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The Team
Sebastien AlvaradoSophomore
Civil EngineeringZahm Hall
Marcela BertiniSophomore
Finance & EconomicsPasquerilla West Hall
Andre ElblingSophomore
FinanceSiegfried Hall
Marina HroszSophomore
Finance & ACMSPasquerilla West Hall
Jack EckmanSophomore
Finance & ACMSFisher Hall
Michael BernardSophomore
BusinessSiegfried Hall
Raphael JafriSophomore
Finance & EconomicsSiegfried Hall
Alejandro AndersonSophomore
Mechanical EngineeringO’Neill Hall
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Executive Summary
Case SummaryRecommend how could the power of Watson and/or
cognitive insights could be applied to weather. Focus on adding value to IBM through the weather industry.
FactorsAnalyzed IBM's financial reports, applications and the recent acquisition of The Weather Company in several
revenue-impacting industries.
RecommendationIBM can add more value to the company by further
exploring agriculture, government and insurance. All areas of cognitive analysis and cloud computing have not reached
its full potential especially in these industries.
Agenda
IBM, Watson & The Weather Industry
Applying Cognitive Insights to Weather
Adding value to IBM & Potential Global Impact
Questions?
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IBM, Watson & The Weather Industry
Applying Cognitive Insights to Weather
Agriculture Insurance Government
Deep Thunder
EZ Farm
Adding Value to IBM&
Potential Global Impact
Questions?
7Source: IBM, Statista, SelectUSA
Weather Industry Overview
Weather Dependent Industries
The ability to utilize weather as a resource can be a game changer for a company such as IBM that has involvement in so many weather-dependent and consumer-focused industries.
Process of Weather Prediction and Results
Benefits of Weather Predictions
Successful Weather Prediction
Damage Prevention or Accurate Customer
Services/Needs
Positive Consumer Feedback
Decreased Potential Revenue Loss
• Mechanical prevention measures for cell towers or airplanes.
• More efficient transportation.• Increased efficiency in agriculture.• Damage prevention for insured
consumers.
8Sources: IBM, WallStreetDaily.com,
Company Overview
IBM + Weather Company Statistics
“Digital is the wires, but digital intelligence, or artificial intelligence as some people call it, is about much more than that. This next decade is about how you combine those and become a cognitive business. It’s the dawn of a new era.”
- Virginia M. Rometty, Chairman, President and Chief Executive Officer, IBM
• Businesses lose more than $500 billion a year due to weather related issues.
• The Weather Company has built a network of 140,000 weather stations together.
• The Weather Company’s mobile is the 4th most used in the U.S.
• The platform handles upwards of 26 billion daily inquiries to its cloud-based services
Strategic Imperative Revenue
3Q16 Yr/Yr
Analytics $4.8 14%
Cloud $3.4 42%
Mobile $1.2 19%
Security $0.5 11%
Social $0.2 (21%)
Total $8.0 15%
40% of IBM’s Revenue
The Weather Company
Data Solutions
Company data packages
Data solutions for media
Alerts
Alerts for engagements
Alerts for worker safety
Source: IBM
The Weather Company Acquisition
In March of 2015 IBM made a $3 billion commitment to invest in the Internet of Things.
In October of 2015 IBM closed a deal on buying the Weather Company’s B2B, mobile and cloud-based web properties.
The cloud data platform will serve as the technology backbone of IBM’s data services and Watson IoT businesses.
The Acquisition
•Proactively alert customers to adverse weather conditions to help reduce claims and improve customer satisfaction.
Insurance
•Improve on-time deliveries and optimize travel routes by predicting potential disruptions in operations due to weather events.
Travel and transportation
•Accelerate response to outages and improve power distribution forecasting for peak demands.
Energy and utilities
•More effectively determining resource needs and responding quickly during severe weather.
Public sector
•Reduce costly equipment failures caused by weather-related damage.
Manufacturing
Applications in other Industries
The Weather Company Solutions
The recent acquisition of The Weather Company’s Product and Technology businesses, a data platform which powered the fourth most-used mobile app daily in the US at the time of its acquisition, will allow IBM to expand its customer reach.
10Source: IBM
IBM WATSON Overview
Watson Learns
•Data from a given topic is uploaded.
•Question-Answer pairs are added.
Watson Thinks
•Analyzes unstructured data from a wide range of sources.
• Interprets complex questions to extract meaning.
Watson Answers
•Presents possible solutions ranked on quality of data and information gathered from a scoring algorithm.
The Cognitive Process
Why WATSON?
“WATSON is a cognitive technology that can think like a human.” IBM
Applications
IBM Watson
Healthcare
Weather Industry
Universities
Businesses &
Developers
1. Understand → Analyze all types of data.2. Reason → Provided personalized solutions
based on user input.3. Learn → Grow in subject as more
information is gathered.4. Interact → Engage in dialog with Watson.
Source: IBM, Fortune, Forbes
SWOT Analysis
Strengths:•First mover•Brand Reputation•Diversified
business•Integrated
services
Weaknesses:•Expensive•Focus on large
enterprises•Low profit
margins
Opportunities:•Expand divisions•Demand for cloud
based services•New APIs•Smaller company
contracts
Threats:•Increasing
competition•Slow economic
growth•Possible security
issues
IBM’s main weaknesses also represent an opportunity for them if they can offer a cheaper option to smaller businesses.
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IBM, Watson & The Weather Industry
Applying Cognitive Insights to Weather
Adding Value to IBM
Agriculture Insurance Government
Deep Thunder
EZ Farm
Adding Value to IBM&
Potential Global Impact
Questions?
Temperature increases
Weeds, pests, and
disease
Possible price crashes in
region
Irrigation and rainfall
Profit of certain crops under specific
weather
13Sources: Statista, The New York Times, IBM, Fortune, World Bank
The Agriculture Industry
E.&J. Gallo Winery• irrigation system
using Watson
Fertilyzer• Watson Tradeoff
Analytics
EZ Farm• Watson and
Precision Agriculture
Big data agriculture is becoming more and more of a trend in the agriculture industry, and applying Watson could revolutionize agriculture.
Big data agriculture
Current ApplicationsOverview
The combine harvesting manufacturing industry
was worth US$ 32 trillion.
2-3% industry CAGR
projected.
Using data in
agriculture is
becoming a tendency.
Source: MarketWatch, IBM, Fortune, ArsTechnica
Deep Thunder
Potential in Weather Industry• Weather industry gradually moving from
public sector (National Weather Service) to private sector, which is a $3-6 billion opportunity.
• Businesses want more focused and specific weather information further in advance.
• Deep Thunder offers hyper-localized forecasts unmatched by current offerings.
Deep Thunder can add value to IBM by making it the leader in the developing private weather sector. The primary application of Deep Thunder will be serving large corporate clients that have very specific questions and problems.
Local, high-resolution weather predictions
Weather Company's
global forecasting
model
Machine-learning Tools
Big Data
Deep Thunder Applications
Deep Thunder
Agriculture Weather Forecasts
Insurance Utility Companies
21 thousand people die a day of hunger
related causes
In 2050 the population is estimated to grow
by 34%. It is also estimated that food production will need to increase by 70% to
reach this new demand.
Sources: IBM, Poverty.com
EZ Farm Goal
• Started by IBM to develop a system so that small farmers in underdeveloped countries can better predict the weather, and plan accordingly.
• Currently under testing in several countries.
How it works• IBM first sets up hardware such as water collection tanks throughout
the farm.
• Once installed it allows farmers to get all the crucial information such as water levels in water tanks, when it will rain, and many other statistics through an app on their phone.
Future
90 % of crop losses are due to weather
• Weather related crop losses could be reduce by about 25% using precise weather instruments.
50% of food harvested never reaches the consumer • This number can be significantly
lowered by the use of precision weather tools to make more effective routes and decisions.
70% of the world’s fresh water is used in agriculture
• If farmers can more precisely predict rainfall, they can use irrigation methods more effectively.
EZ Farm has a lot of potential to change the way small-farming agriculture will exist in the future, and if implemented efficiently, can be applied all over the world.
EZ Farm
Source: IBM
Government
Improve Safety
•Integrating data from multiple sources allows a single, consolidated picture of a whole area – leads to better recommendations.
Communicate Effectively
•Give governments access to the 160 million existing users on the Weather Company’s app to easily deliver critical messages.
Decrease Costs
•By making sure that only certain areas evacuate, millions of dollars can be saved.
IBM’s main value to government in the weather industry will be in lives, infrastructure, and money saved. By integrating multiple data sources, IBM can provide real time suggestions about how to proceed to minimize damages.
Intelligent Operations Center for Emergency
Management
Improve time-to action
Create common operating images
Reduce Costs
Evaluate Potential Impact
Potential Value
Intelligent Operations Center Five Weather APIS
Forecast Data
Enhanced Forecast
Enhanced Historic Data
Global Real-Time
US Real-Time
Weather in Insurance
Weather in Insurance
Sources: IBM, Business Weather
Watson has great potential in the insurance industry due to large number of claims weather generates, and the amount of these that can be easily eliminated.
Customer Engagement• Insurance companies can use alerts and other methods of
communicating with their policy holders. •More than 50% of people warned take actions.
Fraud Detection•By matching the weather information generated by
Watson and the claims the policy holders filed, these insurance companies will be able to detect suspicious claims with ease.
Personalized Offerings•Weather has a huge affect on how people drive,
companies may offer real time assistance, tips, and even coupons to lower accidents.
Telematics•By combining Telematics to weather companies may be
able to even further decrease the amount of claims. •For example if a customer knows that the telematics in his
car is tracking how he drives in risky weather such as a snow storm he may take even further precautions.
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IBM, Watson & The Weather Industry
Applying Cognitive Insights to Weather
Adding Value to IBM&
Potential Global Impact
Agriculture Insurance Government
Deep Thunder
EZ Farm
Questions?
Sources: Food Processing, United Nations, Green Mountain Coffee
Application - Agriculture
More sustainable for companies that actively pursue sustainable practices.
Saves Water so Lower prices for distributors, retailers, etc.
Develops goodwill for brands, suppliers and food services that use IBM’s CSA-verified stamp of approval.
With U.N. approval, IBM could sell their services to farmers/producers which would lower costs and emissions, while also promoting a more sustainable brand to consumers.
Incentive to Use Service: Financially and Socially
IBM/CSA Check of Approval
Possible Commercial Approaches
• Global Alliance Climate-Smart Agriculture (CSA) Initiative at the United Nations.
• Partnership/approval from United Nations Food and Agriculture Association strengthens validity of IBM’s service.
Application - Government
Sources: American Red Cross, Wireless Emergency Alerts, National Oceanic and Atmospheric Administration
With help from Watson, governments can prevent natural disasters’ catastrophic aftereffect by saving more lives and cutting down on relief spending, giving a social value to Watson analytics.
“Amber Alert style” notification system
• Partner with the WEA
How?
Pinpointed accuracy as to where exactly the natural disaster
would hit and to what degree
Broadcast tips to mitigate destruction to your house along
with preemptive warnings
Why?
Extreme weather events cost the US $80 Billion per year
on average
Earlier notification alerts could cut down on traffic,
overall panic, and costs
Billions of Dollars in Damages and Frequency of Billion Dollar Weather
Events
What Would It Look Like
Sources: Apple
Currently, the government uses an emergency notification system, but a partnership with IBM’s Watson weather would significantly improve its effectiveness.
More precise lower costs during and after natural disaster.
Weather predictions can mitigate traffic and panic.
People receives emergency alerts from IBM
Take right measures. Evacuate areas.
Option 2: IBM partners with the government
IBM provides the data that is then broadcasted by the government.
Option 1: IBM gets approval from government
Broadcast pertinent weather information to those living in specific areas.
IBM’s precise weather predictor
Record weather information. Predict outcomes.
Sources: AutoInsurance.org, Progressive
Application - Insurance
● Feature similar to Progressive’s ‘Snapshot’○ Optional device placed in cars/installed in
dashboard software and cell phones■ Warns and discourages driving in dangerous
weather conditions● Rewards may include insurance decrease
● Partner with common fast food restaurants and hotels to offer discounts for safe drivers who pull over in poor driving conditions
● Mutually beneficial:○ Restaurants get more business, brand
promotion, and goodwill through safe driving○ No increased cost to insurance companies,
lower overall costs due to less insurance claims
Watson’s accurate weather predictions can reduce costs to insurance companies while increasing driver safety as approximately 2.7 million weather-related car accidents occur per year.
Car Insurance/Telematics
Partner with Restaurants/Hotels
Summary
Reasons for ImplementationReasons for Implementation
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Cloud Data+
Cognitive Computing
The Weather Company
Deep Thunder
+EZ Farm
Agriculture+
Government+
Insurance
The Weather Industry
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Final Recommendations
AGRICULTURE
Explore Deep Thunder and EZ
Farm.
Get exposure to both emerging
markets and the large corporations.
Sell services to farmers and producers
GOVERNMENT
Establish a partnership with
Government (can be outside the US).
Huge impact. Possibly with low
costs
INSURANCE
Target key insurance companies.
Looking to reduce their costs.
Develop an software that can be
integrated to GPS and smartphones.
Regain influence with the general
public
MORE INVESTMENT(stock price and
assets)
BRAND RECOGNITION(sustainability)
MARKET SHARE
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