IBM has been on a roll lately. On March 16th, the technology giant reminded everyone of its considerable innovation capabilities by announcing the IBM Q (for “Quantum “) initiative, which the company described as an “industry-first initiative to build commercially available universal quantum computing systems. ” And on March 7^th, IBM and Salesforce announced a partnership to integrate IBM’s Watson cognitive platform APIs into Salesforce’s cloud-based CRM software to work in concert with the Salesforce Einstein AI engine, to (according to a joint press release) “… bring new insights from Watson directly into the Salesforce Intelligent Customer Success Platform, combining deep customer insights from Salesforce Einstein with Watson’s structured and unstructured data across many sources and industries including … retail. Together, Watson and Einstein will ingest, reason over and derive recommendations to accelerate decision making and drive greater customer success. ”

Last week, AT&T and IBM announced a pilot collaboration to make it possible for AT&T IoT (Internet of Things) customers to gain insights from all the data that IoT generates using Watson’s cognitive analytical capabilities, to enable faster decision-making (for example, to predict maintenance and improve asset performance). And in another announcement on March 20^th that is sure to impact IoT implementations going forward, the company announced a “new release of IBM Blockchain, the first enterprise-ready blockchain service based on the Linux Foundation’s Hyperledger Fabric version 1.0 … <to enable> developers to quickly build and host security-rich production blockchain networks on the IBM Cloud… “. The biggest value for blockchain is likely to be that it will enable trading partners (for example a manufacturer, a shipper, and a retailer) to have a shared view of events immediately, in a secure and verifiable way.

All of these announcements (and more) coincided with dual events that IBM hosted in Las Vegas last week, Interconnect and Amplify (Amplify used to be called the Smarter Commerce Global Summit until 2015; the focus this year was on what the company now calls Watson Customer Engagement, while Interconnect focused on cloud computing). The headline speaker for the combined events was IBM CEO Ginni Rometty. I had a chance to hear her at the October 2016 World of Watson event, and I was impressed by the vision she painted for the company, and the obvious passion behind it. At the main tent event for the combined conferences this year, Rometty underlined a single theme, that with the IBM Cloud, businesses can “do things you’ve never done before “.

The CEO outlined three basic tenets of IBM’s offering: (1) that the IBM Cloud is “Enterprise strong “, (2) it maintains a “data first ” orientation, and (3) it is “cognitive to the core “. Each of these, in the CEO’s view, create real differentiation between IBM and its nearest competitors. So let’s look at them:

• “Enterprise Strong “: IBM’s system management capabilities are legendary, and it has applied those skills to manage its 52 data centers in 20 countries (the one in China was just announced) that make up the IBM Cloud. According to Rometty, the IBM Cloud is the world’s largest IoT platform (remember that collaboration with AT&T!), but for me the most important part of IBM’s “enterprise strong ” positioning is that it supports on-premise, private cloud, and public cloud integration into what Rometty called “industrialized hybrid “. This is a clear differentiator to Google and Amazon, which don’t offer hybrid cloud capabilities, and HP, which doesn’t support a public cloud implementation. And the best thing about that is that IBM system management capabilities are applied over the hybrid environment. One important aspect of that is data security, which the CEO claimed is “even stronger than on-prem “;

• “Data first “: calling data “the world’s next natural resource “, CEO Rometty said that IBM doesn’t subscribe to the idea of “democratized data ” (another thinly veiled shot at Google). Noting that “80% of the world’s data is private “, she outlined how IBM supports “controlled access and data isolation ” for enterprises that use public, private, and licensed data;

• “Cognitive at the core “: IBM’s positioning of Watson is really interesting – it’s not a “product ” but a cognitive service, something you plug into to get insights. Watson “learns ” from the data it ingests (however that data is presented, i.e. as letters and numbers, or the spoken word, images, or sounds), and then can use what it learns to assist a human in making a decision. Back in December 2008, my RSR partner Paula Rosenblum and I wrote (in a report entitled Improving Retailer Responsiveness With Realtime Business Intelligence) that retailers were “moving from a ‘whatever it takes’ mode to something more engineered: process driven by actionable information. Further, closing the loop between operational systems and BI is important because the “lag time to action ” is getting shorter all the time. ” That was wishful thinking on our part, I think. But Watson will deliver just that, and more.

So as retailers go from thinking of analytics as looking into past performance, to real-time and moving towards future-tense insights, Watson’s cognitive capabilities will make it possible for them to sift through incredible amounts of data to get recommendations instantaneously. That capability is the driving force behind the IBM/Salesforce collaboration. According to Salesforce CEO Marc Benioff (who joined Ginni Rometty onstage during her Amplify/Interconnect keynote), the combination of Salesforce’s “industry leading CRM ” with IBM’s Watson, will be able to help companies do things like predict social behavior.

Cognitive Businesses

On the Amplify side of the dual conferences, the big news was that IBM has made tremendous progress in enabling its solution sets with Watson. The company has defined its current positioning as having three “pillars “: Watson Marketing, Watson Commerce, and Watson Supply Chain. RSR has commented on the Marketing and Commerce directions before, so suffice it to say that IBM continues to advance its capabilities in both areas. The company’s supply chain focus is to help companies avoid supply chain shocks between manufacturers and retailers via real-time monitoring (for example, via IoT) and cognitive analytics – exciting stuff!

So what can stand in the way? On the surface, it seems that the only thing preventing retailers from taking advantage of all the richness on display is their imaginations. But there are big issues that have to be dealt with. For starters, there’s a whole lot of legacy “stuff ” out there that pre-dates modern integration APIs, a lot of slow networks that need to be upgraded or replaced, and (still) a lot of dirty data of questionable value. But the biggest impediment might be that the new capabilities being offered by IBM and some of its competitors are extremely adaptable, meaning that they don’t rigidly dictate how businesses should align their internal processes around them. Instead, businesses must consider how to re-engineer their internal processes to get the best out of the insights created by the new technologies in the context of their needs. Business process re-engineering comes hard for retailers, who frequently fall into the “we’ve always done it this way ” trap.

But IBM has an answer for that too, and stands ready to offer experts from their Global Business Services (GBS) division to help companies over the hump. It all comes down to money.

And speaking of money, a long-time friend (and active CIO) said to me, “You know, I don’t know how we will be able to continue to afford all of these cloud-based services! The monthly P&L impact is starting to exceed the depreciation and amortization of our legacy technology – and we’re just getting started! ” That is an issue that IBM and all of its competitors must address. All the wonderful capabilities in the world are useless if companies can’t afford them.