This is the second part of my interview with IBM’s Mike Rhodin, SVP, Software Solutions, about their moves in the software space. We continued our discussion by covering IBM's smarter commerce initiative. This is an emerging market where the idea of “the educated consumer” has reached a whole new level with explosion of user generated content within Web 2.0.
Mike said that while they had sound offerings in the order capture area with WebSphere Commerce and clients like Macy’s and Target, they wanted to expand to cover the entire B2C lifecycle. He mentioned their acquisition of Sterling Commerce for order capture, order management, shipping and logistics. To provide supply chain optimization they acquired iLog. They also acquired Coremetrics for Web analytics of order tracking and Unica for automated marketing. Unica looks at what the next best action should be taken to drive sales as people explore a commercial web site. It can also be used in physical stores at point of sale terminals. On the analytics side of this process lifecycle, Netezza was acquired to enable better visualization of data.
We went on to discuss what’s next. A big move that IBM is taking involves a transformational look at the use of computers with Watson. The traditional use of computers was to standardize things and allow the machine to consistently provide the same answer every time for the same transaction. Watson is a system that you teach rather than program so its answers continue to evolve as it learns. It will get better but it can also make mistakes. You teach it through a Q&A process. When Watson takes in new data there is a seven fold expansion in its memory as it is making connections between the new data and the old data.
This approach is much like more modern views of human cognition. The old behaviorist view modeled, in part after machines, was a simple stimulus response. You filled the brain with new data and it responded. Piaget introduced the concept of assimilation and accommodation. You assimilate new information based on your existing cognitive structures. You also accommodate these structures based on the new information. There is a give and take process going on as you learn.
IBM is partnering with WellPoint for the first commercial application of Watson to help with medical diagnosis. They system wisely does not tell doctors what to do but offers them the top five probabilities for a diagnosis based on what is known about the patient. It does not take over the doctor’s job but acts as a doctor’s assistant. This use is designed to both increase proper patient healthcare and reduce the cost of care by reducing unnecessary tests and procedures. This makes a lot of sense to me.
IBM's software business has become one of the fastest-growing contributors to IBM's profit. In the last decade, IBM Software profit has tripled, driving more than $9 billion in profits in 2010. With coordinated moves like those Mike described, I can see why this success is occurring. As Mike noted in his blog post, Beyond Collaboration: Becoming a Social Business, “it's one thing to create networks of customers, employees, or partners -- it's quite another to change the processes that run your business, to make them truly social.” It is this change that is required to put social software to work and move it from a useful utility to the core of a new way of doing business.
Big Blue has come a long way from not being in the software business to becoming a leader in it! Keep up the great work IBM.
Posted by: Joe Todisco | October 22, 2011 at 01:01 PM