Successful HR Business Development in the Age of Disruptive Technology Peter Kennedy IBM Director, HR Business Development - Europe

IBM HR Business Development Mission Statement Led by HRBD, HR engages early in the Deal Execution phase and remains involved through Integration phase The IBM HR Business Development team’s mission is to support IBM's business success in all OUTSOURCING opportunities, ACQUISITIONS and DIVESTITURES globally by: influencing and designing the right HR solutions and deal structure that contribute to achieving IBM’s growth, profit, and client satisfaction objectives creating a positive employee experience while minimizing business disruption 2

Business landscape change (in 3 to 5 years) C-suite leaders, including CHROs, expect more competition from rivals outside their own industries Change from 2013 +26% 2013 Business landscape change (in 3 to 5 years) 43% 29% 2015 54% 39% 2013 no change More competition expected from within the same industry More competition expected from other industries 30% 2015 51% +6% 35% 2013 48% no change 2013 Global CHRO

C-suite Leaders expect Cloud, Internet of Things and Mobility to revolutionize their businesses Technologies revolutionizing business (in 3 to 5 years) Cloud computing and services 63% 61% Mobile solutions 61% 49% Internet of Things (IoT) 57% 51% Cognitive computing 37% 33% Advanced manufacturing technologies 28% 35% New energy sources and solutions 23% 33% Bioengineering 12% 18% Man-machine hybrids 10% 13% All CxOs CHROs

WATSON The Era of Cognitive Computing is here!

WATSON The Era of Cognitive Computing is here!

What does this all mean for HR?

Acquisitions & the Evolution of Technical Solutions 2015+ Cognitive Era 2010s Smarter Planet 1990s Distributed Computing 1980s Personal Computer 2000s e-Business Standard Complex FULL INTEGRATION DELAYED INTEGRATION NO INTEGRATION (middleware) (SaaS, Human Capital, Platform, Solutions) BUSINESS IMPACT The business is intergrated with one invoice to the client Operate as a wholly owned IBM company in the process of integrating Continue to operate as before with limited change to structure and business processes Move to IBM Standard terms of business Separate business reporting and tax reporting Synergy is possible Limited synergy Very limited synergy HR ASPECTS Mandated employment transfers at merger Potential for "voluntary" transfer of employment - not ARD mandated No transfer of employment ARD Consultaiton requirements Limited changes to employment T's & C's and benefits Retain back office (HR, F&P, Admin etc) Solution the back office teams (HR, F&P, Admin etc) Retain back office (HR, F&P, Amin etc) .

Strategic Outsourcing & the Evolution of Technical Solutions 2015+ Cognitive Era 1990s Distributed Computing 2000s e-Business 2010s Smarter Planet 1980s Personal Computer Systems Integration Services Integration Balance sheet and technical know-how Large transactions characterized by asset takeover High number of employees in scope, but limited resource actions required Global resources and process excellence Global Centers and supply chain optimization Transfer of workload to GDC requires to identify an “HR Solution” for the transferring HCs New Enterprise IT and cognitive computing Hybrid and services automation / analytics IT transformation / optimization requires a very limited number of employees to perform services Bunsiness Challenges HR Challenges

The European Union Commission “Acquired Rights Directive” Sets a minimum standard of protection for employees in the events of a transfer of undertaking. The Directive provides protection for employees in three ways in the case of employment transfer from the transferor to the transferee (who becomes the new employer) Employment contract: automatic transfer of the employment relationship with all its rights and obligations, therefore protection of the employees’ terms and conditions No dismissals of employees (by the transferor or the transferee) because of the event of the transfer unless ETO (Economic, technical, or organisational) reasons Information and consultation: both parties are required to inform and consult the representatives of the employees affected by the transfer

HR Solution Methodology 7 HR areas for information gathering & Issue identification 5 HR solution options used to address each issue 1. No People Transfer 4. Transfer to JV/Sub 3. Transfer to 3rd Party 2. Secondment 5. Transfer to Buyer C. Culture E. Ts & Cs incl Pensions F. HR Environment G. HR Team D. IR/ER B. Resources A. Business needs HR Eng. Principles & Strategy HR Data Gathering & DD HR Solution HR Cost summary Contract text modules Transition Project plan Competitive Analysis Client segmented HR Value Prop. Client HR information IBM HR Solution offering

IT Learning Curriculum IBM Confidential Watson Job Matching for Outsourcing Solution creating transparency and opportunities Transparency of in-demand jobs, greater career opportunities and focus on developing market-relevant skills IT Learning Curriculum People in scope Resume Skills IBM Redeploy with customer / Outplacement / Exit Solution IBM Staffing plan Business Partner 3rd Party ANALYSIS & MATCH High match Low match Short-term deployment Long-term deployment ADVICE Deployment Current Change Job profile Future Leading IT Workforce Match Non-Match Career Support Center Redeploy (internal)

‘Employee Experience’ HR Re-imagined Cognitive Era Mobile Cognitive Social Cloud Standardisation Era Outsourcing Big Data & Analytics Re-focus on the ‘Employee Experience’ Re-engineering Focus on Process & Policy

New World – New Strategy How do Employees think of HR….Moving from process/policy driven toward experience outcomes Compensation & Benefits Transformation & Operations Cloud & Talent Join IBM Employee & Labour Relations Onboard Work@IBM Leadership & Learning Separation Retention Global Mobility Succeed@IBM Cascade Performance & Goals Watson & Cognitive Travel@IBM Pay Leave IBM Audit Finance CIO Procurement

HRIT Strategy Vision….Enabling Technology for the Employee Experience Cognitive HR Workforce Internet of Things (IoT) Cloud Sociometer Safety Wellbeing Unstructured Data Personalisation Content & API’s Robotic Process Automation Personality Insights Structured Data …first

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