IBM CEO: All Is Not Well With Watson

Well, the big announcement came from IBM, and it wasn't at all surprising.  It also leaves questions unanswered.  The NYT headline reads, "IBM Is Betting That Watson Can Earn Its Keep."

The Watson Business group will have three relevant features that speak to the weakness of the initial concept. 

• Locating it in the East Village far from Armonk speaks to the need to develop a different kind of culture from Big Blue. It is also allows the company to draw from a wider base outside of New York City, since it is easier to get to the Village than it is to Armonk. Princeton and the little tech belt in New Jersey come to mind.
• Experts in industries will be part of the development team. This would presumably address problems the Watson project has had with clients, including WellPoint. 
• The group will have a small venture fund, which clearly says that the basic computing platform needs innovation around its analytical core which can't be done quickly through IBM. 

Henry Morris of IDC says what we've been saying for some time,“Big Data by itself isn't value, it has to deliver recommendations about what to do,"  It can't do that until IBM works directly with its customers to help them understand the dynamics of their own businesses in a way that's helpful to the computer's modes of operation.

Yesterday's comments from WellPoint's Vice President about the IBM Watson experience are a bit puzzling. She said, "...Watson initially took too long to "learn" WellPoint's policies. The task was then to check against treatments for beneficiaries to see if they complied with the policies.  This is not at all a super computing task. IBM's inability to essentially design Google-type searches around the problem seems hard to believe.

The problem, as we said yesterday, is not all about hardware or software--though the latter is a real issue--but it's about being able to work together with the customer and to really understand their needs, as opposed to fobbing off an order for some iron, software and support, which is the traditional IT package. 

On the next conference call, look for analysts to seek revised and specific goals for the Watson Business Group like revenue, net effects on expenses, and earnings contribution to the Road Map.  Get working on those slides now!

Finally, the comparison of the current CEO's early tenure with that of former CEO Sam Palmisano leaves out the luck factor and timing of market and IT cycles.  This is a different time and a different environment, and there needs to be more work done on IBM's sales and customer service paradigms than was evident during headier times.