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The journey to transform an enterprise

The six essential steps for a successful transformation

Thriving organizations in the turbulent 21st century economy share one common denominator: an uncommon flair for reinvention.

While no two organizations are alike, any business can be aided by the approach to organizational transformation IBM has developed – and documented in The Road to a Smarter Enterprise. This publication details six principles that have guided IBM’s own transformation journey and are important for the success of any transformation effort.

“We’ve embarked on a strategy of ongoing transformation that has reshaped the company in fundamental ways over the past decade,” said Linda Sanford, IBM senior vice president, enterprise transformation. “We’ve documented our key lessons learned on what it takes to transform an organization and are sharing them to assist other organizations with their journeys.”


The six principles

2. Establish clear transformation governance
With 31 consecutive quarters of earnings growth, IBM has earned a reputation for steady improvement and delivering on five-year profit plans. This consistent business performance reflects the management system—or governance model—which IBM has established to guide its ongoing transformation.

At the top of the business, Palmisano established the Integration & Values Team, made up of approximately 300 executives from across IBM and designed to lead integration efforts across the company. Other key councils include a globally integrated enterprise forum of svps that meets regularly and leadership councils for enterprise processes and shared services, which together accounted for $6.2 billion of productivity improvements over the past five years.

A few tips on good governance:

  • Make sure the people serving on the councils-include business leaders as well as process and IT leaders-are capable of taking responsibility and driving action.
  • Be wary of leaders "delegating down" - the key decision-makers must have accountability and "skin in the game"
  • Take a fresh look at your councils every year, and ascertain that they're still serving the right purposes.

Productivity at IBM. $4.8B - Spending reduction in shared services over past five years. $1.1B - In process transformation over past two years. Source: IBM Investor Briefing.

3. Transformation requires a data-driven discussion
Fortunately, as the amount of digital information continues to compound exponentially, the analytics software to make sense of this data deluge keeps improving.

Savvy organizations—from hospitals to police departments—are employing clever analytics software to gain faster insight from their information – and deliver truly transformative performance. In its own transformation, IBM is relying on new analytics to make it a smarter enterprise. The Resource Analytics Hub, for example, has helped IBM’s services business to better match supply and demand, reduce bench, accelerate revenue capture and increase utilization—all insight driven through data and analytics.

With processes, our mantra is radical simplification―eliminating, standardizing and automating work that adds to complexity and hinders integration. - Linda Sanford, Senior Vice President, IBM Enterprise Transformation

4. Radically simplify business processes
Process design is easily overlooked, but firms that are smart about transformation understand its importance. To drive transformation, an organization must be built on processes that ease the flow of work, not impede it.

One example within IBM is the transformation of hardware product management, a process aimed at delivering less complex designs and a leaner menu of hardware offerings that clients value. By taking an end-to-approach from design through procurement, hardware product features and options have reduced by 35 percent - making it easier for clients, reducing supplier costs and increasing the reuse of existing building blocks across hardware brands.

When it comes to process simplicity, consider these points:

  • First is to simplify a process from the point of view of the user, not the process owner.
  • Make sure you understand the process as currently executed before you try to simplify it.
  • Let specialists handle specialized tasks.
  • And eliminate process steps with no value add. Ask the question, is this process still necessary?

5. Invest in transformative innovation
New technology alone doesn't create transformation or fix a flawed process. It can, however, accelerate progress and support people as they work in new ways.

The key is to tackle problems first—then apply technology appropriately. IBM's own transformation efforts have been funded in part by the more than $1 billion in IT savings we've driven over the past four years.

IBM has implemented cloud technologies internally to deliver better business outcomes with fewer dollars. IBM has deployed cloud solutions for analytics, collaboration, storage and development and testing, with more operations exploring and moving to cloud.

Blue Insight Cloud, with more than 165,000 users within IBM, is the world's largest private cloud computing environment for business analytics. The basis for the Smart Business Analytics Cloud offering, Blue Insight provides IBM sales teams and developers with insight to better meet the needs of clients, by consolidating and analyzing information from nearly 100 different warehouses and data stores,.

The IBM CIO Development/Test cloud offers the company's developers a self-service, dynamic computing capacity environment. More than 80 percent of IBM's internal development test activity is now supported in the cloud environment, a key enabler for IBM's internal development transformation.

Learn more about the transformative power of cloud technology.

6. Embody creative leadership
It's no wonder creativity was pinpointed as the number one leadership quality needed in IBM’s 2010 Global CEO Study. It takes a new form of leadership, new skills—and imagination—to influence change in a 21st century global enterprise.

In 2008, IBM introduced the Corporate Service Corps, a corporate version of the Peace Corps. Hundreds of employees have participated so far, spending four-week assignments in developing markets in Africa, Asia and Eastern Europe. The countries benefit from the problem-solving skills of IBM’s best up-and-coming leaders, who in turn are gaining a broader range of experiences. The goal is to develop the next generation of forward-thinking, transformative, global leaders for a smarter planet.

Linda Sanford, IBM’s transformation leader, considers transformation a journey that never ends. “These six principles aren’t the final word on successful transformation. We’re learning new lessons every day. But we hope they are a useful framework for any organization to use as they navigate their own journeys to becoming a smarter enterprise.”

165,000 - Number of users on IBM's Blue Insight Cloud, Making it the world's largest private cloud for business analytics.