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Businesses need to operate in the face of uncertainty. And while it's difficult to predict or control external risk (ranging from disease to terrorism to war to adverse legislation to government coups) as well as internal risk (overhead costs, market fluctuations) - the right tools and solutions can make it all a bit easier to handle.
Thanks to IBM, risks of many kinds are becoming much easier to tackle and, in some cases, avoid. The company has tapped into its business insight and technological prowess to develop powerful risk management tools that are allowing businesses to better understand the impact of possible future events and to act accordingly.
A leading motorcycle manufacturer wanted to increase its cost effectiveness as well as improve its market responsiveness and brand image. Its problems were slow time-to-market, high inventory levels and high transportation costs. After examining the causes of the problems, it settled on a number of possible solutions, including Demand Planning, Supply Network Planning or a combination of both. IBM was hired to help decide which applications should be deployed and to develop a high-level roadmap. IBM researchers and consultants used their jointly-developed Business Value Modeling Tool, which includes operational as well as financial metrics and affords a complete view of the value chain for the possible solutions. The result - a strong case for change - was an analysis that transcended traditional return on investment (ROI) calculations to consider the broader impact on business performance.
A European oil company wanted to reduce the cost of seismic surveys of oil fields (both potential and extant) and improve the quality of information gathered. The company engaged IBM Research to develop an application that would help optimize the position of seismic "explosions" and receivers for seismic survey design. This optimization was important for three reasons: first, the better the data, the better the 3-D model; second, the better the algorithms, the less processing time and the better the results; and third, the fewer resources used to achieve these better results, the lower the cost. IBM's solution involved an object-oriented approach, an improved analytic model and an unstructured mesh instead of a fixed grid for interpreting results. The expected result is a two-fold increase in performance over current seismic survey methods - and, of course, less chance of searching for oil where none exists.
As sophisticated as risk assessment tools have become, much more powerful ones are coming down the pike. Eventually, with analytic tools like scorecards and dashboards, companies are likely to be able to enter a "continuous improvement" mode, where executives can see the trouble spots before the fact -- rather than after it -- as well as the reasons why those spots developed. They will also be able to see which initiatives are succeeding and which are not.
This system can be developed as a result of the strong collaboration between IBM Research, which will design the algorithms and other analytical tools, and IBM Global Business Services, which will endow the system with parameters based on its understanding of business. This sort of system is probably two or three years away, but it's definitely coming and, when it does, it could change the very nature of risk management and business decision-making.
It will be a tool that executives could use every day or once a month, whenever it's needed, for up-to-the minute evaluations that include recommendations along with the options. The company will benefit because these options and recommendations are compactly and neatly presented. In addition, the data will be collected rapidly and require fewer staff members, so people will be free to concentrate on other activities.
It's the kind of solution for which IBM, with its strengths in business and technology, is noted. For more information, contact ODIS.
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