IBM 2012 Annual Report Download - page 4

• We make markets by client: We unlock new opportunity
within our existing client base by creating capabilities
for a new generation of IT buyers
— from chief marketing
ocer to chief financial ocer to the head of human
resources and more. I discuss this in greater depth below.
We reinvent core franchises: Our System z enterprise
server, introduced in 2012, is just the latest reinvention
of the mainframe, and it drove System z’s largest capacity
shipment ever during the fourth quarter
— with more
than half of that growth coming from Linux workloads.
Core software platforms such as WebSphere have been
entirely transformed. And Information Technology
Services, which was once a significant reseller of others’
technology
— generating good revenue but low margins —
has shifted significantly to high-value services such
as data center energy eciency, security, and business
continuity and recovery. This has contributed to a
6-point pre-tax income margin improvement in services
since 2000.
We remix our skills and expertise: An innovation model
means continuously remixing and deepening our expertise.
For example, over the past three years we have increased
our skill base in analytics by more than 8,100 experts.
We have also added nearly 9,500 sellers in key areas of
industry expertise
— such as healthcare, energy, telecom
and banking, as well as emerging sectors such as metals
and mining. This year, IBM Global Business Services and
IBM Research will launch the IBM Client Experience
Lab, as well as joint GBS and Software practices in social
business and mobility
— including a tripling of our skill
base in social and mobile technologies and doubling our
skill base in Smarter Commerce.
We reinvent the enterprise itself: We have been highly
disciplined about driving productivity
— through the
adoption of common, shared operations and systems; the
streamlining of enterprise-wide processes; and the leveraging
of global skills
— all in the service of global integration.
And we are now taking the next step, becoming a Smarter
Enterprise:
• In part, this means applying analytics to every part of our
business
— changing how we manage risk, drive eciency,
increase marketing eectiveness and infuse business
insight across the company.
• In part, it means using social technologies to identify
IBM experts and enable them to deliver their knowledge
and leverage our entire portfolio to create a seamless,
high-value client experience.
This ongoing transformation gives us confidence that
we will achieve our goal of $8 billion in productivity
savings over the course of our 2015 Road Map. Sixty
percent of our productivity savings are reinvested
in the business.
Revenue Increase for IBM Growth Initiatives in 2012
For the year ended December 31: 2012
Smarter Planet 25%
Business Analytics 13%
Cloud 80%
Growth Markets 7%*
* at constant currency
We use our strong cash flow strategically: Our cash flow
generation fuels reinvestment in the business
— in R&D,
capital expenditures and acquisitions. At the same time,
we deliver consistently strong returns to you, our owners.
3
A Letter from the Chairman