Tag Archive for 'IBM'

The Globally Integrated Enterprise

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on April 7, 2007
in Emerging Markets, Global Strategy and International Business
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Samuel IBMAt the end of last year, Samuel J. Palmisano, IBM’s Chairman and Chief Executive Officer gave a speech at INSEAD, France. He elaborated on the evolution of the enterprise through three distinct models.

1] In the 19th century the “International model” emerged. Most operations where centred in the home country complemented with overseas sales and distribution subsidiaries.

2] The 20th century was characterised by the “Multinational model“. In order to gain access to local markets the Multinational created smaller versions of the parent company in multiple countries around the world.

3] What once looked like efficiency is now coming to look like redundancy. Therefore all businesses that operate globally around the world are moving to the next model the “globally integrated enterprise“. This enterprise shapes its strategy, management, and operations in a truly global way. It locates operations and functions anywhere in the world based on the right cost, right skills, and the right business environment. And it integrates those operations horizontally and globally.

The idea of this third 21st century model “the globally integrated enterprise” is similar to the transnational model defined by Barlett & Ghosal (2003).

According to Palmisano, in this sphere, the dynamic flow of work across the global platform is driven by three forces: Economics, Expertise, and Openness. This sphere requires two main challenges stated Palmisano, a new model of leadership and the vital issue of trust. The global integrated company will have to be led by a new generation of leaders, with different skills, experiences, and acumen.

The issue of the new skill set required is widely discussed by academics and industry leaders. Up till now there isn’t made any consensus but being cross-cultural minded in all your actions seems like a requisite.

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The Bangalore Paradox

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on May 4, 2005
in Emerging Markets and Global Strategy
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Bangalore, India

The city at the heart of India’s booming information-technology industry is already choking on its own success; but the boom has barely begun. Moreover, Bangalore may be on the verge of overtaking Silicon Valley as the biggest IT employment region in the world on the back of the rise in offshore outsourcing, according to some estimates.

The high-tech Indian city, which is home to major Indian IT outsourcers, including Infosys, Tata Consultancy Services and Wipro Technologies, as well as many Western IT companies, now employs 160,000 people in the technology sector. IT accounts for 100,000 of these jobs, with the rest in business process outsourcing and call centers.

MK Shankaralinge Gowda, secretary of IT and biotechnology for the state government of Karnataka, said that the number of tech workers in the region will exceed 200,000 between 2004 and 2005, as IT and business process outsourcing companies continue to rapidly hire workers.

Gowda claims that Bangalore has already overtaken Silicon Valley, but the latest figures from California’s state government Employment Development Department (EDD) estimate the number of technology workers in Santa Clara County, which is the heart of Silicon Valley, at 175,100 as of June.

However, Silicon Valley is not in danger of losing its stature as a tech leader, and it can benefit from competition overseas, said Sam Haddad, chairman of the Silicon Valley Engineering Hall of Fame and a consulting professor at Stanford University. Haddad said the region is seeing new growth in areas such as nanotechnology. “Silicon Valley is already beginning to reinvent itself,” Haddad said. “I am very optimistic.”

More insight can be found on this webpage.

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Lenovo IBM Marriage

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on May 2, 2005
in Global Strategy and High Tech & Media
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East meet West

Chinese computer maker Lenovo has completed its $1.75 billion purchase of IBM’s personal computer division, creating the world’s third-largest PC maker, the company said Sunday. The deal — one of the biggest foreign acquisitions ever by a Chinese company — is expected to quadruple sales of Lenovo Group Ltd., already Asia’s biggest computer maker, the company said earlier. Complete coverage of this story can be found here and here.

Lenovo was founded in 1984 by academics at the government-backed Chinese Academy of Sciences and first worked out of a small cottage. First set up to distribute equipment made by IBM and other companies, by 1990 it was selling PCs under its own brand name.

IBM now focuses on consulting and software, outsourcing much of its manufacturing. The sale to Lenovo is expected to cut production costs and breathe new life into the PC business, which now accounts for a small portion of IBM’s total sales and profits.

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Health Information Technology

Published
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on April 25, 2005
in Global Strategy and High Tech & Media
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Healt Information Technology


Some interesting developments are going on in the current IT and healthcare business world. Today, IBM plans to announce that it is buying Healthlink, a Houston-based consulting firm and a leader in the fast-growing niche business of helping hospitals and clinics convert to electronic health records.

The move is the second acquisition in health care technology services within a week. Accenture announced last Wednesday that it would buy the North American health practice of the large European consulting firm Capgemini for $175 million.

The purchases by big technology services companies are investments made in preparation for an expected surge in spending on health care information technology. The Bush administration and medical specialists say information technology must replace paper records to improve the quality of health care and contain costs.

The administration is promoting the use of electronic patient records, common technology standards and reimbursement policies for Medicare that measure quality performance. Indeed, the government has set the ambitious goal of adopting electronic health records for all Americans over the next decade and building a national health information network for tracking diseases and treatments.

“Only companies like IBM, with deep technology and financial resources, are going to be able to pull this off,” said Ivo Nelson, chief executive of Healthlink.

IBM is also working on one research application with the Johns Hopkins Bloomberg School of Public Health to simulate the spread of infectious disease. An IBM database modelling tool that includes census data, maps, local transportation routes and traffic patterns will be used by epidemiologists at Johns Hopkins to study how diseases are spread and thus devise containment strategies.

“It’s war games for infectious diseases,” said Dr. Donald S. Burke, a professor at the Johns Hopkins public health school. “You use complex simulations to ask a series of what-if questions.”

Those trends should stimulate investment in health information technology and accelerate consolidation among suppliers and hopefully will positively benefit the war against world diseases.

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IBM’s Transition Goes Beyond Blue

Published
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on April 14, 2005
in Global Strategy and International Business
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IBM Logo

“In the past, IBM defended the mainframe against client-server computing and PCs,” Palmisano says (Chief Executive Samuel J. Palmisano). “We’re not defending the past anymore.” No, IBM is off and running into a new world of business, beyond computers.

This sounds like IBM is changing its definition from international business machines to international business models.

The world of computing that IBM long ruled is increasingly becoming a commodity business. Ruthlessly efficient Dell Inc. fresh from its conquest of the PC market is climbing up in servers and even tech services. “The big question is: Will services go the same way hardware has? We think it will,” says Steve Meyer, a vice-president in Dell’s services unit.

IBM, with its legions of PhDs and closets full of patents, is not built to duke it out with the likes of Dell. Palmisano’s strategy promises a neat escape. Instead of battling in cutthroat markets, he takes advantage of all the low-cost technology by packaging it, augmenting it with sophisticated hardware and software, and selling it to customers in a slew of what he calls business transformation services. That way IBM rides atop the commodity wave - and avoids drowning in it.

Therefore, IBM is putting to use the immense resources it has in-house, from its software programmers to its 3,300 research scientists, to help companies like P&G rethink, remake, and even run their businesses - everything from accounting and customer service to human resources and procurement. “We’re giving our clients a transformational lift,” says Palmisano. He expects that within 10 years IBM could build an annual revenue stream of as much as $50 billion in business consulting and outsourcing services. If so, Palmisano will have created a second services miracle and hitched IBM to a crucial growth market. And in the process, his company will be fixing - or running - big chunks of the world’s business.

In its pursuit of vital industry experience, IBM - much like an eager college intern - is sometimes willing to work for free. IBM’s unpaid partnership with the Mayo Clinic dates back to a cocktail party in 2000 in Mayo’s hometown of Rochester, Minn., where IBM has a computer factory. A Mayo employee and an IBMer realised that scientists at both companies were working on genomics research. This soon led to joint projects on gene profiling of leukaemia cells, and a published paper in a scientific journal in 2003. This is not the kind of connection that Dell, Accenture, or Wipro is likely to make. “This is the way to transform the way we practice medicine,” says Dr. Nina M. Schwenk, chairperson of Mayo’s Information Technology Committee. And for IBM, it’s a foot in the door of the $1.4 trillion health-care business.

In addition to its four original businesses — accounting, HR, customer service, and procurement - it is now ploughing into six others. They include after-sales service for consumer electronics, insurance-claims processing, and supply-chain optimisation. The old IBM would have studied for many months before deciding whether to enter these new businesses. This time, it has set up small SWAT teams to work with a handful of initial clients and launch businesses.

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