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Power Talk with Dr. Manish Gupta (Business and Economy)

Dr. Manish Gupta, Director, IBM Research – India & Chief Technologist, IBM India/South Asia talks at length with Virat Bahri of B&E on IBM’s vision 2015 and the future of business analytics

B&E: IBM has established a new vision for 2015 based on smart world technology. What is the smart planet concept all about?

Dr. Manish Gupta (MG): Technology is now becoming an enabler of fairly profound changes that we can make happen, in not just what was traditionally the field of IT but also to solve some of the long standing problems affecting society. A lot of it is behind the so called smarter planet vision that we have. With the cost of transistors having dropped to say fractions of a paisa, it has now made it possible for us to build sensors very cheaply. And the sensors can be essentially embedded anywhere, which lets us measure the exact condition. and status of practically anything. We used to talk of the internet where people would interconnect.

It is now evolving into what can be called the internet of things. These sensors or these objects are now available on the internet. The status of what's going on, like the traffic situation on the highway or where my goods are at a given time through RFID tags; all this is potentially available on the Internet of things. Earlier, the concept was sense and responds, now we are reaching the stage of predict and respond. For example with smart transportation systems, you don't want to wait for the traffic to build up before doing something; you want to predict before the build-up of the traffic and then plan how to prevent the buildup.

B&E: Tell us some practical implications and the business potential that you see with the smart planet vision.

MG: A study done by the IBM institute of Business Value revealed the following. The entire world economy is estimated at $54 trillion and $15 trillion of that is wasted. Examples are billions of gallons of fuel wasted every year in cars stuck in traffic. Another estimate says that in Delhi alone, we waste 3 million litres of petrol daily (essentially vehicles). We estimate that roughly half of the food supply produced by the world is not reaching people. There are a lot of cities, where again upto 50% of the water could just be getting lost. A lot of sub-optimal decisions have to be taken.

In any industry, you can see a lot of in-efficiencies and the estimate is that around $4 trillion of inefficiency can be removed using IT. That, in a sense, is the kind of market for smart planet. Also, any business that is able to sense or predict some of these changes in environment, supply chain, demand, businesses have and meaningfully act upon it in real time will have a significant advantage. IBM has launched Business Analytics & Optimisation (BAD). We believe that globally it is a $100 billion opportunity today and growing very fast, at around 8% per annum. We believe that business analytics will be bigger than ERP.

B&E: Tell us about the Big Bets happening out of IBM India research and their implications.

MG: The research division globally places what we call big bets in certain technology areas, which usually means a $100 million investment over a five year period. There are two big bets where we are making very significant contribution. The first is the mobile web big bet. It was the first instance where a non-US lab was asked to drive the big bet. Two main reasons why India given leadership - the first is the innovation that our research team has shown. Secondly, in India, there, is a revolution happening in the mobile space, both in terms of mobile phones becoming ubiquitous and in terms of the business models. They are Indian telecom companies which are under stress due to price wars but still making money at ARPUs of $5, where companies in the US are losing money at ARPUs of $50. One of the key innovations that Bharti did was to outsource IT infrastructure and network (considered core at that time) to focus on acquiring customers and maintaining relationships with them. When I give talks to universities in India, students have that perception that we take research from US and apply in India. I cite Bharti’s example and ask them, how many US companies do they know with over 100 million mobile phone subscribers. We have been a key partner of Bharti and provided certain services like billing et al at fractions of amounts that other telecom companies end up spending in the US. We have developed technologies like Snazzy and have already completed planning for Bharti when it crosses 200 million subscribers.

B&E: Research is normally perceived as a cost in most companies. How do you measure research outcomes?

MG: We have fairly well defined processes to measure the impact of research on IBM's businesses and clients. We define research division accomplishments of different kinds - base level accomplishment, outstanding accomplishment and extraordinary accomplishment. There's one accomplishment most common - business impact... where we measure whether the research help create more revenue for IBM or helped IBM save money. You have to have at least $10 million of impact before it is considered a RDA, next level is $100 million and then it is $1 billion. Another accomplishment is scientific impact. Have we created a new field or established a new direction for the research community? We also talk about Horizon 1 2 and 3. There are some projects where we are looking for an impact this year, some where we look at 5 years and there are technologies where we know we won't make-money on for the next ten years, like quantum computing.

B&E: IBM's engineers were criticized for many years as being disconnected from the market. How is that changing now?

MG: Many many years ago, research was corporate funded and research teams would do what they wanted to do. Often there would be technologies that we would develop and competitors would take them to market first. IBM Research's Edgar Codd developed relational databases, and yet who made the most money - Larry Ellison and Oracle! We have started working very closely with our product teams. Now we are also working very closely with clients. We now believe that true innovation has to be done in an open, collaborative manner. It has to be global and multi-disciplinary. Once you un-distend your clients you can come up with insights that are important.

- Business & Economy
June 15, 2010