IBM at the Crossroads

IBM at the Crossroads

Team 3- “Bad Assets”: Annie Purcell, Evan Augello,

Richard DiBlasio, Eliot Lichtenberg, Klaudia Szczerba

Agenda● Issues to be Analyzed

● Background

● Internal Analysis

● External Analysis

● Alternative Solutions

● Our Recommendations

● Implementation Process

● Expected Results

● Questions

Issues to be Analyzed

Relevant Background● History of reacting to change slowly, but eventually always reinvents itself

● Began as hardware company → Emphasis on consulting and software → Cloud

Computing and Data Analytics

● Since 2009 international sales have decreased, mainly from Europe and the

Middle East

● October 2014 was 10th consecutive quarter of flat/declining sales

Offerings and Market Segments

Since 2002- Hardware, Software, Services Revenue by Geographic Segment- 2014

Tangible Resources:

● Buildings in 170

Countries

● Cloud, Big Data &

Watson

Intangible Resources:

● Human Capital

● R&D/Innovation

● Momentum within BD&A

and Cloud Computing

markets

Core Capabilities:

● Cognitive Computing

● Security Reputation

● Longevity of Brand

Internal Analysis

Review of Financials 2010

(Numbers in Millions)

PPE, Net: $14,097

Long-Term Debt: $21,846

Total Liabilities: $90,280

Total Stockholder’s Equity: $23,046

2014(Numbers in Millions)

PPE, Net: $10,771

Long-Term Debt: $35,074

Total Liabilities: $105,518

Total Stockholder’s Equity: $11,868

Stock Price

External Analysis

Alternative Solutions

1

• Focus on Big Data Analytics and becoming first mover in AI (Watson)

• Supported by Strategic Alliances and Development of B to C Operations

• Rebuild lost revenues from Government contracts

3

• Continue the Firm/CEO’s approach of “Doubling Down” on Cloud

Computing

4• Develop Hybrid Cloud to compete with Amazon’s offerings

2

Recommendation● Expand BD&A through the use of Watson’s cognitive computing

○ Marketing campaign to inform public of critical impact of big data

○ First Mover in AI- Watson

○ Develop B → C Operations to increase revenues

○ Strategic Alliances

● Still must maintain cloud computing & other sectors of business

● Continue to look for strategic acquisitions to gain new technology

● All on a global basis

Phase 1: Develop B → C Operations● Partnerships to develop B → C operations

○ Example: Apple- Siri & Watson

○ Partners both on domestic and global scale

● Reach consumer market to increase

revenues & compete more effectively

● Will increase brand awareness & inform

the public of the power of Analytics

● Achieve through developing BD&A

Strategic Unit

Phase 2: Strategic Alliances ● Partner with Universities to increase familiarity with platforms

○ Both domestic universities & abroad

○ Goal of 50 Universities by 2020

● Create training program for BD&A

● Will also increase brand awareness and enhance image with younger demographic

Phase 3: Marketing Campaign/Brand Enhancement● Launch global marketing campaign

around Watson

○ Transform image as old company to

become viewed as innovative brand

○ Enhance brand understanding- What does

IBM do?

● University partnerships and new

presence in consumer markets as

previously mentioned will enhance

campaigns success

Implementation Timeline

Expected Results

Questions & Comments…

Appendix ● Big Data and analytics. Our analytics business grew

7 percent to $17 billion in 2014. We are driving growth by helping our clients integrate all data sources — structured and unstructured — and apply a range of analytics — descriptive, predictive and prescriptive. We combine

this capability with deep knowledge of industries and professions. Our analytics portfolio draws upon more than 30 acquisitions and includes nine Analytics Solutions Centers with an ecosystem of more than 6,000 business partners. Further, we are creating the next stage of Big Data and analytics with cognitive computing.