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Chairman’s Letter

A commitment to corporate responsibility pervades IBM, from new hires to the chairman’s office. In this year’s letter, Chairman, President and Chief Executive Officer Sam Palmisano describes IBM’s long-term approach to corporate responsibility, and the IBMers that make it possible.

IBM’s Approach

Through the years, IBM has consistently expanded the definition of corporate citizenship, pushing the boundaries of what is required to be considered a responsible enterprise. In this section of IBM’s 2010 Corporate Responsibility Report, you will find more detail on our approach to corporate responsibility, and some examples of how that approach manifested itself during the past year.

Communities

At IBM we engage with communities around the world by offering our technology, services and expertise to help solve some of the world’s most complex problems. While the monetary value of these contributions is great, we eschew checkbook philanthropy whenever possible. We believe that this approach is the most efficient, effective and sustainable way to practice good corporate citizenship. And we believe it is helping to make the world work better. In this section of IBM’s 2010 Corporate Responsibility Report, you will find examples of the contributions IBM made to the global community this past year.

The IBMer

For the last 100 years, IBM has pioneered innovative approaches to hiring, managing and retaining our work force. From some of the earliest thinking on work force diversity to progressive programs for employee well-being and leadership development, this ongoing commitment to our employees is critical to the success of IBM and IBMers. And as the nature of our business changes, we will continue to apply the same innovation and creativity we use to develop products and services to our relationship with employees. In this section of IBM’s 2010 Corporate Responsibility Report, you will find examples of the commitments IBM made to its work force this past year.

Environment

IBM has long maintained an unwavering commitment to environmental protection, which was formalized by a corporate environmental policy in 1971. The policy calls for IBM to be an environmental leader across all of our business activities, from our research, operations and products to the services and solutions we provide our clients to help them be more protective of the environment. Download this section of the report (2.2MB)

Supply Chain

IBM manages a supply chain of more than 27,000 suppliers in nearly 100 different countries. We understand that managing a supply chain of this size carries with it considerable social responsibility. Even so, we are continually expanding the definition of what it means to run a responsible supply chain, challenging ourselves and our suppliers to reach ever higher standards of social and environmental compliance. In this section of IBM’s 2010 Corporate Responsibility Report, you will find examples of IBM’s supply chain responsibility efforts over the past year.

Governance,
Ethics and Integrity

Both the size and nature of IBM’s business necessitate that it adhere to the highest standards of conduct. IBM employs more than 400,000 employees, and provides services and technology that support businesses, governments, schools, hospitals and highways. As such, integrity, transparency, privacy and risk management are all crucial parts of our business, and our commitment to making the world work better. In this section of IBM’s 2010 Corporate Responsibility Report, you will find examples of how IBM is setting the modern standard for business ethics.

Smarter Cities Challenge

Perhaps no program exemplifies IBM’s integrated approach to corporate citizenship better than the Smarter Cities Challenge. Announced in November 2010, this $50 million competitive grant program will provide teams of IBM experts to 100 cities around the world over the next three years.

The goal of the Smarter Cities Challenge is to provide city leaders with strategies to improve efficiency, spur economic growth, engage citizens and more. IBM consultants will immerse themselves in local issues involving the administration of healthcare, education, safety, social services, transportation, communications, sustainability, budget management, energy and utilities.

Though the Smarter Cities Challenge is a purely philanthropic endeavor, it is well-aligned with IBM’s business strategy. For the last three years, IBM has been building a substantial business in helping cities in both developed and developing countries to collect and analyze critical data. The result is a better understanding of how these complex systems of systems really work, and how they can work better.

The Smarter Cities Challenge takes that expertise and makes it more widely available, because building smarter cities is not just a business challenge, it’s a societal challenge. Cities are already home to more than half the world’s population, and wield more economic power, greater political influence and more advanced technological capabilities than ever before. Simultaneously, many cities are struggling with a wide range of financial and service delivery challenges, in areas as diverse as transportation, energy, clean water, education, social services, public safety and economic development.

An Overview of Smarter Cities Challenge
Video: An Overview of Smarter Cities Challenge

Watch an overview of IBM’s Smarter Cities Challenge.

IBM’s consultants and technology specialists will help municipalities analyze and prioritize their needs, review strengths and weaknesses, and learn from the successful strategies used by other cities. After studying the role that intelligent technology might play in uniting and advancing different aspects of city life, IBM will identify ideas and opportunities designed to help make regions healthier, safer, smarter, more prosperous and attractive to current and prospective residents and businesses.

In keeping with IBM’s area of expertise, a consistent theme will be collecting, sharing, analyzing and acting on data. For instance, IBM experts might suggest ways to link the processes and objectives of multiple departments to reduce cost and improve productivity. A city’s education program could be more effective if it was closely coordinated with social services, transportation, parks and recreation, public health, and safety. Police officers might be more effective if timely, customized information were electronically “pushed” to them while walking the beat or in transit. Citizen engagement could be improved if computer access were more widespread. Snow removal teams might be more efficiently deployed if ultra-precise weather data were obtained and analyzed.

$50 million

of IBM grants to 100 cities around the world over the next three years.

The Smarter Cities Challenge will also take advantage of City Forward, IBM’s free, Web-based platform, to view and interact with city data while engaging in a public dialogue. City Forward’s straightforward exploration tools allow users to identify patterns, trends and correlations in data that may reveal new insights and point to new areas of interest for further investigation. These explorations can then be shared and discussed within the City Forward Community and beyond—wherever people gather to exchange ideas about cities.

The Smarter Cities Challenge will draw upon IBM’s intrinsic technological savvy, but also upon the field experience accumulated by IBM over the last three years from the company’s ongoing pro bono Corporate Service Corps grant program. Corporate Service Corps deploys teams of top IBM employees from around the world with skills in technology, scientific research, marketing, finance and business development. They work with local governments, not-for-profit civic groups and small businesses to develop blueprints that intersect business, technology and society. Teams have gone to work in places such as Ho Chi Minh City, Vietnam; Rio de Janeiro, Brazil; Chengdu, China; and Katowice, Poland.

City Forward City Forward

City Forward is a free, web-based platform that enables city officials, researchers, academics and interested citizens world-wide to view and interact with city data while engaging in an ongoing public dialogue.

IBM conducted a series of pilot grants in Baltimore, Maryland; Austin, Texas; and Mecklenburg County, North Carolina (Greater Charlotte). Those engagements produced valuable insight into how cities might derive the greatest benefit from IBM’s expertise, and will serve as a model for engagements elsewhere.

“We are honored to have been the first city chosen for IBM’s Smarter Cities Challenge,” said Baltimore Mayor Stephanie Rawlings-Blake. “Over the last number of weeks, we enjoyed brainstorming with IBM about making the delivery of Baltimore City’s citizen services even more effective. It was refreshing to hear new and creative points of view, and inspiring to hear about the successful approaches undertaken by other like-minded cities. I was particularly pleased that they quickly grasped our vision for the future, and offered strategies for realizing and even enhancing those potential plans.”

Smarter Cities Challenge Feature: Smarter Cities Challenge

Explore the Smarter Cities Challenge in Baltimore, Austin and Mecklenburg County.

The approximate value of each Smarter Cities Challenge grant will be equivalent to US$400,000. Each team will comprise top IBM talent, who will bring their unique expertise to the program. The engagement will be conducted in a collaborative, constructive and transparent manner, with IBM team members working alongside leaders from the public, private and volunteer sectors.

Municipalities are selected competitively based on a number of criteria, including the ability to clearly articulate between two and four strategic issues that can potentially and reasonably be acted upon. Also considered will be the city’s track record of innovative problem solving, commitment to the use of technology and open data, and demonstrated willingness to provide public engagement along with access to and time with city leaders.

Growing Smarter Cities Challenge in 2011
Growing Smarter Cities Challenge in 2011

The Smarter Cities Challenge is expanding in 2011. See how St. Louis is building a smarter city.

The most successful proposals will offer clear, compelling evidence that a particular city is poised to best utilize the resources offered in the Smarter Cities Challenge, that the grant has the potential to substantially enhance a city’s capacity to act on key issues, and that the city is ready to match IBM’s investment with its own commitment of time and talent. Municipalities of all sizes are eligible, but it is believed that cities with populations between 100,000 and 700,000 will gain the most from the experience.

Cities interested in researching, and potentially applying for, a Smarter Cities Challenge grant, can visit http://www.smartercitieschallenge.org.

$400,000

worth of technology and services to each city that receives a Smarter Cities Challenge grant.

The Smarter Cities Challenge is sponsored by the international philanthropic foundation at IBM, which has been a leader in corporate social responsibility and corporate citizenship for nearly 100 years. IBM implements initiatives to address specific vital issues such as the environment, community economic development, education, health, literacy, language and culture. IBM employs its most valuable resources—technology and talent—to bring these programs to fruition. Since 2003, more than 150,000 IBM employees have shared more than 12 million hours of service, transforming communities in more than 70 countries. The expertise and time shared during that time is estimated to be valued at one-quarter of one billion U.S. dollars.

12 million

hours of service contributed by IBM employees since 2003.

Supplier Connection

Small businesses are crucial to the vitality of the U.S. economy, as they accounted for two-thirds of net-new jobs created in the United States between 1993 and 2008, according to the Small Business Administration. However, it can be challenging for small businesses to sign up new, large accounts, especially among global companies. And without this source of sustained and sufficient demand, small businesses have little incentive to expand their operations or hire new employees.

With the goal of fueling economic growth and job creation in the United States, IBM and a consortium of large corporations are collaborating to make it easier for small businesses to potentially become suppliers to large companies. The resulting consortium, called Supplier Connection, collectively purchases more than $150 billion in goods and services annually through its global supply chains. The participating companies include IBM, AT&T, Bank of America, Pfizer, Citigroup and UPS.

$150 billion

purchased each year by IBM and other members of Supplier Connection.

The Center for an Urban Future, a not-for-profit research group, recently conducted a study to explore and document the potential benefits and impact of supply chain collaboration by large and small companies. It performed in-depth interviews with supply chain professionals at both large and small firms and examined a range of economic data. In the resulting report, Breaking into the Corporate Supply Chain (pdf), the research group found that “… becoming a corporate supplier provides small firms with a measure of financial stability and valuable new revenues that often enable them to hire new employees, undertake a marketing campaign, add new equipment or pay down debt … Indeed, as we show in this report, breaking into the supply chain of a large corporation can be transformative for small businesses.”

In response, Supplier Connection offers a free Web-based portal that makes it easier for small businesses to become recognized as potential suppliers to large companies and for large companies to identify small companies with which they would do business. The site was created by IBM through a grant of more than $10 million from the IBM International Foundation.

Supplier Connection provides small companies with a standardized and streamlined way to register basic information, share business practices and potentially connect with both large and small businesses to enhance their opportunity for growth. In turn, large companies are now able to quickly find registered suppliers and communicate and forge stronger relationships with new and existing suppliers. Moving forward, Supplier Connection will continue to support economic growth by encouraging businesses, both large and small, to participate in this exciting and important initiative.

Supporting Small Businesses

Supplier Connection’s Web-based portal was created by IBM through a grant of more than $10 million.

Small Business Owners on Supplier Connection:

“We work with businesses of all sizes,” said Amanda Neville, a partner at Thinkso Creative, a New York City design and marketing agency with just over 10 employees. “But we’ve been reluctant to spend the time and resources it takes to complete the lengthy application processes required by some large corporations for new vendors. We’d rather focus on serving our clients through stand-out work.”

“As a busy small business, we can’t spend a lot of time jumping through hoops to apply for new business that we may or may not win. I’m an expert on event planning and catering, not corporate bureaucracy,” says Alison Bates Fisher, senior events designer at Main Event, an Arlington, Virginia, catering company with approximately 30 employees. “If there was an easy way for me to streamline the application process, I would take advantage of it.”

SME Toolkit

In 2002, IBM and the International Finance Corporation (IFC) partnered in the creation of a small and medium enterprise toolkit, or SME Toolkit, which provides entrepreneurs and small businesses with free information critical to burgeoning businesses in areas such as finance, accounting, international business, marketing and human resources.

The Toolkit is available in 35 countries and 18 languages. It is available in emerging markets such as Vietnam, the Philippines and Bangladesh, and in the U.S. for under-served communities such as women-, African American-, Hispanic-, Native American- and Asian-owned businesses. The Toolkit delivers interactive tools, online collaboration and educational content for small businesses. It provides information that helps small businesses learn and implement sustainable business management practices. These tools are often only available to Fortune 1000 companies.

“The Business Planning section of the SME Toolkit was especially helpful, particularly the examples of, and the step-by-step guide to, creating a comprehensive business plan,” said Jon Gilligan, President of Pinnacle Property Services. Jon also used ShopFactory e-Trader to create his company’s Web site. “It was very easy to use, even for this relatively novice computer user.”

Partnerships established by the IFC in each of the countries hosting the site are responsible for localizing, customizing and translating content so that it speaks to the local markets. These partners, such as EDC Pan-African University in Nigeria and Dunn & Bradstreet in Singapore, can also help nurture local businesses and improve their chances of survival.

IBM has dedicated more than $2 million to improve the usability and performance of the SME Toolkit, providing enhanced functionality and creating a resource hub, learning location and meeting place for small and medium businesses. As a result of the partnership with IBM, the Toolkit uses an open-source platform and features Web 2.0 technology. In 2010, access to popular social media sites—such as Facebook, Twitter, and LinkedIn—was added to both the global and American sites. Mobile phone access to the site has also been enabled.

The intent of IBM’s support of the SME Toolkit is to accelerate economic development and job growth in geographies and communities not yet engaged in the market economy, as well as to help spur development of women- and minority-owned businesses in the U.S. The Toolkit is a leading example of IBM partnering with significant outside organizations, contributing the best of IBM’s technical expertise and solutions, and addressing pressing social issues.

$2 million

dedicated to improve the SME Toolkit.

Corporate Service Corps

Started in July 2008, the Corporate Service Corps (CSC) is a philanthropic program that deploys teams of IBMers to help solve some of the most complex problems in developing countries. It is not unlike a business version of the Peace Corps, and as such the program gives host countries the opportunity to benefit from IBM’s expertise in addressing economic, societal and environmental challenges.

In return, IBMers are able to apply their knowledge and skills to real-world problems and develop their leadership capabilities. They team with diverse groups of fellow IBMers from all around the world, learning important cultural lessons along the way. The CSC typifies how IBM integrates its social responsibility efforts with its business strategy, making both more successful and sustainable.

Corporate Service Corps in Action
Video: Corporate Service Corps in Action

IBMer Tim Willeford on his month-long assignment improving living conditions and fostering economic growth in Eqypt with the Corporate Service Corps.

Since its inception, the Corporate Service Corps has sent nearly 1,000 IBMers to more than 20 different countries, including Brazil, China, Egypt, India, Ghana, Malaysia, Nigeria, the Philippines, Poland, Romania, South Africa, Tanzania, Turkey, Vietnam, Sri Lanka, Russia, Kenya, Indonesia and Morocco. Teams of 10–15 IBMers spend approximately six months on a CSC engagement: three months of preparatory work, one month overseas and two months post-service. All projects work at the intersection of business, technology and society. Grant recipients include government agencies, educational institutions and nonprofit organizations. In 2011, IBM will send its 1,000th volunteer out with its 100th CSC team. We expect to reach approximately 1,500 CSC volunteers by the end of 2011, and we will be adding deployments to Kazakhstan, the United Arab Emirates, Thailand, Cambodia and Chile.

In 2010, the IBM Corporate Service Corps was expanded to IBM executives, and called the Executive Service Corps (ESC). We expect to expand the ESC from 33 participants in 2010 to more than 100 in 2011. The core mission of the CSC was maintained in the Executive Service Corps program: leadership development, community development and increased growth market expertise. This past year, teams composed of five to six executives from a dozen countries were deployed for three weeks to Ho Chi Minh City, Vietnam; Katowice, Poland; Rio de Janeiro, Brazil; and Chengdu, China.

1,500

Corporate Service Corps
volunteers by the end of 2011.

CSC and ESC teams each have their unique compositions, experiences and business challenges, but they all share significant immediate and long-term outcomes. Each team member benefits from extensive professional development; each grant recipient receives extensive consulting services focused on its most complex problems; and IBM is enriched with greater knowledge of the needs and issues in growth markets.

Below are some of the highlights from the Executive Service Corps teams in Vietnam, Poland, Brazil and China.

Vietnam

In Vietnam, two executive teams focused on four critical areas of concern for Ho Chi Minh City: food safety, water management, transportation and economic development. The city was presented with ideas for how to collect, integrate and analyze information about these different systems, and how to view them as parts of one fully interdependent system of systems.

“The issues that the CSC team worked on are very important, even life and death issues for our city. The three weeks weren’t long, but the CSC executives came up with very good observations and analysis, working with departments of the City including transportation, food safety, water management, e-government and human resources for high-tech innovation. The team’s very detailed and valuable recommendations fit into the City’s development plan for the next 10 years, while the final report presents an interesting vision as well as concrete next steps for each system and their integration. We are looking forward to further support and cooperation with IBM and the Smarter Cities initiative.”
Dr. Phan Minh Tan

Director, Department of Science and Technology, Ho Chi Minh City, Vietnam

Poland

In Poland, two consecutive teams deployed to the city of Katowice to help develop roadmaps and pilot projects in the following areas: marketing and promotion of the city; improved transportation services; alignment of the public, business and academic sectors; private sector engagement in city planning; and talent retention to stem drain to other cities and abroad.

“Client-facing experience is the biggest personal take-away for me. I received on-the-job mentoring and experience … There is no way that I could have gained this experience in a workshop or class.”
Karen Howe

Executive Service Corps participant

Brazil

In Brazil, a team of IBM executives was sent to Rio where participants worked with the government to address some of the major logistical challenges facing the city that will host the World Cup in 2014 and the Olympics in 2016.

“I was very engaged with this program with the Executive Service Corps team and I would like to say that it was absolutely great to have this program in Rio from a business perspective. We had the opportunity to enhance IBM’s excellent reputation with the community through these five executives, demonstrating IBM’s culture and values. That was absolutely great and I hope we can do another program soon in Rio.”
Pedro Paulo Pereira de Almeida

IBM Regional Director, Smart Cities Brazil

China

The first IBM executive team to Chengdu, China, returned in November 2010. The executives worked very closely with city leaders in a number of strategic areas including cross-government transformation, program management, architecture and other key project areas. A second team went to Chengdu in April 2011.

In the interview after the final Executive Service Corps presentation, one of the Chengdu Municipal government officials said, “Prior to working with the Executive Service Corps, we saw IBM as a hardware and software company and now we know that while they do sell hardware and software, their strength is really as a business transformation partner.”