C-level execs should keep tabs on IBM-Weather Co. deal

IBM’s plans to acquire The Weather Co. underscores the importance of IoT and predictive analytics.

Last week, IBM announced plans to acquire the digital assets from a nontraditional technology organization: The Weather Co. The acquisition, which The Wall Street Journal priced at $2 billion, will include B2B and business-to-consumer assets, such as weather.com and Weather Underground -- and all of the data that goes along with them. The deal, which is expected to close in the first quarter of 2016, does not include the Weather Channel programming. 

In case there's any doubt as to why IBM made the move, CIOs will find clarity in the first paragraph of the company press release, which includes this sentence: "The combination of technology and expertise from the two companies will serve as the foundation for the new Watson IoT unit and Watson IoT cloud platform."

Doug Laney, Gartner analystDoug Laney

The emphasis on external data and the Internet of Things (IoT) by one of technology's stalwarts should not go unnoticed. Rather, it should resonate with CIOs on a couple of levels. First, they should consider what the acquisition says about their companies' forays into IoT. "It's not enough to make a great sensor that just phones home," according to Doug Laney, a Gartner analyst. "This kind of takes it to the next level: How are you going to integrate that data, intersect it with other things like weather data to really drive some sophisticated, high-value predictive and prescriptive analytics?"

Indeed, the acquisition is further evidence of a bigger market shift. "For decades, the value's been in software and software-delivered services. CIOs have been investing in that forever," Ted Schadler, an analyst at Forrester Research Inc., wrote in an email to SearchCIO. But that doesn't go far enough these days. "Increasingly, the value is also insights," he said.

Second, as technology buyers and business strategists, CIOs should make their companies aware that IBM now has its pulse on some critical business data. "Digital weather is the most important exogenous data source on the planet," Schadler wrote in a recent blog post. "If you want insight into people's actions, the global supply chain, and myriad risks and opportunities, forecast the weather."

Four Gartner recommendations

Laney said this latest IBM acquisition -- and its acquisition of Merge Healthcare in August -- is a sign of IBM's still-in-progress evolution as a 21st-century IT services provider, which is a good thing for customers and potential customers. "IBM is making a platform to anyone and everyone who's got data streams," he said. "And if you've got data streams or access to data streams, and you aren't thinking about how to leverage them in a sophisticated analytics way, then you might get leapfrogged by some competitors."

When he discusses the latest news with clients, Laney provides four recommendations for CIOs and business leaders to consider. They are as follows:

  1. To business and analytics leaders with "intractable or chaotic analytics problems, particularly those resulting from extreme levels of data volume and velocity," Laney suggests keeping tabs on IBM's efforts to adapt the platform for something other than weather-related tools. Right now, the technology IBM is acquiring can ingest and analyze IoT weather data. But in the future, "IBM thinks the platform could become a little more general purpose for all manner of IoT devices," Laney said.
  2. Application architects in industries where weather plays a role -- travel, insurance and utilities, among others -- "should consider opportunities to enhance their business forecasts or performance via the kind of granular, long-range weather data that's made available," Laney said.
  3. Marketers should consider IBM a supplemental data source, and perhaps soon as an alternative to established market intelligence firms and data brokers, Laney said.
  4. IoT product developers, sensor developers and so on "should recognize IBM as an emerging gateway for them to be able to license and analyze the data streams coming off of those devices," Laney said.

The big picture for CIOs

On a more strategic level, CIOs should take a page out of IBM's book and get into the information products business, if they haven't already done so. Otherwise, they could put the company's very future at risk, according to experts.

"We're in the middle of the information age," Laney said, "and anyone just processing information that isn't in the business of information themselves is going to find themselves a dinosaur."

When insights are 'digital,' they become assets a CIO can harness.
Ted Schadleranalyst at Forrester Research

Forrester's Schadler agrees. Data is valuable, but the insights derived from that data, which can "net new knowledge about things you didn't know yesterday," are invaluable, he said, especially as organizations make the transition to digital business. "When insights are 'digital,' they become assets a CIO can harness," he said.

To consistently turn data into actionable business insights, Schadler recommends CIOs build what he called "systems of insights," which combine business expertise and technology to find, implement, test, refine and embed useful observations into the everyday workflow. These systems -- businesses will have many -- will improve customer service, personalization efforts and so on. Schadler explains his thinking in Digital Insights are the New Currency of Business, a recent research report co-written with fellow analyst Brian Hopkins.

To build systems of insights, CIOs will have to retool their relationships with the business and rethink their architecture strategy. Namely, because domain knowledge and technology are central to the success of any insights system, "insights teams," which meld "business practitioners, data scientists, business intelligence professions and software developers onto the same team," will be necessary, according to the report.

Ted Schadler, analyst at ForresterTed Schadler

And because technology plays a vital role in building the bridge between data and insights, how the systems are architected will matter. The good news for CIOs is that they've likely laid down some of the groundwork already. "Building out systems of insights is not a complete change from the work your company is already doing in customer insights, business intelligence and big data. It is, instead, a convergence and extension of these things, as well as a shift in mind-set and organization to take insights-driven action and not just supply data," according to the report.

One more thing: Schadler and Hopkins suggest CIOs start with the chief marketing officer (CMO), who already has a horse in the customer insights and customer engagement game. Building systems of insights will cost money -- the authors estimate between $2 million and $10 million over two years, depending on the data infrastructure already in place -- and the CMO "will help fund the technology, assemble your first insights teams and help implement the insights-to-execution process," according to the report.

Welcome to The Data Mill, a weekly column devoted to all things data. Heard something newsy (or gossipy)? Email me or find me on Twitter @TT_Nicole.

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