Chapter 1: The on Demand Journey

In this chapter, we will take an overall look at IBM's company-wide vision for the future of business and information technology, namely, "e-business on demand." This will provide an overall context for our subsequent discussions, which will focus on the "operating environment" component of the on demand strategy.

What Is An On Demand Business?

IBM has been laser focused on a strategy called e-business on demand (or simply on demand) ever since its introduction in October of 2002. You can already see the results of this focus in many of today's IBM products and services. And the $10 billion IBM is committing to the on demand philosophy means that this strategy will increasingly manifest itself in all business consulting activities, computer hardware, software, and IT services over time. Many companies in many different industries have already started on demand initiatives.

At its core, on demand refers to the ability of a business to effectively respond to change. In the words of IBM Chairman and CEO Sam Palmisano, an on demand enterprise is one "...whose business processes-integrated end-to-end across the company and with key partners, suppliers and customers can respond with flexibility and speed to any customer demand, market opportunity, or external threat." While the typical business organizational structures, processes, and underlying infrastructures in place today meet current needs (to a varying degree), they are not prepared to efficiently support a highly dynamic, responsive, and integrated business environment—which is exactly where business is headed.

IBM will be the first to tell you that they did not invent the on demand concept. Rather, it is an outgrowth of what the business community told IBM they needed to be successful in today's fast changing world, namely, the ability to be more dynamic. And this is a burning desire within businesses of all sizes and in all industries. IBM's competitors are also beginning to forward concepts similar to those embodied in the IBM on demand vision. However, no other company has the breadth of products, services (both business and technical), and experience being offered by IBM. Timing is everything... and this enviable position comes at a time when businesses are in need of solutions with broader scope than ever before.

Any meaningful discussion of the on demand concept must start at the business level rather than with technology. That is, the business goals must be the driving force behind the transformation to an on demand model. So let's start by forgetting about technology for a moment and focusing on the four attributes of an on demand business. According to IBM, an on demand business must be:

Responsive

An on demand business has the ability to sense and respond in real time to a dynamic marketplace. Doing this effectively requires a clear and integrated view of customers, employees, suppliers, partners, and competitors.

Variable

An on demand business has flexible and adaptive cost structures and business processes. This requires a migration from fixed cost structures to variable cost structures that can scale with business volume, thereby reducing risk, improving productivity, and optimizing business performance.

Focused

An on demand business concentrates on its core competencies and the value it provides to its customers. It focuses on constantly improving in ways that help differentiate the business from its competitors. Distractions are avoided by building strategic relationships with qualified business partners that manage selected tasks ranging from manufacturing, logistics, and fulfillment to HR and financial operations.

Resilient

An on demand business is prepared to detect and respond to unexpected threats or changes in the marketplace. This readiness is achieved through the implementation of a flexible operating environment that continuously evolves toward ever-improving availability, security, and privacy.