February 16, 2017 | Written by: Harriet Green

A little over a year ago, I announced our intention to build a world-class innovation center for IoT in Munich. Today, we celebrate the opening of that center and get to work on defining the future of this world-changing technology.

We've come a long way

When we announced the Watson IoT Global Headquarters in December of 2015, I remember thinking that we needed to convince the market that the Internet of Things was a movement worth the investment.

IBM was committing $3 billion to our IoT work, $200 million on the center alone. And we were dedicating 1,000 of our brightest minds to work at the center.

I remember thinking I had to promote the Internet of Things itself: to persuade people of its potential. 14 months later, we’re way beyond that. The momentum is self-sustaining and the results are already coming in.

Creating Better Outcomes for Our Clients

Looking at our clients can demonstrate the truth of this, and the volume alone is impressive: in just eight months, the number of clients using our Watson IoT solutions went from 4,000 to 6,000 – a fifty percent increase in less than a year.

And the outcomes themselves are no less impressive. One of our automotive clients is analyzing more than 500 IoT data feeds from its manufacturing operation, from machine settings to maintenance activity. They’re using predictive models to anticipate adjustments in their equipment. And they’ve seen a 25 percent increase in line productivity and a 50 percent reduction in the time required to meet their targets.

Whirlpool, founded in 1911, the same year as IBM, is using connected appliances to develop direct relationships with its customers for the first time in their history. With the data they gather from their appliances in the field, they anticipate a 70 percent decrease in customer service call time, and a 50 percent reduction in warranty part costs.

And Vaillant, maker of the humble heat pump, are working with IBM to radically change their business model. The Internet of Things is enabling them to offer “heating as a service.”

Operational efficiency. Enhanced client experiences. New business models

We are in the process of transforming our relationship with the world around us, both personally and professionally. We are bringing the physical and digital worlds closer together to change the way we live and work.

IBM clients are no longer in need of persuasion about the power of IoT. What they need is guidance: practical advice on how to capitalize on this opportunity, and how to manage the change that IoT is introducing, both inside and outside of their organization.

The IoT ecosystem

The real genius of the IoT goes beyond the things themselves. They’re smart, and are getting more so every day, but more important is the creativity and collaboration taking place between industrial clients, their business partners, their technology providers, and experts in dozens of fields, from engineering to artificial intelligence.

This is the IoT ecosystem: a growing collection of expertise, from across many different disciplines, each necessary to the success of the Internet of Things. We are seeing new partnerships being formed on a daily basis. And the innovation that results is very exciting.

IBM Watson: nurturing the collaboration

Collaboration of this nature, at this scale, doesn’t happen on its own. It requires facilitation and nurturing. And that is why we have built an enterprise-grade, world-class IoT platform that is designed to integrate, scale, analyze and secure the data and insight that flows from the Internet of Things.

The Weather Company acquisition last year supercharged this platform, and brought with it a cloud-based system capable of processing 45 billion daily requests for data. It analyzes location-based data from more than 100 million smartphones, and ingests 400 terabytes of data every day, from more than 800 different sources.

On top of this powerful processing platform, we added the most capable cognitive computing system in the world: IBM Watson.

The Power of Watson

Watson has been hard at work this past year, analyzing and predicting crime, personalizing early childhood learning, and even recommending the most effective treatments for some forms of cancer.

But Watson has also been applying its unique ability to synthesize and understand huge volumes and variety of data to the IoT. Watson can learn your goals, understand your data, and reason through potential courses of action. It can see defects in your production line and even identify their root causes.

Harriet Green outlines the size of opportunity for the IoT

Watson in Action

Many of our clients are already using the Watson IoT Platform:

• ABB are developing new, service service-oriented business models by using Watson to make minute, predictive adjustments to manufacturing equipment
• Ricoh are embedding Watson into their connected whiteboards
• Harman are bringing the power of Watson to their interactive speakers
• BMW group are using Watson to create more intuitive driver support systems

BMW is collocating a team of researchers at our Watson IoT headquarters building in Munich. And they’re not alone. ABB, BNP Paribas, Siemens, CapGemini, Tech Mahindra are all collocating teams at the Watson IoT Headquarters.

A place of collaboration and problem solving

The Munich center is the physical manifestation of the digital ecosystem I mentioned earlier. It’s a place where you can get your hands on IBM’s IoT platform, and even take Watson for a spin. But it’s also a place where together we advance the science of the Internet of Things and drive industry transformation.

The work we will do will be some of the most advanced in the industry. Like the work we’re doing with Airbus and Schaeffler, using digital twins to transform their production process, from the design phase all the way through to their maintenance and servicing.

The concept of digital twins is the idea that through IoT data, you can create a complete digital representation of a physical object; a car, a jet engine, or a building, for example.

We can use these representations to understand and manage complex systems more quickly, more intimately. But to date, most companies have used digital twins for narrow, limited applications.

Some use them as an engineering solution – helping design the next generation of connected products. Others use them to improve operational processes like maintenance around a connected product. But at IBM, we see these digital twins spanning the entire product lifecycle – from designing to planning to testing to building to maintaining to servicing.

Digital twins will link with multiple data sources, integrating and extending across entire supply chains. The resulting ‘digital threads’ will provide a new level of visibility – weaving together suppliers, partners and customers and tying them all closer to the physical world.

The importance of leadership in managing risk and opportunity

Change of this nature, at this scale, introduces both opportunity and risk. While it can be highly rewarding, it can also be difficult to manage; requiring vision, resolve and leadership to implement successfully.

The kinds of change brought on by technology adoption can be uniquely challenging and very disruptive. For some companies, there can be cultural resistance to new sources of data that challenge old ways of thinking or making decisions. For others, we’re talking about entirely new business models being introduced.

Here are some things I’ve learned leading my own transformations, both inside and outside of IBM.

1: Understand the kind of transformation your business requires

Ask your company these questions:

• Are you in crisis mode?
• Are you being disrupted?
• Do you have the opportunity to be the disruptor?

It sounds like a simple exercise, but it’s critical. Because this determination will color every strategic decision you make going forward. And it will define if and how IoT can help facilitate the changes you need to make.

2. Surround yourself with a team built for change

Not everyone in your organization will have the stomach for transformation. So I recommend looking at your team in thirds:

• One third of the existing team will be ready, willing and able to lead change
• One third will need to be promoted from within or borrowed from other parts of the company
• And one third will be new hires from outside the company; people that bring energy and fresh perspective to the journey ahead.

This is a winning formula. I’ve used it many times. It works.

3. Define your destination

Your transformation must have an end state that is clearly articulated and easy to understand. But it also must have many small, medium, and long-term milestones defined along the way; milestones that must serve your customers, employees, investors and business partners. Each of these constituencies should experience some level of success; some benefit throughout each stage of the journey.

Do this, and you’ll gather momentum and support for your strategy from all the key stakeholders.

More from Munich

Take a look at our Watson IoT HQ Landing Page or see all the content from our Genius of Things event.

Harriet Green