IBM 2012 Annual Report Download - page 23

2222 Management Discussion
International Business Machines Corporation and Subsidiary Companies
Growth Markets
The company has benefited from its investments over the past sev-
eral years in the growth markets. The focus now is on geographic
expansion of IBM’s presence; on selected industries of the highest
impact and opportunity; on countries’ build-outs of infrastructure
aligned with their national agendas; and, on creating markets and
new business models to serve the different requirements that exist
in these emerging countries. The company’s effort in developing
new growth markets within the African continent is a good example
of this focus. Many of these initiatives are leading-edge, both in tech-
nologies and business models, and are delivering both increased
revenue and margin expansion.
In order to support this growth, IBM continues to invest signifi-
cantly in these markets to expand capacity, to develop talent and to
deepen its R&D capabilities on the ground. At the same time, IBM
continues to leverage talent across the growth markets under its
globally integrated enterprise model to the benefit of both its clients
and the company worldwide.
Business Analytics and Optimization
Business Analytics and Optimization (BAO) is the category of soft-
ware, systems and services that help organizations take advantage
of all the data available to them for better and faster decision making
and process optimization. This includes data that is being labeled
“Big Data,” which is data of extreme volume, data being generated
at a high velocity, and newer varieties of data like blogs, tweets,
pictures, videos, unstructured text created by the explosion of social
media websites and the instrumentation of nearly everything. BAO
is core to achieving a smarter planet, helping leaders of this new
information-centric and insight-driven world infuse intelligence into
their business processes.
Smarter Analytics is IBM’s unique offering for the BAO category.
With Smarter Analytics and the company’s deep expertise, IBM
can help organizations: 1) grow, retain and satisfy customers
through deep insight on individual customers and similar segments;
2) increase operational efficiency through, for example, supply
chain optimization, predictive maintenance, fraud reduction and
optimization of sales incentives and compensation; 3) transform
their financial processes such as planning, budgeting, forecasting,
financial consolidation, regulatory filing and financial reporting; and
4) better manage risk and regulatory compliance.
The company’s approach to analytics is to ensure clients have
complete end-to-end solutions across industries and functional
focus areas like finance, sales, marketing, operations and risk. These
solutions are designed to help organizations: 1) align around all their
data—both traditional and big data—and establish a strong informa-
tion foundation; 2) apply analytics to their data so they can anticipate
and shape business outcomes, identify patterns and gain insights
into future performance; 3) enable workers on the front lines who
collectively make thousands and even millions of decisions daily with
insight that is immediately actionable so they can make the best
possible decision—decisions like what claims to fast track in an
insurance call center, or what offer is the best for each individual
customer who calls a call center; and 4) create a culture that takes
action on analytics and that truly transforms.
IBM is committed to continually innovating across the spectrum
of analytic capabilities, systems, research, services, deployment and
skills. For example, in 2012, the game changing innovations in
Watson were applied to Healthcare and Financial Services, analytic
research like the ground-breaking work being done on temporal
causal modeling and visualization, and investments in analytic skills
and deployment ability in our new Analytics research centers in
Columbus, Ohio and Halifax, Nova Scotia.
Cloud Computing
Cloud is a model for consuming and delivering business and IT
services. It can deliver significant economies, enable new levels of
speed, flexibility and agility and even serve as a transformative plat-
form for business innovation. From a business perspective, cloud
computing is reshaping industry ecosystems, invigorating product
innovation and enabling new business models that leverage new
sources of competitive differentiation. From an IT perspective, cloud
offers improved access to and utilization of information technology
through use of highly efficient virtualization and management tech-
nology, consumer-style user interfaces and ubiquitous connectivity,
including via mobile technologies.
IBM has already helped thousands of its clients adopt and lever-
age cloud computing through its broad portfolio of IBM SmartCloud
products, solutions and services. Organizations moving beyond initial
exploration of cloud computing seek solutions that align with their
specific needs. IBM’s breadth of cloud capabilities gives it a unique
ability to help clients exploit the advantages of cloud. IBM has cloud
solutions that span infrastructure, platform, applications and busi-
ness process services all geared to enable clients to drive significant
business value through the rapid adoption and exploitation of new
cloud capabilities. IBM’s expert consulting, breakthrough technolo-
gies and a portfolio of cloud-based services are squarely focused
on the requirements of the enterprise.
The company offers a full array of cloud delivery models, includ-
ing private clouds, public clouds and a hybrid of both. IBM helps
build out private, on-premises cloud-based environments that pro-
vide the control, security and isolation that clients require for their
most mission-critical workloads. IBM public clouds provide infra-
structure, platforms and applications as rapidly provisioned and
highly-scalable cloud services on a pay-as-you-go basis. Hybrid
clouds provide seamless integration across private and public cloud
models, ensuring the interoperability, portability and scalability that
clients need to realize the full value of cloud.
Business Model
The company’s business model is built to support two principal
goals: helping clients to become more innovative, efficient and com-
petitive through the application of business insight and IT solutions;
and providing long-term value to shareholders. The business model
has been developed over time through strategic investments in
capabilities and technologies that have superior long-term growth
and profitability prospects based on the value they deliver to clients.
The company’s global capabilities include services, software,
systems, fundamental research and related financing. The broad
mix of businesses and capabilities are combined to provide inte-
grated solutions to the company’s clients.