Deeper understanding of connections between weather and business outcomes could save industry billions
March 31, 2015: IBM and The Weather Company through WSI, its global B2B division, announced a groundbreaking global strategic alliance to integrate real-time weather insights into business to improve operational performance and decision-making. As part of the alliance, The Weather Company, including WSI will shift its massive weather data services platform to the IBM Cloud and integrate its data with IBM analytics and cloud services.
Weather is perhaps the single largest external swing factor in business performance – responsible for an annual economic impact of nearly half a trillion dollars in the US alone. While weather prediction is increasingly precise and granular, business systems generally assume every day is the same. As a result, knowledge of impending extreme weather disruptions – or even routine disruptions that drive well understood behaviors and systemic reactions – don’t always trigger operational responses. Combining weather data with traditional business data and rich data from an unprecedented number of Internet of Things (IoT) enabled systems and devices will fundamentally transform enterprise decision-making.
The IoT and cloud computing allow for collection of data from more than 100,000 weather sensors and aircraft, millions of smartphones, buildings and even moving vehicles.
IBM and WSI will deliver new cloud services to businesses in three key ways:
- Watson Analytics for Weather: IBM and WSI will enable easy integration of historical and real-time weather data in business operations and decision making with IBM analytics platforms such as Watson Analytics. The companies will jointly develop industry solutions for insurance, energy & utilities, retail and logistics among others.
- Cloud and Mobile App Developer Tools: Entrepreneurs and software developers will be able to rapidly build mobile and web apps that take advantage of WSI data combined with data from operational systems, connected devices and sensors using advanced analytics through Bluemix, IBM’s cloud application development platform.
- Business and Operational Weather Expertise: Thousands of consultants from across IBM Global Business Services will be trained to combine WSI data with other sources to more effectively interpret industry pain points, providing clients new insights that solve business problems.
By combining IBM’s cloud computing, industry consulting and analytics expertise with WSI’s precision weather data and forecasts, the two companies can now enable entire industries to utilize understanding of weather on business outcomes and take action at a local level. For example:
- Insurers pay more than $1 billion in claims every year for vehicles damaged by hail. WSI’s Weather Alert service, together with IBM Analytics, enables insurance providers to send policyholders text messages that alert them to impending hailstorms – and safe locations – so vehicles can be moved before damage occurs. These insights have the potential to save insurers up to $25per policyholder per year in hail-prone areas, or millions of dollars annually.
- Each winter, retailers in snowy areas see patterns in which storm forecasts drive spikes in sales of groceries, shovels, sand, salt and cold-weather gear. Yet those same weather events typically hamper retail sales as consumers stay inside. The ability to better understand and predict the impact of such weather events allows retailers to adjust staffing and supply chain strategies as needed – regionally and nationwide.
- Utility companies feel the impact of an increase in temperature and relative humidity – even just a few degrees – dramatically in air conditioning use and power consumption. The difference between 90 and 95 degrees in Texas, for example, can equate to$24 million more in electricity spending per day. With IBM and WSI, utilities will be able to more accurately predict power consumption so they can avoid overproducing power, reduce service interruptions and better serve customers.
“This deal combines the capabilities of the world’s largest and most advanced commercial weather company with the leader in big data and analytics. Together, we’ll help businesses and governments transform their decisions and operations around weather fluctuation at a scale that hasn’t been possible until now,” said David Kenny, chairman and CEO of The Weather Company. “This is a watershed moment for businesses that have long been impacted by weather but haven’t had the rich data or enhanced decision-making ability to drive positive business outcomes. The combination of our new high-resolution forecasting capabilities with IBM analytics opens up a world of possibilities for the enterprise.”
The partnership builds upon IBM’s investment of $3 billion over the next four years in an Internet of Things (IoT) unit to develop a portfolio of cloud services, software and related intellectual property.
“There’s an opportunity to inform all business operations and decision-making with real-time actionable insight delivered securely via the cloud and extracted from all this data collected from sensors all over the planet,” said Bob Picciano, senior vice president, IBM Analytics. “The Weather Company and IBM partnership can be a catalyst to making critical business systems even smarter.”