IBM 2007 Annual Report Download - page 20

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Management Discussion
International Business Machines Corporation and Subsidiary Companies
18
Management Discussion ............................ 14
Road Map .........................................................14
Forward-Looking and
Cautionary Statements .....................................15
Management Discussion Snapshot ..................16
Description of Business ............................. 17
Year in Review ..................................................23
Prior Year in Review ........................................37
Discontinued Operations .................................42
Other Information ............................................42
Global Financing ..............................................50
Report of Management ....................................56
Report of Independent Registered
Public Accounting Firm ...................................57
Consolidated Statements ..................................58
Notes .................................................................64
IBM’s Strategy
In IBM’s view, today’s networked economy has created a global busi-
ness landscape and a mandate for business change. Integrated global
economies have opened markets of new opportunity and new sources
of skills. The Internet has enabled communication and collaboration
across the world and brought with it a new computing model pre-
mised on continuous global connection. In that landscape, companies
can distribute work and technology anywhere in the world.
Given these opportunities, IBM is working with its clients to
develop new business designs and technical architectures that allow
their businesses the flexibility required to compete in this new
landscape. The business is also adjusting its footprint toward emerg-
ing geographies, tapping their double-digit growth, providing the
technology infrastructure they need, and taking advantage of the
talent pools they provide to better service the company’s clients.
IBM’s strategy addresses this new era and delivers value to its
clients through three strategic priorities:
FOCUS ON OPEN TECHNOLOGIES AND
HIGH-VALUE SOLUTIONS
The PC era has ended, representing a fundamental shift in the tech-
nology requirements of the company’s clients. IBM is well positioned
to provide its enterprise clients the open technologies and high-value
solutions they will need to compete.
U IBM is leveraging its leadership position in the convergence of software
and services, in SOA, in virtualization, in high-performance chips, in
open and modular IT— continuing its shift from commoditizing seg-
ments to higher value segments with better profit opportunity.
U The company continues to be a leading force in open source solutions to
enable its clients to achieve higher levels of interoperability, cost efficiency
and quality.
DELIVER INTEGRATION AND INNOVATION TO CLIENTS
Changes in the market have caused IBM’s clients to seek flexibility
and innovation in everything from technical architecture to their
business model. In response, IBM is focused on delivering integra-
tion and innovation to its clients — offering them technologies and
services that support real value creation.
U IBM has a long heritage of transforming the business operations of large
enterprises and has earned the trust to be their innovation partner and
global integrator.
U The company has a deep set of global assets and capabilities it is applying
to improve services profitability, both for its clients and for itself.
BECOME THE PREMIER GLOBALLY
INTEGRATED ENTERPRISE
As global networks and technology capabilities change business eco-
nomics, legacy business designs can quickly become noncompetitive.
IBM believes a globally integrated enterprise, designed for this new
landscape can compete effectively and will benefit from the opportu-
nities offered.
U To reshape its business for the global economy, IBM has replaced vertical
hierarchies with horizontally integrated teams.
U Across the business, the company has made significant investments in
emerging markets, taking core processes and functions that were once
managed regionally and shifting them to a globally integrated model.
Looking forward, IBM is confident it understands the economic shift
of globalization, the evolution of the new computing model and the
powerful role of innovation in this new landscape. Its unique capa-
bilities are well adapted to help the company’s clients innovate and
compete effectively in the new landscape.