ISDC 2013_Referat_Bernie Meyerson_IBM

IS Directors Conference – August 2013
Sustaining Innovation in a Global Enterprise
Dr. Bernard S. Meyerson
Vice President Innovation
IBM Corporation

© 2012 IBM Corporation
IS Director’s Conference-Interlaken 2013
Driving Sustained InnovationDriving Sustained Innovation
In a Globally IntegratedIn a Globally Integrated
EnterpriseEnterprise
Dr. Bernard S. Meyerson
IBM Fellow, Vice President of Innovation
CHQ

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

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

Essential #1: PeopleEssential #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)
DeepinonedisciplineDeepinonediscipline
(analyticthinking&problemsolving)(analyticthinking&problemsolving)
DeepinonesystemDeepinonesystem
(analyticthinking&problemsolving)(analyticthinking&problemsolving)
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
Tokyo
Haifa
Zurich
India
IBM Research Lab
Brazil
Global, Smarter Planet Collaborations
Pangoo
Nairobi
Melbourne

Essential #3:Essential #3:
DynamicsDynamics

1970s1970s 1980s1980s 1990s1990s 2000s2000s
Inter-disciplinary collaboration in the market and across the globe
Centrally FundedCentrally Funded
Joint ProgramsJoint Programs
Research in theResearch in the
MarketplaceMarketplace
CollaborativeCollaborative
InnovationInnovation
CorporateCorporate Collaborative Work on Create business
2010s2010s
Collaborative
fundedfunded
TechnologyTechnology
transfertransfer
Team
Shared agenda
Effectiveness
client
problems advantage for clients
Industry-focused
research
partnerships
Emerging markets
GlobalGlobal
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 Petaflop
Supercomputer (2008)
FirstFirst PetaflopPetaflop
Supercomputer (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 TheSkills 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)-> ~4KB
36,864 words ROM
Avg. Smart Phone:
256 MB – 512 MB Cache
2 GB – 64 GB RAM

After 50 Years,After 50 Years,
How Long BeforeHow Long Before
Technology As We Know ItTechnology As We Know It
Has Run Its Course?Has Run Its Course?

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

Coming to Your Organization Soon;Coming to Your Organization Soon;
Information Technology in theInformation 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 Datacenters
Integrated 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 ImpactAddressing the Impact
ofof ““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 By
Integration

Addressing the “Problem” of Scale-Out; “Slow” Light
IBM-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 Innovation
Scale In By
3D Chip Bonding
Memory
Switching
Storage
Processor

How Critical is ContinuedHow Critical is Continued
Innovation in InformationInnovation in Information
Technology?Technology?
Imagine the EmergingImagine the Emerging
World of Big DataWorld of Big Data
WithoutWithout
The Ability to Digest It?The Ability to Digest It?
Consider The FollowingConsider The Following
Two Grand ChallengesTwo Grand Challenges
From IBMFrom IBM’’s 2008s 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 Billion
Range of estimated U.S. healthcare
spending each year on administrative
and clinical waste, fraud and abuse and
other waste.1
1.5 Million
Errors 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 toworld data with analytics allows one to
bebe ProactiveProactive vsvs ReactiveReactive
Operational/ Transactional
Insights in
Singapore
Road Usage
Optimization,
GHG emission
models
Proactive
Ignorance is
NOT bliss
Data allows
insight, and insight
enables foresight
Foresight allows
one to change
the 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 Banking
One of the largest banks in the world
Challenge;
Managing the complexity of branch networks for
rapid and profitable growth
Analytics Approach to Optimization
Analyze prior business outcomes against all
available local demographics
Create a map of optimal areas for branch
clustering
Deploy 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
Introductory
Stage
Growth
Stage
Maturity
Stage
Decline Stage
Total
Market
Sales
Time
20%
20%
20%
20%
20%
Introductory
Stage
Growth
Stage
Maturity
Stage
Decline Stage
Total
Market
Sales
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 Benefits
2010 realized an 8.22% revenue increase over 2009 , totaling ~ $83M
35,000 fewer taxpayers had serious actions taken against them (A Significant OPEX Reduction)
Collections Optimization*

© 2013 IBM CorporationDr. Bernard Meyerson
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 helpsOnce processed & refined, it helps
power the world.power the world.
30
““Data is the New OilData is the New Oil””

Cybersecurity:Cybersecurity:
Employing Intelligence toEmploying 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.

Evolution of Security Intelligence Beyond the Enterprise
IBM Confidential - For Discussion Purposes Only
Enterprise
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 Engagement
Anomaly Detection at Multiple Scales (ADAMS)

What’s
Next?

© 2013 International Business Machines Corporation 36IS Director’s Conference-Interlaken 2013
Cognitive Computing
Complex reasoning and interaction extends human cognition
Legal
Suggest defense/
prosecution arguments
Telemarketing
Next generation –
persuasive – call center
Healthcare
Surface best protocols
to practitioners
Finance
Enhance decision
support

How Would You Leverage AHow Would You Leverage A
TirelessTireless ““GeniusGenius”” At Your SideAt 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
accelerate
Data 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

ISDC 2013_Referat_Bernie Meyerson_IBM

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