January 13, 2014
By Sarah Sluis,

At NRF’s Big Show, IBM CEO Frames Big Data as a Natural Resource

NEW YORK (NRF's Big Show) — "Big data is a buzzword, and we're in an industry that loves hype," declared IBM Chairperson and CEO Ginni Rometty today in an afternoon keynote on the first day of the National Retail Federation's "Big Show." "But I actually feel this one is underhyped. I think it will be the next generation's natural resource."

Speaking to a crowd of thousands, Rometty talked about how technology will transform the retail industry, focusing on the implications of big data, cloud computing, and machine learning, the latter coming on the heels of Friday’s announcement about IBM’S investment in Watson.

Rometty offered an example of an ecommerce interaction with Watson that pulled together elements of live chat, search, recommendations, and reviews. On the North Face Web site, a user can ask Watson, "What kind of gear do I need for a fourteen-day trip to Patagonia?" and Watson will respond with gear recommendations. If the site visitor mentions a winter trip, Watson will return gear rated to Patagonia's winter conditions. The question "What is ABS Technology?" will return answers not focused on exercises for the abdominal muscles or anti-lock brakes, Rometty explained, but the avalanche-protecting technology that makes contextual sense. She announced that most of Watson's efforts to date have focused on cancer diagnoses, via a soon-to-launch partnership with Memorial Sloan-Kettering Hospital in New York, but that Watson will soon turn his attention to the retail, travel, and financial services industries.

For retailers, who often operate thousands of locations, including international operations, cloud computing is not just a technology decision, "but a business decision," Rometty said. "You can be agile and have security at the same time."

She offered the example of storing customer data that strips out identifying information as one way to solve the problem of security, but emphasized that often security comes down to policy decisions. More than 100 countries around the world already have regulations mandating some level od data protection, she reported.

For retailers, security is also about building trust with customers. "What's at stake is your most precious asset, your brand," she said

For retailers who already believe that they are using analytics to make decisions, Rometty tried to shake their confidence to spur further innovation. Supply chains, for example, have long been optimized based on structured data, like order numbers or size. The new way to optimize supply chains is by using unstructured data, like pictures, videos, tweets, location data, or information from wearable technology.

"Eighty percent of the world's data has been created in the past two years," Rometty stated. "2.5 billion gigabytes are created every day," much from newer, unstructured data that's coming from technology like smartphones and social networks.

To make sense of it all, data analytics starts with being descriptive, like a pin on a map. It becomes predictive when it maps a route and estimates the time it will take to get somewhere, and prescriptive when it offers new routes to avoid traffic in real time.

Rometty challenged retailers who may be adept at descriptive modeling to move to predictive and prescriptive, noting that it will be "a huge basis of competitive advantage."

Rometty ended her talk by encouraging information for up-and-comers: millennials and smaller retailers. Answering the audience question "Do you have to be a big retailer to use big data?" Rometty observed that really using big data is often a question of culture. Culture can be more flexible and quicker to embrace change in smaller organizations. She also noted millennials' receptivity to trusting retailers with their information. That generation is likely to see sharing in transactional terms. As long as they're getting value out of sharing their information, they will be open to sharing their purchase history, location, and more with retailers, she pointed out.