© 2014 IBM Corporation Transportation Industry Cloud Point of View Institute for Business Value Partner’s Name, Partner’s Title DD Month YYYY

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  • 2014 IBM Corporation Transportation Industry Cloud Point of View Institute for Business Value Partners Name, Partners Title DD Month YYYY
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  • 2014 IBM Corporation IBM Institute for Business Value Executive summary Cloud computing is not new to the transportation sector, but most transport providers have only just started to understand the power of cloud computing to not just improve efficiency, but also to transform collaboration paradigms and business models Companies in the transportation sector are hungry for cloud-driven improvements because competitive pressures and customer expectations are making it harder to sustain profits Cloud projects are attractive in the transportation sector because they help convert capital expense into operating expense, which frees up funds for innovation and other investments Several companies in the industry are exploring more transformative uses of cloud computing, including solutions to work around legacy back office and transaction support systems, and to collaborate more effectively with ecosystem partners IBM is uniquely positioned to help transportation companies envision and implement innovative cloud-based strategies 2
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  • 2014 IBM Corporation IBM Institute for Business Value 3 IBM can help 2 Traditional transportation operating models will evolve 1 Cloud will transform the global transportation industry 3
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  • 2014 IBM Corporation IBM Institute for Business Value Transformative technologies are disrupting industries 4 Source: [1] http://www.forbes.com/sites/peterhigh/2013/08/05/meg-mccarthys-climb-from-cio-to-evp-of-operations-and-technology-at-aetna/ [2] Joint IBV/EIU Cloud-enabled Business Model Survey of 572 business & IT leaders Mobile revolution Connectivity, access and participation are growing rapidly Social media explosion Quickly becoming the primary communication & collaboration format Hyper digitization Digital content is produced and accessed more quickly than ever before The power of analytics Real time analysis, predictive analytics and micro- segmentation emerging Transformational cloud Clouds attributes make it a powerful delivery model enabling new business models, cost benefits, flexibility and large on-demand capacity Gmail is a pioneer example of cloud computing, supported well by advertisement based revenue model, clouds low cost delivery model enabled and sustained free email service Ecosystem of connected health and wellness apps that delivers a consolidated view of users health. Strong & growing ecosystem with 12 APIs and 7 Apps that cover all aspects of health care 1 Xerox Mobile Print platform uses cloud to convert and process print requests, removing complexity, reducing costs and enabling diverse devices and print configurations 2
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  • 2014 IBM Corporation IBM Institute for Business Value The transport sector is also impacted by these disruptions; necessitating innovation and agility to drive profitable growth 5 FORCES SHAPING GLOBAL TRANSPORTATION IMPLICATIONS FORCES SHAPING CLOUD COMPUTING Market demand for cloud solutions is fueling rapid innovation across all industries and markets Costs and complexity of maintaining legacy systems is skyrocketing, making modernized variable cost based alternatives more attractive Competition among cloud providers is driving down costs Unrelenting competition, unconstrained capacity growth, and continued focus on price keep transport margins low Customers have grown weary of onerous requirements to connect to back office systems Customers express interest in alternative transport solutions Many providers will struggle to maintain status quo solutions Many customers require significantly more flexibility in transport interactions Transportation companies and their customers are eager to adopt cloud solutions
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  • 2014 IBM Corporation IBM Institute for Business Value Relentless pressure on margins coupled with modest growth in transport demand require low-to-no cost industry improvements 6 Low margins across all transport sub-sectors Shipping and Tracking struggle with particularly low margins, typically less than 3% Even the most profitable transport segment, air freight and freight services produces margins that are less than 5% Compared to the services sector, all areas of transportation produce modest returns on equity With no profit, shipping produces no return on equity Source: Yahoo finance industry analysis tool, YTD June 2014: http://biz.yahoo.com/p/773qpmu.htmlhttp://biz.yahoo.com/p/773qpmu.html Relative Return on Equity, 2014 Relative Profit Margins, 2014 ServicesAir Delivery & Freight Services TruckingShipping ServicesAir Delivery & Freight Services Trucking Shipping 28% 23% 14% 0% 5.8% 4.9% 2.7% -0.3%
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  • 2014 IBM Corporation IBM Institute for Business Value As they advance along their transformational journey, transportation leaders focus on four key imperatives 7 CREATE A CUSTOMER FOCUSED ENTERPRISE INCREASE FLEXIBILITY AND STREAMLINE OPERATIONS DRIVE INNOVATION WHILE MANAGING COST OPTIMIZE ENTERPRISE RISK MANAGEMENT Cloud computing improves efficiency, expands innovation potential and drives revenue growth Optimize data and leverage analytics to adapt to new behaviors, cultivate trust, and drive profitable growth Improve operating leverage with variable cost structures that increase flexibility and reduce risk Deliver new services quickly that decrease cost per transaction and drive competitive differentiation Maximize return on equity, combat fraud and mitigate operational risk while achieving compliance objectives
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  • 2014 IBM Corporation IBM Institute for Business Value In order to address industry challenges and manage changes, business leaders can leverage cloud to transform their businesses 8 Shifts CapEx to OpEx Shifts cost from fixed to variable, pay as you go Cost flexibility Business Scalability Market adaptability Masked complexity Context-driven variability Ecosystem connectivity Allocate and release resources based on demand Gain from scale economics Speeds time to market Supports rapid prototyping and innovation Expands product sophistication Simpler for customers/users Drives context-driven, user-centric experiences (preferences, movements, behaviors) Facilitates new value nets of partners, customers and other external players Enables industry platforms Cloud empowers six potentially game changing business enablers Cloud computing is a pay-per-use consumption and delivery model that enables real-time delivery of configurable computing resources (for example, networks, servers, storage, applications, services). Resource Pooling Broad Network Access Rapid Elasticity On-demand self service Measured service Clouds essential characteristics Source: NIST, IBM IBV Power of cloud study
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  • 2014 IBM Corporation IBM Institute for Business Value Cloud enabled collaboration, analytics, and mobile delivery, increases flexibility and make it easy to compose business functions 9 CLOUD ENABLES COMPOSABLE BUSINESS MODELS Ability to restlessly re-invent applications, services and processes Assembled from blocks of capability that can be rapidly changed Small (Micro) blocks perform simple tasks reducing risk of using and changing Well defined interfaces (APIs) makes blocks easy to use and share Blocks share data to take advantage of analytics A Collaborative Enterprise Leveraging Advanced Analytics Delivering Insight Where it is Most Needed Employees, customers, and business partners are connected in real time to coordinate deliveries, arrange customs clearance, and process insurance claims The days of transportation companies depending on the local knowledge of staff and partners are gone intelligent systems take in data and calculate optimal solutions automatically The entire database of legacy records information about shipper volumes, and access to unstructured market trends, will allow companies to dramatically improve forecasting and capacity planning
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  • 2014 IBM Corporation IBM Institute for Business Value Cloud enabled mobile solutions, collaboration tools and analytics will improve the customer experience and drive operational efficiency 10 Fully automated transaction and billing support Touch-free interactions for both new and existing customers Exception-driven updates for status, delays, customs processing, etc. Seamless integration with partner and customer operational and supply chain management systems CURRENT FRUSTRATIONS Mostly manual quote generation Highly dependent on employee knowledge Significant training period for new customers Frequent data entry/re-entry errors Frustrating complex rate structures Complex back office connections Too many incorrect invoices CLOUD DISRUPTIONS FUTURE OF TRANSPORTATION
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  • 2014 IBM Corporation IBM Institute for Business Value Cloud enables transportation companies to drive transformation by bringing the full power of legacy data to the front line employee 11 Freight Rates for each specific customer, product and market Sales Leads relevant to sales associates, regions, and products Shipment Status real time data about the location and condition of each shipment Financial Details always up to date information about payment terms and past performance for each customer and business partner Insights and recommended actions delivered to the smart phones held by: Dock agents Sales associates Tracking teams Warehouse managers Dispatchers
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  • 2014 IBM Corporation IBM Institute for Business Value C

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