The 3^rd U.S. IBM Smarter Commerce conference was held last week in Nashville, TN at the Opryland Hotel & Conference Center. Usually, RSR’s intrepid conference-goers don’t do a Rick Steve-style travelogue, but I have to comment on the venue itself. The Opryland is a big giant terrarium complete with a man-made delta (without the cottonmouth snakes, muskrats, etc.), a Disneyesque “New Orleans ” street, and several wings with names like “Magnolia “, “Delta “, etc. If IBM wanted to make sure that the attendees had an opportunity to walk off the southern-style cooking that was available from one of the many restaurants, they certainly succeeded. Four thumbs up for the Opryland! It’s quite an experience… but the conference agenda was so full that I never did manage to sneak off to go downtown and experience “Twangtown ” (although I kept a guitar pick in my pocket the entire time, just in case).

But now to the business at hand. The conference itself has gotten big in the three years that we’ve participated. IBM estimated the attendance at 3500, but that seems a little conservative to me; at any rate, a lot of people came, including representation from many retail companies. The reason for that of course is that IBM has been acquiring retail customers by virtue of both their sales efforts and the acquisitions that have built out the portfolio (Sterling, Tealeaf, Unica, DemandTec, Coremetrics, Kenexa, SPSS).

Timing Is Everything

The Smarter Commerce strategy focuses on four lines-of-business: Smarter Commerce, Smarter Workforce, Smarter Analytics, and Smarter Cities. An IBM’er confided with me that although the company would love to be able to say that the build-out of the “Smarter ” message was by a grand design, it was really more serendipity than anything. The company launched the Smarter Planet campaign following a 2008 speech by then-CEO Sam Palmisano, when he talked about how the world’s industries were becoming smarter because of better interconnectedness and measurements. The rest is history; the company found that the “Smarter ” concept was applicable across the boards.

Now, the “Smarter ” message is built on four “pillars “: Engage, Fulfill, Transact, and Service. The company has built enough functionality into the portfolio of solutions that the attention of the industry analysts who attended the conference turned to the question of how well the component pieces integrate (IBM admitted that they have work to do), as opposed to the functionality itself. Unquestionably, the portfolio is strong and the company is winning a lot of business as a result. And with the strategic partnership between IBM’s Sterling Commerce suite and Toshiba (highlighted in a 1/29/2013 Retail Paradox Weekly column entitled Postscript NRF), the company’s solutions can enable a number of “cross channel ” scenarios that integrate the store experience with the digital one. So whether its by serendipity or grand design, IBM’s Smarter Commerce solutions are available to retailers at the right moment in time.

The Portfolio Gets a Big Brain

The biggest announcement at the conference was the news about how IBM is integrating its Watson technology into the portfolio. Many will remember Watson as that cool computer that won on Jeopardy! In 2011. But Manoj Saxena, IBM’s General Manager of Watson Solutions, put a more serious spin on the technology’s capabilities. Describing Watson in terms of “cognitive computing “, Saxena explained to the assembled that Watson is a technology that learns from people and data, consuming both structured and unstructured data to learn. How important is the technology’s ability to make sense out of unstructured (non-columnar) data? According to the IBM exec, 80% of all the world’s data is unstructured and 90% of it was created in the last two years. In other words, consumers are using technology in unprecedented ways, and that creates the opportunity to understand them – if only businesses can handle the data.

Saxena explained that Watson understands natural language, generates and evaluates evidence-based hypotheses based on both what it learns from natural language data and more traditional structured data, and then learns and adapts from user selections and responses. The speaker used this example: When Watson is asked the question, “what’s 2 + 2? “, it replies with several answers: “it’s 4 “, “it’s a car configuration “, “it’s a typical family “, etc. When those choices are provided to users, it then adapts based on the most commonly accepted answer, in this case “it’s 4 “. In other words, it’s a cognitive system that improves with time and use.

The reason for the on-stage explanation of how it works was to highlight why the company’s announcement of the IBM “Watson Engagement Advisor ” is a good idea. Anyone who has had to work their way through any Call Center scripted experience to get a problem solved would welcome this technology (I recommended to IBM that they give a system to AT&T, having recently experienced their voice-response system, with its – I kid you not because I counted ‚Äòem – 10 layers of menus before I got to a human).

VP/GM Craig Hayman and Smarter Commerce Global Leader Paul Papas met with industry analysts to illustrate the Smarter Commerce solution stack with Watson embedded this way:

What I found so interesting about the discussion was that the IBM’ers are talking about an information-driven business, not a transaction-driven one. It’s a hard concept for some retailers to grab onto – because after all, the business is still measured by transactions. So, even as Wall Street continues to hammer retailers about same store sales, companies like IBM are preaching about the value of interactions (Hayman talked about the concept of a “virtuous circle ” vs. a transaction). While that’s a subject of at least one other 1500 word column, for now suffice it to say that because consumers are conversing to and about retailers and their value offerings in the digital domain, it’s all about data- lots of data (that of course is the “big data ” that analysts like to talk about) that has to be turned into information in order to be useful.

Why Soft-Pedal It?

I left the Smarter Commerce conference wondering a little why IBM, great marketing machine that it is, was soft-pedaling the Watson announcement. Although it got main-stage attention, I think it could have used the “big push ” treatment, not unlike the way SAP was “all HANA, everywhere ” at the recent SAPPHIRE conference (see my RSR partner’s 5/20/2013 Retail Paradox Weekly piece entitled HANA and Her Sisters: A Rejuvenated SAP Looks Forward at Sapphire 2013).

The RSR team has been writing since 2007 about narrowing the “lag time to action “. The theory goes that the quicker you can turn an observation into something actionable, the more effective you can be in retail (which is a highly reactive business). The Watson technology purports to take it to a whole new level by being able to correlate a lot of data really, really fast, to help the decision-maker (ultimately, consumers themselves) make the best decision possible. As the conference Keynote speaker, former Tesco CEO Terry Leahy said, “customers are the most reliable guide “, and if retailers can harness big data fast enough to personalize each and every moment of engagement with customers, they can go far beyond the limitations of 20^th Century retailing.

I think that’s a big deal – IBM should bang the Watson drum much more. And if (as conference host Jay Baer rhetorically asked), Watson could also help me find my room at the Opryland, all would be good.