© 2009 IBM Corporation Smarter Decisions for Optimized Performance IBM Global Executive Forum Panel Discussion Business Analytics and Optimization Fred Balboni, Global Leader Business Analytics and Optimization November 12, 2009

© 2009 IBM Corporation2 Transactional Automation Business Process Management Resource Planning Task / Process Automation Recording & Reporting Business Analytics & Optimization Business Efficiency Aggregation and Data Warehousing Cross-functional Integration Performance Measurement Enterprise Integration Detection, Direction & Prediction $566B  3% CGR* $105B  8% CGR* Source: IBM Analysis on addressable market opportunity based on GMV 1H09 data; includes addressable Hardware, Software and Services opportunity. CGRs Business Analytics & Optimization is the next big investment area for companies – similar to ERP or CRM in the past

© 2009 IBM Corporation3 Today, 80% of new data growth is unstructured content, generated largely by , with increasing contribution by documents, images, and video and audio By 2010, the codified information base of the world is expected to double every 11 hours Executives are being called upon to make more and faster decisions. Today, 70% of executives believe that poor decision making has degraded their companies’ performance Volume of Digital Data Variety of Information Velocity of Decision Making The management dilemma

© 2009 IBM Corporation Sense and respondPredict and act Instinct and intuitionReal-time, fact-driven EfficientOptimized Skilled analytics expertsEveryone Back office Decision Support Point of impact Action Support Traditional ApproachNew Approach Source: Business Analytics and Optimization for the Intelligent Enterprise, April in 3 business leaders frequently make critical decisions without the information they need 1 in 2 don’t have access to the information across their organization needed to do their jobs 4 in 5 business leaders see information as a source of competitive advantage Clients see the need to adopt new ways of working to improve speed to insight and speed to impact

© 2009 IBM Corporation5 Intelligent Enterprises integrate information into business decisions and insight into operations Source: Breakaway with Business Analytics and Optimization: Operationalizing Analytics available in late 2009 at Business operations Information and analytics How the business applies information to achieve its goals Policies Business Processes Organization How the business manages information and learns from it Ad hoc Foundational Competitive Spreadsheets and extracts Data warehouses, governance and production reporting Process automation and workflow Master data management, dashboards and scorecards Command and control Task integration (e.g., ERP) Business process integration (e.g., CRM) and collaboration Breakaway Predictions, contextual business rules and patterns Prescriptive, real- time, pattern-based strategies with situational context Business analytics and optimization maturity Differentiating

© 2009 IBM Corporation6 Top performers encourage questions while management systems also empower employees to anticipate and act Culture Source: Breakaway with Business Analytics and Optimization: Operationalizing Analytics available in late 2009 at Leading performance drivers Questioning Challenge the status quo to improve the business and create new opportunities Empowered Enable and empower employees to analyse, decide and act Anticipating Predict and prepare for the future by evaluating trade-offs proactively 21.9X 5.6X 15X Highest level of Intelligent Enterprise expertise Key: Top performers (i.e., 1st quintile relative to industry peers). Lower performers (i.e., 4th and 5th quintile relative to industry peers). Relative difference of top performers to lower performers

© 2009 IBM Corporation7 Business Objectives for Revenue protection and growth Competitive differentiation such as innovation and deeper insight Cost takeout and efficiency Improved risk management and regulatory compliance Operating enablement such as continuous improvement 10% 12% 33% 41% 71% Top-line focused Internally focused IBM’s 2009 survey of 398 executives worldwide found top-line focus is back and it’s a global phenomena Source: Breakaway with Business Analytics and Optimization: Operationalizing Analytics available in late 2009 at

© 2009 IBM Corporation8 Current Next 24 Months Project Scope Top Ten Priorities Pricing and offer strategies Branding and reputation management Product/services market selection Lead generation and pipeline management Promotion and offer management Logistics and distribution management Increase Focus Customer segmentation and profitability Demand forecasting and management Enterprise goal setting and alignment Budgeting and resource allocation Maintain Focus Reporting and performance measurement Cost/expense management Career path and succession management Fraud and financial risk management Leadership development Channel performance Re-assess Focus Tactic We predict a shift in projects to better reflect near term priorities Source: Breakaway with Business Analytics and Optimization: Operationalizing Analytics available in late 2009 at