IBM's Smart Planet Strategy Starting to Catch On

Posted by: Steve Hamm on July 13

A few months ago, when I called up a top Wall Street analyst to talk to him about IBM’s “Smarter Planet” strategy, he scoffed. “Good marketing, but that’s all,” he told me. There appears to be more to it. A couple of days ago, when I interviewed Steve Mills, the boss of IBM’s software division, for a story I’m developing, he pointed to the Smarter Planet stuff as one of the bright spots in the company’s revenue picture. “The phone rings off the hook every day for this,” he told me. (It’s IBM’s quiet period, so Mills’ PR man told me his comments were not to be construed as a formal statement about the company’s quarterly financial performance.)

The big idea behind the Smarter Planet strategy is that many of the physical systems in the world—electrical grids, transportation systems, buildings, factories, rivers, etc.— can be operated or managed much more efficiently if they’re monitored by sensors, their performance is analyzed, and then they’re tinkered with to make them work better. “The world is somewhat underinstrumented,” said Mills, somewhat geekily.

So there’s an opportunity to apply information technology to physical infrastructure in powerful new ways. If the technology catches on, it will open up potentially vast new markets for the IT industry. But the success of these new markets relies in many cases on governments opening up their wallets or whole industries changing the way they operate. So this isn’t the kind of thing you’d expect to take off rapidly. Or, at least, I didn’t expect it.

But it seems like the combination of concerns about global warming and the various economic stimulus packages are creating a relatively fertile climate for smarter infrastructure.

The IBMers gave me a couple of examples:

—The San Francisco Public Utilities Commission is using IBM software to help reduce its pollution of the bodies of water that border the city on three sides.

—Netherlands Railways is using IBM software to manage more than 5,000 trains on a network of 390 stations and 2,800 kilometers of track.

—Volkswagen Group is using IBM sensor and RFID technology to improve the efficiency of its manufacturing operations.

Mills says IBM expects to have hundreds of customer examples it can talk about publicly by the end of the year.

From its beginnings, even before the Smarter Planet was a much repeated advertising slogan, I thought the strategy was a good business idea, not to mention good for the planet. But I had my doubts about how successful IBM would be in rounding up paying customers. Apparently I was wrong.

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