IBM Smarter Oil and Gas Why Data Matters: Extracting Insights, Making Better Decisions Mark Decyk Practice Leader Advanced Analytics and Optimization IBM Global Business Services
Something meaningful is happening Every human being, company, organization, city, nation, natural system, and man-made system is becoming instrumented, interconnected, and intelligent. This is leading to new savings and efficiency but perhaps as important, new possibilities for progress Because it can. Because it must. Because we want it to. 2
1 billion transistors for each person on earth. Because it can 1 trillion things connected to the net. By 2010, 30 billion RFID tags, embedded into our world. 28 million Canadians online as of March 2008 3
50% of Canada s personal Greenhouse gases results from passenger road transportation. Traffic congestion and fuel consumption costs Canada s 9 major urban areas between $2.3 and $3.7 billion per year. Because it must Health-care spending is expected to grow faster than Canada's economy, outpacing inflation and population growth. Weather-related events inflicted $1 trillion in damage from1980 to 2003. If the Energy Grid in Canada was just 5% more efficient, it would be like permanently eliminating the fuel and greenhouse gas emissions from 4 million cars. 4
Smarter energy Smarter traffic Smarter oil fields Smarter water management Smarter food supply Because we want it to Smarter disease prevention Smarter architecture Smarter healthcare 5
Smarter Planet instrumented interconnected intelligent people companies, institutions, industries man-made systems nature s systems 6
The growing velocity of the volume, variety, and granularity of information is driving new, unprecedented complexity Today, the processing power of the web is about equivalent to one human brain. By 2040, it will exceed the total processing power of all of humanity Every day, 15 petabytes of new information are being generated. This is eight times more than the information in all U.S. libraries Tomorrow s issues and opportunities will be bigger and harder to solve in ways that defy our imaginations today By 2010, the amount of digital information will grow to 988 exabytes (equivalent to a stack of books from the sun to Pluto and back) 80% of new data growth is unstructured content INFORMATION Timelines for action will be compressed beyond current ability to respond We are approaching a do or die moment: enterprises that act will survive to prosper, and those that don t will be wash away * Source: TED 2007: Predicting the Next 5000 Days of the Web. IBM analysis 7
Organizations will need to adopt new ways of working to improve speed to insight and speed to impact Traditional Approach New Approach Instinct and intuition Fact-driven Corrective Directive Years, months, weeks Hours, minutes, seconds Human insight Applied semantics Decision support Action support Efficient Optimized 8
The value is immediate and strategic for the smarter organization Improve opportunities for growing customers, improving relationships, identifying new markets, and developing new products and services Intelligent profitable growth Better predict and identify risk events and build resiliency and agility of the organization to respond and act. Cost takeout and efficiency Proactive risk management Optimize the allocation and deployment of resources and capital to create more efficiency and manage costs smartly Different organizations may identify different priorities for business analytics 9
The intelligent enterprise is Anticipating Predicts and prepares for the future and doesn t only react or correct actions, but also steers and evaluates trade-offs Aware Gathers, senses, & uses structured and unstructured information from every node, person, and sensor within the environment Empowering Enables and extends employees' memory, insight and reach, as well as the authority to decide and act Linked Connects internal and external functions front to back across geographies in a way that aligns to desired business outcomes Questioning Reserves the right to get smarter by challenging its status quo while creating new opportunities Precise Uses only the most relevant information to support timely decisions/actions closer to the point of impact and consequence 10
Why change and why now? The information environment is at a tipping point To survive, business leaders must act The enterprise has not kept up and cannot keep up Traditional transactional and humanauthored enterprise data is rapidly growing People at all levels need better information and executives need to make decisions more quickly Decision making is based on instinct, subjective information, and often the wrong facts Unstructured data is growing at geometric and exponential progressions, and most of it is not used in analytics Decisions need to be made based on a new set of facts based on the entirety and richness of the information base Existing tools cannot access or analyze the growing data effectively and aren t positioned to handle the data deluge The unblinking eyes of instruments and sensors is producing tireless streams of new data Mental bandwidth needs to be reallocated towards harder and more pressing decisions Huge amounts of data are ignored, mismanaged, or under-utilized We are approaching a do or die moment: enterprises that act on the opportunity will survive to prosper, and those that don t will be lost 11
Five key related capabilities will enable the Intelligent Enterprise BAO Strategy Business Intelligence & Performance Management Advanced Analytics and Optimization Enterprise Information Management Enterprise Content Management BAO Strategy and Roadmap BAO Process Improvement BAO Governance Dashboards & Scorecards Planning, Budgeting, & Forecasting Business Analytics & Reporting Advanced Analytics Analytic Applications Predictive Modeling Business Optimization Visualization Data Integration Data Quality Data Architecture Master Data Management Document & Records Management Web 2.0 / Web Content Management Digital Asset & Rights Management Archiving & Record Management 12
Example One: Electronic Records Management 13
14 Photograph (cc) Philllie Casablanca on flickr.com
15 Photograph (cc) AComment on flickr.com
Financial documents Large assets generate and attract paper throughout their life Owner s manuals Engineering drawings Maintenance documentation 16 Photograph (cc) users_lib on flickr.com
A simplified example that pulls it all together Lease/purchase asset in Financial System Purchase requisition in Financial system Create asset in Asset Mgmt Schedule maintenance in Asset Mgmt Analysis to determine new equipment need Create RFP Receive RFP Responses Maintenance Records Structured Unstructured Metadata Enterprise search Predictive analytics Records management 17
Example Two: Social Media Analytics 18
Consumers are tuning out our carefully crafted advertising messages 78% of consumers trust other consumers versus 13% for mobile text ads and 63% for newspaper ads 1 1. http://www.balladinplaine.com/sla-2008-word-of-mouth-marketing-tuesday-june-17/ and are speaking directly with each other using social media 19
How can we listen in on the discussion? Monitor the entire public Internet. Read every word in detail to determine whether what is being said is interesting to us. Filters many thousands of daily articles down to dozens of highly relevant items. Highlight the most important items. Interpret sentiment. Assess emerging issues. Identify reputational risks. Monitor historical trends and patterns. COBRA is an IBM solution for Social Media Analytics 20
Leading organizations benefit from monitoring social media Corporate Communication & PR Watching competitors, NGOs, Regulators Monitoring corporate and personal (eg CEO) reputation Marketing & Category Management Consumer and shopper insight Analysis of contact centre data Launch and promotion tracking Monitoring response to advertising R&D Technology scouting Patent search Quality Management Analysis of customer complaints Monitoring press for recalls Photograph (cc) ky_olsen on flickr.com 21
The new Oil! Data is the new oil! Clive Humby ANA Senior marketer s summit, Kellogg School "Data is just like crude. It s valuable, but if unrefined it cannot really be used. It has to be changed into gas, plastic, chemicals, etc to create a valuable entity that drives profitable activity; so must data be broken down, analyzed for it to have value." Michael Palmer at http://ana.blogs.com/maestros/2006/11/data_is_the_new.html Photograph (cc) L.C.Nøttaasen on flickr.com 22
Mark Decyk Associate Partner IBM Global Business Services decyk@ca.ibm.com 416-478-8539 Photograph (cc) Horia Varlan on flickr 23