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Cbs essay comp smarter planet

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My presentation to students @ Copenhagen Business School highlighting some of smarter planet perspectives and challenges in selected areas8.12.2012
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© 2012 IBM Corporation Smarter Business Essay Competition IBM Smarter Business Anders Quitzau Innovation Executive 1
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Page 1: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

IBM Smarter BusinessAnders QuitzauInnovation Executive

1

Page 2: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

The world is becoming smaller and flatter.

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© 2012 IBM Corporation

Smarter Business Essay Competition

The reality of living in a globally integrated world is upon us.

§ Frozen credit markets and limited access to capital.

§ Economic downturn and future uncertainty.

§ Energy shortfalls and erratic commodity prices.

§ Information explosion and risk/opportunity growth.

§ Slowing superpowers and emerging economies.

§ Increasingly complex supply chains and empowered consumers.

The world is connected:economically, socially and technically.

Page 4: Cbs essay comp smarter planet

IBM Denmark Smarter Planet

U.S. CPG companies and retailers lose $40 billion annually due to inefficient supply chains.

14 4

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IBM Denmark Smarter Planet

In the U.S., a typical carrot has traveled 1,600 miles, a potato 1,200 miles, a chuck roast 600 miles…

…grocers and consumers throw away $48 billion worth of food every year.

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IBM Denmark Smarter Planet

In six years the power consumption of a server has risen from 8 watts to more than 100 watts per $1,000 worth of technology.

On average, for every 100 units of energy piped into a data center, only 3 units are used for actual computing. More than half goes to cooling the servers.

In distributed computing environments 85% of computing capacity sits idle.

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© 2012 IBM Corporation

Smarter Business Essay Competition

A mandate for change is a mandate for smart.

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© 2012 IBM Corporation

Smarter Business Essay Competition

The world is about to geta whole lot smarter.

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© 2012 IBM Corporation

Smarter Business Essay Competition

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Our world is becoming

INSTRUMENTED

Our world is becoming

INTERCONNECTED Virtually all things, processes and ways of working are becoming

INTELLIGENT

An opportunity to think and act in new ways—economically, socially and technically.

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© 2012 IBM Corporation

Smarter Business Essay Competition

Now we have the opportunity to measure and track every details and consequences in processes and life cycles.

10

By 2010, there were more than 1 billion camera phones in existence.

By 2010, 30 billion RFID tags will be embedded into our world and across entire ecosystems.

Nearly 85% of new automobiles now contain event data recorders.

1 billion30 billion 85%

Instrumented Interconnected Intelligent

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© 2012 IBM Corporation

Smarter Business Essay Competition

People, systems and “things” can communicate with each other in completely new ways...

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There will be an estimated 2 billion people on the internet by 2011.

2 billionThere are an estimated 4 billion mobile phone subscribers worldwide.

4 billionSoon, there will be 1 trillion connected devices in the world, constituting an “internet of things.”

1 trillion

Instrumented Interconnected Intelligent

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© 2012 IBM Corporation

Smarter Business Essay Competition

Now we can respond much faster to, and make more accurate predictions about, changes in the environment and achieve better results on future events.

12

Every day, 15 petabytes of new information are being generated. This is 8x more than the information in all U.S. libraries.

15 petabytesScientists are working to prevent influenza pandemics by modeling the viruses with a supercomputer that can operate at one petaflop, or one quadrillion operations per second.

1 petaflopNew analytics enable high-resolution weather forecasts for areas as fine as 1 to 2 square acres.

1 square kilometer

Instrumented Interconnected Intelligent

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© 2012 IBM Corporation

Smarter Business Essay Competition

The convergence of physical and digital has enormous value

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What is really going on?

When to act?

What to do?

How to do it?

What is happening?

Collect and interpret new data from sensor systems to determine events

Analyze events to identify insights that determine when to act

Visualization of events in business context

1.

2.

3.4.

5.

Determine the best course of action to respond to identified business situations

Manage and choreograph the processes that perform the action

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© 2012 IBM Corporation

Smarter Business Essay Competition

+ + =An opportunity to think and act in new ways—

economically, socially and technically.

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© 2012 IBM Corporation

Smarter Business Essay Competition

A smarter planet holds enormous promise for progress.

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© 2012 IBM Corporation

Smarter Business Essay Competition

Every natural system and man-made system is becoming interconnected, instrumented and intelligent.

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© 2012 IBM Corporation

Smarter Business Essay Competition

Smarter planet: Thinking and acting in new ways to make our systems more efficient, productive and responsive.

§ GREEN AND BEYOND

§ SMART WORK

§ NEW INTELLIGENCE § DYNAMIC

INFRASTRUCTURE

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© 2012 IBM Corporation

Smarter Business Essay Competition

Let’s Build a Smarter Planet

Retail

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© 2012 IBM Corporation

Smarter Business Essay Competition

Changes impacting the retail industry

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IBM Internal Use Only © 2009 IBM Corporation

Building a smarter planet

3

SOCIOECONOMIC !  Global financial crisis and credit

crunch !  Consumers in major markets

spending less (constrained by income)

!  Growth markets resilient !  Product and food safety !  Environmental concerns

COMPETITIVE !  Industry consolidation and

proliferation of private label !  Reduced barriers to entry and

new business models

CONSUMER BEHAVIOR !  Decreased spending ability and �Flight to value� amid job insecurity and inflation

!  Technology savvy and informed, with high expectations from online ratings to e-coupons

!  Increasingly concerned about food/product safety and environment

TECHNOLOGICAL !  Pace of technology change

such as pervasive connectivity !  Consumer adoption of

technology, mobile devices, and social networking

!  Security and compliance

The global economic crisis has been a catalyst for change, forcing retailers to address many other changes impacting the industry.

Changes Impacting the Retail Industry

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IBM Internal Use Only © 2009 IBM Corporation

Building a smarter planet

4 Limited Endless

As a result, consumers are becoming Smarter – increasingly intelligent, instruments and interconnected

Store POS

Web Site

Mobile

Source: IBM Global Retail Industry

Immersive

Call Center

Social Web

Store Kiosk

© 2012 IBM Corporation

Smarter Business Essay Competition

Consumers are becoming Smarter -

increasingly

- intelligent, - instrumental, and- interconnected

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Page 21: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

Let’s Build a Smarter Planet

Banking

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© 2012 IBM Corporation

Smarter Business Essay Competition

Changes impacting the financial industry

22

Building a smarter planet: Financial Services

IBM Internal Use Only © 2009 IBM Corporation 3

There are dramatic forces of change across financial institutions

CLIENTS Rapidly evolving expectations for

offerings, service unbiased advice, and convenience

REGULATION Radically increased oversight

ushering in a new era of increased government

intervention

TRUST Rebuilding trust and confidence across the system is critical to

future growth and stability

CAPITALIZATION Mature markets and

emerging markets alike focus on rebuilding their

capital reserves

COMPETITION Intensified competition with

increased M&A, divestitures and entrance of non-bank service

providers

ECONOMY Weak conditions impact

investment decisions and reduce need for financial services

Page 23: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

The global financial system is highly complex with many stakeholders

23

Building a smarter planet: Financial Services

IBM Internal Use Only © 2009 IBM Corporation

The global financial system is highly complex with many stakeholders and requires new approaches to create value

4

• The global financial system is massively interconnected and interdependent

• An adaptive system which is a complex network – evolving organically

• The number of intersection points of the financial services networks across the 18 largest countries increased 14x in 20 years1

• The system moves more than $74T around the world each day

• Digitization of the “real economy” has transformed availability of information and how decisions are made

• Anonymity and susceptibility make the system an attractive target for criminal elements

• The system intermediates the needs of billions of people in 190 countries - in thousands of languages.

1 – Rethinking the Financial Network, Andrew Haldane, Executive Director, Financial Stability, Bank of England

Policy makers

Regulators Supervisors

Financial institutions

Compliance

Laws and rules

Surveillance and monitoring

Standards

Soundness Stability

Building a smarter planet: Financial Services

IBM Internal Use Only © 2009 IBM Corporation

The global financial system is highly complex with many stakeholders and requires new approaches to create value

4

• The global financial system is massively interconnected and interdependent

• An adaptive system which is a complex network – evolving organically

• The number of intersection points of the financial services networks across the 18 largest countries increased 14x in 20 years1

• The system moves more than $74T around the world each day

• Digitization of the “real economy” has transformed availability of information and how decisions are made

• Anonymity and susceptibility make the system an attractive target for criminal elements

• The system intermediates the needs of billions of people in 190 countries - in thousands of languages.

1 – Rethinking the Financial Network, Andrew Haldane, Executive Director, Financial Stability, Bank of England

Policy makers

Regulators Supervisors

Financial institutions

Compliance

Laws and rules

Surveillance and monitoring

Standards

Soundness Stability

Building a smarter planet: Financial Services

IBM Internal Use Only © 2009 IBM Corporation

The global financial system is highly complex with many stakeholders and requires new approaches to create value

4

• The global financial system is massively interconnected and interdependent

• An adaptive system which is a complex network – evolving organically

• The number of intersection points of the financial services networks across the 18 largest countries increased 14x in 20 years1

• The system moves more than $74T around the world each day

• Digitization of the “real economy” has transformed availability of information and how decisions are made

• Anonymity and susceptibility make the system an attractive target for criminal elements

• The system intermediates the needs of billions of people in 190 countries - in thousands of languages.

1 – Rethinking the Financial Network, Andrew Haldane, Executive Director, Financial Stability, Bank of England

Policy makers

Regulators Supervisors

Financial institutions

Compliance

Laws and rules

Surveillance and monitoring

Standards

Soundness Stability

Page 24: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

These conditions require new approaches to create value

24

Building a smarter planet: Financial Services

IBM Internal Use Only © 2009 IBM Corporation

Winners will focus on three key imperatives

7

Develop enterprise wide capabilities to enable informed judgment, client- centricity and profitable growth

Achieve compliance objectives while mitigating operational risk, fighting crime and optimizing financial returns

Drive a simplified and streamlined agile enterprise that balances growth, efficiency and business resiliency

Integrate risk management

Develop new intelligence

Reinvent the business model

Building a smarter planet: Financial Services

IBM Internal Use Only © 2009 IBM Corporation

Winners will focus on three key imperatives

7

Develop enterprise wide capabilities to enable informed judgment, client- centricity and profitable growth

Achieve compliance objectives while mitigating operational risk, fighting crime and optimizing financial returns

Drive a simplified and streamlined agile enterprise that balances growth, efficiency and business resiliency

Integrate risk management

Develop new intelligence

Reinvent the business model

Building a smarter planet: Financial Services

IBM Internal Use Only © 2009 IBM Corporation

Winners will focus on three key imperatives

7

Develop enterprise wide capabilities to enable informed judgment, client- centricity and profitable growth

Achieve compliance objectives while mitigating operational risk, fighting crime and optimizing financial returns

Drive a simplified and streamlined agile enterprise that balances growth, efficiency and business resiliency

Integrate risk management

Develop new intelligence

Reinvent the business model

Winners will focus on three key imperatives

Page 25: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

Let’s Build a Smarter Planet

Smarter Commerce

25

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© 2012 IBM Corporation

Smarter Business Essay Competition

Supply-Chain Executives face three significant challenges

26

VolatilityComplex market conditions causing constant flux in demand

Visibility Need for integrated, timely information to make rapid decisions

Value Constant pressure for the supply chain and operations to create enterprise value

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© 2012 IBM Corporation

Smarter Business Essay Competition

Visionaries and planners are building strategic, smarter supply chain capabilities

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4 New rules for a new decade

Visionaries also enjoy enhanced return on their efforts and investments. Based on our analysis, these enterprises experi-ence higher return on invested capital and higher revenue growth performance than the others (see page !").

New rule #1: Know the customer as well as yourself. Smooth volatility with predictive demand. From interviews conducted in our CEO study, we learned that #$ percent of top executives view volatility in the new economic environment as their largest concern." When CEOs speak of volatility they refer to deeper/faster processing cycles, such as order to cash and procure to pay. Volatility has been a serious challenge in the past several years for supply chain executives, as well.

Responding to volatility in market conditions, and the resulting customer demand patterns, has proved to be the biggest challenge for supply chain executives and, not surpris-ingly, a key investment area. Still feeling the repercussions of the worst economic downturn in decades, many companies are currently focused on stabilizing their businesses against this volatility.

Even though surveyed executives rated demand variability and changing customer expectations as their two biggest challenges – ahead of even cost containment – they are responding to these impediments in different ways. Some, such as operators, are hunkered down, focused on operational improvement and a return to “business as usual.” Operators are doing rudimentary

Visionariesq� Predict demand and immediately respond across their networks

q� Use business intelligence and analytics

q� Collaborate with supply chain partners

q� Optimize inventory, cost and their global network

q� Utilize variable cost structures

Plannersq� Employ enterprise S&OP

q� Focus on cost reduction/containment

q� Enhance visibility to key partners with dashboards

q� Use network distribution planning

Operatorsq� Use rudimentary planning

q� Emphasize cost reduction/containment

q� &NQMPZ�åYFE�TUSVDUVSFT�QSPDFTTFTq� 'PDVT�PO�QSPEVDU�æPX�XJUI�MJUUMF�JOUFHSBUJPO

Never 5-10 years 3-5 years 1-2 years Now

6LJQLðFDQW

Impressive

6WDEOH

None

Source: IBM Institute for Business Value.

Figure 2: Visionaries and planners are building strategic, smarter supply chain capabilities.

Strategic capabilities over time

Fina

ncia

l ret

urns

Page 28: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

Let’s Build a Smarter Planet

Sustainability

28

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© 2012 IBM Corporation

Smarter Business Essay Competition

Why sustainability?

29

Competitive differentiation and positive brand image

Cost efficiencies in energy, water and waste management

Potential for gaining share of new and growing market segments

Page 30: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

Strategy

Innovators use sustainability strategy to become industry leaders

30

6 Driving performance through sustainability

Innovators standout on strategyThe innovators indicated that their sustainability strategy is core to their overall business strategy. When asked about the strategic objectives of their sustainability programs, innovators most often cited competitive advantage, followed by industry leadership and enhanced brand (see Figure !). For the rest of the population, the top response was customer demand, followed by competitive advantage and cost ef"ciency.

The innovators strive to become industry leaders, and they focus on innovative sustainable practices to achieve this goal. Their priorities focus on environmental challenges (#$ percent), social challenges (%& percent) and outside-the-enter-prise broader economic challenges (%' percent).

Many innovators are involving stakeholders in their sustain-ability activities, communicating their plans and proffering their strategies as a tool to recruit new employees. Many are engaging the extended enterprise – including customers, suppliers, partners, NGOs and other interested parties – in the co-creation of innovative sustainability strategies. In addition, realizing the importance of goal setting, innovators monitor their performance against clearly articulated goals, targets and measures and report their successes to employees, customers, business partners and shareholders.

Our innovators understand that a sustainability strategy is the foundation that supports a comprehensive program and true value achievement. Innovative companies – those leading the way with well-developed strategies – articulate a sustainability vision and accompanying strategy that are core to the overall business strategy and position them for competitive advantage.

Customer demands

Competitive advantage

$PTU�FGåDJFODZ

&OIBODFE�CSBOE

Regulatory compliance

*OEVTUSZ�MFBEFSTIJQ

0QFSBUJPOBM�FGåDJFODJFT

$BSCPO�GPPUQSJOU�SFEVDUJPO

Market opportunities

Differentiated products/services

4PVSDF�������*#.�*OTUJUVUF�GPS�#VTJOFTT�7BMVF�BOE�&TUZ�&OWJSPONFOUBM�1BSUOFST�4VTUBJOBCJMJUZ�3FTFBSDI�4UVEZ�

Figure 3: Strategic objectives.

What are the strategic objectives of your sustainability strategy?

27%27%

45%23%

18%23%

32%22%

27%22%

36%21%

27%19%

27%17%

32%15%

18%13% Others

Innovators

#1 differentiator

#3 differentiator

#2 differentiator

Page 31: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

Let’s Build a Smarter Planet

Social Business

31

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© 2012 IBM Corporation

Smarter Business Essay Competition

Social Businesses have distinct characteristics that distinguish them from other organizations

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At their core, they are...Engaged deeply connecting people to be involved in productive, efficient ways

Transparent providing line of sight across traditional boundaries and better aligning actions to needs

Nimble speeding upbusiness with insight toanticipate and addressevolving opportunities

They activate networks of people that apply relevant content and expertise to improve and accelerate how work gets done, delivering unprecedented return for the time invested

Page 34: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

CIOs are also reporting a shift in investment consistent with these trends

34

According to the 2012 IBM CIO Study:

66% of CIOs from top-performing organizations see internal communication and collaboration as key to innovation

74% of CIOs see collaboration and communication as a key driver in transforming their organizations

Nearly 3 times as many CIOs in top-performing organizations view Social Network Analysis as a top priority

Page 35: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

Business functions will need to be redefined in a Social Business... but how?

Marketing

CustomerService

Product Development

Human Resources

Smarter Business Essay Competition

Page 36: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

The way the world works is changing—and leaders must lead through the unknown.

Increase in the gap betweenleaders’ need for change andtheir ability to manage it.

8 in 10CEOs anticipate turbulentchange and bold moves.

3x

Source: 2008 IBM CEO Study

Page 37: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

Six imperatives for a Smarter Business

37

Page 38: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

We’ve only just begun to uncover what is possible ona smarter planet.

The world will continue to become smaller, flatter and smarter. We are moving into the age of the globally integrated and intelligent economy, society and planet.

The question is, what will we do with it?

in• Smarter Commerce• Smarter Social Business• Smarter Banking• Smarter Retail• Smarter Sustainability

Page 40: Cbs essay comp smarter planet

© 2012 IBM Corporation

Smarter Business Essay Competition

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