© 2010 IBM Corporation 4th India Steel Summit – Achievement and Unfinished Agenda Capitalising on Complexity Presentation by IBM 1IBM Confidential.

© 2010 IBM Corporation

4th India Steel Summit – Achievement and Unfinished Agenda

Capitalising on Complexity

Presentation by IBM

1 IBM Confidential


Agenda

Steel Industry – Context in India

The New Economic Environment

The Agenda for CEOs– Agenda for Steel

Smarter Planet

2 IBM Confidential


• The Indian National Steel Policy 2005 projects a production Level of 100 Million Tonnes by 2020 on the basis of

• GDP Growth of 7.5 % per annum• Indian Production CAGR 7.3% • Global Consumption growth at 3% per

annum

• The Ministry of Steel expects that India will be the second largest manufacturer of steel by 2015-16

• Provided all fresh capacity creation requirements are met

• CAGR of crude steel production in the period between 2004-05 to 2008-09 was 8.6%

• Industry Capacity utilisation of 84% was achieved in 2009-10 (provisional)

• Productivity and Sustainability are primary concerns during this hyper-growth

• MOUs have been signed for a cumulative production volume of 276 million tonnes

3 IBM Confidential

Source : Ministry of Steel Annual Report 2009-10 IBM Analysis




Growing Domestic Market, Global Imbalances in Supply and Demand

Availability of Iron Ore and Coal

Availability of low cost resources, manpower

Advances in Technology

Skills

Infrastructure – land, water, electricity, connectivity

Climate Change, Environmental Concerns, Sustainability

Risk and Compliance Pressures

4 IBM Confidential

Opportunities Challenges

Source : National Steel Policy, IBM CEO Study 2010



“The New Economic Environment”

Complexity – the primary feature of this environment, characterised by:

– Massive global shifts increase uncertainty– Continued rise of technology as key external

factor– Challenges are compounded by regional

differences

IBM has concluded the 2010 Global CEO Study trying to understand how CEOs across the world are reacting to this environment

– 1541 CEO Interviews were conducted– 61 CEO Interviews in India / South Asia

5 IBM Confidential

2010

Capitalizing on Complexity

© 2010 IBM Corporation6

Massive global shifts in the New Economic Environment

Slow down or reversal of globalizationIncreased protectionism, dominance of local interests and local requirements

Continued globalizationGlobal capital flows, trade, access to markets, skills and knowledge

Mature markets retain economic powerConsumer demand, economic power and innovation skewed towards mature markets

Rapidly developing markets gain economic powerConsumer demand, economic power and innovation shifting to rapidly developing markets

Small government, light regulationMove or return to unrestrained market with limited state ownership or regulatory reform

Big government, heavier regulationGreater government involvement, more regulation and government as a stakeholder in strategic businesses

67%16%17%

70%14%16%

76%10%

Source: IBM CEO Study 2010 Q8 Which of these future scenarios for the next five years do you consider more realistic? Globalization n=1515; Markets n=1502; Government n=1519; ISA n=61

14%

75%15%10%

36%30%34%

87%10%3

Full Sample

India / South Asia

Full Sample

India / South Asia

Full Sample

E&UIndia / South Asia

Not at all/to a limited extent To a large/very large extentTo some extent


Continued rise of technology as key external factor

Source: IBM CEO Study 2010 Q1 What are the 3 most important ‘external’ forces that will impact your organization over the next 3 years? n=1538

Three most important ‘external’ forces over the next three years


The New Economic Environment is experienced as being distinctly different

69%18%13%More volatileDeeper/faster cycles, more risk

65%21%14%More uncertainLess predictable

60%22%18%More complexMulti-faceted, interconnected

53%21%26%Structurally differentSustained change

Source: IBM CEO Study 2010 Q7 To what extent is the new economic environment different? Volatile n=1514; Uncertain n=1521; Complex n=1522 ; Structurally different n=1523; ISA n=61


Full Sample

54%34%12%

51%32%17%

51%32%17%

37%30%33%

India / South Asia

Not at all/to a limited extent To a large/very large extentTo some extent

“Last year’s experience was a wake-up call, like looking into the dark with no light at the end of the tunnel.”CEO, Industrial Products, The Netherlands


Five factors add to the sense of uncertainty and volatility

Source: Q9 To what extent will the following factors impact your organization over the next 5 years? Industry transformation n=1515; Information Explosion n=1514; Sustainability n=1507; Shorter time cycles: n=1501; Talent Shortages n=1523; Shifts between mature and rapidly developing markets n=1499; Shift between public/private boundaries n=1513; Shift between global/local markets n=1498; Scarcity of resources n=1490; ISA n=61

62%

61%

59%

Industry transformation

58%

Information explosion

Sustainability

Shorter time cycles

Talent shortages

Factors impacting your organization to a large extent over the next 5 years

58%

Shifts between mature and rapidly developing markets

Shift between public and private boundaries

Shift between global and local markets

Scarcity of natural resources

50%

38%

36%

29%

48%

48%

53%

60%

62%

43%

26%

33%

39% Full Sample India / South Asia


Complexity – the Indian CEO’s viewpoint

10 IBM Confidential

70%Expect high/very high level of complexity over the next 5 years

52%Currently experiencing high/very high level of complexity 35%

more

70%

63%

Expect high/very high level of complexity over 5 years

Feel prepared for expected complexity

7%

Complexity gap*

What should be on the agenda of CEOs in the

New Economic Environment?


The Agenda: Stand Out Performance in a Complex World

• Creativity is #1 leadership quality• Drive change in the organization to

stay ahead of market and use of wide range of communication styles and tools

• Break with status quo of industry, enterprise and revenue models

• Simplify operations and products to better manage complexity

• Use iterative strategies, make quick decisions and execute with speed

• Integrate globally, increase cost variability and exploit partnering to increase agility

• “Getting closer to customers” is the single most important theme

• Better understand customer needs through collaboration and info sharing

• Exploit the information explosion to deliver unprecedented customer service


The Agenda : Driving Creative Leadership

Source: Q19 Which of the following leadership qualities do you think are most important in the next five years? n=1538; ISA n=61

56%

63%

39%

Integrity

Creativity

Focus on Sustainability

How will you develop the critical capabilities to enhance creativity among your leadership?

In what ways can you explore, reward and integrate diverse and unconventional points of view?

What is your approach to evaluating every element of your business model to get the most from currently untapped opportunities?

How will you leverage new communication styles, technologies and tools, both to lead a new generation of talent and to encourage breakthrough thinking?

Questions to consider

Dimension to focus on


Source: Q13 Which of the following dimensions will you focus on more to realize your strategy in the new economic environment over the next 5 years? n=1523, n=303; ISA n=60

Insight & intelligence

Getting closer to customer

People skills

77%

87%

84%

Agenda : Getting closer to the customer

How will you engage customers in new ways that increase interest and loyalty to generate new demand and revenue sources?

How can you involve customers more effectively and directly in product and service development?

Can you hear the voice of your customers through the vast amount of data? Can you understand and act upon the information?


Dimension to focus on


Agenda : Building Operating Dexterity

54%

ISA

61%

Standouts

13% more

Simplify Operating Strategy

ISA Standouts

5%more

43% 45%

Improve Execution Speed

ISA Standouts

129%more

7%

16%

Focus on Global Integration

In what ways can you simplify processes, without ignoring underlying complexity, and develop the agility required to execute rapidly?

How can your organization benefit from taking on more complexity on behalf of your clients or customers?

How will you integrate and analyze timely information to gain insight, make quick decisions and enable dynamic course correction?

Have you implemented asset and cost flexibility and defined partnering strategies to compete in your chosen markets?



The Agenda for Steel : Stand Out Performance in a Complex World

• Break with status quo of industry, enterprise and revenue models

• Drive Growth by leveraging strengths and skills

• Simplify operations to better manage complexity

• Make quick decisions and execute with speed

• Integrate globally, increase cost variability and exploit partnering to increase agility

• Better understand customer needs through collaboration and info sharing

• Exploit the information explosion to deliver unprecedented customer service


New intelligence transforms the way Steel companies operate: increased yield recovery, lower costs, improved safety, and higher production rates.

Increased use of technology to improve capacity utilisation, throughput and sustainability

IntelligentInterconnected

Connecting multiple operational nodes for real-time collaboration across the globe speeds decision-making and increases productivity.

Manage -- in real time / near real-time -- the flow of materials across the manufacturing process and supply chain from a central Production / Supply Chain Command Centre.

Remote plant monitoring systems can improve asset utilization and reduce risk by allowing people to monitor and control operations, such as mines, furnaces and yards, from a safe location.

Equipment monitoring systems can capture and analyze equipment operating conditions at run time

Instrumented

Stand Out Performance enabled by a new business infrastructure that is Instrumented, Interconnected, and Intelligent

© 2010 IBM CorporationIBM Confidential

HSM

BF

Iron Ore

Coal

Torpedo

Caster

EAF Plant 1

LadleCustomer

Service Center - CTL

Truck

CRM Line

LRF

Train RF

Conveyer

Plant 2

IBM’s Smarter Planet Solutions links the physical to the digital creating intelligent systems

Smart Integrated Operations EnablementOne open channel to all data required to operate assets in real time

Smart Integrated Operations EnablementOne open channel to all data required to operate assets in real time

Semantic Model Standard-Based Standardized Metrics Event Management

INSTRUMENTEDAbility to measure, sense and monitor the condition of

almost everything.

INTERCONNECTEDPeople, systems and objects can communicate and

interact with each other in entirely new ways.

INTELLIGENTRespond to changes quickly and accurately, and get better

results by predicting and optimizing for future events.

Smart Manufacturing for MetalsComprehensive set of capabilities to enable smarter decisions faster

Smart Manufacturing for MetalsComprehensive set of capabilities to enable smarter decisions faster

Visibility Collaboration Analytics Optimization

Physical Meets Digital Linking physical world assets, resources and infrastructure with the digital world of event processing, business analytics and

optimization.

Truck

© 2010 IBM Corporation18 IBM Confidential

Let’s Build a Smarter Planet

Sivaramakrishnan NarayananExecutive Director – Industrial Sector,

IBM Global Business Services - India / South [email protected]

© 2010 IBM Corporation 4th India Steel Summit – Achievement and Unfinished Agenda Capitalising on Complexity Presentation by IBM 1IBM Confidential.

Documents

government n

sustainability n

different n

ibm confidential slide

globalization n

ibm ceo study

ibm corporation9

ibm corporation7