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SOMERS, N.Y.—When CEO Sam Palmisano set IBM on the path toward On Demand in October 2002, he said the company would help its customers better respond to their own customers, competitors and rapidly changing market. But in Palmisanos view, the transformation starts at home, so he decided IBM must first transform itself into an on-demand entity as proof that the company was ready for an on-demand world.
Collaboration was key to delivering an on-demand environment, said Linda Sanford, senior vice president of enterprise on-demand transformation and information technology at IBM and the executive Palmisano picked to lead the companys internal effort to reinvent itself as an on-demand entity.
“Collaboration plus innovation equals innovation and growth,” Sanford told a Cyberposium audience in January at Harvard Business School, in Cambridge, Mass. The audience of MBA candidates seemed to get it, sitting rapt during Sanfords speech and following up with questions about collaboration.
Last month, at IBMs facility here, Sanford told eWEEK that collaboration is the first part of the process for getting everybody in an organization working on the same page. She defined an on-demand business as an enterprise that has integrated business processes across the company with business partners, suppliers and clients and can respond with speed to any demand, market opportunity or external threat.
“When Sam launched it … he really launched it with two equally important points,” Sanford said. “One was that clearly he had heard, after meeting with many of our customers and our suppliers and our partners, that theyre all dealing with this reinvention of their businesses. Having just come out of … the dot-com boom and the dot-com bust and just one unpredictable thing after another happening, all businesses were stepping back and saying, We need to reassess and re-evaluate what we do and how we do it so were not caught flat-footed when the next thing happens.”
So, she said, the No. 1 “part of our job is to help our customers reinvent themselves. Equally important, we needed to demonstrate to our customers that we were eating our own cooking. We needed to reinvent ourselves as well.”
Bruce Harreld, IBMs senior vice president of strategy, recalled the beginnings of that approach: “I said to Sam, I think we need a timeout here, and we need to really think about this. So Sam actually carved out a day in August, which then led to an agreement of the senior management team in August of 2002 to dramatically change things. We didnt know what to call it; in fact, we didnt care what we called it. So whatever you want to call that, I think over the next 10 years, were going to really make a major difference here.”
Next page: IBM says its two steps ahead of customers.
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Sanford said IBM is about two steps ahead of its customers in terms of implementing an on-demand effort, in which customers participate as well. “We are constantly learning from each other,” she said. “And my whole point on collaboration is that collaboration exists not only within IBM but also with other constituencies like customers and business partners and suppliers.”
IBM customers such as Donald Doane, CEO of OpenDemand Systems Inc., are “seeing a benefit in terms of IBM becoming more responsive to our needs, which is especially critical to our customers in the midmarket. As an example, the turnaround time for us to find the right client representative within IBM is down to just hours,” said Doane, in Newark, N.J. “Often, youll see companies come out with a strategy that they want their customers and partners to execute, but they do not execute it themselves. It speaks volumes that IBM is not just talking about on demand, they are leveraging it to make their business processes run more efficiently.”
In implementing the changes, the company focused on four initiatives—Total Buyer Experience, Integrated Supply Chain, On Demand Workplace and IT Enablement, Sanford said.
On Demand Workplace is a critical element in driving collaboration within IBM, Sanford said. “We went to our customers and asked what they were most unhappy with us about, and they said, Im tired of being the integrator. Whether its your products with all your other products or your products with other peoples products, Im not the integrator. Im the banker or Im a medical facility or Im an educational institution; I dont want to do the integration. Deliver the solution to me.”
Frank Squillante is vice president in charge of IBMs On Demand Workplace, an upgrade of IBMs internal portal, known as W3. On Demand Workplace is a window into IBMs 320,000 employees, he said. IBM estimates that each employee saves from 1 to 3 hours per month in looking for information and other things related to the portal upgrade, he said.
Kyle Hilligoss, an IBM salesman for the On Demand e-business team and one of the early users of the new system, said the system has saved him time searching for information for customers. “Thats critical for being responsive back to a client,” Hilligoss said.
Mark Slocum, IBMs vice president of operations and strategy, who heads the companys Integrated Supply Chain, said ISC is IBMs competitive weapon. Prior to 2002, IBM had 30 supply chains. Today the company has only ISC. Slocum said the effort saved the company $5.6 billion in 2002 and more than $7 billion last year. “If we can raise customer satisfaction by one point, it means between $2 billion and $3 billion to us,” Slocum said.