By Joe Clabby, President, Clabby Analytics
Two years ago after IBM’s Insight 2014 conference, I wrote a piece for the Pund-IT Review about IBM’s Watson cognitive computing environment, I stated the following:
“We in the analyst community need to see some black ink coming from IBM’s cognitive computing Watson efforts. I personally believe that Watson is on the cusp of hitting it big – starting probably in about a year or two.” I further stated that: “Watson will become profitable in about two years as the betas reach closure and as IBM works out its deployment and pricing plans.”
At that time my big concerns regarding Watson were that I was not seeing an expansive portfolio of cognitive applications; many customer environments were still “in beta test”; the Watson business partner ecosystem was in its infancy; and IBM’s Watson pricing/deployment plans were “obscure”. But, after attending this year’s World of Watson (WoW) conference in Las Vegas, all of my concerns have been assuaged. Why is that the case? Because:
- The Watson applications portfolio has been markedly expanded – helped by a huge ($1 billion+) investment by IBM in hardware and software development;
- The Watson ecosystem has greatly expanded as dozens and dozens of developers and partners have created cognitive computing and analytics solutions on top of the Watson platform;
- The “quiet beta customers” of 2014 have been replaced by “vocal Watson customer enthusiasts” – as evidenced by the 50 or so live testimonials at this year’s WoW conference, and by the dozens of Watson user break-out sessions that could be found on the conference schedule; and,
- IBM’s pricing and deployment scheme for Watson has solidified – with the company placing a huge emphasis on Watson cloud service delivery models.
Just before getting on the plane to Las Vegas I reviewed IBM’s 3rd quarter earnings announcement and I noted that the company reported that cognitive solutions (which include Watson revenues) had reached $4.2 billion, up 4.5 percent. IBM also reported that cloud revenue within the segment grew 74 percent (up 75 percent adjusting for currency), and Solutions Software grew 8 percent. What this shows me is that IBM’s major initiatives in cognitive, cloud and service delivery are now delivering the “black ink” that I’ve been looking for.
And this revenue jump may be just the tip of the iceberg – Ginni Rometty, IBM’s Chairman, President and CEO, reported in her keynote address that cognitive computing is estimated to be a $31 billion industry in the near future! And with IBM’s clear leadership in cognitive technology, the future looks very bright indeed for IBM’s Watson cognitive computing initiative.
The World of Watson Conference
The World of Watson conference merged with the analytics/cognitive/data management conference formerly known as “Insight.”. Plenty of discussions on databases, data management, analytics, security and other related topics were still to be found at the WoW event – but, by changing the conference name, IBM has chosen to drive home the importance of its cognitive computing offerings.
This year’s WoW conference was attended by a large contingent of customers, business partners and IBMers – 17,000+ strong. The exhibition floor, where I usually spend the lion’s share of my time, was the largest I’ve ever seen (with 500,000 square feet of space). The conference featured 1200 sessions, including 500+ client experiences; 120 business partners; and 200+ hands-on labs/certifications.
The exhibition floor itself was organized into four quadrants:
- Transforming industries (real-life examples of cognitive-based industry transformations);
- Monetizing data (how specific business processes and roles can thrive in the cognitive era);
- Reimagining professions (how data, analytics, and cognitive services are coming together to enhance, scale, and accelerate human expertise); and,
- Redefining development (how IBM cognitive tools benefit developers).
The key messages IBM sought to deliver were:
- Cognitive is transforming every aspect of our lives;
- Data, analytics and cloud are the foundation for cognitive business; and,
- Cognitive business is “the way” going forward (meaning it will help people make better decisions and solve complex problems more quickly).
The Big News: More Application Solutions
My number one concern with Watson back in 2014 was its limited application solution portfolio. At that time Watson felt more like a technology in search of problems to solve rather than an industry-focused collection of real world solutions. But at WoW I observed that the Watson portfolio has been greatly expanded with a collection of on premises and cloud-based solutions.
I also observed that there appear to be two approaches to expand the Watson portfolio: 1) a concept I’ll call “front-ending,” and, 2) a concept called “embedding.” Think of Watson mainly as an environment that can manage and analyze data. IBM now refers to the data that Watson curates as a “corpus” – a body of knowledge that grows with a given business. Enterprises can create corpuses with all sorts of structured and unstructured data in them – but queries need to be formulated or query software or libraries need to be created or made available to query each respective corpus. At WoW I saw dozens of applications developed by IBM and its business partners that reside on top of Watson (like an overlay), that query a Watson corpus, and that implement certain process flows to deliver desired results.
My favorite example of this approach was designed by a company known as Persistent. This company can install Internet-of-Things devices in a washroom that can monitor the amount of toilet paper, soap, and paper towels that are available. (Yes, I know this sounds mundane, but it is a good example of this “front ending” approach that I’m seeking to describe…). The application can then place an order for replacement materials once certain threshold levels had been reached – and the application can also schedule a maintenance representative to replace dwindling supplies.
This application is not as profound as some of the other applications that Watson is performing in the areas of medical research or in financial markets. But it is illustrative of: 1) new applications that are being written to query Watson corpuses; 2) workflows that are being automated; and, 3) new efficiencies that are being introduced.
The “embedding” options for the Watson application portfolio mean that existing software is being improved by adding Watson-based functionalities. For example, existing software may be able to tell an enterprise executive that there is a problem in given processes or business units – but that software may lack the facilities to tell the executive why the problem has occurred and what to do about it. By augmenting a traditional reporting system with embedded Watson functionality, executives can take advantage of the platform’s ability to analyze structured and unstructured data to quickly get to the root cause of a problem. Then knowledge bases can be created to suggest work-arounds to given problems.
One of the best examples I saw of this was in a new IBM product known as Watson Supply Chain which uses cognitive technology to increase transparency, intelligence and predictability. Working with a company known as TransVoyant (which manages an extensive database of global shipping information and tracks weather events), IBM’s Watson Supply Chain can provide comprehensive visibility into supply chain activities across the globe. So, for instance, if a shipment of hard disks manufactured in China is about to leave Hong Kong, and there is a monsoon brewing in its path, executives can be alerted to possible trouble, can explore alternative routes or find alternative suppliers – and can also be advised of the financial impacts of their decisions.
The net effect is that new intelligence and predictive analytics have been added to a traditional supply chain application by embedding Watson, as well as by introducing a new source of data (TransVoyant) to provide new insights. I saw dozens of examples of applications that now have similar new analytics features thanks to embedding intelligent, cognitive Watson analytics within their workflows.
The Expanded Partner Ecosystem
At WoW, the number of third-party ecosystem vendors was at least three-fold larger than Insight 2014. IBM claims to now have 120+ Watson business partners. Not all were represented at WoW but some of IBM’s most noteworthy Watson business partners include QueBIT, Centric Netherlands B.V., Enterprise Computing Limited, New England Systems, SYNNEX Infotec Corporation, Sirius Computer Solutions, Prolifics, Addedo, ICit Business Intelligence, Revelwood and Cubewise. A list of the awards that these Watson partners have received from IBM can be found here.
The Customers are Speaking Out
During WoW, close to fifty IBM Watson customers took to the stage to relay their experiences and successes. The big change here is that many customers in 2014 were still in beta and were not willing to share results but now users are clamoring to get to the stage. Some provided descriptions of the business benefits that they had achieved using Watson cognitive technologies; others went a step further to describe the benefits that Watson technology can deliver to society. This group included executives who appeared on stage with Ginni Rometty during her key note; John B. King – U.S. Secretary of Education; Mary Barra – Chairman and Chief Executive Officer at General Motors Company; and Professor Yitzhak Peterburg – Chairman of the Board at Teva Pharmaceutical Industries Ltd.
What Was Missing
IBM tends to talk at a very high level about “solutions”, but it is often difficult to figure out which mix of products are required to build specific cognitive solutions. Granted, there are different data sets coming from various internal and external sources that will need to be filtered, cleansed and managed; granted that some Watson service will be needed to access and analyze those data sets; and granted that customers want a variety of widely different application solutions – so a wide variety of products may be needed to construct a cognitive solution.
But IBM main tent presentations were very light describing products and their capabilities in depth – and which services or APIs are required to construct certain types of solutions. When cruising the demo floor, many customers were packed deeply around certain demos attempting to figure out which products to use to build their respective cognitive solutions. So one thing IBM could do better at next year’s show would be to put more solutions architects on stage and on the exhibition floor to help prospective customers better understand its broad and deep software portfolio.
I believe that IBM’s Watson has turned the corner from being an interesting experimental technology to becoming an invaluable cognitive system. The purpose of this tool is to help provide new insights by analyzing vast amounts of data and assimilating answers or constructing predictions based-upon that data analysis. I also believe the learning capability of Watson is critical, and a differentiator from complex analysis tools of the past and present. As data changes and as decisions are made, Watson adjusts, and improves. At WoW, I saw numerous examples of how Watson is being used to augment problem understanding and resolution (IBM is now calling the former A.I. [artificial intelligence] “augmented intelligence”).
From a competitive standpoint, there are numerous other companies building “cognitive” offerings. Microsoft, Google, Cognitive Scale, Cisco (Cognitive Threat Analytics), HPE (Haven on Demand), Customer Matrix, Spark Cognition (see this report for a description of these products) – to name but a few – all have cognitive programs underway. But IBM, with its huge investments in database management software, in security, in analytics, in process flow, in APIs and cloud architecture, in mobile, in geospatial, in the Internet-of-Things, in cloud services and delivery models, in software solutions – and more – is far better positioned than any other major technology company to lead the charge into cognitive computing. Two years ago I was looking for signs of increasing profitability from the Watson Initiative. I now see an immense new market opening up for cognitive solutions – and IBM is ideally positioned to claim a gigantic share of that market.