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IBM's Insurance Industry Leader for EMEA, Performance Management and Business Intelligence talks to TheWherebusiness about how to create a smarter planet in the context of analysing time and location.
The starting point has to be the topic of analytics in its broadest context. IBM’s Institute of Business Value recently conducted a survey of 4500 business executives from 120 countries and representing 30 industries. The survey revealed that 58% of those interviewed believe that the use of analytics gives them a competitive advantage, and using analytics they are twice as likely to outperform their peers. Best of class companies are already using analytics for the management of their operations, reduction of risk, and to give insight into their customers.
That’s only part of the story. For some organisations, analytics is about looking in the rear view mirror, and turning their existing data into information. Others want to be able to anticipate changes over time, and modify their strategy and operations accordingly. That’s why predictive analytics is becoming so popular.
The third component is location, in other words the analytics of ‘place’. Where are my most profitable customers? Where are my best performing branches? Where do I deploy my salesforce? GIS is already being explored for its ability to track and model the progress of humans throughout their daily routines both in their daily commute and also in leisure. We also see the concept used in modelling the spread of contagious disease.
Analytics is about understanding what has happened, why it has happened, what is likely to happen next, and now ‘where’ will it happen. We describe this as ‘spatial temporal analytics’. This idea isn’t entirely new, but the quality of delivery is now maturing.
How does an understanding of this lead to a smarter planet, and what do you mean by this term?
‘Smarter planet’ is IBM's point of view on how interconnected technologies change the way the world works. That is, the systems and processes that enable physical goods to be developed, manufactured, bought and sold; services to be delivered; everything from people and money to oil, water and electrons to move; and billions of people to work, govern themselves and live.
Time and location are key metrics which need to be considered to give us the fullest picture.
How can a smarter planet make us more instrumented, intelligent and interconnected?
A significant aspect of being smarter is the way we interconnect between human and natural systems -- weather, climate, water, CO2, waste and ecosystem services -- to move industry and society toward more sustainable growth. The catalyst for this change is transformation of the world's infrastructure, which is becoming increasingly instrumented, interconnected and intelligent.
By 2010, there were a billion transistors per human, each costing one ten-millionth of a cent.
This technology is being embedded into billions of devices - cars, appliances, roadways, etc. By the end of 2011, an estimated 2 billion people were on the Web - connected to devices in an unprecedented way.
Massively powerful computers and computing "clouds" are already being affordably applied to processing, modelling, forecasting and analyzing the mountains of data all this will generate. Large numbers of diverse sensors will continue to provide useful information about the state of the environment.
For the first time in history, almost anything can become digitally aware and interconnected. The real question is ‘how do we apply these capabilities’?
So we know we are all now connected - economically, technically and socially. Being connected is not sufficient. But beyond this we also need to apply intelligence into our systems and ways of working. The world has become flatter and smaller, and the challenge is that it has to become ‘smarter’.
According to published reports, the losses of electrical energy due to inefficient grid systems range from 40 to 70 percent around the world. So utilities in the U.S., Denmark, Australia and Italy are now building digital grids to monitor the energy system in real time. This lets them fix outages much faster, and source and distribute power more intelligently. It also makes the integration of traditional and new sources of power possible, providing end-to-end insight across all forms of energy.
Let’s think about the opportunity: Smart airports, smart banks, smart roadways, smart work, smart cities - with so much technology available at such a low cost, the list of possibilities is endless.
To what extent do you think current technologies are enabling the development of a smarter planet, and which ones?
What we are now seeing is increasingly a convergence of technologies, for example the coming together of GIS and analytics. Another example might be analytics in a cloud environment, helping to cope with what we call ‘big data’ – massive volumes of information at our fingertips.
It's obvious, when you consider the changes driving our planet today, that we're going to have to run a lot smarter and more efficiently – especially as organisations seek the next areas of investment to drive economic growth and to move large parts of the global economy out of recession.
How does this kind of analysis fit into location-based and geo-location services marketing: can it improve customer segmentation or is there another purpose for it?
It’s pretty clear that spatial temporal analytics play strongly to the topic of customer analytics. The ability to add or ‘mash’ additional demographic and other relevant information into the analytic matrix allows a much more accurate insight into customer behaviour.
Analytics generally helps us better understand not only what the customer has traditionally bought, but what they will buy in the future. It allows call centre staff for example to be able to suggest the ‘best’ and ‘next best offer’, and also for supermarkets to ensure that they are stocking the right inventory in the right location, for the right time of the year...
It goes much further than this. For example our view of a ‘smarter city’ recognises the impact of work patterns, fuel economy and even parking-space availability as components of solving the traffic congestion problem. Smarter insurance allows fraudulent insurance claims to be more quickly identified and investigated, whereas other claims can be fast-tracked, leading to improvement in customer service.
How large is the market for spatial temporal analytics and what does its ecosystem look like?
It’s easy to think that the market size is just a combination of the existing GIS and analytics marketplaces in terms of value. In reality there is likely to be some overlap – but I suspect that these converged technologies will start to let the genie out of the bottle. Stronger visualisations will increase user acceptance, and therefore increase market size. We already know that the overall market for both analytics and GIS is valued in billions of dollars, but at this point the full extent of the opportunity is limited only by our imagination.
As one example, the move towards insurers offering ‘pay as you drive’ and ‘pay how you drive’ products is creating new opportunities. Imagine if insurance premiums were not only influenced by your age and record, but the route you chose (or prompted to follow by your sat nav) and what time you travelled.
Also I think that we should also look beyond commercial application, but also to think about these things with a sense of social responsibility. In an increasingly fragile planet where drought and major weather events are becoming the ‘norm’, the use of technology gives us the opportunity to transform our response to such emergencies.
What are the emerging trends for it, and what tools are used to analyse this kind of data?
In 2009 Sam Palmisano, Chairman of IBM introduced the concept of the ‘Decade of Smart’. IBM believes the Decade of Smart will see companies and public sector taking advantage of the mass of data in the world to leverage and optimise the use of analytics. The “Decade of Smart”, is about being more intelligent in using data to drive better decisions is key to business success and more effective use of public funds.
“The Decade of Smart, in my mind, is all about the possibilities,” said Rob Ashe, General Manager of IBM Business Analytics. What he meant, in real terms, is the inventive use of tools to synergise on data and tools, and identify new points of convergence.
At a more immediate level IBM have already integrated GIS capability into our Cognos 10 reporting platform to make access easier for end users. IBM Netezza, an ‘out of the box’ pre-bundled hardware and software offering, already embeds GIS and analytical reporting into its build.
Please provide TheWhereBusinessReaders with an insight into your presentation at January 2012’s Location Intelligence Conference, and why do you think people should attend it?
IBM has a vision for the future in which technology is one of the key enablers for change, but we are not a voice in the wilderness, Within IBM we are called to ‘think’ and not just to react, and we are also encouraged to share our ideas about a Smarter Planet and discuss them.
We recognise that business value is also a catalyst for change. Many industry executives want to understand the ROI of their potential investments and my presentation will share some of the most up to date market research by our Institute of Business Value into the value of analytics, and of course the potential impact of geography in that equation.
Are there any developments that you are working on for IBM that you would care to mention?
At any time IBM are working on multiple initiatives across multiple industries and in multiple geographies, and have said that they will spend of the order of $20Bn over the next five years. It’s inevitable that there will be multiple new initiatives going forward, and exciting times ahead.
In my own sphere of influence in insurance, we are actively looking at the influence of risk accumulation in the context of Regulation, something called Solvency 2, and how this can be represented from a geographical point of view.
At a more local level, I also want to mention IBM’s ‘Celebration of Service’. IBM had our 100th birthday this year, and all the staff were encouraged to participate in a voluntary scheme to help the community. I chose to work with a children’s hospice in Kent to better understand how the use of analytics can not only help that specific organisation raise money but also how we might extend to other mid-sized charities of all types across all geographies.
Any further comments?
I guess my closing comment is a personal one. When my son chose to study geography at university, like many parents I agreed to his decision without fully understanding his reasoning and why he thought geography was so important.
Over the past five years I have increasingly come to recognise the importance of location, or the ‘power of place’ – when before then the whole topic hadn’t really hit my radar. I wonder how many industry and public sector executives are still in the same mindset as I was then, and have yet to recognise the importance of location’ in optimising their decisions.
So I guess it’s a rare but nevertheless important example of a father following his son’s footprints.
Location Intelligence Conference
Date for your diary: January 16, 2012 - Europe - TBC, Dates TBC. Come to hear Tony speak at Location Intelligence for Enterprise Europe. He will be talking about the following:
Utilise Location Analytics within Organisations to Achieve Strategic Objectives
Case studies and examples of world class implementation: Understand why analytics is the Number 1 priority on the buying agenda of CIO’s.
- Discuss the inevitable convergence of GIS and business analytics in public and private sector.
- Understand the business value of location analytics, and create winning strategies using converged technologies.
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