“Follow the money” is not just a maxim for investigative reporters; it’s also good business. Launched in November, IBM’s Smarter Planet initiative–its ambitious approach to health care, energy, infrastructure, and other problems–sounds like a marketing campaign. On the ground, though, it’s a rallying cry that focuses every aspect of the company on doing what it does best: solving problems through well-coordinated data-driven systems.
It’s also a grab for the estimated $101 billion in IT spending on U.S. projects triggered by the stimulus package, according to market forecaster IDC. Although IBM has laid off nearly 8,000 employees so far this year, some groups are pursuing and winning new business.
The global energy and utility team, one of the company’s fastest-growing divisions, helps utilities cut costs and modernize. The typical utility company doesn’t have enough real-time info about how much electricity customers are using, so it builds in a cushion–the sort of inefficiency that IBM targets. “If the airlines operated this way, they’d have 10% more planes at the gate in case they needed them”, says Allan Schurr (pictured right), a VP in IBM global energy.
Six months ago, IBM began “adding intelligence,” as it puts it, to the grid north of Dallas. Oncor, a local utility, has been installing about 15,000 smart meters a week in homes and businesses. Instead of monthly readings performed in person, the new meters inform Oncor’s network about energy use every 15 minutes. IBM analyzes the new data to let consumers monitor consumption, like tracking phone usage online; the utility expects power usage to drop by 10%, which corresponds to a similar cut in carbon emissions.
The smart grid creates other savings, too. There’s no need for the utility to dispatch a truck for readings or to switch on power. And Oncor can offer more targeted service that wasn’t previously possible, such as identifying an outage at an individual home.
Oncor’s plan to install 3 million smart meters by 2012 is just one of about 50 IBM smart-grid projects already underway. In another promising project in Washington State, IBM software prices electricity according to supply and demand, and customers can adjust power-gorging activities, such as cooking or doing laundry, to cheaper, off-peak rates.
“There’s an urgency now like I’ve never seen, coming from all over the world,” says Schurr. “The utilities are acting all at once to change their business.”