Why is weather data important to companies?

Science of forecasting is reaping rewards for Big Blue

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When IBM paid a reported $2bn plus for The Weather Company last year, a few eyebrows were understandably raised but a year on and the mist is starting to clear a little. Although it was always obvious that weather data lay at the heart of the decision – particularly the potential for it when you consider the developing autonomous vehicle industry – there was still a sense of what more could it do? Was there anything else in the pot? Like any acquisition, the acquired have to start justifying the price tag, a little like a star footballer being under pressure to perform and justify a large transfer fee, so it’s perhaps not surprising that the business is in launch mode again.

A gathering of existing and potential customers at IBM’s Southbank offices next to the River Thames in London in August got a glimpse of a new Operations Dashboard for Retail, a sort of weather and traffic command centre for shopkeepers. It joins the growing list of industry-focussed weather data products the business is pushing and according to EMEA MD Alex Rutter, the retail dashboard is a direct response to customer demands.

Retailers, it seems, want to understand more about how weather affects shopping habits in different regions and across different shop locations. On the surface, the idea seems a little like garnish, great to look at but not completely necessary and then you see the numbers. Rutter talks about one retailer (which incidentally was a key reason behind the company developing the dashboard) and how a store lost out on around £1m ($1.3) in potential sales because it didn’t predict the recent warm spell in London. Also, according to retailer Next plc, which released a trading statement in early August, the better than expected weather in June and July this year boosted sales by nearly seven percent.

For Rutter and The Weather Company this is fertile ground. Logistics too. The Weather Company’s Beth Padera cited a National Academies of Sciences, Engineering and Medicine statistic that 28 percent of crashes and 19 percent of fatalities are apparently weather-related. Transport also makes sense, given this stat, particularly airlines.

“We’re taking Watson into the airline industry to cut the workload of pilots in pre-flight briefings,” says Rutter, revealing a new product to be launched later this year. He wouldn’t give any more details but this is a first for the company, using Watson beyond its advertising business.

To date, The Weather Company’s main use of IBM’s ‘cognitive’ computer system is for advertising, where the ads are interactive and listen to questions to personalise results, such as in the recent Toyota Prius ads. Watson is not used in the company’s weather data analytics and probability forecasting – it has its own Deep Thunder machine learning engine for that. Crunching data and using the company’s own probability model to develop meaningful results for customers, it is, says Rutter, “pure science” although not in the putting people out of jobs automation way. There are over 160 meteorologists on the books too.

So what do the customers think? To date, the company boasts a mixed bag, from large utilities through to transport, agriculture, insurance and retail and given that weather knowledge does not come cheap - prices start at around $25,000 a year – the reasoning behind IBM’s acquisition becomes more evident. But is it really a must-have?

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