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With much fanfare and a rarely seen introduction by CEO Ginni Rometty, IBM launched IBM Watson as a new business unit focused on cognitive computing technology and solutions, now being led by Senior Vice President Mike Rhodin. The announcement is summarized here:. Until now IBM Watson was important but had neither this stature in IBM’s organizational structure nor enough investment to support what the company proclaims is the third phase of computing. As IBM tells it, computing paradigms began with the century-old tabular computing, followed by the age of programmatic computing, in which IBM developed many products and advancements. The third phase is cognitive computing, an area in which the company has invested significantly to advance its technology. IBM has been on this journey for some time, long before the IBM Watson system beat humans on Jeopardy!. Its machine-learning efforts started with the IBM 704 and computer checkers in the 1950s, followed by decades of utilizing the computing power of the IBM 360 mainframe, the IBM AS/400, the IBM RS/6000 and even IBM XT computers in the 1980s. Now IBM Watson is focused on reaching the full potential of cognitive computing.

If IBM is right that cognitive computing will be the next wave VR_techaward_winnerof innovation in the industry and a new phase of computing, it has placed itself at the center of a substantial new market opportunity. Even at the most basic level to simplify the process of making information more available is what IBM Watson provides and our information optimization research finds is very important to 65 percent of organization. The company says it has invested $1 billion and placed up to two thousand skilled people in the new business unit. It also is spending $100 million on the incubation of companies that are building on the Watson platform, and has a new and dedicated building in Lower Manhattan, known as Silicon Alley, its focal point for cognitive computing ideas that IBM has unveiled to the public. There is no question that IBM Watson is innovate as we recognized in 2012 as being the recipient of our overall operation innovation technology innovation award.

These recent actions build on IBM’s announcement last fall that it is commercializing IBM Watson to enable developers and partners to innovate on the platform. Its launch of the IBM Watson Developers Cloud marketplace introduces new offerings and content essential to building its ecosystem of resources to meet existing and future demand for applications of cognitive computing. The step is essential in that it will maximize the number of products using IBM Watson and provide IBM with a springboard to exponentially grow its efforts. At the same time, IBM is working with academic institutions

IBM’s announcements included new products to complement the IBM Watson portfolio and give it a broader footprint and value to customers. The first new product announced is IBM Watson Discovery Advisor, a tool that helps pharmaceutical companies plow through massive volumes of big data. This is a good place to start, as harvesting the right information for specific roles and purposes is the foundation of cognitive computing, enabling organizations not just to access information but to synthesize it.

The next announcement was IBM Watson Analytics, a product previously known as Project Neo and introduced to the market last fall, which my colleague Tony Cosentino covered. Incubated in IBM’s business analytics group and using a spectrum of analytic and discovery technology, the product and people who worked on it and other efforts are being transferred to the IBM Watson business unit. Though it was not initially built for IBM Watson today, the discovery and exploratory technology integrates the pillars of analytics, helping facilitate a knowledge discovery process whereby you can explore data through natural language and discover new insights. The move to shift IBM Watson Analytics was unexpected and introduces new pressure to market and sell the product. It has growing potential for line-of-business analysts, who will want to examine this and other tools from IBM’s business analytics group. Only time will tell if IBM will be able to fully monetize the product’s potential through its IBM Watson effort, but the move could be its short-term method to gain customers and revenue. It definitely will be a complement when it interfaces to IBM Watson and utilizes the knowledge that Watson creates.

The next major product announcement was IBM Watson Explorer, a big data analytics tool that enables collaborative discovery, navigation and search across information in applications. Both analytics tools advance the science of big data technologies but focus on more than just the mechanics of what big data does, as described by the “four V’s”: volume, variety, velocity and veracity. Rather, they address the value of what is possible through the so-called W’s, focusing on the who, what, where, when and why. This is what we call information optimization, facilitating the business potential of not just big data but of cognitive computing. For its part, IBM is applying its big data and information management efforts to IBM Watson, categorizing them as IBM Watson foundations. This is critical as our information optimization research finds that organizations do not have enough capabilities to integrate and normalize information from disparate sources as the largest shortcoming of technology in 45 percent of organizations. By integrating and utilizing these big data and business analytics tools as part of IBM Watson, cognitive computing will from a competency perspective be more advanced even if these products are not directly needed for enabling IBM Watson.

With this much at stake IBM was not going to leave customer endorsements to chance, and while it has taken some criticism that customer commitment might not be as high as it has claimed, that question was answered at the IBM Watson event. For one, the medical and healthcare industry was front and center to validate its commitment to IBM, represented by organizations such as the Cleveland Clinic and Memorial Sloan-Kettering Cancer Center. Most interesting was an early peek at the potential of mass consumerization of IBM Watson. The first example was presented by e-commerce facilitator Fluid: Its Fluid XPS is focused on changing the digital experience of consumers by gaining access to information about their needs for products and services in a holistic manner. The example it promoted cold weather gear for camping by asking a question as a front end to the North Face website. A second example was the potential to have IBM Watson be the natural language interface for finding a vacation destination, specifying certain criteria like class, price, type and climate of location; today this requires repetitive tasks such as filling out forms and making your own comparisons to determine where you want to go and for what price. The concept was presented by Terry Jones, the former CEO of Sabre and Travelocity and chairman of Kayak. He has more than 40 years of experience in the travel industry and now consults about business innovation through his company, called Essential Ideas. IBM also demonstrated how cognitive computing can provide the next generation of marketing can synthesize the interactions and psychology of individuals to more effectively market to them. These examples point to the potential of enabling natural-language recognition technology to discover relevant responses that guide users’ actions and decisions.

As part of my analysis over the past couple of years, I’ve been following this step forward and wrote about the new category of cognitive computing. In 2013, IBM brought forward IBM Watson Engagement Advisor and focused on smarter customer service through a simpler engagement approach to improving the customer vr_NGCE_Research_01_impetus_for_improving_engagementexperience, a topic my colleague Richard Snow has assessed. This effort by IBM is as our customer engagement research has found is centered on improving the customer experience as found in 74 percent of organizations. I have also seen IBM demonstrate similar solutions for employees and managers as part of human capital management. More important, these solutions embrace mobile computing whereby devices can be used as input and response tools anywhere, at any time which our research finds smartphones accessible to be used in 73 percent of organizations according to our information optimization research. Intellectually, IBM continues to advance its research and scientific developments to ensure that it can transition its work into products that customers can use. At the launch of the IBM Watson business unit, IBM Research’s Dr. Guruduth Banavar brought forward some of the latest thinking on cognitive science and the ability to teach machines to reason and what is called neurosynaptics, a discussion that is available on IBM Research’s cognitive computing page. The material is fascinating; it provides insight on the future of computing and how it will impact roles and businesses in the next decade.

As it begins to scale its offering, part of IBM’s challenge is to manage the continuous information feeds that effectively make IBM Watson smarter. While IBM does not talk much about the content aspects of what is required, it is clearly more than just loading files, and these efforts are just as important as librarians are to libraries, whereby they are not just stewards to a collection of books but ensure the value and improvement of the library. There is still a level of mystery on the technical mechanics and readiness of the platform that the company needs to address before the natural-language interface is ready to work its magic. In addition, IBM is still using a natural-language form of text and working through how it can make voice mainstream with IBM Watson, as Apple and Google and others have done. IBM has been working on speech in research for some time and more recently with Nuance, who IBM announced a partnership with back in 2011, but it has yet to demonstrate this capability to the mainstream public, which indicates hesitation on how fast it plans to use voice and speech as the interface. While IBM was not able to fully monetize its early efforts in speech technology, it is now becoming mainstream in the consumer market but has yet to evolve significantly in the business markets as part of enterprise software. I am looking forward to seeing more of what it can do in terms of voice and speech input and Watson talking iteratively to help expedite what is truly natural language for humans.

IBM does not often create new business units and elevate them to this level of commitment and investment for the future. While the business goals for IBM Watson are lofty from both revenue and computing perspectives, no other company – not even Microsoft, Oracle or SAP – has both the established technology foundation and the people and financial resources that IBM has to make this a reality. IBM should be congratulated for making the investment in cognitive computing and helping create new jobs and opportunity that will incubate not just in Silicon Alley but across the globe as others realize the full potential. Our technology innovation research finds that increasing the value of an organization is very important to over half (56%) of organizations which is exactly what IBM is hoping will increase its business opportunity. If you want to catch up on the dialogue and resources related to this topic, you can search #IBMWatson on Twitter and follow @IBMWatson. If you want to learn more about IBM Watson and cognitive computing, go to www.ibm.com/watson and you will find more information about the technology, our research on the topic and the value of this new computing paradigm.

Regards,

Mark Smith

CEO & Chief Research Officer

Greetings, everyone, and best wishes for a great start to 2014. In this new year, utilizing best practices and skills learned in 2013 will be critical for optimizing the use of efforts to support both business and IT. In 2013 many organizations made progress in balancing technology decisions across business and IT as the lines of business continued to take leading roles in investment and prioritization. Major investments were made in business applications using software as a service,VRLogobug400x400 business analytics and mobile computing applications. In some other areas of innovation, particularly big data and social collaboration, deployments are just beginning to happen and a significant amount of projects are in experimental and proof of concept than enterprise use.

As usual, there was no shortage of diatribes from technology suppliers. Gamification and virtualization were loudly touted, but the most exaggerated were variations on the “Internet of things,” which at times seemed to include, well, anything found anywhere on the Internet. Beneath the hype, however, is something very real: the need to interconnect people across the Internet and the enterprise more seamlessly and in ways that would have seemed futuristic not long ago. All this is having an impact on the IT function. As many of these technology innovations are becoming part of business, IT is beginning to be become more aligned to what the business needs now and in the future, backing off from making assumptions about what is needed. Savvy IT pros, from the CIO down, realize that If business decision-makers are not convinced IT will make such an alignment, they will insist on going their own way and not only spend what they believe is required to improve operation of the business processes they are held accountable for, but also invest in areas that they believe will give them a competitive edge and lead to the best outcomes for their areas of responsibility. This sets the stage for our focus in the new year.

Building on our work in 2013, we have set our 2014 research agenda, which is geared toward helping you figure out what makes most sense in the new landscape. Using our market research approach based on proven methodologies, we will provide a new generation of insights on how to get the best use of technology to support business and IT. I hope that you will look to us for the research facts and analysis that inspire you to make decisions based on a balanced perspective for both the business and IT sides. Don’t let your direction be skewed by advice from only an IT or a technology perspective; instead, make sure it is based on perspectives that are relevant to your business areas and the demands of your industry. Without this balanced approach you risk taking the wrong path, wasting time and valuable resources and lengthening the time to value in your markets. To get a balanced perspective on a variety of critical business concerns, you can dive into our research agendas and through our announcement of them. Here’s a snapshot of them.

In the overall area of technology innovation for business and IT, our research agenda for 2014 provides guidance to help organizations realize the potential of technology in the critical areas of big data, business analytics, cloud computing, mobile technology, social collaboration and social media. Our benchmark research shows that in each of these areas organizations made significant strides in 2013 in terms of maturity in their deployments and use; we recognized a number of them in our annual awards program for top technology suppliers and organizations across business and IT. The most powerful outcome of these technologies is when they are blended together to meet specific business needs in innovative and transformative ways.

For the Office of Finance, new research in long-range planning and finance analytics will provide a strategic guide on what it needs to drive the best success from its efforts. Not only does Finance maintain a leadership position for its own processes, but it increasingly provides leadership and guidance for human resources and IT as well as assistance to sales, marketing, customer service, the supply chain and other areas that are key to the operations of a corporation. With a full review of financial management vendors in our Value Index, we will bring a deeper assessment of applications for finance and business planning. Our Office of Finance research agenda for 2014 not only focuses on some key points in the areas of financial management and next generation of business planning but also on pricing, profitability and even taxation, areas that are sometimes lost when suppliers talk about ERP solving every business problem – which it does not. New research on the overall direction of the office of finance will bring a reality check to what finance is investing upon in regards to technology and business processes that meet their specific needs. Be sure to follow the astute analysis of trends and markets by Robert Kugel, our senior vice president of research.

Another top priority is utilizing people effectively, a critical aspect of every business requiring investments in human capital management that enable organizations to effectively recruit, engage and retain quality workforce with the best possible employee experience. Organizations cannot just overhaul traditional HR technologies – they must also integrate talent management for salary workers and workforce management for hourly workers to ensure that the entire workforce operates efficiently and that the investments made reach their full potential. HR, an early adopter of cloud services, is now in a transition period in which it needs to unify the myriad applications it has rented. In many cases this means consolidating suppliers to get a more cohesive and streamlined view of employee performance and simplify employees’ access to systems. In our 2014 Human Capital Management research agenda, more capable HR systems and advances in mobile and social technologies that support learning management are key priorities; this agenda builds on newly released research on workforce management and human capital analytics, and upcoming payroll management. If you haven’t already had a chance, check out the market and technology analyses of Stephan Millard, Ventana’s vice president and research director, as you go forward with your human capital management efforts.

Other areas of continued refinement are sales and marketing, which of course are critical to achieving successful business outcomes and optimal financial results. Improving sales performance requires a concerted effort, and over the past decade we have been refining a blueprint to ensure that sales teams have the proper applications and technology to support their activities. To provide that support, it is essential to determine if the right level of investment is being made. Many professionals now realize that customer relationship management and sales force automation meet only part of what a sales organization needs, from executives and management to the sales operations required to manage the hierarchy of sales and account representatives and their managers. One key activity is sales forecasting; many organizations do not have sufficient visibility and knowledge of the sales pipeline to adjust their focus to reach the best possible outcomes, and today they need not just quarterly data but also monthly and weekly views. In addition, the compensation and incentives that motivate sales leave much room for improvement, needing data to determine not just variable pay but how well sales people and group are reaching the full potential in their quotas and territories. Our 2014 Sales and Marketing research agenda will bring forward research and facts to help Sales make the right investments in these areas and others to focus on efficiency and execution. Those leading sales teams will need to determine whether and where they need to make improvements, which includes creating a better alignment with marketing to generate sales demand using new techniques and to educate prospects to help ease the sales process. This can’t be done without having the right information about products and services that can be used in marketing as well as in commerce, sales and the supply chain; product information management is essential, and we will continue to track and write about it. These areas of focus, along with examining the role of sales analytics, will uncover new potential in what Sales can do to meet its mission.

Engaging customers and providing a great experience is essential for best-in-class organizations, but that requires effective technology in all aspects of customer interaction and service. This is excruciatingly important, as the ability of customers to comment on a customer experience (negative or positive) is instant via social media. Our research agenda for customer applications and technology shines light on a range of helpful tools, from customer engagement applications to the use of analytics and cloud computing in optimizing multichannel contact centers, as well as subscription billing and recurring revenue. Building on a foundation of research on customer service agents in contact centers and other areas of the business, it reveals that much must be done to retrofit the archaic telephone call centers of the past to meet the interaction needs of today and the future. If you have not had a chance to examine the analyst perspectives of Richard Snow, Ventana vice president and research director, I encourage you to do so.

Further, the energy in business analytics continues to increase as organizations begin to see a return on  insights that help them more confidently lead and manage business initiatives. Business analytics is moving beyond business intelligence efforts that are typically managed in IT, and organizations are starting to make big data investments that bring a new generation of tools to analysts and business users, enabling them to utilize more self-sufficient discovery and exploratory methods, including predictive ones. Providing visualization of data will only meet a small set of the business analytics needs of organizations though much of the focus in 2013 was in this area of focus. However, in the shift to empowering businesses with analytics many organizations have gotten caught up in the excitement around the technology without rationalizing the needs and skills of their users; they need to develop a clear set of what we call personas to align the right technology with the right individuals. We also address the issue of most organizations still being challenged by a lack of automation in assembling and integrating data for business analytics, functionality that can save time in realizing the value from analytics. The processing of events for real or right time needs are critical as found in our operational intelligence research that will also assess and rate the vendors in 2014. Also at the beginning of this year will be the release of the most comprehensive rating in our hands on evaluation of mobile BI products in our Value Index that will cover products that operate on smartphones and tablets. A new version of the business intelligence value index will come in 2014 too. New research in location analytics and information optimization (finding value in information through big data) set the foundation for upcoming research in big data analytics that will reveal insights from early adopters and enable others to benefit from their efforts. We have found that there is a skills and process gap in most organizations, and we’ll conduct new research on the next generation of business analytics to help organizations fully utilize analytics and exploit the insights. Tony Cosentino, our vice president and research director, has a robust Business Analytics research agenda for 2014 that will help organizations build a foundation and roadmap.

Not to be overshadowed by the momentum of business analytics, big data is becoming less mysterious for organizations, many of which love the conversation but have not investigated how they can actually step forward to seize innovations in the storage and processing of data. Getting past the market diatribes about the four V’s of big data – variety, velocity, volume and veracity – is critical; we see a new generation of value characteristics described as the four W’s: who, what, so what and now what, which are address the classic when, where, who and why. Our big data and information optimization research agenda for 2014 examines the growing portfolio of big data technologies including databases, in-memory processing, appliances and Hadoop, all of which have distinct characteristics and require different skill levels. As we enter 2014 a new generation of converged technology is unifying these capabilities in appliances that bring hardware and software together, making big data initiatives easier to implement and deploy. Just as organizations continue to deploy new types of big data technologies to gain a competitive edge, we have entered a new age of requirements for big data integration that can help utilize data across the enterprise in an architected manner, which is part of the background for new research in this area. We will also have a new Value Index in data integration for 2014 that will cover the needs across the department, enterpris and big data. Our new research on finding information value from big data will help business and IT set a more balanced focus on big data.

We have now publicly unveiled the research agendas for 2014 to whichValueIndexLogo we provided early access for our clients. We post research agendas publicly to provide depth on the themes and plans for our research in the year including benchmarks and Value Indexes. Unlike us, most IT analyst firms do not publish their annual plans and have dropped the process, ignoring the rigor it takes to ensure an independent level of research is conducted. This is part of the challenge I laid down to the IT analyst industry, in which too many just go along and “wing it with nothing” or refuse to publish with access at no charge. We have a passion for research and a laser focus on the best practices and insights related to the applications and technology that help business and IT be successful. I believe our firm plays a meaningful role in helping organizations improve their use of technology.

For more than a decade Ventana Research has been providing fact-based perspectives, from our analysis and guidance to our best practices and insights. Such perspectives are not available from any IT analyst or consulting firm that is aligned to a particular vendor’s technology and resources. We demonstrated our commitment to public dialogue in two great events held in 2013, our business technology leadership and technology innovation summits. To see what I mean, look at the video replays available online, as well as presentations on business technology leadership and technology innovation. This year also will include summits that will help provide the guidance and insight you need to be successful in utilizing technology effectively across business and IT. Equally exciting was the recognition of recipients of our Technology Leadership and Technology Innovation awards, furthering our commitment to celebrate technology pioneers and leaders in organizations and suppliers. Please follow us on social media at Twitter or LinkedIn to get the latest updates on our events and research.

On behalf of the entire team at Ventana Research, I wish you a prosperous and innovative 2014. We hope you derive full value from technology in 2014, and we look forward to hearing from you through any of our channels, including research, blogs and social media. Taking heed of best practices and benefits realized by others is critical, but aspiring to be ahead of your competition through the best possible business and IT results will require innovative approaches in use of technology. Refer to our research agendas to ensure that you don’t miss the big ideas and practice methods in your efforts, and count on us to help you build further assessments and benchmark comparisons to reach your full potential.

Best Regards,

Mark Smith

CEO & Chief Research Officer

Mark Smith – Twitter

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