ISDC 2013_Referat_Bernie Meyerson_IBM

IS Directors Conference – August 2013

Sustaining Innovation in a Global Enterprise

Dr. Bernard S. MeyersonVice President InnovationIBM Corporation

© 2012 IBM Corporation

IS Director’s Conference-Interlaken 2013

Driving Sustained InnovationDriving Sustained Innovation In a Globally Integrated In a Globally Integrated EnterpriseEnterprise

Dr. Bernard S. MeyersonIBM Fellow, Vice President of InnovationCHQ

© 2012 IBM CorporationIS Director’s Conference-Interlaken 2013

2007

Why Innovate?Why Innovate?“What is the most important capability required for growth?”“What is the most important capability required for growth?”

0 10 20 30 40 50 60

Ability to manage increasing regulation costs

Ability to allocate capital

Ability to manage a global organization

Ability to allocate the best talent

Ability to innovate

Source: McKinsey survey of 9,345 global executives 07

McKinsey Global Survey 2010: 84% of executives say Innovation is extremely or very important to their companies’ growth strategyMcKinsey Global Survey 2010: 84% of executives say Innovation is extremely or very important to their companies’ growth strategy



Key Elements of Key Elements of Sustainable InnovationSustainable Innovation A short list of EssentialsA short list of Essentials


Essential #1: People Essential #1: People (T(T--Shaped Innovators)Shaped Innovators) Requirement: Deep, ExpertRequirement: Deep, Expert--Thinking, with Broad ComplexThinking, with Broad Complex--Communications SkillsCommunications Skills

Many disciplinesMany disciplines(understanding & communications)(understanding & communications)

Many systemsMany systems(understanding & communications)(understanding & communications)

Deep in one discipline

Deep in one discipline

(analytic thinking & problem solving)


Deep in one system

Deep in one system



Many teamMany team--oriented projects completedoriented projects completed(resume: outcomes, accomplishments & awards)(resume: outcomes, accomplishments & awards)

Broad across many

Deep in at least one


Essential #2: Essential #2: InfrastructureInfrastructure


The World is Now Our LaboratoryThe World is Now Our Laboratory

China

WatsonAlmaden

Austin

TokyoHaifa

Zurich

India

IBM Research Lab

Brazil

Global, Smarter Planet Collaborations

Pangoo

Nairobi

Melbourne

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Essential #3:Essential #3: DynamicsDynamics


1970s1970s 1980s1980s 1990s1990s 2000s2000s

Inter-disciplinary collaboration in the market and across the globe

Centrally FundedCentrally FundedJoint ProgramsJoint Programs

Research in the Research in the MarketplaceMarketplace

Collaborative Collaborative InnovationInnovation

CorporateCorporate Collaborative Work on Create business

2010s2010sCollaborative

fundedfunded

TechnologyTechnologytransfertransfer

TeamShared agenda

Effectiveness

clientproblems advantage for clients

Industry-focusedresearch

partnershipsEmerging markets

Global Global CollaborationCollaboration

Innovators Too Must Evolve;Innovators Too Must Evolve; From Inward Looking to Global, Client Focused ExpertsFrom Inward Looking to Global, Client Focused Experts


Result; Result; Innovations That MatterInnovations That Matter


Innovations That Changed History

Nano MRI (2009)Nano MRI (2009)Nano MRI (2009)

First PetaflopSupercomputer (2008)First First PetaflopPetaflopSupercomputer (2008)Supercomputer (2008)

Cell (2005)Cell (2005)Cell (2005)

Blue Gene/L (2004)Blue Gene/L (2004)Blue Gene/L (2004)

Carbon Nanotubes (2003)Carbon Nanotubes (2003)Carbon Nanotubes (2003)

Copper Interconnect Wiring (1997)Copper Interconnect Wiring (1997)Copper Interconnect Wiring (1997)

Deep Blue (1997)Deep Blue (1997)Deep Blue (1997)

SiGe (1994)SiGe (1994)SiGe (1994)

High Temperature Superconductivity (1987)High Temperature Superconductivity (1987)High Temperature Superconductivity (1987)

Scanning Tunneling Microscope (1986)Scanning Tunneling Microscope (1986)Scanning Tunneling Microscope (1986)Relational Database (1970)Relational Database (1970)Relational Database (1970)

Fractals (1967)Fractals (1967)Fractals (1967)

One Transistor Memory Cell (1966)One Transistor Memory Cell (1966)One Transistor Memory Cell (1966)

RAMAC (1956)RAMAC (1956)RAMAC (1956)

Fortran (1957)Fortran (1957)Fortran (1957)

Speech Recognition (1971))Speech Recognition (1971))Speech Recognition (1971))

RISC (1980)RISC (1980)RISC (1980)

Watson (2011)Watson (2011)Watson (2011)


Continuous Innovation; Continuous Innovation; Skills Beyond The Skills Beyond The ““AHA!AHA!”” MomentMoment

Disk Drives–If IBM had not continued to innovate in this field,

today’s laptops would weigh approximately 250,000 Tons

NeverNever Undervalue Ongoing InnovationUndervalue Ongoing Innovation

x2


The Transformative Power of Technology Lives On; Every Generation of Technology Enables Remarkable Outcomes

Apollo 11:2048 words RAM (16-bit word)-> ~4KB36,864 words ROM

Avg. Smart Phone:256 MB – 512 MB Cache2 GB – 64 GB RAM


After 50 Years,After 50 Years, How Long Before How Long Before

Technology As We Know It Technology As We Know It Has Run Its Course?Has Run Its Course?


We Are At A Fundamental We Are At A Fundamental Discontinuity in Information Discontinuity in Information Technology on Many FrontsTechnology on Many Fronts


Coming to Your Organization Soon; Coming to Your Organization Soon; Information Technology in the Information Technology in the ““PostPost--Silicon EraSilicon Era””

Silicon transistors will dominate Information Technology for decades to come, but contribute little to its progress.We will “worry” about the seemingly ridiculous, such as “slow” light and the Australian Strategy for DatacentersIntegrated solutions made up of specialized hardware, software, systems, and network functionality, will compensate up for lost technology benefits.Despite this, Information Technology will accelerate in terms of its contributions to business differentiation



Truly Odd Issues;Truly Odd Issues; Addressing the Impact Addressing the Impact

of of ““SlowSlow”” LightLight


For Decades We Have Scaled Chips Down in Size and Systems and Datacenters Up in Scale

Scale out Scale out

Scale up

Scale down

Question: Even at 300,000,000 meters/sec,Is Light Fast Enough To

Keep Pace With Technology?Hint; Datacenters can

be hundreds of meters in size

Answer;Not even close.


The New, Near Term Architecture; Scale In

Scale In

Memory

Switching

Storage

Processor

Scale In ByIntegration


Addressing the “Problem” of Scale-Out; “Slow” LightIBM-3M Collaboration in 3D

Use 3D chip stacking to turn tens of meters into tens of microns, e.g. make signal paths shorter by a factor of about a million.

No problem, you must only;Thin chips to <50 microns.Stack 50 or so together.Connect them up somehow.Don’t set fire to them.


The Next Several Decades; Creating New Paradigms For Information

Technology Requires Ever More InnovationScale In By

3D Chip Bonding

Memory

Switching

Storage

Processor



How Critical is Continued How Critical is Continued Innovation in Information Innovation in Information

Technology?Technology?Imagine the Emerging Imagine the Emerging

World of Big Data World of Big Data WithoutWithout

The Ability to Digest It?The Ability to Digest It?

Consider The FollowingConsider The FollowingTwo Grand Challenges Two Grand Challenges

From IBMFrom IBM’’s 2008 s 2008 Innovation JamInnovation Jam


Today there are 1 Billion cars on the road. That number will double in 2020

Congested roadways cost $78 Billion annually in the form of 4.2 Billion lost working hours and 2.9 billion gallons of wasted gas.

Global Challenge: Transportation


Global Challenge: Healthcare

$475-$750 BillionRange of estimated U.S. healthcare

spending each year on administrative and clinical waste, fraud and abuse and other waste.1

1.5 MillionErrors in the way medications are

prescribed, delivered and taken harm 1.5 million people in the U.S. every year.2


Innovation using Big Data:Innovation using Big Data: Transforming TransportationTransforming Transportation


Integrating realIntegrating real--world data with analytics allows one to world data with analytics allows one to be be ProactiveProactive vsvs ReactiveReactive

Operational/ TransactionalInsights in Singapore

Road Usage Optimization,

GHG emission models

Proactive

Ignorance is NOT bliss

Data allowsinsight, and insightenables foresight

Foresight allowsone to changethe future for

the better


Can We Really Know the Future?Can We Really Know the Future? Blue is the prediction, Blue is the prediction, Black is measuredBlack is measured

10 minute-ahead volume forecast (blue) at three

locations vs. actual data (black)

10 minute-ahead speed forecast (blue) at the

same three locations vs. actual data (black)

The Power of Big Data

•In the long past-----You’re stuck in traffic, here’s why…..•In the recent past-----You will be stuck in traffic, here’s why…….•In the present-----You would have been stuck, but I took care of it


Transforming Banking: Solutions for Smarter BankingOne of the largest banks in the world

Challenge;Managing the complexity of branch networks forrapid and profitable growth

Analytics Approach to OptimizationAnalyze prior business outcomes against all

available local demographicsCreate a map of optimal areas for branch

clusteringDeploy new branches per formula optimized for

newly deposited funds in the first year of business.

IBM’s China Research Labs delivered a plan that produced an additional $1.04B in deposits in one city alone

Market Potential AnalysisMarket Potential Analysis

CClusteringlustering

Site Location OptimizationSite Location Optimization


A Branch Location Challenge From A Massive Bank in China; Maximizing Profit via Advanced Analytic and Optimization Methods

Clusters indicate the hot areas with highest market potential for branch investment

CClusteringlustering

Branch Performance EvaluationBranch Performance Evaluation

IntroductoryStage

GrowthStage

MaturityStage Decline Stage

TotalMarketSales

Time

20%

20%

20%

20%

20%Introductory

StageGrowthStage

MaturityStage Decline Stage

TotalMarketSales

Time

20%

20%

20%

20%

20%

Evaluate the performance of existing branches

Market Potential AnalysisMarket Potential Analysis

Based on economic geography data, market potential forecasting calculates and evaluates market potential

High Market Potential

Low Market Potential

Recommend branch locations with proper configurations such as branch format, service capacity, product, etc

Site Location OptimizationSite Location Optimization

China Research Lab’s Collaborative Innovation helped a bank increase its new branch fund intakes by $1.04B deposit in one city alone


The Challenge

NYS Tax Authority wanted a way to improve the efficiency and effectiveness of its tax collections process , which relied on rigid, manual rules to implement a complex process involving various legal/business constraints. The goal was to disassemble this rigid procedure leaving fragments of it intact wherever necessary, and automatically configure the rest based on analytics and optimization.

The Solution

IBM Research used a Markov Decision Process (MDP) framework to model the tax collection process, with “states” representing information on a taxpayer’s stage in the collection process, movement from one state to the next dependent on collection “actions” (e.g., phone call, warrant, levy), and “reward” represented by the tax collected for the taxpayer in question. A constrained Reinforcement Learning procedure was used to optimize (based on historical data) the expected long term cumulative rewards, using data analytics and optimization iteratively. The optimized MDP provided a policy mapping tax payer states to collection actions so as to maximize the long term cumulative rewards

Client: NY State Tax Authority

Business Benefits2010 realized an 8.22% revenue increase over 2009 , totaling ~ $83M35,000 fewer taxpayers had serious actions taken against them (A Significant OPEX Reduction)

Collections Optimization*

© 2013 IBM CorporationDr. Bernard Meyerson IS Director’s Conference-Interlaken 2013 Ann Winbald, Co-founder Hummer

Winbald Venture Capital

In its raw form, oil has little value.In its raw form, oil has little value.Once processed & refined, it helps Once processed & refined, it helps power the world.power the world.

30

““Data is the New OilData is the New Oil””



Cybersecurity: Cybersecurity:

Employing Intelligence to Employing Intelligence to Counter AggressionCounter Aggression

32 © 2012 IBM CorporationIS Director’s Conference-Interlaken 2013

http://www.globalpost.com/dispatch/news/regions/americas/united-states/121012/panetta-us-cyber-security-threat-pre-911-moment


@Computerworld: Bank security weaknesses led to cyber looting of $45M from ATMs #cybercrime (by @jaivijayan) http://t.co/mtXGG58eZU

"It's surprising that even some level of analytics wasn't used," to spot and prevent fraudulent transactions, he said. "When they were hitting 3,000 ATMs around the world at the same time, you'd think there'd be some analytics" to detect it, he(Jim Stickley, chief technology officer at TraceSecurity Inc.) said.

http://t.co/mtXGG58eZU


Evolution of Security Intelligence Beyond the Enterprise

IBM Confidential - For Discussion Purposes OnlyEnterprise Customers

Cybersecurity Platform (for Watson and US North)

Insider Threat Platform

Cloud Security Analytics

Mobile Security Analytics System G Social Media Monitoring

Systems of Record

Systems of EngagementAnomaly Detection at Multiple Scales (ADAMS)



What’sNext?

© 2013 International Business Machines Corporation 36IS Director’s Conference-Interlaken 2013

Cognitive Computing Complex reasoning and interaction extends human cognition

LegalSuggest defense/ prosecution arguments

TelemarketingNext generation – persuasive – call center

HealthcareSurface best protocols to practitioners

FinanceEnhance decision support


How Would You Leverage A How Would You Leverage A Tireless Tireless ““GeniusGenius”” At Your Side At Your Side

in Your Business?in Your Business?


The New Realities of InnovationThe New Realities of Innovation

Despite all present challenges, progress in Information Technology will continue to accelerateData Analytics will extract unprecedented insights from BIG DATA, and become as common a “tool” as the pocket calculator.Cognitive systems will emerge as profound disruptors of the status quo.



Thank youThank you