Joint innovation programs in outsourcing partnerships

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1 T Networked Business Forum Joint innovation programs in outsourcing partnerships Ville Peltola

2 Agenda Who am I and what do I do? Very short IBM overview Outsourcing business overview Innovation - why an important topic for IBM Joint innovation programs with Clients Case examples

3 Who am I and what do I do in IBM This is a wordle. It is a new way of visualizing data, using IBM s publicly available many eyes tool.

4 IBM Overview

5 Outsourcing overview Management Processes Business Processes Applications IT Infrastructure Operational Processes accounting HR finance procurement development maintenance support help desk servers network desktop telecom facilities

6 Outsourcing Full Scope Management Processes Business Processes Applications IT Infrastructure Operational Processes accounting HR finance procurement development maintenance support help desk servers network desktop telecom facilities

7 Outsourcing Multisourcing Management Processes Business Processes Applications IT Infrastructure Operational Processes accounting HR finance procurement development maintenance support help desk servers network desktop telecom facilities

8 Outsourcing 2.0?

9 Outsourcing Services Integrator LOB Dependency Tree ENTERPRISE LINE OF BUSINESS BUSINESS PROCESS SERVICE PROVIDERS Managed according to E2E Business SLAs Tracked against E2E IT SLAs and KPIs { { SERVICES INTEGRATOR BUSINESS SERVICE IT BUSINESS SERVICE service catalogue Application Request IT SYSTEM IT RESOURCE IT MANAGEMENT SERVICE } Managed according to IT SLAs and KPIs Business of IT Dependency Tree

10 Market perspective: Five major shifts Yesterday s services market Future services market IT Solutions Full-scope outsourcing Business Solutions enabled by IT Selective outsourcing and out-tasking 3 Customized offerings Standardized offerings 4 Labor-based business models Asset-based business models 5 Competitive concentration Competitive fracliententation

11

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13 History of Innovations

14 So what does IBM think is Innovation? Innovation 1 = the successful commercialization or application of new ideas, products, technologies or solutions to create tangible value for our clients, our business or society Innovation is more than invention Innovation occurs at the intersection of invention and insight. It s about the application of invention the fusion of new developments and new approaches to solve problems. Sam Palmisano, IBM Chairman of the Board of Directors Innovation is more than just new products or services 2 Opportunities for innovation exist through a companies various processes and external touch points Finance Process. Offering Delivery Business models Value Networks Core processes Process Flexibility Infrastructure performance Products & Systems Solutions Services Channel Brand Customer experience Notes 1- Innovation definition from IBM Corporate learning Innovation Whitepaper 2- modified based on a model from the Doblin Group

15 So what makes IBM special in outsourcing?

16 Dear CEO, how would you like to have our Nobel Prize winning researchers work on your most challenging problems?...

17 Planet IBM

18 IBM Research 8 Global labs > 3000 Researchers > $5B annual R&D budget

19 Diversity of Disciplines at IBM Research Behavioral Sciences Chemistry Computer Science Electrical Engineering Materials Science Mathematical Sciences Physics Service Science, Management & Engineering Science & Engineering Business & Management Technology Innovation Business Innovation Social Innovation Demand Innovation Social & Cognitive Sciences Economics & Markets

20 Different Joint Innovation Models in Outsourcing Small No dedicated resources, innovation included in the governance model X workshops / lab visits / briefings per year

21 Different Joint Innovation Models in Outsourcing Small No dedicated resources, innovation included in the governance model X workshops / lab visits / briefings per year Medium Dedicated but not full time resources from both parties Dedicated IBM Research & Best of Blue contact person Innovation an integral part of the partnership and in the governance model

22 Different Joint Innovation Models in Outsourcing Small No dedicated resources, innovation included in the governance model X workshops / lab visits / briefings per year Medium Dedicated but not full time resources from both parties Dedicated IBM Research & Best of Blue contact person Innovation an integral part of the partnership and in the governance model Large The Full Value Creation Center (VCC) model Senior innovation related executive sponsors from both parties Focus to initiate First Of A Kind (FOAK) projects with IBM Research Participation in the IBM Global Innovation Outlook

23 VCC governance model Lines of Business (LOB) Value Creation Center ( VCC Core Team) Requirements Nominations Traditional Business Executive Sponsors Client Senior Executive(s) IBM Senior Executive(s) Client Co-Leader Program Mgmt IBM Co-Leader Research Advocates Industry Consultants VCC Steering Committee (VSC) Implementation Resources IBM Client Business partners Project Project definition & Statement of Work Identify Resources and Source LOB Business and IT Champion IP Rights Defined Guide Projects Assess and Report Milestones Studies Project Studies Initiatives Key Strategic Direction Initiatives Prioritization Review and transition proj. Client Operating Environment

24 Innovation Process in the VCC Discussions Themes Initiatives (Projects) Employees Customers Step 1 Idea Generation & Identification The VCC reviews the ideas input into it filtering selected ideas into them es Ideas to be progressed are developed into themes with overlapping ideas interlocked Step 2 Review & Discussion Step 3 Theme Selection Themes are qualified into sized and scoped initiatives with positive business cases Step 4 Initiative Development Initiatives are developed into delivery projects to ensure business value delivered Step 5 Project Delivery Value Creation Partners Key: Core VCC Initiative Development Activity Ideas are generated from various sources such as employees, customers and partners and input into the VCC Delivery Project Output from VCC Ideas Not Input into the VCC

25 Open Innovation model Speed Dating Company

26 Case Examples Finnair and Customer Equity Lifetime Management (CELM) Large telco and Social Network Analysis (SNA) Large bank and optimal application consolidation Large bank and customer queue challenge z( i) = Pa( i, k) y( k) + Pm( i, k) wm( k) + Pi( i, k) wi( k) + all machine k all network k all app k i all middleware k all image k Ph( i, k) wh( k) + Ps( i, k) ws( k) + all site k Pn( i, k) wn( k) + Pe( i, external) we( external)

27 IBM Academy Study Why we did the study Lessons learned People. People You don t put paintings into the wall when the house is on fire, You own our heart, you won t get our lungs Aim for quick wins and communicate Don t focus just on IT, try to solve business problems

28 Questions & Answers

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