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This chapter is from the book

Governance

A majority of clients who have engaged with IBM to learn about the internal transformation efforts are most interested in the governance topic. How do you organize to take advantage of analytics? Where do you put the analytics group? Is it an IT function? Who leads analytics projects, and who is on the team? How do you set up your organization to be able to adapt processes to incorporate analytics? Interestingly, it is organizational obstacles—not data or financial concerns—that are roadblocks to adoption of big data and analytics; examples include not knowing how to use analytics to improve the performance of the enterprise and lack of bandwidth because of competing priorities.14

IBM’s approach has been very pragmatic and initially was quite focused in areas of the business that had the most challenges. Analytics was used as a means to address the most significant challenges first. There was a general notion that analytics could add value within IBM, but where it got very specific very fast was with large, critical problems in supply chain operations. At one point, supply chain problems were costing IBM millions of dollars per year. That story changed dramatically when using analytics become a way of doing business, and today IBM’s supply chain is world class.

IBM’s transformation to use analytics is part of a larger enterprise transformation that began in 1993 to transform its business processes. As part of this enterprise transformation, IBM’s organization evolved to incorporate Value Services, defined as a group of functional units, processes, and initiatives dedicated to working collaboratively to improve productivity and effectiveness through business transformation:15

  1. Globally Integrated Enterprise Shared Services: To support this transformation, globally integrated organizational units providing support services to all of IBM were formed.16 Four of the functional areas described in the upcoming chapters are Globally Integrated Enterprise Shared Services: human resources, integrated supply chain finance, information technology, and marketing.
  2. Enterprise Transformation Initiatives: A number of enterprise-wide initiatives were launched to drive radical, innovative transformation in the way IBM works with clients, business partners, and its own employees. Three Enterprise Transformation Initiatives, which are described in later chapters, are Development, Smarter Commerce Inside IBM, and Hardware Product Management Transformation.

Since they provide support services to all of IBM or drive radical, innovative transformation, Globally Integrated Enterprise Shared Services and Enterprise Transformation Initiatives are control points for leveraging analytics. For example, when Finance creates and deploys an analytic solution to predict spending, all of IBM’s business units reap the benefits.

The next evolution of IBM’s transformation is to migrate from a globally integrated enterprise to a smarter enterprise by optimizing the entire enterprise with the following technologies:17

  • Analytics to gain business insight for customers and the enterprise
  • Social media for business collaboration both inside and outside the enterprise
  • Mobile communications for pervasive connectivity
  • Cloud technologies for IT enablement

IBM’s transformation to a smarter enterprise is described in “Creating a Smarter Enterprise: The Science of Transformation.”18 IBM’s transformation to use analytics enterprise-wide, which began in 2004, continues; today, analytics is complemented with social, mobile, and cloud.

Many people are surprised to learn that at IBM, analytics was not centralized and not driven out of IT. Analytics is mostly thought of as a technology, and many expect technology projects to be owned by IT, but because analytics is a way of doing business, it needed to be close to the business, woven like a silver thread into the fabric of all of the business processes. The focus was on how to become smarter and more agile with the use of analytics to solve business problems; being close to those problems was required. Business analysts partner with analytics practitioners and in some cases used what IBM refers to as the “secret sauce” for analytics—IBM Research, which is a unique and differentiating function. Few companies have a 400-person math department to draw on. What does this mean for other companies? IBM has leveraged its math department both to apply analytics internally and to add some of the learnings and benefits to its analytics products and solutions. So you can get the benefit of a large math department without having to have your own.

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