Big blue sky thinking

By Ben Thompson

Can greater instrumentation, interconnectedness and intelligence be used to revolutionize infrastructure and make the world a better place? IBM certainly thinks so, and is betting billions to prove its point. Ben Thompson reports.

“Creating a smarter planet is about the integration, analysis and monitoring of existing infrastructure, along with the addition of new analytic and management capabilities, which has made a lot of this possible. And it's amazing what we've been able to create.”

We live in an unpredictable world. You know it when you get caught in an unforecast storm on a sunny summer’s day; you know it when the stock market tanks and your previously rock-solid investments are reduced to worthless junk; you know it when you hit unexpected gridlock on the way to that all-important business meeting. What you don’t always know are the hows, whys and wherefores – the myriad combination of variables that fell into place in order for those events to unfold.
 
It’s like trying to link the butterfly in China to the tornado in Texas: did the miniscule changes in atmospheric conditions caused by the flapping of the butterfly’s wings set in motion a chain of events that ultimately led to the formation of a Texan twister 7000 miles away? Without the right information, how do you know whether each of those interactions are connected? What other factors played a part in creating the right conditions for those complex systems to develop? And given better intelligence, is it possible to predict how such permutations might play out in future?
 
Saving the planet

It is precisely these questions that IBM hopes to answer. Approximately 30 percent of the company’s $6 billion annual R&D budget goes into long-term research, with the department churning out more than 4000 patents a year. IBM consultants then mine that output for so-called ‘repeatable assets’ – problem-solving technologies that can be applied in a variety of different settings and industries – under the aegis of IBM’s Smarter Planet initiative, a program built on the idea that if we can connect the systems that run our world, we can create less traffic, healthier food, cleaner water and safer cities, amongst other things.

Dr Mark Dean is Vice President of Global Strategy and Operations for IBM Research, and responsible for setting the direction of the company’s overall research strategy across eight worldwide labs. He believes that a better understanding of the way systems work can help solve some of the challenges we face as a global society. “Most of the environments we work and live in are complex systems, a group of operating elements that together are too complex for us to visualize,” he explains. “Experience helps us to make a guess about what might happen in a particular system, but as humans we just don’t have the capacity to model all the possible outcomes in our minds. So we are looking for approaches that allow us to come up with some reasonable insight into how those systems work.”

Consider some facts. Congested roadways in the US cost $78 billion in 4.2 billion lost work hours and 2.9 billion gallons of wasted gas annually, not to mention having a significant adverse impact on air quality. Inefficient supply chains cost $40 billion annually in lost productivity, more than three percent of total sales. Our power grids are hemorrhaging energy, with enough electricity lost annually to power India, Germany and Canada for an entire year. And our healthcare system really isn’t a ‘system’ at all; it fails to link diagnoses, drug delivery, healthcare providers, insurers and patients, while costs spiral out of control, threatening both individuals and institutions.

“I think we’ve reached a breaking point in lots of different industries,” acknowledges Dean. “Things develop legacies over time, and once we get something working we tend to push that approach to its limits until it reaches a point of capacity. It’s time to break down the old established ways of doing things, in order to move to the next level. We need to add in new approaches that allow us to do things more efficiently, to develop more trust, to get more done. It’s time for a fundamental reboot of the basic operating systems that drive our economies, our markets and our societies.”

IBM believes such a reboot is possible by thinking smarter – and has the customer case studies to prove it. Stockholm, for instance, has used a congestion management system to cut gridlock by 20 percent, reduce emissions by 12 percent and increase public transportation use dramatically. Smart food systems are using RFID technology to trace meat and poultry from the farm through the supply chain to store shelves. Smarter healthcare systems can lower the cost of therapy by as much as 90 percent. And similar intelligent systems are transforming energy grids, supply chains and water management, as well as helping confirm the authenticity of pharmaceuticals and the security of currency exchanges.
 
“We’re using these technologies to help countries, organizations and companies blend old with new, so you don’t have to do a rip-and-replace,” says Dean. “There’s still a lot of capacity out there; it’s just that new approaches need to be brought to bear in order to utilize it. Creating a smarter planet is about the integration, analysis and monitoring of existing infrastructure, along with the addition of new analytic and management capabilities, which has made a lot of this possible. And it’s amazing what we’ve been able to create.”
 
Powering up

Take the energy industry, for example. For decades, power was something the average consumer didn’t think about too much. Electricity was just there (except, of course, when it wasn’t, and then it was all you could think about until it came back on). Today, however, climate change, rising energy prices and technology advances have all helped to reshape the collective mindset of consumers, turning many from passive ratepayers to highly informed, environmentally conscious customers who want a role in how and when they use power – as well as what they pay for it.

As Vice President of IBM’s global energy and utilities business, Allan Schurr has witnessed this shifting dynamic firsthand. “All three of those things have fundamentally altered the go-forward for utilities so there’s not really an option of business-as-usual,” he says. “There is a real groundswell of change taking place in the industry. Up until now it has operated more or less in the same manner for the last 50 years – central station generation pushing electrons through a hierarchal distribution network down to the end consumer, with very little information flow. What we’re now doing is adding substantially more intelligence and data collection systems to the energy picture, so that far more energy awareness and energy efficiency can be effected through the use of new technology and better interaction amongst the parties. It’s really exciting.”

Schurr explains how smart grids use sensors, meters, digital controls and analytic tools to automate, monitor and control the two-way flow of energy across operations – from power plant to plug. A power company can optimize grid performance, prevent outages, restore outages faster and allow consumers to manage energy usage right down to the individual networked appliance. Smart grids can also incorporate new sustainable energies such as wind and solar generation, and interact locally with distributed power sources or plug-in electric vehicles.

Intelligent networks are a win-win, says Schurr. “There are opportunities to reduce the amount of investment that utilities are required to make if they have more precise information about loading,” he explains. “There are opportunities to increase reliability based on information about where outages are occurring, how extensive they are, and whether power has been restored after an event. And most importantly, there are opportunities for efficiencies on the consumer side. With greater granularity of information, consumers can make better decisions about what they purchase in terms of appliances, how efficiently their equipment is operating and whether or not they can shift their consumption patterns from more expensive peak periods to less expensive off-peak times.”

One of IBM’s flagship projects can be found in the Mediterranean. Malta’s electricity and water systems are inexorably intertwined, with the country depending entirely on foreign oil for the production of all of its electricity and more than half of its water supply, which filters through an energy-intensive desalination process. A newly implemented smart grid, integrating both water and power systems, will be able to identify water leaks and electricity losses in the grid, allowing the utilities to more intelligently plan their investments in the network and reduce inefficiency. Over 250,000 interactive meters will monitor electricity usage in real time, set variable rates and reward customers who consume less energy and water.

“By becoming more efficient with water use, they reduce electricity consumption; and by becoming more efficient with electricity consumption, they reduce the importing of fuel that is used to power their generators,” says Schurr. “It’s a very exciting project that demonstrates how taking a very ambitious agenda and putting it into reality can be done economically.”

Dealing with complexity

The project also highlights another key point: that many of the challenges we face today are interrelated, and involve a greater understanding of the interplay between a variety of complex systems in order to be tackled intelligently. The synergy between the water and power sectors is one example, but there are countless others.

“This whole Smarter Planet initiative is about trying to understand these different environmental areas as part of a larger, more complex ecosystem, and being able to generate enough information so that we can start to identify patterns and see where the impact points are,” says Sharon Nunes, Vice President of Big Green Innovations, an organization created to identify and launch new businesses for IBM. “Take water, for example. There’s a lot of stress on water systems around the world. With a limited supply, we need to be able to better manage it – and that means better monitoring and measurement, as well as having a holistic picture of what the demand will be and where that demand will come from.”

Clearly, there’s plenty of room for improvement. For instance, municipalities commonly lose as much as 50 percent of their water supply through leaky infrastructure, while global agriculture wastes an estimated 60 percent of the 2500 trillion liters it uses every year. One in five people still lacks access to safe drinking water and the United Nations predicts that nearly half the world’s population will experience critical water shortages by the year 2080. As an example of the inefficiency inherent in the system, Nunes highlights how there are nearly 53,000 water agencies in the United States alone, but very little coordination between them – despite the fact that they are all managing a shared resource. “There is no sharing of data to achieve a holistic view of the entire watershed or water ecosystem,” she says. “Yet if you want to ensure that water is distributed amongst all of the competing demands in an equitable fashion, you really need to understand what the supply is and what the demand is on that entire system.”

To address such issues, IBM is working on a number of programs to help make management of the world’s water ecosystem smarter. Together with the Beacon Institute for Rivers and Estuaries and Clarkson University, the company is creating a data platform to support instrumentation of the entire length of the 315-mile Hudson River for a real-time view of a river system that supplies both industry and individuals. In the Netherlands, the company is working with partners to build smarter levees that can monitor changing flood conditions and respond accordingly. And across the world, sensors are revolutionizing agriculture, providing detailed information on air quality, soil moisture content and temperature to calculate optimal irrigation schedules. Elsewhere, smart metering can give individuals and businesses timely insight into their own water use, raising awareness, locating inefficiencies and decreasing demand. IBM and the Dow Chemical Company, through its Dow Water Solutions business, are working together to enable unprecedented visibility into water usage – starting with desalination plants. And IBM itself is saving over $3 million a year at one North American semiconductor plant through a comprehensive water management solution.

Nunes’ team is also hoping to move beyond real-time monitoring to prediction, using advanced computing and analytics to support better-informed management decisions. The test-bed is a collaborative research initiative with the Marine Institute in Ireland that aims to turn Galway Bay into a living laboratory – instrumenting the bay to gather data on water temperature, currents, wave strength, salinity and marine life, and applying algorithms that can forecast everything from wave patterns over 24 hours to the right time to harvest mussels. “There’s a lot of data available about water, but there is not a lot of information,” she explains. “What we have found working with the Ireland team is that we’ve been able to take a lot of what you would think of as disparate information and integrate it to give us a better picture of what is happening in Galway Bay.”

Healthy profits

Healthcare is another sector set to benefit. “Our current approach to healthcare is just not sustainable,” says Sean Hogan, IBM’s VP for Healthcare Delivery Systems. “However, the financial crisis has highlighted the burden that healthcare costs are placing on our society, and as such is prompting a very engaging debate about what to do about it. And the conclusion is that if we are going to address the issues of access, cost and healthcare quality, we have to have better information technology to support that.”

Rising costs, limited access, high error rates, lack of coverage, poor response to chronic disease and the lengthy development cycle for new medicines – Hogan explains how most of these could be improved if we could link diagnosis to drug discovery to healthcare providers to insurers to employers to patients and communities. Today, these components, processes and participants that comprise the vast healthcare system aren’t connected. Duplication and handoffs are rampant. Deep wells of lifesaving information are inaccessible.

IBM believes that a smarter healthcare system starts with better connections, better data, and faster and more detailed analysis. It means integrating data and centering it on the patient, so each person ‘owns’ his or her information and has access to a networked team of collaborative care. It means moving away from paper records, in order to reduce medical errors and improve efficiencies. And it means applying advanced analytics to vast amounts of data, to improve outcomes.

“If you had a map of all industries and plotted the sophistication of the use of information technology within those industries, healthcare would be on the lower end of the spectrum – despite the fact that it is a very technology intensive and information intensive sector,” says Hogan. “But IT can help make the administrative process smarter and more efficient; it can enable health information to be shared between care providers and eliminate redundant procedures; and it can better support the process of care so that physicians have the right information available to support the decisions they need to make.”

For instance, Sainte-Justine, a research hospital in Quebec, is automating the gathering, managing and updating of critical research data, which is often spread across different departments. With the help of IBM technology, the center is applying analytics to speed childhood cancer research and improve patient care while drastically lowering the cost of data acquisition and enhancing data quality. Another example is Geisinger Health Systems, which is integrating clinical, financial, operational, claims, genomic and other information into an integrated environment of medical intelligence that helps doctors deliver more personalized care. This enables them to make smarter decisions and deliver higher quality care, all because they can easily turn information into actionable knowledge.

And true to the premise of Smarter Planet, healthcare systems like these hold promise beyond their particular communities, patients and diseases. “The smart ideas from one can be replicated across an increasingly efficient, interconnected and intelligent system,” says Hogan. “This should result in lower costs, better-quality care and healthier people and communities. In other words, we’ll have a true healthcare system with the focus where it belongs – on the patient.”

Green means green

Of course, despite the undoubted societal benefits the program is likely to stimulate, Smarter Planet is not purely governed by altruism. Nunes estimates that information technology for water management could become a $20 billion market over the next few years, while in the energy sector, recent research by analyst firm The Brattle Group suggests US utilities alone will spend $1.5 trillion upgrading infrastructure by 2030. Make no mistake: the building of smarter systems will be a multitrillion-dollar opportunity for tech companies such as IBM.

It helps that there is currently federal funding available for many of these initiatives as a result of the recently passed economic stimulus package. The American Recovery and Reinvestment Act of 2009 includes $19 billion for healthcare technology, $11 billion for the implementation of smart-grid technologies and has $6 billion earmarked for water infrastructure projects. Federal money has also been set aside for expanding broadband and wireless access, as well as countless other infrastructure improvement projects that could help realize the vision of implementing a more intelligent approach to the way we manage our socio-economic systems.

IBM is not alone in pursuing this emerging market. GE has ramped up its Ecomagination program; Cisco has its recently announced EnergyWise project; and similar initiatives from technology big-hitters such as Google, Hewlett-Packard and Fujitsu, amongst others, have also raised awareness as to the opportunities in this space. Ultimately, this is a good thing: not only are such companies spending at a time when the economy desperately needs it, they are also establishing the ground rules for a new way of looking at the world. The vision of a smarter planet is one where technology provides the building blocks for change; however, it will be up to people to effect those improvements and implement the vision.

It’s why IBM is spending millions on the marketing side of Smarter Planet – in order to generate a greater appreciation of both the challenges we face as a society, and the solutions that are possible using existing technologies and approaches. “Why get smarter?” asks Palmisano. “Firstly, because we can: the technology is both available and affordable. Secondly, because we must: the shocks we’ve seen to so many systems show that the current approaches aren’t sustainable. And finally because we want to: IBM is starting a conversation with the world because we think now is the time to make these changes for the better.”

The final point is that this is a campaign that has the potential to inspire us all to try and make a difference. We might not have a $6 billion research budget or a big picture view, but we can all recognize inefficiencies in the way society operates on a daily basis. If we can think of ways to become smarter ourselves, we can not only improve our quality of life and make the world a better place in which to live; we might also make a fortune in the process.