Growth	  Opportuni2es	  for	  	  IBM	  Watson	  Entrance	  to	  Mining	  Industry	                                        ...
Agenda	               Methodology	          Overview	                                                               (Inten...
Execu2ve	  Summary	  v  Methodology	       Ø  Backward	  hypothesis	  driven	  problem	  solving	  frame	  in	  selecAng...
 Industry	  Selec2on	  and	  Evalua2on	  overview	                                                     High	  Margin	     ...
Economics	  analysis	  of	  mining	  industry:	  Levels	  of	  Market	               	            The	  U.S	              ...
Mining	  industry	  economics	  analysis:	  The	  U.S	  market	       Leading	  Mining	  country	       Provide	  Variety	...
Mining	  industry	  products	  margin	  analysis:	  High	  margin	          Profit	  margins	  for	  the	  major	          ...
Mining	  industry	  products	  analysis:	  Large	  volume	  output	  of	  cooper	   Ø  General	  trend:	  both	  output	 ...
Mining	  industry	  products	  analysis	  –	  Silver	  sector:	  Up-­‐going	  price	  and	  greater	  poten2al	           ...
Mining	  products	  analysis	  -­‐	  gold:	  The	  increasing	         output	  and	  upward-­‐trend	  pricing	  	  Ø  4t...
Mining	  industry	  economics	  analysis:	  The	  North	  America	  market	         Two	  largest	  mining	  naAons:	  the...
The	  North	  America	  Market:	  	  Large	  industry	  size	  by	  revenue	  and	  stable	  growth	  in	  oil	  and	  gas...
The	  North	  America	  Market	  in	  oil	  and	  gas	  sector:	  Promising	  market	  poten2al	  by	  market	  measuremen...
The	  North	  America	  market:	  Large	  poten2al	  in	  petroleum	  sector	  due	  to	  rich	  reserve	       Source:	  ...
Mining	  industry	  economics	  analysis:	  The	  global	  market	         Numerous	  opportuniAes	  	         World	  con...
Global	  market	  expansion:	  Rich	  opportuni2es	  in	  Australia	  due	  to	  its	  mining	  industry	  strength	  and	...
Global	  market	  expansion:	  Rich	  opportuni2es	  in	     South	  Africa	  due	  to	  its	  mining	  industry	  strengt...
Put	  Watson	  to	  work:	  Filling	  up	  industry	  needs	  with	  IBM	  capability	  and	  capacity	           Watson—I...
Put	  Watson	  to	  work:	  Suppor2ng	  high	  volume	  calcula2on	  in	  mining	  industry	   	  	  EX1	  	  	  	  	  	  ...
Programma2c	  compu2ng:	  Time	  saving	  and	  resource	  saving	                    Watson	  Programma2c	  Compu2ng:	   ...
Strong	  informa2on	  support	  to	  fit	  mining	  industry’s	  need	  Mining:	  Data	  Intensive	  Industry	  Watson:	  	...
Op2mizing	  execu2on	  plan	  solves	  the	  industry	  concern	  of	  several	  aspects	  :Watson’s	  learning	  system	 ...
Underperforming	  execu2on	  plan	  can	  severely	  handicap	  the	  mining	  process	          Es2mated	  Mine	  Cleanup...
IBM	  Watson’s	  capabili2es	  to	  generate	  op2mal	  execu2ve	  plan	  corresponding	  to	  poten2al	  concerns	       ...
Put	  Watson	  to	  work:	  Instant	  communica2on	  regarding	  prompt	  interac2on	  and	  dynamic	  predic2on	     Prom...
Sorts	  of	  human	  input	  in	  mining	  process	  and	  possible	  errors	  genera2on	          •  Engineer            ...
Prompt	  interac2on:	  IBM	  Watson	  provides	  quick	  response	  and	  instant	  solu2ons	  to	  constant	  change	    ...
IBM	  Watson’s	  capability	  comparing	  to	  human	  capability:	  Significantly	  lowering	  error	  rates	             ...
Example	  of	  oil	  exploita2on	  in	  explaining	  how	  IBM	  Watson	  can	  help	  to	  lower	  error	  and	  leverage...
GO-­‐TO-­‐MARKET:	  Strategic	  Framework	  	   Leverage	  IBM	  Watson’s	  Advantages	     Promising	     Emerging	      ...
Define	  the	  Market	  and	  Target	  the	  Segment	  The	  key	  players	  in	  private	  and	  public	  sector	  Develop...
IBM’s	  Breaking	  Into	  Mining	  Industry	  	    A	  Brand	  New	  Product	  to	  A	  New	  Market	                     ...
Key	  steps	  in	  approaching	  poten2al	  clients	  General	  Marke2ng	  &	  Highly	  Targeted	  Companies	  General	  M...
Key	  steps	  in	  approaching	  poten2al	  clients	  Professional	  Conference	                                          ...
Execu2on	  –	  Conference	  Details	  Agenda	  Ø  PresentaAon	   about	   Watson’s	      ability	  –	  Big	  Data	  Suppo...
Challenge	  and	  Assump2ons	  	  based	  on	  the	  current	  situa2on	   System	  integraAon	         Mapping	  out	  th...
 Appendix	  	  1.	  United	  States	  Geological	  Survey	  Data	  Series	  140	  2.	  Yahoo	  finance	  3.	  United	  Stat...
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IBM Watson Market Entry Consulting

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IBM Watson Market Entry Consulting

  1. 1. Growth  Opportuni2es  for    IBM  Watson  Entrance  to  Mining  Industry   Team  5   May  9,  2012   1  
  2. 2. Agenda   Methodology   Overview   (Intensive  Data   Economic   Support  &   Technology  Fit   Analysis   Instant   Communica2on)   Define  the   Break  Into  the   Target   industry     2  
  3. 3. Execu2ve  Summary  v  Methodology   Ø  Backward  hypothesis  driven  problem  solving  frame  in  selecAng  and   evaluaAng  industry  based  on  IBM  Watson’s  disAncAve  ways    v  Industry  EvaluaAon  &  SelecAng   Ø  Mining  industry  and  demonstrate  it  regarding:     Ø  Industry  economics  analysis  -­‐  the  industry  is  large  by  revenue  and   with  large  margin   Ø  Technology  fit  -­‐  demonstraAng  Watson’s  value  differenAaAon:  big   data,  learning  and  logic  ability,  hypothesis  tesAng  and  generaAng   and  understand  human  speech    v   Go-­‐to-­‐Market  Strategy   Ø  How  to  define  the  target  segment  within  the  chosen  industry  and   corresponding  markeAng  mix  to  break  into  the  industry   3  
  4. 4.  Industry  Selec2on  and  Evalua2on  overview   High  Margin   Industry   Economics   Market  space  for  IBM  Watson   Size  of  industry   by  Revenue   High  volume   calculaAon   InformaAon  Mining  Industry   Intensive  Data   support   •  Technology  fit  of  IBM  Watson   OpAmize  plan     •  Value  differenAaAon   Prompt   interacAon   Instant   CommunicaAon   Dynamic   predicAon   4  
  5. 5. Economics  analysis  of  mining  industry:  Levels  of  Market     The  U.S   •  Purchasing     •  Overview   North  America   power   •  Sector  analysis   •  PotenAal   •  Profit  Margin   market  space       Global   5  
  6. 6. Mining  industry  economics  analysis:  The  U.S  market   Leading  Mining  country   Provide  Variety  of  mining  commodiAes   High  profit  margin  for  mining  commodiAes   6  
  7. 7. Mining  industry  products  margin  analysis:  High  margin   Profit  margins  for  the  major   Comparison  of  the  NPM  of  mining  industry   mining  industry  product   products  with  industrial  average     Net  Profit     45  Industry   Margin   Ranking   40  Average  of  216     35  industries     7.8   30  Silver     41   3   25  Industrial  Metals  &     20  Minerals   26   7   15     10  Copper     25.1   8   5  Gold     24   9   0    Oil  &  Gas     13.6   34    Non-­‐metalic  mineral     5.9   121       Source:  Yahoo  finance   7  
  8. 8. Mining  industry  products  analysis:  Large  volume  output  of  cooper   Ø  General  trend:  both  output  and  price  are   on  the  rise   Ø  Equally  necessary  for  industrial  and   consumer  use     Historic  price  on  cooper  on  LME   8    Source:  United  States  Geological  Survey  Data  Series  140  
  9. 9. Mining  industry  products  analysis  –  Silver  sector:  Up-­‐going  price  and  greater  poten2al   U.S  Silver  Produc2on  from  1987-­‐2011   80     70  Ø  Large  consumpAon   60  Ø  Pricing  advantage  due  to  demand   50  Ø  Mining  sites  exists  in  19  states     40   ProducAon   30   20   10   0   Silver  price  index  from  2008  -­‐  2012   Year   1987   1989   1991   1993   1995   1997   1999   2001   2003   2005   2007  Source:  Bullion  Price  Silver,  A  graph  of  the  History  of  Copper  prices  on  the  LME,  from  2003-­‐2008.  Prices  are  in  US  Dollars  per  metric  tonne.   9  
  10. 10. Mining  products  analysis  -­‐  gold:  The  increasing   output  and  upward-­‐trend  pricing    Ø  4th  largest  gold  mining  naAon  Ø  Net  exporter  of  gold  Ø  Mining  sites  exists  in  23  states   Output  of  gold   mines  in  the  U.S   1840-­‐2010    Historic  gold  price  index  :  2008-­‐2011       Source:  Bullion  Price  Gold,  US  Census  Bureau  (1960)  Historical  Sta,s,cs  of  the  United  States,  p.371.   10  
  11. 11. Mining  industry  economics  analysis:  The  North  America  market   Two  largest  mining  naAons:  the  U.S  and  Canada   VarieAes  of  ongoing  projects   High  employment  industry   11  
  12. 12. The  North  America  Market:    Large  industry  size  by  revenue  and  stable  growth  in  oil  and  gas  sector   Source:  Frost  &  Sullivan     12  
  13. 13. The  North  America  Market  in  oil  and  gas  sector:  Promising  market  poten2al  by  market  measurements   Measurement  item   Measurement   Trend   Market  age   Mature   Revenue   $2.17  billion   Increasing   PotenAal   $2.84  billion   Increasing   Revenues(Maximum   future  market  size)   Base  Year  growth   3.3%   Increasing   rate  2005   Compound  annual   3.3%   Increasing   growth  rate   Source:  Frost  &  Sullivan   13    
  14. 14. The  North  America  market:  Large  poten2al  in  petroleum  sector  due  to  rich  reserve   Source:  CIA  –  The  World  Factbook   14  
  15. 15. Mining  industry  economics  analysis:  The  global  market   Numerous  opportuniAes     World  constant  growth  in  demand  of  mining  products     English  is  widely  spoken  or  as  the  official  language   15  
  16. 16. Global  market  expansion:  Rich  opportuni2es  in  Australia  due  to  its  mining  industry  strength  and  poten2al   Ø  3rd  largest  supplier  of  iron  ore   Opportuni2es  and  facts   Ø  2nd  largest  producer  in  Nickel   Ø  Mining  as  prime  industry   Ø  2nd  largest  gold  producer   Ø  Contributor  to  domesAc   Ø  Responsible  of  11%  of  world’s   economics   producAon  of  Uranium   Ø  Rich  resources  of  metal  and   Ø  1st  largest  producer  of  opal   non-­‐metallic  minerals   Ø  Strong  companies  and  big   players.   Ø  Mining  acAviAes  in  all  of  its   states.   Ø  Technology  advanced:  Open  to   high  technology  products  and   resoluAon.   Ore  and  minerals  exports  in  Australia:     1960-­‐2020E   Source:  Australian  Bureau  of  StaAsAcs   16  
  17. 17. Global  market  expansion:  Rich  opportuni2es  in   South  Africa  due  to  its  mining  industry  strengths   and  poten2al  South  Africa   Ø  Large  volume    and   profitable  industry   Ø  Revenue  of  gold  supplies   the  procurement  of  high-­‐ tech  and  expensive   equipment   Ø  Driver  of  economics,  18%   of  GDP   Ø  Mining  acAviAes  in  all  of   its  states.  Ø  3rd  largest  exporter  of  coal  Ø  2nd  largest  producer  of  gold,  ilmenite,   palladium,  ruAle  and  zirconium.  Ø  Largest  producer  of  chrome,   manganese,  plaAnum,  vanadium  and   vermiculite.   Source:  Department  of  Minerals  and  Energy   17  
  18. 18. Put  Watson  to  work:  Filling  up  industry  needs  with  IBM  capability  and  capacity   Watson—Industry   ProgrammaAc  compuAng—High  volume  calculaAon   Large  informaAon  storage—Strong  informaAon  support   Learning  system—OpAmal  execuAve  plan   18  
  19. 19. Put  Watson  to  work:  Suppor2ng  high  volume  calcula2on  in  mining  industry      EX1                            Wisconsin  Nonmetallic             Watson   Emission   mining  agreements:     calculaAon   programmaAc   Mining  operators  to  determine  an   compuAng     emission   calculaAon   scheme   that   could   be   applied   consistently   Filling  up  industry  needs  with  IBM  capability   throughout  the  State  of  Wisconsin   and  capacity   EX2   Important  indicators   Indicator   in  mining  industry calculaAon   Loss  rate   The  ore   deposit   grade   Deposit   Ore   rate  of   recovery   Watson   diluAon   Mining   rate   programmaAc   Industry   compuAng     19  
  20. 20. Programma2c  compu2ng:  Time  saving  and  resource  saving   Watson  Programma2c  Compu2ng:   Watson  ushers  in  a  new  era  of  compu2ng  –  from   tabula2on  and  programming  to  reasoning  systems   Precise  and  accurate  compu2ng  results   Need:   Need:   The  comprehensive   The  numerical  simulaAon   calculaAon  process  takes   needs  advanced  and   long  Ame  and  high   repeated  calculaAon  to   intensive  labor  costs.   generate  the  opAmal     exploraAon  method.     20  
  21. 21. Strong  informa2on  support  to  fit  mining  industry’s  need  Mining:  Data  Intensive  Industry  Watson:     physical  properAes  Ø  UAlize   historical   data   to   compare   analysis     with   the   current   mining   situaAon   to  ensure  the  effecAve  condiAon    Ø  Physical   properAes   analysis   like   density   of   water,   combusAon   Watson  quick  response(  200M   pages  of  informa2on  in  3   speed,  melAng  point  Ø  Analyze   past   similar   cases   and   seconds)  and  strong  informa2on   support   forecast  the  opAmal  plan  Ø  Hotspot  locaAon  informaAon   Accurate  and  quick  informa2on   support   past  similar  cases     hotspot  locaAon   21  
  22. 22. Op2mizing  execu2on  plan  solves  the  industry  concern  of  several  aspects  :Watson’s  learning  system  can  op2mize  the  decision   Save  natural  sources   Watson’s   learning   Accident  rate   system  can   Labor  costs opAmize   the  decision Cleanup  costs 22  
  23. 23. Underperforming  execu2on  plan  can  severely  handicap  the  mining  process   Es2mated  Mine  Cleanup  Costs   Average  Cleanup  Cost  Per   Category   Number  of  Sites   Site(thousands$)   Landscape   Disturbance   231,900   4.4  Safety  Hazard   116,300   19.5  Surface  Water  ContaminaAon   14,400   1,000-­‐3,000   Groundwater  ContaminaAon   500   7,500-­‐12,500   23  
  24. 24. IBM  Watson’s  capabili2es  to  generate  op2mal  execu2ve  plan  corresponding  to  poten2al  concerns   Avoid   Decrease   over-­‐ accident   exploraAon   rate     Save   Watson  Learning  Systems:   Save  labor   natural   -­‐Input  technological  models     costs   source     -­‐Leverages  deep  content   analysis   -­‐Evidence  based  reasoning  to   opAmize  decisions   -­‐Reduce  labor  costs   -­‐Hypothesis  generaAng/test   24  
  25. 25. Put  Watson  to  work:  Instant  communica2on  regarding  prompt  interac2on  and  dynamic  predic2on   Prompt  Interac2on Dynamic  Predic2on •  Mining  exploraAon  and   •  Any  Any  mistake    or  error  of   extracAon  are    dynamic   judgment  throughout    the   processes  that  require  human   extracAon  may  lead  to   supervision  and  instant   devastaAng  consequence soluAon •  Watson’s  higher  accuracy  of   •  Watson’s    QA  system  provides   predicAon  driven  by   in-­‐Ame  soluAon  to  increase   hypothesis  will  largely  reduce   efficiency error  rate  and  mining  accident 25  
  26. 26. Sorts  of  human  input  in  mining  process  and  possible  errors  genera2on   •  Engineer •  Mineworkers •  Maintenance   •  Geologist •  Specialist Personnel •  Environmentalist •  Equipment   Operator •  Supervisor 15 An  average  of  over    thousands  of  mineworkers  die   from  mining  accidents  in  the  world  each  year. 26  
  27. 27. Prompt  interac2on:  IBM  Watson  provides  quick  response  and  instant  solu2ons  to  constant  change   •  Process  500GB  data   Higher  efficiency  and   Quick   in  1  second  and   enable  supervisors  to   response provide  soluAon  in   complete  mulAple   3  seconds tasks SoluAon   •  Instant  soluAon  to   PrevenAng  potenAal   to   emergencies   mining  accident  and   constant   happened  during   ensure  the  safety  of   change extracAon mining  staff Ø The  process  of  extracAng  crude  oil  and  natural  gas  is  dynamic  due  to  their   properAes,  which  needs  conAnuous  improvement.   Ø   Some  properAes  of  oil  &  gas  can  only  be  learned  aoer  the  drilling  of  oil  &  gas   well.   27  
  28. 28. IBM  Watson’s  capability  comparing  to  human  capability:  Significantly  lowering  error  rates   Human  limitaAons  in  capability  and  capacity  /  human  errors     Human  has  forgepng  curve   Human’s  judgment  is   Comparison  of  alternaAve   and  limited  knowledge   influenced  by  external   opAons  is  Ame-­‐consuming reserve environment  condiAon IBM’s  capability  and  capacity:  Over  100    technologies  are  adapted  to  process   human  language  and  hypothesis   Higher  accuracy 28  
  29. 29. Example  of  oil  exploita2on  in  explaining  how  IBM  Watson  can  help  to  lower  error  and  leverage  produc2on.   ExploraAon EvaluaAon ExtracAon • Sedimentary  condiAon   • Reservoir  simulaAon   • Oil  and  gas  well  drilling   analysis  (gravity  survey,   analysis  based  on   and  pumping  unit   magneAc  survey,  etc)   history  data  and  seismic   installaAon done  by  geologist reflecAon  survey Create  substructure   Detect  and  Determine  the   profile  and  idenAfy   Oil  drilling extent  of  oil  deposit   opAmal  extracAon  method Instant   Data   Instant   Communica2on Intensive Communica2on 29  
  30. 30. GO-­‐TO-­‐MARKET:  Strategic  Framework     Leverage  IBM  Watson’s  Advantages   Promising   Emerging   Find  The  Target  Segment   Technology   High  Profit   Quick   SoluAon   Capability   Margin   Large  Data  Sets   Win-­‐Win  SituaAon   Prone  to   Increase   Reduce   Improve   Human  Error   Intensive   profit   cost   quality   Data   Long  Time   Support   Horizon  Projects   30  
  31. 31. Define  the  Market  and  Target  the  Segment  The  key  players  in  private  and  public  sector  Develop  strategic  partnership  with  major  players   Petroleum   Private   Mineral   Sector   New   Mining   Energy  Industry   USGS   Public   EIA   Sector   CEQ   31  
  32. 32. IBM’s  Breaking  Into  Mining  Industry     A  Brand  New  Product  to  A  New  Market   Exis2ng  Products   New  Products  ExisAng  Market   Market  PenetraAon   Product  Development   Watson’s  mulAple  funcAons/learning  curve  New  Markets   Market  Development   DiversificaAon   Customize  product  for  industry  Finding  New  Business  Opportuni7es-­‐  For  IBM  Watson    Ø  Development  market  among  current  segments-­‐recruit  more  clients  in  finance  and   healthcare  industry  Ø  Find  opportuniAes  with  exisAng  customer:  increase  derived  service  for  customers   like  CiA  Ø  Acquire  New  Customers:  launch  in  mining  industry  Ø  Develop  Research  Program:  explore  potenAal  markets     32  
  33. 33. Key  steps  in  approaching  poten2al  clients  General  Marke2ng  &  Highly  Targeted  Companies  General  Marke7ng  to  the  Niche  Segment  Ø  Mining  Trade  Show  and  exhibiAons  Ø  Mining  PublicaAons  Ø  Professional  Conference    Ø  Technology  Seminar  Break  Into  the  Industry     Influencer     Technical  professionals     Purchaser     AdministraAon       Decision  Maker-­‐CEO     IniAator     Technical  professionals     End  User-­‐Engineers/Workers     33  
  34. 34. Key  steps  in  approaching  poten2al  clients  Professional  Conference   The  companies  who  come  to   Invite  selected   Customers  who   the  conference  are  the  ones   potenAal   Deal   are  interested   Customers   in  IBM  Watson   who  are  interested  in   Watson.  This  is  more  cost-­‐ effecAve  for  IBM.  Execu7on  Plan  Ø  Invite  the  technical  experts  and  senior  management  who  are  likely  the  decision-­‐ makers  Ø  Illustrate  Watson’s  funcAons  and  elaborate  on  its  customizability.  Ø  Explain  Watson’s  ability  to  increase  revenues  and  facilitate  higher  quality  mining   projects  Ø  Appeal  to  the  technical  experts  by  demonstraAng  the  convenience  offered  by   Watson’s  adopAon     34  
  35. 35. Execu2on  –  Conference  Details  Agenda  Ø  PresentaAon   about   Watson’s   ability  –  Big  Data  Support  &  Instant   CommunicaAon  Ø  Emphasize   how   Watson   can   facilitate  the  experts’  work  but  not   replace  them  –  will  make  their  life   easier  Ø    Q   &   A   SecAon:   The   technical   experts   and   senior   management   will   be   able   to   ask   Watson   Aim:   quesAons   parAcular   about   mining   Ø  Create  awareness     and  interact  with  Watson   Ø  Arract  Interest  and  build  potenAal  client  Ø  Discussion   database  Ø  Happy  Hour  &  Dinner   Ø  Build  strategic  partnership  with  major  players   35  
  36. 36. Challenge  and  Assump2ons    based  on  the  current  situa2on   System  integraAon   Mapping  out  the  key  skills  in  integraAon  of  IBM  Watson  and  current   mining  equipment  and  subsystems   Not  every  key  players  has  the  capability  of  specific  system  integraAon   Copyright  issues   Need  to  negoAate  with  the  copyright  holder  about  the  pricing.   Time  consuming  in  negoAaAon  and  integraAon.   36  
  37. 37.  Appendix    1.  United  States  Geological  Survey  Data  Series  140  2.  Yahoo  finance  3.  United  States  Geological  Survey  Data  Series  140  4.  Bullion  Price  Silver,  A  graph  of  the  History  of  Copper  prices  on  the  LME,  from  2003  2008.  Prices  are  in  US  Dollars  per  metric  tonne.  5.   Bullion   Price   Gold,   US   Census   Bureau   (1960)   Historical   Sta,s,cs   of   the   United  States,  p.371  6.  Frost  &  Sullivan  7.  CIA  –  The  World  Factbook  8.  Australian  Bureau  of  Sta,s,cs  9.  Department  of  Minerals  and  Energy  10.  Cleaning  up  mining  waste  by  Stuart  buck  and  avidgerard  11.  Prices,  Labor  Costs,  and  Profits  in  the  Australian  Mining  Industry:  12.  2001  through  2006    By  Jim  Stanford  Ph.D.  13.  MSHAreport         37      
  38. 38. 38  

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