Editor’s note: Jack Narcotta, Jennifer Hamel and Andrew Smith are analysts at Technology Business Research. They break down IBM’s plans for a new Internet of Things effort, investing $3 billion.
HAMPTON, N.H. – TBR believes IBM’s announcement that it intends to spend $3 billion over the next four years to create an Internet of Things (IoT) business unit positions the company well in the fluid and rapidly growing IoT industry, and IBM will leverage IoT to ensure its customers make better business decisions more quickly. While a dedicated IoT business unit is a new venture for IBM, the company has been engaged for several years in deploying commercial IoT solutions to clients in heavy industry, manufacturing and transportation markets.
For IBM, IoT is less about establishing a foothold in an emerging technology segment than it is about expanding and emphasizing the company’s capacity to transform its customers’ business processes, helping them streamline their business, manage their operations in real time and monetize the data IoT devices will generate. TBR believes broadening IBM’s footprint in commercial IoT is an important component of its long-term growth strategy, leveraging its business consulting capabilities to drive end-to-end solutions that transform its customers’ businesses.
Commercial IoT solutions include network, software, hardware and service components, many of which are in the IBM portfolio. As these transformative solutions generate increased profits for IBM’s customers, IBM aims to gain a larger share of customers’ wallets. With the formation of the IoT business, IBM will be able to leverage the intellectual property, software and service capabilities, and business-centric best practices gleaned from IBM’s Smarter Cities and Smarter Planet initiatives, bringing IBM’s value proposition more in line with customers’ long-term plans to deploy and monetize IoT.
For IBM, IoT is not solely about building systems of connected devices. IoT represents an opportunity for IBM to enhance customers’ decision-making processes for their regular business operations as well as make those operations more nimble when reacting to unexpected events, such as winter storms or surges in energy usage during heat waves.
As the featured alliance of the new IoT initiative, IBM’s partnership with The Weather Company highlights the potential for businesses to gain actionable insight from weather data generated by mobile devices, or sensors installed in vehicles, buildings and industrial equipment. Combined with IBM’s analytics tools, The Weather Company data would enable companies in a broad spectrum of industries, including retail, government, insurance, energy, logistics and manufacturing, to adapt quickly to seasonal customer buying patterns or weather-related supply chain challenges.
IBM adds to its data repertoire with The Weather Company and will quickly enable Bluemix apps and Watson Analytics to deliver new solutions
TBR expects IBM to quickly complement existing Bluemix applications with weather data integration, particularly in applications designed for the insurance sector. We expect IBM to take a similar approach to its partnership with The Weather Company that it has with Twitter, promoting ease of access to data and insights through Bluemix and Watson Analytics, and driving adoption and innovation within the broader IBM ecosystem. The injection of weather data into IBM’s Bluemix platform will open up opportunities for developers and users and complements the vendor’s growing pool of data, which can be tapped through various platforms and applications. At IBM’s Investor Briefing in February, the company showcased IoT-oriented applications developed on Bluemix that can track devices or vehicles and monitor various vital statistics.
The Weather Company enhances the network of marquee alliances IBM built over the past year to deliver data-insight-driven consulting services
As customers increasingly expect fast, domain-specific business outcomes from their analytics investments, IBM will continue to dominate the business intelligence (BI) professional services market through simultaneous investments in high-value data sources, cloud-based analytics platforms and industry-oriented consulting services. IBM will integrate The Weather Company’s expertise around the business impact of weather events with its own industry-focused consulting and systems integration (C&SI) capabilities delivered through IBM Global Business Services (GBS).
As part of the alliance, IBM announced it will train 5,000 GBS consultants to merge The Weather Company data with enterprise data and data from other sources, such as Twitter, to drive business insights that address clients’ domain-specific pain points.
TBR expects IBM will continue to amass partners with access to high-value data streams as it builds out the IoT unit over the next four years. Such alliances enhance the company’s growing portfolio of repeatable IP-based solution offerings, while increasing exposure of IBM’s analytics-focused C&SI services in GBS.