The month of October was a busy one for IBM, filled as usual with a slew of announcements in hardware, software, and services, but the highlight for the quarter has been a speech by IBM Chairman Sam Palmisano in which he outlined "A smarter planet: the next leadership agenda" at the Council on Foreign Relations in New York City on Nov. 6, 2008.
Sam has lead a number of global conferences on innovation over the past five years to raise consciousness about how the world of business has been changing. At the Business Leadership Forum in St. Petersburg, Russia eighteen months ago he described how globalization has evolved — international companies became multinational companies and have now become globally integrated companies. As IBM has preached and practiced, becoming a globally integrated enterprise means locating operations and functions anywhere in the world based on the right cost, the right skills, and the right business environment. (IBM now has more than 10,000 employees in China and more than 50,000 in India). But now the world has changed — again — and leaders of businesses and institutions everywhere have a unique opportunity to transform not just the way the world is but the way the world works.
Sam said that the crisis in our financial markets has "jolted us awake to the realities and dangers of highly complex global systems". He went on to describe how the movement of information, work and capital across developed and developing nations is just one aspect of global integration. New factors are entering the equation — global climate change, environmental and geopolitical issues surrounding energy, and the global supply chains for food and medicine. "We are all now connected — economically, technically and socially. But we’re also learning that being connected is not sufficient. Yes, the world continues to get "flatter." And yes, it continues to get smaller and more interconnected". All this pales in comparison to something happening that holds even greater potential.
In a word, Sam says, "our planet is becoming smarter". What he means is the infusion of intelligence into the way the world works. This is being made possible as the world becomes densely populated with electronic chips. Not only a couple of billion people on the Internet, twice that with mobile phones but also tens of billions of Radio Frequency Identification (RFID) tags will allow for much more automation and efficiency across entire ecosystems—supply-chains, healthcare networks, cities… even natural systems like rivers. As all of these become interconnected, they will be able to "talk" to one another and share information about where they are and what they are doing. An enormous amount of information will be created from cars, appliances, cameras, roadways, and pipelines. Sam painted a future where supercomputers will turn mountains of data into intelligence that can be "translated into action, making our systems, processes and infrastructures more efficient, more productive and responsive—in a word, smarter".
Not only will it be possible to implement a smarter interconnected world — it will be essential to our survival. The growth of the past decade has caused a lot of inefficiencies to creep into our global systems. For example in electrical production, there are losses of electrical energy because the grids are not "smart" enough to avoid brownouts and to intelligently distribute excess energy where it is needed. Congested roadways in the U.S. cost $78 billion annually in wasted time and fuel. Consumer product and retail industries lose about $40 billion annually due to supply chain inefficiencies. Healthcare systems don’t link diagnosis, to drug discovery, to healthcare delivery, to insurers, nor to patients. On top of that, the planet’s water supply is drying up, one in five people lacks access to safe drinking water, and half the world’s population does not have adequate sanitation.
Sam says that our financial markets problem will be analyzed for decades, but he says one thing is already clear. Financial institutions did a great job of spreading their risks around but they were not able to track what risks they actually had and quantify them. That uncertainly undermined confidence and things unraveled from there.
The good news is that all the challenges Sam described lend themselves to systems and technology solutions. There are many proof points already. Sam did not talk about IBM’s role but he obviously did not pick examples that his competitors worked on. Stockholm’s automated traffic system has resulted in 20 percent less traffic, a 12 percent drop in emissions and a reported 40,000 additional daily users of public transport. Intelligent oil field technologies increase both pump performance and well productivity—in a business where only 20-30 percent of available reserves are currently extracted. Smart food systems such as one now running in the Nordics use RFID technology to trace meat and poultry from the farm through the supply chain to supermarket shelves. ActiveCare Network monitors 2 million patients in 38 states for the proper delivery of injections and vaccines.
All of these projects and many more lead to competitiveness in a globally integrated economy. "From the boardroom to the kitchen table, people everywhere are ready, eager for a new way of doing things". Sam called it a "time for courage and vision, a period of opportunity". The New York Times summed up the speech as "IBM Has Tech Answer for Woes of Economy". Certainly a lot of opportunity for IBM but the speech also relates to the company’s corporate responsibility.
List of Announcements for October 2008
A smarter planet: the next leadership agenda
A smarter planet: an outline
IBM announces preliminary 2008 third-quarter results
IBM builds on SOA leadership
IBM debuts New Enterprise Data Center specialty
IBM launches cloud services initiative
New IBM servers to power Merrill Lynch
IBM to extend Pakistan Telemedicine Project