IBM Think 2019 Chairman’s Address: Building Cognitive Enterprises

IBM Think 2019 got its official kickoff yesterday. IBM’s Chairman, President and CEO Ginni Rometty delivered the conference keynote welcoming prominent CEOs and company leaders while discussing transforming into Cognitive Enterprises.
Dear Tech… The address started with a video of individuals writing an open letter to the tech industry. Security, cloud, scale, safety, AI-ending bias, understanding each other, business, etc.  It starts with people, who then use tech to make the world better – together.

Five customer speakers joined Ginni Rometty during the address:

• Greg Kalinsky, Geico
• Ted Chung, Hyundai Card Co., Ltd
• Jim Whitehurst, Red Hat
• Bernard Tyson, Kaiser Permanente
• John Donovan, AT&T Communications

Key messages and insights from each speaker are below (you can also view the replay).

Ginni Rometty, President and CEO, IBM

Shared with the audience that there are 120 countries and 22 industries in attendance at IBM Think 2019.
The second chapter of digital and AI is beginning, and these dimensions include:

• Scaling
• Hybrid cloud
• Mission critical apps
• Trust and responsible stewardship

Five lessons learned when it comes to scaling digital and AI:

1. Outside in – CX apps
2. Inside out – workflow and data driving change
3. Business platform to connect CX and data, AI infused in a workflow
4. Going to need an AI platform
5. Will never have AI without information architecture (IA) because you spend 80% of the time getting data

Announcements

• Watson Anywhere – Support any cloud variation including private, public, on premises, etc.  Most open scalable AI solution available today.
• IBM Business Automation with Watson – Workflow with moments of intelligence built-in
• IBM End to End services – 22 offerings
• IBM Cloud Integration Platform – Connect data from anyone’s platform
• IBM Hyper Protect – Highest level of security today

Greg Kalinsky, EVP and CIO, Geico

Shared journey of digitization at Geico:

• Recent contest by replaying commercials and people vote (1.5m voted for the “Hump Day” commercial)
• Geico is a commoditized industry – nobody wants to buy insurance, has to and hopes to not use it
• Distinguishes themselves via customer service and price
• Internet removed manual processes
• Moving to mobile, couldn’t quite get there in terms of intuitive and dynamic but 8,000,000 use the mobile app
• Nervous that consumers were not ready for AI and would alienate people

Phases of transformation

Phase 1

• Do no harm – Initial stage was a PoC
• Would review verbatim transcripts to see how customers reacted with Watson because they didn’t know it was Watson

Phase 2

• Now investing time and effort to value-add phase – go beyond “do no harm” and increase sales
• Started with auto, got some improvement but not up to max goals
• Decided to try it on renters policy instead.  Were able to reconfigure it to simplify flow and got a 40% increase rate in closure on those policies.
• Now, figuring out how can the same lift be brought back to auto

Takeaways and Leadership Lesson

• To get the value of AI, you can’t just layer it on your existing processes – Not just outside in but go inside out
• Opportunity may appear obvious but people do not like change. Must work together to distinguish yourself and leverage tech to change the way things are done.

Ted Chung, CEO, Hyundai Card Co., Ltd

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Scaling AI and digital – Hyundai Card’s strategy and transformation journey started 15 years ago with branding and marketing. 4 years ago started digital transformation – AI and blockchain.
Plan to put AI at the center of customer service.

• 50% of calls went unresolved
• Poor customer service cost $65 billion
• 30% turnover in the US

Pain points:

• Almost impossible to memorize benefits, terms, conditions from a financial product
• Training cost is high

Looked to AI to help:

• Turnover rate is now 10% – a 20% decrease
• The younger generation wants to interact with text and mobile devices
• Developed a Watson conversation based customer service app with 2 personas – one serious and one fun

Now building a large data lake to allow super customizations.

• Market segmentation
• Takes raw info, maps to service info and then to insights
• For example, there can be 10 addresses – home, work, shopping, eating, etc. Marry that with identified preferred shopping times as an example to determine when to market.

Biggest lesson learned

Have a lot of data but don’t know how to use it. If you find your data is a mess, you have taken the first step. Understand AI is evolving. Lastly, project management must understand both AI and the business.

Jim Whitehurst, CEO, Red Hat

Shared his viewpoint on the technology landscape and open source:

• 3.5 billion in revenue with no IP
• The growth of user-driven innovation
• For a subset of problems enterprises need, software is out there in open source – By-products of large companies is open source
• Many open source products are not meant to have long term use
• Puts life-cycle security around open source so enterprises can use them
• E.g. RedHat helped update Kubernetes so it can run legacy stateful apps
• Open source can get you 90% of the way there, RedHat can help with the other 10%
• That is good but getting at enterprise data is what is important.
• Linux, containers, and Kubernetes is where most innovation is happening

Bernard Tyson, Chairman and CEO, Kaiser Permanente

Pioneered preventative vs reactive healthcare – started with a vision. Now in a great place in healthcare, but it didn’t change much until the late 20th century. People used to die early so healthcare wasn’t an issue – sanitation and food changed that.
At KP, previously created a system called a “fix-it” system, where the organization tailored everything so patients must come to KP. This has changed drastically – it is being flipped upside down because of the thought, “why focus on sickness only?”
Realization this is healthcare, not sickcare – early detection, diagnosis, etc. are all things needed to help a person thrive. KP is helping people understand their health.
Cloud – what it’s enabled and the journey:

• KP has always used technology, always collected data, lots of it
• Built up physical data centers
• Worried about data security with cloud
• Now over half of the data is stored in IBM cloud
• This has helped enable affordability coverage and care and accessibility

Social determinants – factors that influence health:

• Healthcare contributes about 10%
• Behaviors are about 40% (exercise, eating, etc)
• Rest are social determinants, e.g. environment, shelter, pollution, crime
• Data and AI: a way to innovate and act on social determinants

Leadership lesson

It is a journey and the reality needs to be embraced.  Technology has opened up possibilities and we cannot let history stop that.

John Donovan, CEO, AT&T Communications

John Donavan has taken AT&T Communications through end-to-end digital transformation journey.
Phase 1

• Started in 2013 – had a million CPU cores
• Decided to visualize the environment – 80k VMs

Now, figuring out:

• How to move it to the cloud
• Micro-services
• How to virtualize network functions
• Move from micro-services to functions

Phase 2
Move inside out with mission-critical apps.

• Tried to move 40-year-old systems just to gain experiences moving
• Used learning to move more complex and critical systems in a repeatable capacity

AI example:

• 70k trucks dispatched every day
• Dealing with a dispatch system that is old, but people know the system and the process
• Data can be used to make decisions, e.g. because of weather or traffic, dispatch a truck an hour away instead of one 15 minutes away
• AI is most powerful when a device can make local decisions combined with macro decisions in a cloud

He wrapped up by sharing that 5G technology will be a big pendulum swing coming which will maximize hybrid cloud.
If you were unable to make it to Think this year, I highly recommend checking out the recording of this keynote session – lots of great insights from leaders who are making huge strides with AI.