Mike Lawrie of IBM in Europe, the Middle East and Africa and I am delighted to be here to help kick off this session on globalization because I think all of us recognize the power of globalization and tremendous business opportunities associated with it. It is a sweeping force that I think no company or no nation state can afford to ignore in any way, and it's really a sea change globalization. It is increasingly being driven by the advances in technology and the connectivity and the rise of global telecommunications and computer networks.

And that's really why at IBM we have chosen electronic business or what we call e business as our integrating strategy, the umbrella strategy under which all our business priorities and initiatives are based. We are also helping companies, whether they be small companies or large companies, try to help them promote the usability and the acceptance and the use of technology in the global market place by helping again both small companies and large companies to understand the enormous strategic implications of this era we are in and how increasingly to translate the value of this technology into competitive advantage. And we are also trying to help Governments understand that without very sound public policy, it is very difficult for electronic business to meet the optimistic projections that we all see and all hope for in the future. And that's really why we have created the Institute of Advance Commerce over a year ago. Stewart Feldman is our Director and later in the program he will be going through many of the details associated with this Institute.

Of course I think it's very important that as Europe continues to restructure and grow that many of the companies and many of the institutions embrace globalization and also the nature of the regulatory framework within which many companies and institutions operate. So we have also invited to be on today's program really I think one of the most qualified people to talk about this and that's Dr Martin Vangerman, the EU Commissioner responsible for Industrial Affairs, Information and Telecommunication Technologies. And he's going to bring us up to speed on what the European Union is doing to really create the right environment for the advent of the electronic marketplace in Europe. We have also invited some leading customers to be with us this afternoon and tomorrow that will share with all of us some of their electronic business experiences. You will hear from Stefan Kilsler who is a member of the board for sales at Lufthansa Airlines and he'll talk about their efforts around globalization. The fact that no single company can really go it alone, can fulfil customer requirements without forging strategic alliances globally.

And we'll also hear from Mike Winch who is the IT Director for Safeway Stores in the UK who will share with us some of the successes and some of the stresses associated with their globalization efforts. And then we also have Holga Heinz with us, who is the CIO of Carlstac who will discuss the growing importance of what we refer to as customer relationship processes and applications that extend out to customers and business partners in the global marketplace. And in addition we have Irving Withouskburger who is IBM's General Manager of the IBM Internet Division, who will share with us some of the latest thinking and developments around the technologies that are enabling companies to become truly global.

So we have got quite a line up over the next day and a half, but I would like to begin just with a couple of thoughts about globalization. As I said there are a lot of trends and great incentives for companies to compete globally and e business is one of the fundamental ways of in fact becoming global. And I think globalization without a doubt is dissolving barriers like time and distance. The ability to work across geographic boundaries. It's clear that competition can no longer just remain localized, that they must compete on a global basis. Never before have we seen such a level playing field for small companies to be able to compete with very large companies and institutions. And never before have we seen established larger organizations be under such a threat from new business models that are often engendered by smaller businesses that are competing.

Now one of the results of this globalization trend is the move from what I will call mass markets to customized markets. And customized markets really become possible, really become real when companies can learn from their experiences in the marketplace, can learn from their customers and then develop the capacity to manage much of these insights, much of this knowledge, much of this change. They are able to manage this on a global basis and react very quickly to the changes in the marketplace, to the changes that they see with their customers or segments that they compete in. And not only these markets that we see around the world becoming increasing customized but the competitive landscape is changing very dramatically like we have not seen in many years.

We see accelerating cycle times where companies are forced to drive their production cycle times in web years or very short periods of time so that they can leapfrog a competitor and we see smaller companies, or companies coming up with new technology or new offerings which can leapfrog established companies. We see falling transaction costs. Just a few short years ago, take the airline industry as an example. The cost of issuing a ticket was upward to 8 or 9 US dollars, with the introduction of the Internet that has dropped to as low as 1 US dollar. Or banking transactions, that used to cost on average say 1 US dollar dropped to as little as a few cents on the dollar. Just imagine what that can do to a business or an industry with those types of new business models and new types of cost structures.

So in many cases we see the old business sort of command and control and hierarchic orientated business models beginning to be displaced by more horizontal business models which again means that employees can collaborate and tame and respond very quickly to the changes in a marketplace on a worldwide basis and this is what is creating new business models and very lean aggressive competitors. And one of the biggest pressures we see has been around the companies logistics system or their supply chain or distribution channels. Many new business models are being ushered in here and increasingly we see companies not talking about competing with one another but their supply chains, their logistics, their distribution systems competing with other similar distribution and logistic systems. So the world has changed in many ways, companies today need to have their operations run on a 24-hour day basis, 7 days a week 365 days a year and, again, that is creating incredible new pressures and opportunities within many customer supply chains. So in many ways, this is a whole new world that is being ushered in by globalization.

Let's take a look at the European marketplace real quickly. What do we see there? Many say that Europe is still in many ways lagging behind - fighting rather than embracing globalization - and you have heard many of the reasons over and over again - limited growth, public sector monopolies, excess of regulatory burn-ins, traditionally lower IT investment rate and so on. Some of that is certainly true but I personally see a great opportunity and dramatic changes in the European business environment today and as we go forward. In my view, this is a very unique time to be doing business in Europe. Now we have seen a slow down in the economic activity that began some time in the second half of last year but Europe along with North America really are the twin pillars of growth on a global basis. The recent surge on merger and acquisition activity in Europe was unheard of just a few short years ago and in many ways resembles trends we have seen in North America, 5, 6 or 7 years ago.

The global mergers - who could have imagined just 3 or 4 years ago a merger on the scale of Daimler Chrysler or the recent activity of Olivetti and Telecom Italia or even the banking transactions, or proposed transactions in France with BNP's challenge to Societe Generale and Paribas. These were unheard of events just a short time ago. So no matter what industry you are in telecommunications, banking we are seeing very fundamental shift, a very fundamental restructuring of European economies. And I think a very successful introduction of the Euro earlier this year is one of the key ingredients for very stable, solid economic growth in the future. But the Euro is more than just a currency. It is really going to be a means for 300m customers to compare prices across borders, and this again will put pressures on companies to rethink their distributions channels, how they reach out to these customers, how they fine tune their marketing strategies.

So all of this I helping to fuel much of this change and much of this growth that I think we will continue to see in the future and also driving many new alliances that many customers will need to forge to be able to compete globally. Now within all this we see a fairly dramatic shift to e business or electronic business and when you look at this from a European stand point it becomes very obvious that information technology with probably the most symblamatic example, the explosion in the use and the availability of the Internet is both a driver and an enabler of much of this change. We are seeing a shift in how all transactions are conducted between companies and their customers, between companies and their employees, their business partners, between citizens and their Governments and between citizens and their schools and other institutions they interact with on a daily basis. So we are really, we think, entering a period, an influction point, where this technology becomes so ubiquitous that it begins to be part of the everyday fabric of our lives. And literally we see a time where millions of companies will be connected to literally billions of customers and consumers using billions of devices whether they be cellphones, or personal computers or kiosks or smart cards as a way of interacting with these companies, a way of gaining access to information and new services both from the public sector and the private sector.

For those institutions both public and private can leverage this to their competitive advantage the opportunities are endless. We also think for those that can't leverage it, can't translate this into competitive advantage they run a very severe risk, the risk of irrelevancy as many of these changes take hold and flourish in Europe and elsewhere. Now if you talk about Europe those are the trends but last year IBM conducted over 4000 engagements with customers in Europe alone on how to translate the value of this technology into competitive advantage. You can see on the slide fully 85% of the people that we have talked to from our own research believe that electronic business and electronic commerce are going to be fundamental to their businesses as they go forward, and they will be at a disadvantage if they don't figure out how to harness it to their advantage. More than two thirds of the companies, both large and small that we have talked with feel that conducting e business will become the norm. Now one difference between Europe and other places like North America is we see e business as beginning to develop along a very pragmatic trajectory and I call that trajectory 'Business to Business' as opposed to 'Business to Consumer'.

So increasingly companies large and small in Europe are making the investments in the infrastructure and the applications to drive their connections, to their customers, to their business partners, to their suppliers and this we think will be a trend which we will see for the foreseeable future in terms of investment in Europe. Now we have identified a very simple model that I am very briefly going to share with you that helps customers think about how do you become in e business, how do you get started? We call it the e business cycle and this has been developed from countless engagements and research that we have done with our customers on a worldwide basis.

This is not a hierarchical model; customers enter this cycle at different places and get started in different ways. But typically it starts with the transformation of business processing. New ways of linking suppliers and business partners and customers rethinking the way companies want to deliver their products or their services. And typically companies transform their business processes in one of three ways. Often they will just fine tune and improve an existing process.

IBM is a great example of this. We took a highly manual procurement system and converted that to an electronic procurement system. So in 1999 IBM will do almost $9billion of its procurement electronically. The manual system was a system that generated almost 100 million pieces of paper a year and that has been reduced to a number far less than 100 million pieces! So that's an example of taking an existing process and really improving if through the use of this technology and rethinking it.

We also see many customers who are reinventing their business processes as a result of a new competitor that may enter the scene. A great example of this would be Berdlesmans Barnes and Noble. They had to reinvent the way they were going to distribute books as a result of the advent of Amazon.com forced them to completely reinvent the business process. And then of course the third way the companies transform their business processes is by creating entirely new approaches to market, and I think Amazon.com is a great example of how a company completely rethinks the business model and transforms basic business processes.

Now the second part of this model is what I will call Bill because once you have transformed may key critical business processes the next step is to begin to build the next generation of applications that will allow you to reach those new markets or new customers or take advantage of these redesigned business processes. So this next generation of what we call e business applications will have some very different characteristics than previous generations of applications. For example, many of them will run on servers rather than PCs or other clients that were chained to a desktop or were chained to an individual user.

These new applications will leverage the enormous investment that customers have made in existing applications. No customers will throw out completely everything that they have done to take advantage of much of these new developments. And these new applications will have to scale to handle transaction levels that are magnitude of orders more than what we have seen in the past. IBM along with many other companies are working on standards to ensure that these applications, this next generation, can run across multiple hardware platforms, can run on the whole new generation of devices that are beginning to enter the marketplace, so that the establishment of standards that transcends individual companies or individual products become a key enabler of the development and building of many of these new applications. And once these applications are built they have to run, and they have to run, as I said before, 24 hours a day, 7 days a week, 365 days a year.

This requires a scaleable hardware architecture, it requires applications can be managed, that they can be secure, that we are sure that who gets into these applications and get into this information are the companies that are authorized to do so. So this is an area that IBM has done an enormous amount of work ensuring that our particularly hardware platforms are able to meet this increased need of our customers as they begin to scale many of these new applications. And we of course think that the future will not be totally revolving around the PC. We see the PC as just another device that will connect to the world's telecommunication and computer networks but rather as I said many of these applications will run on centralized servers which can make this information available to the broadest number of users.

And then the last part of this model is probably the most powerful. It's when companies can begin to leverage all of the information in their institutions. Leveraging it by getting it to the right people and their companies at the right time that can use this for competitive advantage and local companies with their customers. And increasingly this is not just tacit information but is the intuitive information, the subtle, intuitive knowledge that many employees and customers and companies have and how to react and how to respond to very local situations and markets. And this is where the real power of this technology can be leveraged and as a very famous CEO said "The ability to translate this into action at the point of contact with a market or customer is the ultimate competitive business advantage".

Now before I wrap up and turn this over to the next speaker, I do want to just give you one example of a company right here in Europe that has gone through this cycle.

This company is Deutsche Babcock. Many of you may have heard of this. This is a fairly large German mechanical engineering firm. They have 30,000 employees and operate in 150 different locations around the world, so truly a global company. Now in the early 90s by their own admission this company was being slowed by their own internal processes, by the cumbersomness of many of those processes. They were operating under a very rigid centralized hierarchical management system and this was showing up in their inability to meet many of the local requirements of their customers. So they decided to completely rethink many of their processes as that model suggested to transform some of their critical business processes.

So one of the things that that they did was to centralize their decision making process and they did this by building a whole new set of applications - in this case on Lotus Notes - that allowed their employees to collaborate, allowed them to share information, not only locally but globally, and this allowed them to gain access to new insights about their markets, about their customers and respond more quickly. Now if you talk about leveraging this application and leveraging this capability, just recently they have introduced the ability for employees to select their own managers. So the managers now in this company now need to put their resume on line and the employees, based on the track record of the manager, based on the track record of the executive, chooses with which manager they would like to work. Now you talk about a cultural change and I am bringing this up because when the gentleman who explained this to me a couple of months ago told me this, I couldn't believe it. How many managers would be out of business if employees got to choose with whom they worked? The results of this I think are clear, a rejuvenated, reinvented in many ways company that is really beginning to see the benefits of e business and the transformation of many of their business processes.

Now before I hand the stage here over to Dr Vangerman, I'd just like to again quickly recap and set up what you will hear more about over the next day and a half. Competition today in my view is really happening between business models not just between companies. And these business models are increasingly leveraging the internet, leveraging the web in order to compete on a global basis. I think the new industrial order if you will is really built on networks, the internet being the greatest example of those networks. And as I said businesses really risk irrelevancy if they are unable to harness this capability and build their own new business models so that they can effectively compete with many of the new entrants, with many of the new business models that we are seeing merge, and many of those new and hottest business models are in fact built on the web, built on the internet, and hopefully you walk away knowing that much of this is happening in Europe today - this is not something that will happen 2 or 3 or 4 years from now - it is in fact happening as we speak. It is a great opportunity for those who avail themselves and certainly a risk for those who are unable to figure out how to harness its capabilities.

So with that I would like to introduce Dr Martin Vangerman. Many of you may know him, he's written a couple of very interesting books - I must admit I haven't read any of them yet but we flew down together on the plane this morning and I now have a lifetime supply so I'm sure I will get a chance to read them. but the one someone mentioned to me was the meeting the global challenge in the establishment of the successful European policy, and I believe that many of the insights that Dr Vangerman had - when was that book written? 5 years ago? - have in fact come to pass. So it is my great pleasure to introduce Dr Bangemann.