Mobile, Cloud, Security, Cognitive and Analytics

Digital business has moved from an aspiration to the new norm. Companies have embraced cloud,
mobile and analytics to engage customers and propel growth. They’re also charting new territory
with digital services driven by the Internet of Things and cognitive computing to create new business
models and revenue streams.

The IBM Center for Applied Insights has been tracking these trends and analyzing how leading
organizations create strategic advantage. We’ve tapped into the experience of leading organizations
around the world to highlight patterns of adoption and best practices for companies embarking on
or advancing key business priorities that drive the digital enterprise. We focus on what organizations
are doing and how they succeed.

This report aggregates insights from various quantitative and qualitative studies recently conducted
by the Center. From the proven to the cutting edge, these are the trends that are empowering
organizations.
About the IBM Center for Applied Insights
ibm.com/ibmcai | ibmcai.com
The IBM Center for Applied Insights introduces new
ways of thinking, working and leading. Through
evidence-based research, the Center arms leaders
with pragmatic guidance and the case for change.

Cloud
Mobile
Security
Analytics
Internet of Things
Cognitive
Quantum
Resiliency
Digital services
Applied Insights 2016

Hybrid cloud is the de facto state of IT.

Two-thirds of organizations that blend traditional and cloud
infrastructures are already gaining advantage from their
hybrid environments. However, leaders among them use
hybrid cloud to power digital transformation, going beyond
cost reduction and productivity gains.

What’s more, these leaders are using hybrid cloud to
springboard to next-generation initiatives such as the
Internet of Things and cognitive computing, aiming to
disrupt and capture new markets.
Cloud
START | Cloud | Resiliency | Security | Mobile | Analytics | IoT | Digital services | Cognitive | Quantum

Source: IBM Center for Applied Insights study
Growing up hybrid: Accelerating digital transformation
(ibm.com/ibmcai/hybrid-cloud)

Hybrid cloud is the new norm
70%
of hybrid implementers report they will
always have a blend of traditional IT and
cloud
90%
!
of leading organizations say hybrid is crucial
to their strategy and gives them greater ROI
than all-traditional or all-cloud environments
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2-3 years ago Currently 2-3 years from now
Traditional IT
Public
Cloud
Private
Cloud

Leaders use hybrid cloud
to forge their digital futures
85%of leading organizations
report that hybrid cloud
is accelerating their
digital transformation
EFFICIENCY & PRODUCTIVITY
DIGITAL BUSINESS
NEXT-
GENERATION
INITIATIVES
HYBRID ENVIRONMENT
Comprehensive hybrid cloud integration and management
Hybrid cloud enables cost reduction and efficiency gains
Hybrid cloud enables new business growth
Hybrid cloud enables disruption

Leaders use hybrid cloud to
jump-start next-generation
initiatives
Leading organizations are
more likely to be using hybrid cloud
to drive initiatives in cognitive
computing
5X
Chasers Challengers Frontrunners
Frontrunners
vs. Chasers
Commercializing insights 2.9x
Cognitive computing 5.1x
Internet of Things 1.7x
14%

21%

7%

16%

21%

15%

40%

36%

36%

%
using
hybrid
cloud
to
enable:

How do leaders gain more value
than others from hybrid cloud?
Comprehensive hybrid strategy
3X more likely to have an enterprise-wide hybrid
strategy
Hybrid transforms culture
2X more likely to report that hybrid cloud
reduces shadow IT
Advanced hybrid management
5X more likely to be using advanced analytics to
manage hybrid cloud
Improved security & data
protection
2.5X more likely to achieve data protection
through hybrid cloud

A foray into digital
entertainment
!
Russia’s renowned Mariinsky Theatre was looking to
expand its global reach by live-streaming opera,
ballet and orchestra performances. The quality of the
streamed content was a critical priority.

By connecting its existing infrastructure to a scalable,
high-performance cloud hosting solution, the theatre
was able to accommodate a fluctuating number of
viewers on its digital content streaming platform.

As a result of this hybrid cloud deployment, the
theatre was able to cut capital expense by $20,000,
boost performance by 30 percent and accelerate
infrastructure deployment by 99 percent.
!
!
Applying
cognitive insights
!
Finland’s largest airline was looking to manage costs
and grow revenue by offering new digital services to
improve customer experience.

The airline leveraged the flexibility of a hybrid cloud
platform to integrate new cloud services with its
existing infrastructure. As part of its digital
transformation, it started using cognitive capabilities to
improve employee productivity by enabling agents to
more quickly find responses to customer needs and
intelligent, online self-help tools for employees to locate
information.

With implementation underway, Finnair hopes to gain
operational efficiency, reduce complexity and establish
a foundation to support new growth initiatives.
Driving digital transformation
through hybrid cloud

We live in an always-on world. But it’s getting harder for
disaster recovery professionals to maintain an always-on
environment.

Fifty percent of organizations are not prepared to handle
service disruptions from cybercrimes or attacks, though 55
percent are including an increasing number of "critical”
systems in disaster recovery (DR) plans.

But some companies are better at mastering disaster
recovery. How are these leaders reaching the heights of
business resiliency?
Resiliency
Masters of disaster recovery: How highly resilient organizations excel
(ibm.com/ibmcai/disaster-recovery)

Develop an enterprise-wide strategy by working
with senior executives and the board, then base
your approach on both compliance requirements
and consumer and business needs.
Approach disaster recovery
holistically and strategically
Leaders are
2.5X more likely to
maintain an
integrated DR plan

Collaborate with risk leaders including security leaders
and the CRO to enhance disaster recovery
compliance and governance.
Collaborate with risk and
security experts
Leaders are
3.5X more likely to
involve the CISO in
DR planning

Leverage new technologies
Incorporate new technologies such as cloud,
advanced analytics, social and mobile into disaster
recovery plans to both respond to and prevent future
service disruptions.

Leaders are 15X
more likely to use
diagnostic
analytics to
pinpoint risk

Test rigorously
Design a robust testing plan that continuously
improves through testing insights and includes
infrastructure and supply chain connections.
Leaders are 2.5X
more likely to test
at least annually

Cybersecurity risk is an immense threat. It’s also a top
C-suite priority, with funding for security efforts growing to
reﬂect the gravity of the challenge.

Security leaders are realizing that simply “checking the box”
to address compliance requirements is no longer a sufﬁcient
strategy.

Those further up the maturity curve are transforming their
programs to be truly risk-based by using a sophisticated
approach to determine risks and prioritize security
investments.
Security
From checkboxes to frameworks: CISO insights on moving from compliance
to risk-based cybersecurity programs (ibm.com/ibmcai/ciso)

What do CISOs struggle with?
Strategy
How do I transform a compliance-based security program into
one focused on risk?
Communication
How can I best communicate risk to top management
and manage expectations?
Consumability
Do I have the skills, resources and tools to implement the right
controls for success?

CISOs are increasingly turning
to customized frameworks as
the strategic tool of choice to
assess risk and prioritize threats
85%!
!
88%
of CISOs report that upper-management
support for cybersecurity efforts has
increased.
of CISOs report that their security budgets
have increased.

Go to > From checkboxes to frameworks!
“I always try to make the
compliance argument the
last thing because I think
that way too many
programs are aligned
around ‘What’s the
minimum thing I have to do
to get a check mark?’.”
CISO, Retail

Takeaways to develop risk-
based cybersecurity programs
Develop
Customize frameworks to enable strategic assessment of
real risks and cybersecurity priorities.
Direct
Use frameworks as an effective communications
tool to relay cybersecurity strategy.

Deliver
Implement the guidance derived from frameworks.


Maverick perspective on
cybersecurity strategy
Orchestrating the lifecycle of cyber defense
A CISO of a financial services firm takes a targeted approach to
frameworks in order to address the company’s business priorities. Using
NIST, ISO and SANS, he developed a customized framework to address
the attacks the company was seeing.

The framework focuses on key risks including loss of financial data,
financial account compromise, business continuity and regulatory risk.
The framework also identified primary threat agents including hacktivists
and organized crime.

His team then developed a phased rollout plan to protect against the
most common risks using a variety of tools orchestrated to span the full
lifecycle of cyber defense, helping ensure business continuity even in the
event of a single tool failure. Instead of a peer network of CISOs to guide
his investment decisions, this maverick taps the Silicon Valley venture
capital community to learn about disruptive new tools that can address
his company’s security challenges.

Mobile has become the go-to standard for accessing
applications and services. And while the mobile platform war
may be over, the race is still on to create better apps faster
and to seamlessly manage the mobile lifecycle from agile
development to secure delivery to exceptional customer
experiences.

But only one-third of mobile application development
projects are successful—fully achieving budget, schedule
and project objectives.

What are the star qualities for successfully managing mobile
projects?
Mobile
Star qualities: What it takes for mobile development projects to succeed
(ibm.com/ibmcai/mobiledev)

Experience and expertise
make for a strong cast
Successful projects are 30%
more likely to have at least one
developer with more than ﬁve years
of mobile development experience.

Platforms set the stage for
flexibility
Successful projects are 35% more
likely to use cloud-based platforms
to develop the mobile application.

Collaboration keeps the
production on track
Three-fourths of successful
projects collaborate using agile
software development methods,
versus two-thirds of less
successful projects.

User analytics inspires the
next act
Two-thirds of successful projects
analyze user behavior closely.
Compared to other projects, they
are 20% more likely to do so.

Leaders talk about their
successful mobile projects
Analytics helps bank
respond quickly to customers
!
Canada’s Tangerine bank offers a great example of the
beneﬁts of incorporating indirect feedback data. After
the bank integrated a quality assurance service into its
mobile app that combines behind-the-scenes usage
data with direct customer feedback, the bank could
more quickly act on customer input. According to the
bank’s CIO, “[Customers] don’t have to wait six months
for us to address their concerns.” What’s more, the
CIO says, the feedback “helps us learn and make
better applications.”
Accelerating mobile
development with cloud
!
When the CIO for the San Francisco Bay Area Rapid
Transit (BART) system wanted to give maintenance
engineers and supervisors mobile access to the
company’s maintenance reliability information system,
he didn’t have months to wait. Using cloud-based
integration services and platforms, the team reduced
provisioning and development time by over 90 percent.
This allowed them to develop the new mobile app in
only 15 days, instead of an estimated six months. And
new features can go live in 45 seconds—a huge win
when it comes to meeting user expectations.

Data, the new natural resource is growing rapidly. Yet many
companies are still early in their journey to set up and
optimize their analytics function and related capabilities.

However, organizations at the forefront are standardizing
and optimizing analytics capabilities and skills to glean
meaningful insights.

What can we learn from forward-thinking enterprises to
thrive in a data-rich future?
Source: IBM Center for Applied Insights studies
Competing in the insight economy (bit.ly/CAI-InsightEconomy)
Teaching organizations to ﬁsh in a data-rich future: Stories from data leaders (ibm.com/ibmcai/cdostudy)
Breakthrough experiments in data science: Practical lessons for success (ibm.com/ibmcai/data-science)
Analytics

Organizations are turning
data insights into tangible
business value
are creating new forms of economic
value from insight.

have monetized insight.

say data-driven insight will be a
signiﬁcant contributor to revenue
over the next 3 years.
71%
32%
42%

Through three steps, data leaders
can help their organizations fully
capitalize on their data and
achieve better business outcomes
Make data
a priority
Develop
from within
Free
the data

Showcase
your
results
Infuse data
science into
culture
Design a
data science
capability
Equip with
the right
technology
Leaders can also offer practical
advice for integrating data science
capabilities within organizations

These data leaders are using data science
to drive up revenue...
“We increased our business
40% year over year. And
the losses are about a third
to a quarter of what the
industry is seeing.”

VP of Credit Risk Analysis &
Econometrics, Banking
“These are opportunities
in the millions, either in terms
of driving the top line,
or just getting smarter in the
online marketing space and
spend allocation.”

Chief Analytic Ofﬁcer, Travel
“We’re able to increase
revenue because we are now
reaching people that we
wouldn’t have otherwise
gotten to. And we were able
to minimize the drain from
other competing agents.”

Lead Data Scientist, Insurance
Increased business
year over year
Grew top line and
saved on bottom line
Reached expanded
group of customers

…and are using data science to improve
efficiency and effectiveness
“The churn model is a big
success—between $11 and
$16 million dollars in savings
per year has been a lot of
proof that what we do works.”

Chief Data Scientist, Telecom
“We were able to see that
people were shopping earlier
than ever before. We needed
to have more toys on the shelf
by October; November was
not good enough.”

Director Customer Service Systems,
Retail
“I'm able to model the effect
of a hailstorm on a set of
stores that may sell out of
shingles. We’re getting into
other data in order to enhance
some of this bottom line
functionality.”

Data Scientist & Advanced Analytics
Architect, Retail
Saved millions by
reducing churn
Found new patterns
in holiday shopping
Forecast effects of
weather on sales

IoT is on the verge of widespread penetration, promising
new business opportunities and beneﬁts such as increased
operating efﬁciencies, improved customer experience
and accelerated innovation.

IoT can be transformative for businesses that embrace its
potential. But effective and fully implemented IoT systems
need an integrated fabric of devices, data, connections,
processes and people—all built on a solid and secure
technology platform.
Internet of Things
Source: IBM Center for Applied Insights IoT articles (ibmcai.com/tag/iot/)


IoT has moved beyond the hype
of organizations expect IoT to transform their
business or offer signiﬁcant new revenue or
cost-saving opportunities in the short term.1

of executives say they have adopted IoT-based
systems or plan to do so.2

40%
62%
Industry leaders understand the transformative
potential of IoT and are implementing IoT-based
systems.

Connecting everything isn’t
enough—real business value
comes from IoT data insights
of manufacturers are currently collecting and using
data generated by smart sensors to enhance
manufacturing and operating processes.4

of IoT app developers spend at least 25% of their
time with analytics or databases.5
35%
79%
IoT applications are generating large volumes of data that could reach
507.5 ZB per year by 2019.3
Business value will only come to those who improve their data
capabilities, including storage, integration and analysis.

Trust, authentication and
standards are essential to the
widespread adoption of IoT
of enterprises will have digital security devoted to
protecting IoT devices and services by 2017.6

of executives say that privacy and security
concerns are a major barrier to IoT investment.7
20%
39%
Organizations must consider how to manage the
complexities of connecting to a seemingly unlimited
number of devices.

IoT enables disruption across
industries
of retail decision makers believe IoT will drastically
change the way companies do business in the next 3
years.8
80%
The global number of connected devices being managed by utility
companies is projected to grow to 1.53 billion in 2020, more than
triple the 485 million devices reported in 2013.9
IoT can be a game changer for enterprises that embrace it,
changing the way work gets done and improving the top
and bottom line.

Digital services centered on empowered consumers are
disrupting every industry, revealing new business models
and opening up adjacent markets to increase economic
value.

New digital services are not only changing how
entertainment is accessed, but also making commerce
pervasive across smart devices and allowing education to
penetrate far corners of the globe.

An early example of this disruption—the automotive industry
—serves as a great case study for how every industry can
be impacted, and why every company should be poised to
disrupt.

Digital services
Digital disruption and the future of the automotive industry
(ibm.com/ibmcai/future-auto)


“The auto industry is poised
for more change in the next 5
to 10 years than it’s seen in the
past 50.”
Mary Barra, CEO, General Motors10
For over 100 years the automotive industry has created competitive advantage through
engineering excellence. Going forward, this will no longer be sufﬁcient.

The connected car is
part of a wider
“system of systems,”
with the potential to
create a dazzling
array of new digital
services

Digital services in automotive:
Control and disruption
The in-vehicle experience and the extent to
which smartphones may displace OEM built-in
technologies is a critical battleground.
OEMs are in pole position to own services and
increase customer stickiness from in-vehicle data.
Car sharing, ridesharing and increased use of social
business are recasting economic value.

Digital services in automotive:
Control and disruption

Ø  Use a “fail fast” approach to
new business models
Ø  Consider non-traditional
partnering
Ø  Sense and respond to rapidly
changing customer needs
How can the auto industry
adapt and thrive?

We are entering a cognitive era. Through cognitive systems,
we’re ﬁnally unlocking a host of unstructured data that’s
previously been unusable. Unlike computers of the past,
these systems are capable of understanding natural
language, and they can reason and learn. This opens an
entirely new realm of possibilities.

Over time, cognitive computing will transform jobs,
businesses and entire industries. It will augment the best of
our human thinking—helping us better understand and
manage our world’s complex systems. It will enhance and
extend our expertise, enabling a “smarter us.”

But what does it take for an organization to “become
cognitive?”
Cognitive computing
Source: IBM Center for Applied Insights study!
Becoming cognitive: Insights from interviews with the ﬁrst wave of Watson users!
!
!

How is cognitive computing
different?
Ø  It differs from advanced search or analytics
Ø  It learns as it’s taught
Ø  It requires a new kind of interaction
Ø  It allows us to solve problems in new ways
!
!
!
!
“What gives me hope is that the
Edisons of the world can now fail
10,000 times faster, so we'll get more
out of them.”
CEO, Computer Services solution provider

What types of benefits are
users seeking?
Ø  Improve decision making
Ø  Gain competitive
differentiation
Ø  Ask better questions
“Rather than us being dictated by
the tools, we're dictating what the
tools should do for us. I think that
change in how people and things
communicate is the most scalable,
broadly applicable element.”
Director of Product Strategy, Retail solution provider
Ø  Free up expertise
Ø  Manage complexity
Ø  Augment skills

How are users preparing their
organizations?
Casting the vision
A clear use case, strong executive support, a long-term plan for adoption
and deployment, and an innovative organizational culture are all essential to
forging a strong vision at the beginning of the cognitive journey.
!
!
Managing expectations
Pioneering organizations set expectations carefully with both end users and
senior executives. This allows them to keep the hopes and desires of the
organization in sync with the realities of the cognitive platform.

How are users preparing their
organizations?
Orchestrating cognitive training
Organizations have to commit to properly training their system. They have to
make the right experts available and encourage their involvement. These
experts have to see things through to the end—training, testing and helping
deploy.
!
Driving via a diverse team
Organizations need the right team members with the right technical skills and
subject matter knowledge to both deploy and use cognitive systems. Users will
also need to develop new skills and operate differently than they are used to.
. !
Applied Insights 2016 IBM Center for Applied Insights

“I can't imagine building a
technology company now
without at least thinking about
the cloud or mobile. Cognitive will
be like that. The decision won't
be whether to use it or not; it will
be ﬁguring out how.”
CEO, Healthcare solution provider

Quantum computers promise exponentially more speed and
power than what is achievable with computers today.

Harnessing such capabilities would provide extraordinary
business advantages in areas as diverse as
pharmaceuticals, encryption and weather forecasting.

Quantum has the potential to impact problems on a global
scale. The possibilities of solving what is unsolvable today
are signiﬁcant for businesses and for the planet.

And the wait may be shorter than you think.

Quantum computing
A quantum of possibilities: The business advantages of taking the quantum leap
(ibm.com/ibmcai/quantumcomputing)

The quantum advantage
for business
Greater speed and power offer clear beneﬁts across
industries. But the real differentiator is that these beneﬁts
compound quantum's true strength—an entirely new way
to tackle problems.

“Quantum is a very good
example of the rapid progress
that we can accomplish if we
are ambitious and focused as
scientists and as a community.
Think about the opportunity for
the planet.”
Alan Aspuru-Guzik, Harvard University

Impact on
applications
& industries
Government!
Pharmaceutical!
Financial services!
Manufacturing & Industrial!
Travel & Transportation!
Telecommunications!

Preparing for a quantum future
Nurture new skills and roles as quantum scientists and
engineers, as well as entrepreneurs and quantum
generalists will be in demand.
Expand quantum education programs
to train for new roles that encompass
physics, engineering, computer science
and business.

Open innovation between academia and business
will be necessary to accelerate quantum innovation,
ﬁnance projects and encourage adoption.


Cloud!
Mobile
Security!
Analytics
Internet of Things
Cognitive
Quantum
Resiliency
Digital services
Applied Insights 2016 thought leadership publication summary
Growing up hybrid: Accelerating digital transformation
(ibm.com/ibmcai/hybrid-cloud)

Masters of disaster recovery: How highly resilient organizations excel
(ibm.com/ibmcai/disaster-recovery)
From checkboxes to frameworks: CISO insights on moving from compliance
to risk-based cybersecurity programs (ibm.com/ibmcai/ciso)
Star qualities: What it takes for mobile development projects to succeed
(ibm.com/ibmcai/mobiledev)

Competing in the insight economy (bit.ly/CAI-InsightEconomy), Teaching
organizations to ﬁsh in a data-rich future (ibm.com/ibmcai/cdostudy), Breakthrough
experiments in data science (ibm.com/ibmcai/data-science)
IBM Center for Applied Insights IoT articles
(ibmcai.com/tag/IoT/)

Digital disruption and the future of the automotive industry
(ibm.com/ibmcai/future-auto)
Becoming cognitive: Insights from the ﬁrst wave of Watson users

A quantum of possibilities: The business advantages of taking the quantum leap
(ibm.com/ibmcai/quantumcomputing)

Sources and references:

1. “Gartner Survey Shows More Than 40 Percent of Organizations Expect
Internet of Things to Have a Significant Impact Over Next Three Years.”
Gartner. 2015. http://www.gartner.com/newsroom/id/2977018
2. “We Asked Executives About The Internet Of Things And Their Answers
Reveal That Security Remains A Huge Concern.” Business Insider. 2015.
http://www.businessinsider.com/internet-of-things-survey-and-
statistics-2015-1
3. “Cisco Global Cloud Index Projects Cloud Traffic to Quadruple by 2019.”
CISCO. 2015. http://newsroom.cisco.com/press-release-content?
type=webcontent&articleId=1724918
4. “The Internet of Things: What it means for US manufacturing.” PWC. 2015.
https://www.pwc.com/us/en/industrial-products/assets/big-data-next-
manufacturing-pwc.pdf
5. “Internet of Things - Vertical Research Service.” Evans Data Corporation.
2015. http://www.evansdata.com/reports/viewRelease.php?reportID=38
6. “Gartner Says that the Internet Of Things Will Change Cybersecurity
Forever.” Gartner. 2015. http://www.gartner.com/newsroom/id/3123018
7. “We Asked Executives About The Internet Of Things And Their Answers
Reveal That Security Remains A Huge Concern.” Business Insider. 2015.
http://www.businessinsider.com/internet-of-things-survey-and-
statistics-2015-1
8. “The Internet Of Things In Retail: Great Expectations.” Retail Systems
Research. 2015. http://rsrresearch.com/wp-content/uploads/
2015/08/2015IoTRSR.pdf
9. “Transforming industries: Energy & Utilities.” Ericsson. 2014. http://
www.ericsson.com/res/docs/2014/gtwp-op-transforming-industries-aw-
print.pdf
10. Mary Barra, General Motors CEO, speaking at The Code Conference. May,
2015 – www.mobileworldlive.com/apple-says-car-ultimate-mobile-device and
www.cnbc.com/2015/05/27/readying-apple-google-connected-tech.html

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February 2016

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Mobile, Cloud, Security, Cognitive and Analytics

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