Main motive of the presentation: James Manyika, McKinsey: “…for the first time, we now have technology affecting every single sector of the economy.” I talk about how technology drives the gap between users and organizations and how it helps in closing the gap.

1. © 2014 IBM Corporation
European Service Innovation Centre
Conference
9-10 September, 2014 in Helsinki, Finland
IBM’s global approach to service market
Juha Hulkkonen – juha.hulkkonen@fi.ibm.com
09 September 2014

2. © 2014 IBM Corporation2
How IBM has conquered the world with its service offering?
What is the business philosophy of IBM – unveiling the rationale behind radical innovations and service
approach.
What is the future of services in IBM?
Continuous development of service operations?
What should policy-makers know and understand about today’s service markets?
James Manyika, McKinsey: “…for the first time, we now have
technology affecting every single sector of the economy.”
Agenda
Source: McKinsey

3. © 2014 IBM Corporation3
Quality of life depends directly on the quality of service systems
3
Systems
that govern
Systems
that move, store,
harvest, process
Systems
that enable
healthy, wealthy,
and wise people
Source: Steven Woods, Jim Spohrer
We all are embedded
in tens of service
systems
The footprint of
our new digital
lives

4. © 2014 IBM Corporation4
What are the (system) trends? What are the (service) needs?
Digital Immigrant
Born: 1988
Graduated university:
2014
Digital Native
Born: 2014
Enters university:
2032
Digital Survivor
Born: 1959
Graduated university:
1984
Source: Internet

5. © 2014 IBM Corporation5
Customer experiences with new platform technologies and
business models are dramatically increasing expectations
Source: 2011 IBM Digital Transformation Study, IBV Analysis
Organizations are playing catch-up to
meet rapidly expanding expectations
Customers are empowered through
technology, with ever-growing influence
Customers have an insatiable desire
for sophistication in all areas of life
Organizations are increasingly
pressured to provide something
beyond what they do today

6. © 2014 IBM Corporation6
Enabling technologies are driving change through economic
and societal forces
Source: 2011 IBM Digital Transformation Study, IBV Analysis
Enabling technologies
Connected and Open
Simple and Intelligent
Fast and Scalable
Proliferation of mobile devices and internet access
Trust and accountability with partners and consumers
Reduced and masked complexity
Analytics and insights to drive decision-making
Faster and more frequent interactions
Reduced cost of collaboration
Social
Mobile
Analytics
Cloud
3-D Printing
Internet of Things
Nanotech
Organizations
must embrace
new technologies
to drive
innovation
Forces

7. © 2014 IBM Corporation7
Anywhere, anytime Contextual Autonomous
CircularCognitive Situational
The age of smarter service systems is starting in every sector
Source: Corning; IBM; MIT MediaLab

8. © 2014 IBM Corporation8
The time required to start a business has decreased from
months to weeks or days; the cost from millions to thousands
.
Starting a new business
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
& Sales
Service
Alibaba.com 3-D Printing UPS Amazon Shopify
Shipstation
Blogosphere
2014 Days
Source: http://www.economist.com/news/special-report/21593580-cheap-and-ubiquitous-building-blocks-digital-products-and-services-have-caused; Organizational Science
2004 Weeks or months
Source
Materials
Customer
Service
Storage
Product
Assembly
Packaging
Storage
Order
Fulfillment
Internet
Storefront
Payment
Returns
Advertising
Salesforce.com
Running a business

9. © 2014 IBM Corporation99
Service organizations will need to understand the forces and
reinvent their businesses appropriately
Customer demands
expand rapidly
Quality of life depends
on service systems
Organizations should
(and can) act now
We are embedded in
nested service systems
The service systems
framework enables
organizations to identify
their service ecosystems
Forces
Connected & Open
Simple & Intelligent
Fast & Scalable
Consumers are demanding
greater sophistication
Organizations are
increasingly pressured to
catch-up
Organizations must rethink
services based on the
environment in which they
find themselves
Changes are necessitating
smarter service systems
Source
Materials
Customer
Service
Storage
Product
Assembly
Packaging
Storage
Order
Fulfillment
Internet
Storefront
Payment
Returns
Advertising
Technology expands what
is possible
Adopt agility and new pace
of change both in mindset
and in technology

10. © 2014 IBM Corporation10
For further information:
Brown, Eric, https://www.youtube.com/watch?v=np1sJ08Q7lw, IBM
Ernst and Young, http://www.ey.com/GL/en/Issues/Business-environment/Six-global-trends-shaping-the-
business-world
Forbes, http://www.forbes.com/sites/rebeccabagley/2014/07/15/how-the-cloud-and-big-data-are-changing-
small-business/
Gartner, http://www.gartner.com/technology/research/top-10-technology-trends
IBM Institute for Business Value, The new age of ecosystems, http://www-
935.ibm.com/services/us/gbs/thoughtleadership/ecosystempartnering/
McKinsey,
http://www.mckinsey.com/insights/business_technology/why_every_leader_should_care_about_digitizatio
n_and_disruptive_innovation
McKinsey,
http://www.mckinsey.com/insights/business_technology/accelerating_the_digitization_of_business_proces
ses
Moore, Geoffrey A, Escape Velocity, HarperCollings Publishers, New York
PricewaterhouseCoopers, http://www.pwc.com/techforecast
Spohrer,Jim, http://www.slideshare.net/spohrer, IBM
Woods, Steven, Digital Body Language, New Year Publishing, Danville