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How New Intelligence Will Tame The Information Explosion

When one in three business leaders are making major decisions with incomplete or untrusted information, it’s not a matter of too little information. When half of them don’t have sufficient information from their organizations to do their jobs, a glaring paradox emerges—information scarcity and abundance existing side by side.

These results, from IBM's recent global survey of 225 business leaders, highlight the severe toll today’s information overloadis taking on business, and the heavy price businesses are paying when they use traditional methods to cope with it.

As we know, information has been proliferating for decades - and there’s no end in sight. Next year, the world’s store of digital information will reach an estimated 988 exabytes – that’s equivalent to a stack of books reaching from the sun to Pluto and back. And it’s not just the amount of information – it’s also the warp speed in which it’s delivered, along with intense granularity and divergent formats.

The net result: an incessant stream of real-time information reflecting finer and finer slices of reality.

We characterize this world of information as instrumented, interconnected and intelligent. While most organizations are struggling to accommodate to it, the most forward-looking are taking advantage of extraordinary new ways of using information to optimize business performance, collaborate and drive innovation.

New Intelligence, applied well, gives organizations the ability to predict and steer rather than just sense and react to events. It brings together the power of human cognition and computational excellence. It shifts the agenda to situational awareness and prediction: sudden changes in customer demand, loss of a key supplier, new environmental regulations, a new product or service that disrupts an entire industry. And when evaluating the trade-offs inherent in any business decision, New Intelligenceenables organizations to calculate rather than guess at likely outcomes.

New Intelligence as industry accelerator

In Europe, for example, Volkswagen is affixing radio frequency identification(RFID) tags to containers of auto parts. Information about each container is automatically collected at shipping, as well as during transport, storage, and the assembly line. Even empty containers can be located, as RFID tracking continues for the return trip to suppliers. The information that is collected and analyzed has an immediate impact: more efficient logistics and manufacturing – and no profit-draining surprises at the line.

However, New Intelligencegoes further than hands-free tracking. Companies with a store of real-time information obtained from remote sensors have the opportunity to apply advanced analytics for optimization. An example: balancing energy efficiency with customer service requirements in a way that advances a particular business strategy. It’s safe to say that in an industry undergoing global realignment New Intelligenceis likely to be a prerequisite for competitive advantage.

New Intelligence applies beyond digitized sensors and tags. County governments in one state used advanced analytics to identify analyze and identify acceptable patterns for Medicaid claims submitted by providers; outliers were automatically flagged for further investigation. Private insurance companies pioneered these same methods to eliminate fraud and waste in their payment streams in a way that pays off much more quickly than traditional auditing techniques.

Implications for CEOs

Today’s business leaders face challenges that stand in stark contrast to those of their predecessors, who had the luxury of making strategic and operational decisions on the basis of intuition, and a close circle of advisors. Because New Intelligencethrives on information complexity, simplicity creates opportunity cost, not advantage. Today’s CEOs have entirely new ways to pursue growth, but only if they are also able to pursue an entirely new approach to decision-making. Entering an emerging market? New analytics can quickly provide insights about social and cultural considerations. Integrating operations? Analytics can objectively show outcomes of alternative resource-allocation scenarios.

Increasingly, smarter organizations will gain advantage by making New Intelligencepervasive – across every function, location and department in their businesses, and across every partnership in their business ecosystems. Early evidence is encouraging. Industry out-performers are eight times more likely than under-performers to pursue business analytics at an enterprise level.

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Jim Bramante is Managing Partner, North America, in IBM's Global Business Services organization. He is located in the firm's Philadelphia office. Steve LaValle is the global leader of Strategy services within IBM's Business Analytics and Optimization practice. He is located in the firm's Boston office.