Well, hello everybody. Here we are in the Austin Solution Experience Lab at IBM. And this is Michael Coté with RedMonk and we've got a guest with ourselves. Would you like to introduce yourself? Sure, I'd be happy to. My name is Jeff Smith and I'm the Vice President of the Communications Sector for the IBM software business. Another big part of IBM's business overall, besides being a technology supplier, is being a supplier of knowledge through our consulting practice to mostly very industry specific kind of problem sets. So as it turns out, we actually have quite a bit of domain expertise in the energy and utility space, which we are combining with our technology platforms and foundations to help customers deliver total solutions. I'm curious when it comes to energy, what exactly is the energy industry? Sure. Anything in the energy and utilities industry will start with an overall view or categorization of the problems that these energy and utilities companies are trying to solve. So they tend to break their business into three primary domains. The generation of the utility, or in the case of electricity, we tend to call it power generation. The transmission and distribution of the utility. This is where you get into the whole notion of an intelligent utility network, or in the case of electricity, a smart grid. And then the way that the utility deals with their customers and suppliers and the whole kind of customer iteration or customer operations part of their business. One of the fundamental starting points of a framework is to be able to go out into the world and talk to the customers and partners in the context of the problems that they're trying to solve. So our framework is built around those three fundamental solution areas for energy and utilities. You know, obviously IBM has a lot that you guys are doing in this area.
2:00Right. But I wonder, I mean, you have some new initiatives coming out, and I wonder how those connect and sort of ground all of this stuff. Like how the SAFE initiative, for example, fits into all of this. So if you look at what the fundamental problems are that SAFE addresses, we started getting into this earlier. But the areas of generation and distribution and, you know, the whole notion of interaction with your customers. Right. So let's talk about the middle section because it's really where, frankly, most of the early action is. That is the notion of what we call an intelligent utility network. We purposely generalize that term as opposed to saying smart grid because smart grid tends to refer to a power grid and it limits you into this world of electricity. Right, right. But the fact is that water as a utility is critical and will increasingly require intelligent distribution and management of the flow of water. And gas is certainly one that is already that way in addition to electricity. So electricity tends to be what you think of when you say grid. Let's start with the notion of an advanced meter. Just about everybody is starting their march down the smart grid with the notion of installing an advanced or an intelligent meter. And really what this is is a meter that can gather a lot of information about what's going on in the realm that it can see and communicate in a two-way fashion with, you know, not only the items in the realm that it can see that are consuming the power, but also the utility that's controlling the power in a way that either causes intelligent things to happen in the facility or that gathers a lot of information and brings it back to the central location and then they can do something smart with it. In the beginning, the whole notion of an intelligent meter was to, you know, allow you to turn service on and off without having to, you know, do a truck roll and send, you know, a guy out there or a person out there to turn it on. Or not have to send somebody out there to read it so you can tell how much power that the company was using.
4:04Increasingly, the intelligent meter will play a central role in the actual optimization of the entire flow. And so most people are starting with this notion of an intelligent meter. If you look at this section of our framework, we point out the technologies in the IBM product portfolio that would be involved in that example. We call it advanced metering. It's sort of a mapping of the technologies you have to these scenarios that you're talking with. That's exactly right. And actually doing, the software that actually does all of this. The software that does the work. And the good news for us is that, you know, we recognize that this is something that we need to do and want to do with other key partners that provide part of the capability for that entire story. And so SAFE as a framework is not only a collection of technologies that enable this, let's say, advanced metering management, but also that an ISV can interface with or leverage to help bring that total picture to the customer. While IBM is not in the meter business, we are for sure in the business of the software which would instrument the meter, like actually, you know, perhaps a piece of software that might sit inside a meter or in some kind of a collection point in a neighborhood where lots of meters are talking to it. Right. And do an intelligent job of correlating all the information that comes from that meter, categorizing it, sending it back to central facilities, housing it, storing it, and then allowing you to do, you know, trend analysis or predictive analysis on that, and then, you know, ultimately feeding the notion of using that information for optimization. It seems like there must be some sort of original content that gets mixed into that, that specializes it down to the industry. It's absolutely correct. And so the original content, we call it industry-specific assets.
6:05Right. But the industry-specific assets that come with it can come in a couple of different forms. In some cases, it's actually part of the product portfolio, but in an extension or some kind of a feature or a capability that you can buy along with the software that is specifically targeted at an ENU problem. Or in some cases, it's an asset which we offer along with the product that either the customer themselves or perhaps some kind of an integrator that they would hire, whether it's IBM or not, would use to actually, you know, methodologies, best practices, things that they would use to implement the solution, even though it's not part of the licensed product. One of the other things that we didn't talk about, that SAFE is built on the premise that the most effective way for us to implement these intelligent utility networks in the long term is built around a set of industry standards. Standards for how the pieces interact with each other, standards for how the data is constructed or brought back and analyzed, etc. And so the reality of the world today is that there are some of these standards that exist. A lot of them aren't really being leveraged. There's a lot of legacy equipment out there and interfaces out there. But we have a vision of a set of standards that we all agree need to be leveraged. So SAFE is built on the premise of being able to get the ultimate result through the use of these standards, but, you know, kind of meet the systems where they are today and start off with interfaces to whatever kind of elements exist. In general, what's the benefit of standards to anybody? I mean, standards enable maximum flexibility and interoperability, which ultimately the most benefits the customer who gets to, you know, buy, you know, pieces of things that fit together.
8:07Therefore, they can, you know, don't feel like they have to go get everything from one supplier and, you know, sort of locked into their specific portfolio. Right. So standards enable the maximum amount of interoperability and, therefore, flexibility of technical and vendor flexibility for the customers and the partners in the ecosystem. The world of the smart grid is going to be every bit as heterogeneous as, you know, a data center in the back office of a bank. I mean, it's just the reality of the way the world works. So standards are mandatory for that and standards give you the kind of flexibility and interoperability that is going to be required to make this work. I appreciate you spending all this time to talk with us. Okay. Thanks a lot. Thanks for having me.