IBM Smarter Commerce 2011

© 2011 IBM Corporation

Smarter CommerceRedefining the value chain in the age of the customer

March, 2011


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Today’s News: IBM Smarter Commerce

� Adding a new services practice with more than a

thousand dedicated experts

� $2.5 billion in commerce-related acquisitions & new

software investments since 2010

� Integrated & globalized product offerings

– New Cloud analytics including an IBM Coremetrics

offering to measure and optimize social presence in

such social media properties such as Facebook and

Twitter.

– IBM will also deliver software solutions that allow

companies to deliver relevant and consistent messages

across all sales and marketing channels - from the web

to email to stores to call centers.

� A Smarter Commerce University dedicated to on-

ramping business partners and new hires

� Communicating overall smarter commerce trend

story and IT solution need in the market

Smarter Commerce

Recent Acquisitions Position IBM as the Only Solutions Provider Integrating All Elements

of the Commerce Lifecycle Spanning Buying, Marketing, Selling and Service

Consulting & Services

Software

Systems & Technology

Research

Smarter Commerce is a unique approach that

increases the value companies generate for

their customers, partners and shareholders in a

rapidly changing digital world. It is designed to

help companies better integrate and more

effectively manage their value chain, including

buy, market, sell, and service processes to put

the customer at the center of decisions and

actions leading to greater customer loyalty,

revenue / margin growth and agility.

IBM Expands Global Business Services With New Smarter Commerce Services, Software


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We have entered the age of the empowered customer

Social networking and mobile commerce have dramatically changed the dynamic between buyer and seller.

Customer expectations of service, price and delivery is soaring.

This is changing the entire way products are sourced, manufactured and distributed—and making business more complex than ever.

Customers now have unlimited access to information and can instantly share it with the world

95 millionNumber of tweets sent via Twitter each day

75%Percentage of people who believe companies don’t tell the truth in advertisements

$93 billionAmount in sales missed due to out of stock inventory


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These disruptive forces ripple from the customer through the

enterprise and across entire industries

Individuals

� The connected consumer

� The networked workforce

� The empowered citizen

Industries

� Value migration

� Value chain redefinition

� Fragmentation

Enterprises

� Evolved business models

� Optimized digital operations

� Connected enterprise

“"The consumer is using new channels to

perceive value, and associated pricing

implications.“Consumer Products CEO, United States

"Profits will shift away from analog

distribution to digital distribution; we

will see increased margins in digital

distribution and increased international

distribution.“Media and Entertainment CEO, United States

Source: IBV Analysis

“Disintermediation of clients by smaller

niche players (such as mobile players) is

cause for concern.“Financial Markets CEO, Canada


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� Understanding and anticipating customer

behavior and needs based on customer

insights across all channels

� Adapting sourcing and procurement based

on customer demand and optimize supplier

interactions across extended value chains

�Marketing, selling and fulfilling the right

product and service at the right price, time

and place

� Servicing customers flawlessly, predicting

and driving customer loyalty

376%

A US-based national communications service provider boosted ROI by reducing customer churn.

70%

A leading provider of teaching, learning and research solutions grew direct-to-consumer commerce revenues.

An international transportation company reduced partner integration time.

95%

Power has shifted to the customer compressing margins

Successful companies are transforming their approach to commerce


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At IBM, we call the path forward: Smarter Commerce

Smarter Commerce is a

strategic approach that

places the customer at the

center of your business

operations

It increases margins by

boosting efficiency at every

stage of the commerce cycle

It synchronizes your

entire value chain to

deliver consistent and

predictable outcomes .

It maximizes the insight

generated through customer

interactions.

It capitalizes on social and

mobile commerce.

It drives growth by enhancing,

extending, and redefining the

value you provide.

It improves collaboration

and visibility for your

customers & partners.

Customer


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Smarter Commerce focuses on three dimensions centered around the customer

In today’s world of

instant business, you

need deep insights, in

real-time that you can

turn into immediate

action

In turn, you must re-

think how your

customers define

value, and the

changes you must

make to your value

chain so you can

deliver exactly what

your customers

want - profitablyYou need an approach

that allows you to more

effectively Connect,

Collaborate, Conduct

Commerce and Create a

differentiated customer

experience.

Customer Insight Customer Value Strategy

Customer & Partner Engagement

… increasing the value companies generate

for their customers and partners in a rapidly

changing digital world

Customer


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Smarter Commerce can help transform

every phase of the commerce cycle

BuyDrive intelligent,

adaptive and

optimized

extended supply

chains based on

customer demand

MarketCreate

personalized and

relevant offers

with unified cross-

channel marketing

ServiceAnticipate

behavior and

deliver flawless

customer service

across all

channels

Sell Enable

customers and

partners to

buy any offer

from any supplier

across any

channel

Sourcing, controlling

and procurement of

goods and services

Targeted and

personalized

marketing across all

customer interactions

Selling and fulfillment

of products and

services across

all channels

Servicing

customer needs

across all

interaction

channels

MarketBuy

Service Sell

Customer

InsightStrategy

Engagement


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IBM’s integrated portfolio for Smarter Commerce

Buy Market Sell Service

Core Business Processes

CORE BUSINESS SOLUTIONS

VALUE CHAIN STRATEGY AND SERVICES

Advanced AnalyticsStore analytics | Purchase analytics | Consumer loyalty | Predictive and prescriptive | Social Analytics | Master data management

Market and customer mgmtAligning sales, marketing and operations

to engage with customers

Innovation and business valueInnovating and aligning business models to

drive value to the customer

• Trading Partner Mgmt

• Supplier Management

• Supply Chain Visibility

• Logistics Management

• Inventory Optimization

• Predictive Analytics/Modeling

• Behavioral Segmentation

• Cross-channel Campaign Mgmt

• Search Optimization, Ad

Targeting

• Marketing Resource Mgmt

• B2B / B2C Cross-channel

commerce

• Distributed Order Orchestration

• Fulfillment and Supply Chain

Optimization

• Mobile Commerce

• Retail Store

• Delivery & Service

Scheduling

• Customer Self Service

Enablement

• Reverse Logistics

• Case Management

Operating and Organization ModelsDesigning operations, supply chain and the

organization model to deliver customer value

Workload Optimized Systems(Z-Enterprise, Power, X, Storage and Systems Software)

focused on agility, integration and automation to drive relevant business outcomes


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� Manage Marketing across Multiple Interaction Channels– Cross-channel marketing strategy is defined and planned using Unica

– Coremetrics is used to track consumer actions, and make relevant recommendations

– The e-commerce web site and order capture is provided by WebSphere Commerce

– Customer experience with responsive interaction is guaranteed by workload optimized systems

Solution ScenarioPlanning, coordinating & executing marketing campaigns to stimulate commerce demand

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Generate demand with Unica eMessage(email creation, delivery, tracking

Marketing messages and campaigns are defined and

planned using Unica Campaign

Deliver custom landing pages with targeted messages and promotions via WebSphere

Commerce Precision Marketing

Web

MobileRetail Store Systems

Store

Optimize display and search results with Coremetrics AdTarget and Coremetrics Search

Insights from social media, third party websites, purchase history ,etc

Capture responses and refine


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� Offer regional product promotions and optimize inventory location

– ILOG is used to optimize the logistics network

– Network details are deployed into the Sterling Transportation Management System

– Sterling Supply Chain Visibility monitors flow of inventory vs. annual norms

– WebSphere Commerce leverages this intelligence to issue custom regional promotions

OR Regional promotion to sell Denver inventory faster is delivered via WebSphere

Commerce Precision

Marketing

Warm winter in Denver results in excess snow

blower

inventory…

…meanwhile, a cold spell in Boston is

causing back orders due to lack of

inventory

Supply Chain Visibility

Sterling

Trigger an inventory movement of snow blowers from Denver to Boston

lLOG Logistics Network Optimization

Solution ScenarioLeveraging supply chain intelligence to shift inventory & execute regional promotions

Capture results for future supply and inventory


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IntegratedComprehensive

Outcome Driven Flexible and Open

What is unique about IBM’s Smarter Commerce?

� Optimizes the

complete commerce

lifecycle

� Leading software,

services and

infrastructure

� Integrated analytics

� Integrated focused

industry solutions

� Measureable business

outcomes

� Outcomes tailored to

business domains

� Flexible deployment

� Modular offerings and

flexible consumption12

Suppliers

Influencers

PartnersCustomers IBM Smarter Commerce


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INNOVATION

RESEARCH

INVESTMENT

EDUCATION

Software: $2.5+ billion investment in best of breed buy-market-sell software since 2010

Services: Global Business Services expanding its consulting and solutions capabilities for commerce with a new practice

IBM Smarter Commerce: Making it Real

IBM Research Innovation: 3000 researchers , including in the areas of customer insight, financial management, social business and supply chain

Enabling our Ecosystem: An IBM Smarter Commerce University dedicated to on-ramping business partners, new hires and consultants

Business Analytics & Optimization: 14 billion in analytics focused acquisitions. The BAO practice has 8,000+ dedicated business consultants with industry expertise

Smarter Computing: Over 25,000 hardware and 25,000 software developers. IBM is investing in Workload Optimized Systems to help companies manage the needs driven by commerce applications


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What does Smarter Commerce mean to these clients?

Staples

For Staples, a $24B retailer,

Smarter Commerce means

transforming the customer

experience across all

interaction channels by

delivering a personalized

buying experience for over

10,000 B2C and B2B customers

in 27 countries

ING Bank

For ING Bank, serving over 85M

customers, Smarter Commerce

means transforming their

marketing so personalized

product offers can be delivered

across multiple channels in real

time resulting in €20M increase

in corporate earnings, 35%

reduction in marketing costs,

and shorter cycle times

Crocs

For Crocs, a $700M

manufacturer, Smarter

Commerce means transforming

their fulfillment operations and

supply chain so internet

customer orders are filled with

100% accuracy through their

network of suppliers at the

lowest cost


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Buy Market Sell Service

Core business processesCORE BUSINESS SOLUTIONS

VALUE CHAIN STRATEGY AND SERVICES

Advanced analyticsStore analytics | Purchase analytics | Consumer loyalty | Predictive and prescriptive | Social Analytics | Master data management

Sourcing and procuring goods

and materials required to

deliver products and services to

meet customer demand

Selling and fulfillment of products

and services across multiple

channels to drive sales

Servicing customer needs across

all interaction channels to drive

repeat sales and enhance lifetime

value of a customer

• Cross-Channel Order Capture, Cart

and Catalog

• Customer-centric Shopping Experience

• B2C/B2B StorefrontsCoremetrics• Digital Analytics

• Behavioral Segmentation

• Search Optimization, Ad

Targeting, and Real-time

Website

Recommendations

Sterling Commerce• Cross Channel Order

Management

• Configuration

• Pricing

• Multi-vendor catalog

• Quoting

Sterling Commerce• Distributed Order Management

• Warehouse Management

• Transportation Management

• Supply Chain Visibility Sterling

Collaboration Network/B2B Services

Unica• Cross-channel

Campaign Mgmt

• Real-time Decisioning,

Event Detection, and

Contact Optimization

• Operations Mgmt

ILOG Supply Chain• Network Optimization

• Transportation Optimization

Sterling Commerce• Warehouse Management

• Transportation Management

• Supply Chain Visibility

• Sterling Collaboration

Network/B2B Services

ILOG Supply Chain• Product Optimization

• Inventory Optimization

Retail Store Solutions

• Retail POS Solutions

• Self-Service Portal/Kiosk

• POS Applications

Sterling Commerce• Delivery & service Scheduling

• Reverse Logistics

IBM Case Manager• Case Design, Run-time, Analytics

• Collaboration

• Rules & Events

PureScale Application Systems

Smart Analytics System BPM Suite

Integration across best-of-breed products to deliver industry focused solutions

Workload Optimized Systems(Z-Enterprise, Power, X, Storage and Systems Software)

focused on agility, integration and automation to drive relevant business outcomes

Developing, delivering, and

measuring relevant and consistent messages across multiple channels

to drive demand


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� Provide a consistent view of a consumer’s order across multiple interaction channels– Coremetrics is used to track consumer actions, and make relevant recommendations

– The e-commerce web site and order capture is provided by WebSphere Commerce

– Sterling Order Management maintains a consistent view of the consumer’s order

– The POS from Retail Store Systems integrates with the entire system

Consumer is shown a web ad for a new TV. Ad content selected by Coremetrics.

Consumer completes the purchase using WebSphere Commerce

Phones the call center or engages online to change the order from delivery to pickup. Process powered by Sterling Order Management

Visits the store to pickup the TV, views the order via the IBM RSS POS

Unica prompts the POS to recommend an offer on new speakers and local installation services … sold!

Decides to extend the order, from a mobile device

Solution ScenarioA unified, cross-channel shopping experience

Capture responses and refine


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Challenge

Solution

Results

Customer Profile

Staples enables customers to shop seamlessly across all channels

� Automated support for diverse policies, contracts, buyer roles on a single platform

� Over $1Billion (70%) of total B2B sales driven through site

� Support a personalized, customer-centric experience for B2C customers

� Support multiple B2B customers buying under multiple contracts, with buyers that have differing levels of purchase authority

� Single IBM commerce platform handles both B2B and B2C

� 10,000+ buying organizations each see contract-specific pricing and policies

Staples sells office supplies,

technology, furniture and business

services to consumers and

businesses in 27 countries around the

world.


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ING Bank coordinating marketing outreach to consumers

� €20 million increase in corporate earnings attributed to

increased marketing effectiveness

� Annual direct mail costs reduced by 35%

� Campaign cycle time reduced to maximum of 4 weeks

� Multiple bank brands, driving 60 million pieces of direct mail

each year, were merged into one

� Campaign management process was disconnected, costly

and involved too many stakeholders

� Marketing costs were increasing while response rates were

declining

� Unified cross-channel solution controls marketing via direct mail, email, web, call center and branches

� No marketing silos: a centralized customer intelligence team has the tools to plan and execute multichannel marketing campaigns

Challenge

Solution

Results

Customer Profile

ING offers banking, investments, life

insurance and retirement services to over

85 million private, corporate and

institutional clients in more than 40

countries.


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Dal-tile delivers perfect order orchestration

� A sales center could only see what they had available in their individual store

� Existing system was costing them time and money due to its inflexibility

� Manage all of the customer needs through a single sales center

� IBM® Sterling Order Management reduced order fulfillment costs by efficiently orchestrating order and service fulfillment

� Flexibility for future growth required to meet changing customer demands

Challenge

Solution

Results

� Stores can capture and modify orders through a single system for all delivery methods — including home delivery, in-store pickup, and plant delivery

� Enables Dal-Tile to keep inventory at a minimum and reduce their inventory costs

� A sales center could only see what they had available in their individual store

� Existing system was costing them time and money due to its inflexibility

� Manage all of the customer needs through a single sales center

� IBM® Sterling Order Management reduced order fulfillment costs by efficiently orchestrating order and service fulfillment

� Flexibility for future growth required to meet changing customer demands Customer Profile

Dal-tile designs, manufacturers, and

distributes ceramic, porcelain, glass, metal,

and natural stone tile products to the

construction and development,

architecture, and do-it-yourself markets.


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Challenge

Solution

Results

SXC health solutions enables secure information exchange

� Comprehensive integration serving as their hub for inbound and outbound data

� Secure and reliable exchange of data

� Due to the amount of information being sent to all aspects of the pharmaceutical supply chain, SXC must have a secure and reliable system for data exchange

� IBM® Sterling Business Integration Suite Process provides visibility allowing SXC to check all attributes of their files and exchange data securely

Customer Profile

SXC is a key player in the pharmacy

supply chain, providing eligibility,

enrollment, payment, claims and

reporting data.

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