Global CIO: IBM CEO Palmisano Challenges IT Industry Via Smarter Planet 2

Whether you agree with his premise or think it's just marketing hype, IBM CEO Sam Palmisano has successfully articulated a global vision that transcends IT products and services by focusing upon the power of intelligence in improving everything from people's quality of life to business outcomes to policy decisions.

This is important because while we all talk about the potential of technology and how wonderful it will be when we can truly integrate business and technology, Palmisano's Smarter Planet strategy goes beyond the talk phase and offers real, live examples of what can happen when we move past data and information and instead deal with intelligence; when we no longer have to infer but can truly know; and when we use the power of technology to inform and animate leadership and action.

That is the real promise of IT. That is the scope of vision that more leading IT companies need to be providing. And that is the type of big-picture outcomes that CIOs need to weave into their strategies, their plans, and their own visions for how they can create maximum value for their companies and deliver superb value to their customers.

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I'm not saying everyone should try to emulate IBM; quite the contrary. Rather, the new standard Palmisano and IBM have set here is one of reach, of aspiration, and yes, of vision: how and why are my products and services truly superior; how and why my solutions to your problems will surpass your expectations; how I am able to not merely react to your requests but am able to act in lockstep with you because I can anticipate what you need as that need arises.

Granted, 2009 was not exactly the ideal environment for IT companies to play the vision thing; no, that would have gone over about as well as a Red Sox hat in the Yankee Stadium bleachers. But several leading IT companies have said that 2010 will be a significantly better year than 2009 (not that it could ever be worse), and out of that sense of opportunity comes the need for both customers and suppliers to push the bar dramatically higher: for CIOs, that means not grade-school stuff like "speak the language of business" but instead the grown-up responsibility of pushing business value and market vision to unprecedented levels within your companies.

In that context, let me offer some examples from a speech Palmisano gave the other day in London at the Royal Institute of International Affairs to illustrate why this industry needs fresh ideas, more business-centric objectives, and a greater sense of what's possible. After each Palmisano excerpt, I've tossed in a question or two in italics for your consideration.

"Enormous computational power can now be delivered in forms so small, abundant and inexpensive that it is being put into things no one would recognize as computers: cars, appliances, roadways and rail lines, power grids, clothes; across processes and global supply chains; and even in natural systems, such as agricultural and waterways," Palmisano said.

"All of these digital devices—soon to number in the trillions—are being connected through the Internet. . . . Lastly, all that data—the knowledge of the world, the flow of markets, the pulse of societies—can be turned into intelligence, because we now have the processing power and advanced analytics to make sense of it all."

Question: Is this emergent world of trillions of intelligent devices something you and your team are thinking about? If not, why not?

"In a study of 439 cities, those that employ transportation congestion solutions—including ramp metering, signal coordination and incident management—reduced travel delays on average by more than 700,000 hours annually and saved nearly $15 million each," Palmisano said, citing improvements in air quality and increased usage of public transportation.

Question: As CIO, can you articulate in clear terms like that the value you're delivering to your customers? Or have you still got yourself duct-taped to your chair in the basement IT lab, poring over SLAs and server logs?

"Four leading retailers have reduced supply chain costs by up to 30 percent, reduced inventory levels by up to 25 percent, and increased sales up to 10 percent. They've done so by analyzing customer buying behaviors, aligning merchandising assortments with demand and building end-to-end visibility across their entire supply chain," Palmisano said.

Question: Forget IBM for a moment—have you shaved every last excess dollar of cost out of your supply chain? If not, is the reason because you're relying on brute force instead of intelligence? How about inventory levels: could you use a decrease of 10% or 15% or even 25%? Are you demanding the right outcomes from the IT companies who help you manage these areas?

One of my favorite anecdotes from Palmisano's talk was about a utility company that was able to improve its meter-reading cycle from monthly to every 15 minutes, providing not only it but also its customers with more intelligence and with more options for how to act on that intelligence: "As Terry's experience shows, when it comes to culture, you need to work both from the top down and the bottom up," Palmisano said in setting up this anecdote. "That's also what Patricia Graham, CIO of CenterPoint Energy in Houston, did. She understood that many roles throughout CenterPoint were going to change—and many employees had no idea what automated metering was. So she didn't just issue a mandate from on high. She began interacting with the workers in the field—"the guys who own the meters," as she put it—engaging them in the proof of concept, in brainstorming and in focus groups. Today, CenterPoint is reading its meters every 15 minutes, as opposed to once a month."

Question: Make a list of five intractable obstacles your company faces in acquiring and acting upon better and more-timely information. Propose what outcome you'd like to have and tell your IT suppliers you need them to come up with a strong solution. If they say they can't, then isn't it time to find some new key suppliers? Isn't it time to pump up the intelligence?

Palmisano also emphasized that whatever our data-volume challenges might be today, the rise of these trillions of computational devices means that those challenges are only going to intensify—so the need for applying more intelligence is paramount.

"It's logical, isn't it?" asked Palmisano. "All of this pervasive instrumentation enhances our ability to sense and capture what is actually happening in any given system. Where we once inferred, we now know. Where we once interpolated and extrapolated, we can now determine. The historical is giving way to the real-time. "We are amassing an unimaginable amount of data in the world. In just three years, IP traffic is expected to total more than half a zettabyte. (That's a trillion gigabytes—or a 1 followed by 21 zeroes.)"

And to be sure, in such a world stuffed with ubiquitous intelligent devices snatching unfathomable volumes of data being crunced by phenomenally powerful analytical engines, our sense of privacy will come under assault. Palmisano put it this way:

"But with that promise come some disquieting implications. That's the final learning of the past year. Consider two of the more obvious ones: privacy and security. Cameras here in London and in Chicago can help alert police and other first responders to emergencies far faster and more precisely than ever before. That saves lives. But, as you know, some citizens have expressed discomfort at living in… not a safer society, but a 'surveillance society.'

"You may have read an article a few years ago that reported that the London flat in which George Orwell wrote "1984"—and introduced all of us to Big Brother—has 32 closed-circuit cameras within 200 yards, scanning every move. They weren't there to watch his flat, of course. They're scanning traffic and providing security for businesses. Stil, the irony—and the potential concern—are self-evident.

"Yes, people like lower crime—less traffic, shorter queues, better health and all the other benefits of smarter systems. But they may be increasingly uncomfortable having so much information known about them. Who has all this data? What will they do with it? Do I trust them? Is it secure?"

Good questions. Let's make sure we all come up with intelligent answers.