISV Limited engagement – Mkt
OI but Reseller should and/or Integrator (RSI) development
manage in “destacked” IBM/Reseller/ISV/Integrator
manner in SaaS and xSP markets

Investment in assets & solutions as part of Segment Team

corporate strategy to drive value into our
clients Enable Invest
 Software & Services acquisitions provide enhanced

opportunity for growth
– SWG selectively acquire to extend & enhance portfolio
– GTS acquisitions & investments enable growth through pre-
configured, differentiated products that leverage assets & utilize
proprietary IP
 STG announcing an evolutionary new model for Efficient

Enterprise IT Delivery Addressing a Changing Landscape
– NEDC to drive infrastructure transformation
– New platform announcements in Mainframe, Power and Modular

Acquisitions Added to Enhance the Segment Team

Solutions
Enable Invest
Aptrix
PureEdge Lotus Rational Rational
Bowstreet Information Labs
*WebDialogs SystemCorp
Information
*Net Integration Tech Management Tivoli BuildForge
*Watchfire
WebSphere *Telelogic AB
Informix Ascential
Metamerge Micromuse
Tarian DWL
TrelliSoft Rembo
CrossAccess iPhrase CrossWorlds
Green Pastures Access360 MRO
Holosofx Think Dynamics
Trigo LAS Gluecode
Alphablox Unicorn Candle *Vallent
DataPower Cyanea Systems *Consul
Venetica FileNet
Webify Isogon
*DataMirror SRD
*Princeton Softech *AptSoft Collation
*Solid Information Tech CIMS Labs
*Cognos Ubiquity
Note: Acquisitions since Jan 2001; * 2007/2008 Acquisitions

New asset based packaged offerings for the Segment Team

BP channel – Business Continuity, Security,
Migration Enable Invest
2006-2008 Examples
Data Remote
ISS Migration Data
Integrated solutions & Softek Protection
Remote
Recovery Data
ISS
Selective out-tasking Express Protection
Data Remote
Recovery Migration Data
Standardized offerings Express ISS
&Softek Protection
Global delivery
Data Remote
Recovery Migration Data
Asset-based models Express ISS
& Softek Protection

New Enterprise Data Center Segment Team
Enable Invest
An Evolutionary New Model for Efficient Enterprise IT

Delivery Addressing a Changing Landscape
 End-to-end virtualization that delivers new economics, high

utilization & energy efficiency
 Service management technologies that

deliver control & flexible deployment
of infrastructure
 Dynamic scheduling and provisioning

based on business priorities

Enablement – continue to enhance our end Segment Team

to end capability
Enable Invest
 Significant Projects underway in many areas
– Distribution - enablement & delivery of Pan-EMEA Multi-

country capability
– Process - continued focus on end-to-end experience in order

to drive simplification & improve business management
– Earnings – redesign incentive structure to provide predictable

earnings, enable growth & investment by/with our partners

2007 Distribution landscape – Segment Team

NE IOT (excluding CEMAAS)
Enable Invest
Nordic 15
Germany 7
UKISA 10
Austria & Switzerland 10
42 Distribution Centers

2008/9 Distribution landscape post Segment Team

Multi-Country distribution (hardware)
Enable Invest
Nordic 0-2
Germany 2-4
UKISA 1-3
Belgium 1-2 Central Europe 1-3
Austria & Switzerland 0-1
5-12 Distribution Centers

location independent

Program objectives focus on margin enhancement,

investment and continued drive for simplification
Driving Up Profit
“Pay for Contribution”
Expanding Driving Efficiency

The Business “Simplification”
“Investment”

Driving up Profit Segment Team
Enable Invest
 Enhanced opportunity to earn as we jointly grow the business
– Additional incentives for new clients, winbacks, solutions, portfolio

attachment & penetration into mid-market
– More selectivity in bid process focussed at retaining margin
– Selling the IBM portfolio to drive incremental margin
– Significant investment in autonomous and low touch business
– Reduction in payment & claim cycle times
– Supported by investment dollars, targeted marketing programmes,

common tools, reduced number of targets & enhanced end-to-end
management

Our mutual success depends on… Segment Team
Enable Invest
 Jointly delivering on the strategy
 Build closer relationships & drive incremental business
 Deliver value to our customers
 Effective enablement

Business Partner Excellence Award
 Annual award
 Nominations made by local IBM
teams
 Judged on specific criteria
– Innovation
– IBM affinity
– Effective teaming
– Solutions focus
– Brand coverage
– Business growth

Business Partner Excellence Award - 2007

Our mutual success depends on… Segment Team
Enable Invest
 Jointly delivering on the strategy
 Build closer relationships & drive incremental business
 Deliver value to our customers
 Effective enablement

obrigado
dank u
gracias
Danke schon
gråces
Thank you! gràcies
Cпacибo
grazie ‫תודה רבה‬
ευχαριστώ
tesekkur djiere
ederim dieuf
merci

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Winning Together, Driving Success

© 2007 IBM Corporation

What we’ll cover this morning

 IBM’s growth strategy & you – Mike Rhodin

© 2007 IBM Corporation

Several years ago, we saw change coming

Changes in Changes Changes

A new computing Integration and The rising tide

© 2007 IBM Corporation

We made important strategic decisions

1. To focus on 2. To deliver 3. To become

© 2007 IBM Corporation

We remixed our businesses

IBM PRE-TAX INCOME

Services 41% Services 37%

© 2007 IBM Corporation

We globally integrated IBM

© 2007 IBM Corporation

Today IBM is a Higher-performing Enterprise

© 2007 IBM Corporation

© 2007 IBM Corporation

Our new Long-term financial objectives

2010 Earnings per Share Roadmap

© 2007 IBM Corporation

Our value proposition differentiates us

The IBM Difference

Financial Strength & Flexibility

© 2007 IBM Corporation

We are able to invest in future sources of growth

Primary Uses of Cash over

© 2007 IBM Corporation

© 2007 IBM Corporation

 General Business Market Opportunity

© 2007 IBM Corporation

Medium Business is growing fastest, where

Large Enterprise $21B

Medium Business (100 – $31B

© 2007 IBM Corporation

Capture addressable market opportunity with

Infrastructure Strategy Influencer Application Process Implementer

Solution market player

ISV Core applications • Patient Administration Systems

• Medical Document Management

Hybrid Cross topics ERP (HR, FI/CO), BI, BW

product/ IBM competences -

SI IBM`s revenue Medium Low Medium High High

 Clarity of IBM versus Partner landscape and market opportunity

To drive growth in all segments, two distinct

© 2007 IBM Corporation

General Business Coverage Model, Today and

Primary Mid-Market Competitive

Critical Partner role * OI: +38% OO: +55% to +74%

* Example: Business Partner STG pipeline as % of total STG pipeline - 2Q08

Three key plays to drive growth in GB in 2008

Accelerate growth in Emerging

(1)100% of Emerging Countries Overlays LE & MM Growth

© 2007 IBM Corporation

Growth Play #1: Accelerate Growth in Emerging

© 2007 IBM Corporation

Growth Play #2: Driving Double Digit Growth in

 Increase industry specialization

 Industry aligned Territories & TSR Industry

 Stronger services and solution selling skills