## Five strategies to prepare for paradigm-shifting quantum technology

Download the reportDownload the infographicQuantum computing is nearing a phase of commercialization that may change our world. Early adopters of quantum’s unique ability to solve certain types of problems may achieve breakthroughs that enable new business models. Visionary organizations are already aligning with the emerging quantum computing ecosystem to become “quantum ready.” These forward-thinking enterprises are exploring use cases and associated algorithms that address complex business problems. This report discusses the paradigm shift that quantum computing represents for business, explains why your enterprise may need to act now, and provides five recommendations to advance your organization down the path of quantum-enabled business advantage.

What is quantum computing?

Quantum computing takes advantage of the laws of quantum mechanics found in nature and represents a fundamental change from classical information processing. Two properties of quantum behavior – superposition and entanglement – may allow quantum computers to solve problems intractable for today’s conventional, or classical, machines:

—

*Superposition*. A classical computer uses binary bits that can only depict either a “1” or a “0.” Instead, quantum computers use qubits that can depict a “1”, a “0”, or any combination (or “superposition”) of the qubits’ possible states. Therefore, a quantum computer with n qubits can have all 2n possibilities in superposition with one another. This supplies quantum computers with an exponential set of states they can explore to solve certain types of problems better than classical computers.—

*Entanglement*. In the quantum world, two qubits located even light-years apart can still act in ways that are strongly correlated. Quantum computing takes advantage of this entanglement to encode problems that exploit interdependence between qubits.The quantum properties of superposition and entanglement help enable quantum computers to rapidly explore an enormous set of possibilities to identify an optimal answer that could drive business value. As future quantum computers can calculate certain answers exponentially faster than today’s classical machines (see Figure 1), they will enable tackling business problems that are exponentially more complex. Despite classical computers’ limitations, quantum computers are not expected to replace them in the foreseeable future. Instead, hybrid quantum-classical architectures are expected to emerge that “outsource” portions of difficult problems to a quantum computer.

Quantum computing appears set to potentially transform certain industries. For instance, current computational chemistry methods rely heavily on approximation because the exact equations cannot be solved by classical computers. But, quantum algorithms are expected to deliver accurate simulations of molecules over longer timescales, currently impossible to model precisely. This could enable life-saving drug discoveries and significantly shorten the number of years required to develop pharmaceuticals.

What is quantum computing?

Quantum computing takes advantage of the laws of quantum mechanics found in nature and represents a fundamental change from classical information processing. Two properties of quantum behavior – superposition and entanglement – may allow quantum computers to solve problems intractable for today’s conventional, or classical, machines:

—

*Superposition*. A classical computer uses binary bits that can only depict either a “1” or a “0.” Instead, quantum computers use qubits that can depict a “1”, a “0”, or any combination (or “superposition”) of the qubits’ possible states. Therefore, a quantum computer with n qubits can have all 2n possibilities in superposition with one another. This supplies quantum computers with an exponential set of states they can explore to solve certain types of problems better than classical computers.—

*Entanglement*. In the quantum world, two qubits located even light-years apart can still act in ways that are strongly correlated. Quantum computing takes advantage of this entanglement to encode problems that exploit interdependence between qubits.The quantum properties of superposition and entanglement help enable quantum computers to rapidly explore an enormous set of possibilities to identify an optimal answer that could drive business value. As future quantum computers can calculate certain answers exponentially faster than today’s classical machines (see Figure 1), they will enable tackling business problems that are exponentially more complex. Despite classical computers’ limitations, quantum computers are not expected to replace them in the foreseeable future. Instead, hybrid quantum-classical architectures are expected to emerge that “outsource” portions of difficult problems to a quantum computer.

Quantum computing appears set to potentially transform certain industries. For instance, current computational chemistry methods rely heavily on approximation because the exact equations cannot be solved by classical computers. But, quantum algorithms are expected to deliver accurate simulations of molecules over longer timescales, currently impossible to model precisely. This could enable life-saving drug discoveries and significantly shorten the number of years required to develop pharmaceuticals.

Figure 1

*Quantum computing's potential for significant speedup over classical computers, according to IBM internal analysis*

Additionally, quantum computing’s anticipated ability to solve today’s impossibly complex logistics optimization problems could drive considerable cost savings and carbon footprint reduction. For example, consider improving the global routes of the trillion-dollar shipping industry. If quantum computing could improve container utilization and shipping volumes by even a small fraction, this could save shippers hundreds of millions of dollars. To profit from quantum computing’s advantages ahead of competitors, forward-looking businesses are already developing expertise to explore which use cases may benefit their own industries.

Quantum: The smallest amount or unit of something, especially energy.

The dawn of quantum advantage

The time when quantum computers can solve some business problems that classical computers cannot – often called quantum advantage – appears close at hand.For example, “constant-depth” quantum circuits have already been demonstrated to be

*more powerful than their classical counterparts*. Figure 2 illustrates what quantum advantage could look like for a particular business use case. Precisely when quantum advantage will occur for a specific use case is uncertain, causing market forecasts to vary widely over the next five years – from approximately*USD 500 million*to as much as*USD 29 billion.*Figure 2

Commercialization of a quantum use case

Development of the quantum computing ecosystem is accelerating, in anticipation of the opportunities the new technology will create. Startups and partnerships between researchers and technology providers are springing up to translate quantum research into capabilities suited to the business world. Technology firms developing quantum computers are already partnering with businesses to identify potential use cases, develop quantum algorithms and test solutions on actual quantum computers. This quickly growing engagement of businesses with quantum technology will hasten the arrival of the first commercial applications.

Selecting the right quantum computer for your business

Not all quantum computers are created equal, nor do they solve the same problems. From the most limited to the most versatile,

*quantum computers are typically classified into three categories:*quantum annealing, noisy intermediate-scale quantum (NISQ) computing, and fault-tolerant universal quantum computing.The consensus of the scientific community is that

*quantum annealing*will not offer a meaningful speed-up over classical computing. Furthermore, quantum annealers are not on the development path that leads to fault-tolerant universal quantum machines. As a result, quantum annealers cannot be considered true quantum computers.In the near term, NISQ computers have the best potential to deliver business advantage and many new algorithms are being adapted for them. Moreover, as NISQ computers scale up, they progress toward the ultimate goal of quantum computing – a fault-tolerant universal quantum computer that can handle important classes of business and scientific problems often exponentially faster than a classical machine.

“When you change the way you look at things, the things you look at change.”

Future shock – Why your organization may need to act now

Why tackle quantum computing now? Technological and competitive forces are ushering in the quantum age sooner than you might expect. Organizations paying attention today could take industry leadership away from those who are not. Here are three reasons why businesses are considering getting quantum ready now:

— Quantum computers have the potential to transform industry value chains, particularly in the areas of chemistry, biology, healthcare, materials science, finance and artificial intelligence (AI).

— Due to quantum computing’s steep learning curve, a “fast-follower” approach may only produce laggards that have overspent trying to catch up.

— Building an in-house “Quantum Center of Competency” will take time.

“When you change the way you look at things, the things you look at change.”

Quantum computers have the potential to transform industry value chains

Quantum computers are expected to transform industries because they have the potential to address exponentially complex problems that classical computers cannot. Future quantum computers could help achieve product breakthroughs in areas such as chemistry, biology, healthcare, finance, AI and materials science, enabling rapid market share gains and greater profitability for the visionary companies that adopt them. In this way, quantum computing’s problem-solving capabilities could dramatically redefine competitive advantage, transforming business operating models and value chains that revolutionize entire industries.

For example, the optimization of logistic systems is typically based on a “hub and spoke” network model. The problem of optimally designing individual point-to-point routes satisfying various requirements on a large-scale logistic network is very complex and can quickly become out-of-reach for classical supercomputers. If one were to explore all the possibilities in such an optimization problem, it could take billions of years even with just a few hundred terminals in the network. Quantum computing may be able to explore the space of possibilities much quicker. For example, in the context of airline scheduling optimization, quantum computing may be able to create daily ad hoc flight schedules, specifically tailored for the thousands of passengers flying to hundreds of destinations on a specific day, reducing customer travel time, air traffic congestion and airline fuel costs. If an enterprise were to develop a quantum solution for logistic network design optimization, it could swiftly aim to become a market leader in every industry where logistics are critical to success.

A fast-follower approach may only produce laggards that have overspent

Unlike with more linear or incremental technological advancement, a fast-follower approach is less likely to be effective for adopting quantum computing. This is due to:

— Quantum computing’s steep learning curve

— Excessive costs associated with “catching up.”

Consider a use case that a quantum computer could solve exponentially faster than a classical machine – designing a purpose-built material for the electronics or transportation industries that is significantly lighter and stronger than current substances (see Figure 2). The accelerated development of such a revolutionary material would position a manufacturer to outflank its competitors in short order. Moving up the learning curve, this newly “quantum-enabled” market leader could quickly gain increasing advantage over competitors by fine-tuning its breakthrough material, as well as by expanding into new materials customized for other applications.

While hypothetical, this example illustrates how a steep learning curve could make it extremely difficult even for so-called fast followers to quickly catch up with firstmover businesses, potentially resulting in winner-take-all” scenarios in certain industries. Even if catching up were possible for a specific use case, it would likely be associated with extortionate costs related to, for example, buying in-house expertise, procuring access to the best infrastructure, funding advantageous partnerships and/or acquiring a company with the necessary capabilities.

Building an in-house Quantum Center of Competency will take time

Although most businesses have heard about quantum computing by now, many do not have the talent or expertise required to take advantage of its impending business transformation – and acquiring it won’t be easy. The supply of quantum computing talent is limited, with fierce competition for skilled resources.

Once the right people are on board, it will likely take years to develop a deep understanding of quantum computing’s potential impact on a given business. Recent technological shifts, such as the almost decade-long migration to graphics processing units (GPUs) to accelerate big data workloads, underscore the time it takes to build competency when adopting a new technology.

Given quantum’s potential for radical industry transformation, exponential problem-solving capabilities and the difficulty to obtain quantum-skilled resources, leading enterprises should consider acting now.

Seizing quantum advantage for your business

What could the commercialization of quantum computing mean for your business? In the near-to-medium term, quantum computing could confer business benefits in three areas: quantum simulation, quantum optimization and quantum-assisted machine learning (see Figure 3).

Figure 3

The anticipated uses of NISQ quantum computing

Quantum simulation

Because quantum mechanics describes how nature works at a fundamental level, quantum computing is well suited to model processes and systems that occur in nature (see "Case studies: IBM, JP Morgan Chase"). This potent capability could open the door to electric carmakers developing longer-life batteries. Biotech startups could rapidly develop drugs tailored to an individual patient. The costs of electric power transmission could be reduced. Fertilizer could be manufactured more efficiently, with exciting implications for growing the world’s food.

Quantum optimization

The art of solving optimization problems involves finding the best or “optimal” solution in a situation where many possible answers exist. Take the example of building a package delivery schedule. Mathematically, more than 3.6 million possible combinations exist for scheduling ten deliveries in adjacent time slots. But which schedule represents the optimal solution given variables such as timing requirements of the recipients, potential delays and the shelf life of transported goods? Even when applying approximation techniques, the number of possibilities is still far too large for a classical computer to explore. As a result, classical computers today take extensive shortcuts to solve optimization problems of significant size. Unfortunately, their solutions are often likely suboptimal. Businesses that could benefit from quantum optimization include:

— Telecommunications companies upgrading their network infrastructure

— Healthcare providers optimizing patient treatments

— Governments improving air traffic control

— Consumer products and retail companies tailoring marketing offers

— Financial services firms enhancing their risk optimization

— Organizations developing employee work schedules

— Universities scheduling classes.

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