IBM joins Weather Co. to develop forecast tools for businesses

31 Mar 2015 | Author: | No comments yet »

Can Weather Data Alter Business Decisions? IBM Thinks So.

IBM has joined forces with the Weather Company to help businesses harness vast quantities of weather data, proving that the cloud is about far more than just technology. IBM is hoping to harness the data collected by smartphones, tablets, connected vehicles and appliances as part of its new Internet of Things business unit. (Joeg Sarbach/Associated Press) IBM is investing $3 billion US to build an “Internet of Things” division aimed at harnessing the massive trove of data collected by smartphones, tablets, connected vehicles and appliances and using it to help companies better manage their businesses. The tech giant and the Weather Company’s WSI business division will deliver weather-focused enterprise cloud services, the companies announced on Tuesday. The move signals a commitment by IBM to broaden its offerings as it focuses on new projects, especially after a year with rocky financials and a “disappointing” outlook for 2015. “Weather is perhaps the single largest external swing factor in business performance – responsible for an annual economic impact of nearly half a trillion dollars in the U.S. alone,” according to IBM. International Business Machines Corp. announced Tuesday that it’s joining with Weather Co. to build tools that help companies in the retail, insurance and utilities industries anticipate and prepare for bad weather.

The company said that it will be able to use cloud computing to process data collected data from “more than 100,000 weather sensors and aircraft, millions of smartphones, buildings and even moving vehicles.” Among the firms that IBM says could benefit from the new Weather Channel partnership are insurance companies, which could use Big Blue’s data to save money by halting operations or change their offerings based on weather forecasts. However, WSI’s Weather Alert service, combined with IBM’s Analytics technology, could be used to send policyholders text messages alerting them of impending hailstorms and safe locations for their vehicles. The new business unit is part of IBM’s shift away from hardware toward spending billions to focus on analytics, cloud computing, mobile services and security. IBM has faced three straight years of falling sales as demand wanes for legacy hardware and services and unprofitable units are divested. “We are going to monetize this through analytics, no question,” Joel Cawley, general manager of information and insight services at IBM, said in an interview. IBM plans to launch an online service that helps insurance companies extract insight from connected vehicles, to create new pricing and services customized to individual drivers.

The US-based firm is already working in areas like smart cities offering solutions, ranging from water management to retail and customer loyalty to traffic control. “IBM will enable clients and industry partners apply IoT data to build solutions based on an open platform. This is a major focus of investment for IBM because it’s a rich and broad-based opportunity where innovation matters,” IBM Analytics Senior Vice President Bob Picciano said. It could also help determine exactly how many people were hit by a natural disaster so insurers could respond to claims faster. “Most people, most businesses, most governments wait for weather to happen to them and react to it rather than anticipate what it will do to them,” said Mark Gildersleeve, president of the Weather Co.’s WSI division. Most businesses “don’t anticipate the weather and don’t understand the things you can do to take action ahead of time.” Among retailers that have reported weather-related setbacks is Gap Inc., which blamed cold weather for sluggish sales in February 2014. IBM has actually had several pieces in place for some time, but it has been fragmented, says Joel Cawley, GM for information and Insights as a Service at IBM.

More than 2,000 IBM researchers, software developers and consultants will be dedicated to delivering real-time insights delivered via the cloud to business and government clients, IBM added in a blog. Not only can weather data help better predict electricity demand, it is invaluable for renewable energy developers. “Any company that can manage the energy supply-demand volatility better (e.g. via better trading) has a strong market advantage,” said Holger Kisker, vice president and research director for Forrester Research. Gildersleeve offers the example of one auto-insurance carrier that already uses WSI data to send weather alerts to policyholders, warning them of approaching hailstorms. The service has already helped reduce potential damage by 52% in regions typically affected by those sort of damage, he said. “The skill in weather forecasts has improved faster than the skill in decision-making,” Gildersleeve said. “Every business needs a weather strategy, but most don’t. Insurance companies, power companies, and governments all need weather data to help proactively make better determinations instead of simply reacting to the weather after the fact.

He points to a project IBM did in China monitoring air pollution as something the company could package using the platform components and sell to other countries with a similar requirement. Tonight’s announcement fits in with a much bigger picture of IBM’s strategies and priorities moving forward, whether it’s Watson processing big data, its cloud strategy or analytics.

A key piece of this approach is building a platform play across the different categories and IBM wants very much to attract developers to this vision.

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