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NRF Keynote: IBM CEO Ginni Rometty Talks Big Data

It was all about big data at the National Retail Federation’s star-spangled afternoon keynote session, “A New Era of Value: A Conversation with Ginni Rometty,” which had the IBM chairman, president and CEO and moderator Terry Lundgren, Macy’s chairman president and CEO walking on stage to a pumping instrumental version of Daft Punk’s, “Get Lucky.”

The talk was centered on how value is shifting in business due in large part to “the explosion of data,” and that data is fast becoming “the world’s vast new natural resource.”

Before Lundgren introduced Rometty, he said, “Big data is projected to grow 800 percent in the next five years.” He added that retailers will need to–as Rometty has with IBM–change their company focus to be on the customer and everything about them.

From a technology executive to a room full of retailers Rometty opened, saying, “This is about the intersection of industries. Yours and mine.”

Rometty maintained the momentum and excitement of the session’s opening as she continued her talk, and told the audience very plainly that big data is going to be the basis of competitive advantage in the very near future.

Cloud-based storage was the next big point Rometty stressed saying that, for retailers, using the cloud is less about the technology and more about business models.

The third major message Rometty delivered to the audience, who packed the Jacob Javitz Convention Center’s North Hall where George W. Bush gave the morning keynote, was that cognitive technology systems, or systems that can learn over time, will radically change the retail industry.

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There’s a tendency to over-hype buzzwords in the retail industry, but Rometty said big data is under-hyped. “It’s going to be our generation’s next natural resource,” she said.

Big data is so relevant now because there’s not just one type of technology changing; there are a number of technology shifts and innovations happening now, and they are all converging at once, Rometty said. There are shifts in mobile interactions, data advancements and social interactions. “It’s a new era,” she said.

Rometty added that 2.5 billion gigabytes of data are created each day and 80 percent of all the world’s data has been created in just the last two years.

There are already companies in China using technology that knows what a customer buys in a retail store and who are using that data to then suggest a complete outfit, she said.

Kohl’s has been working on a new data-driven customer experience where shoppers can opt in for participation as they enter a store and if, for example, they linger in the shoe department, the store might send an instant coupon to their mobile device to be used on a pair of shoes.

“The intelligence of online shopping is coming together with the tactile experience of shopping in stores,” Rometty said.

Of course, big data will also impact the supply chain. Rometty gave Walmart’s Retail Link as an example of how this is already happening. When the revolutionary Internet-based tool that allows both suppliers and employees to access point of sale and other data hit the market, it was largely based on structured data. It did not consider the relevant social or behavioral type data that Retail Link 2.0 now does.

There are two common behaviors that the best performers in the world have, Rometty said. One, they use multiple structures of data like point of sale, behavioral and social media data, for example. Two, they use a range of analytics including descriptive, predictive and prescriptive, she said.

MapQuest, for example, incorporates descriptive data when a user enters address information seeking directions, predictive data when it comes up with a route and estimated time to get from one point to the next, and prescriptive when on that route the user is able to get route updates based on their behaviors in getting to a destination, Rometty explained.

When it comes to the cloud, the biggest thing for retailers to consider will be the type of cloud their company is building, where and how the data will be stored and whether they can audit and manage the data as thought it were their own.

Analysts say 50 percent of companies will be using clouds in the next two years, Rometty said.

As Rometty got to the notion of cognitive data, she said, “We’re at the break of a new era of computing. We’re going to start seeing services that learn.”

And they won’t “learn” because they’ve been programmed a certain way, the systems are taught, she said. They learn by experience and as different things happen, different patterns are detected, the cognitive system gets better and more apt to understand with time. It’s an era of man-machine collaboration, Rometty said.

One such example is Fluid XPS (Expert Personal Shopper) powered by IBM Watson, the company’s cognitive supercomputer system capable of answering questions posed in natural language. IBM will partner with North Face to bring the personal shopper feature to its e-commerce business this year.

Here’s how it works: The customer visits the North Face website and types into the system something like, “I’m going on a hiking trip to Patagonia- what kind of gear will I need?” The website will then show a set of relevant product categories, backpacks, hiking jackets and the like. Once the shopper selects a category, the program considers weather conditions in Patagonia, for example, before narrowing down the selection. One of the options the customer likes includes ABS technology as a feature. The shopper could then ask the program, “What is ABS technology?” and get an answer. Once the shopper is settled on an item to purchase, they could type in, “How is it rated?” and get data from multiple sites where the product is reviewed plus reviews from North Face itself.

With that kind of tailored experience, brands can build trust, Rometty said.

Lundgren rejoined Rometty on stage for a short panel discussion portion and the audience was able to pose questions.

An audience member asked whether big data was just for big retailers. Rometty responded saying it’s not an issue of size. “The value of this info is going to fall to those who refine it,” she said, adding that, “The more nimble are going to have an easier time.”

With so much talk about big data, it would have been impossible not to mention the holiday season data breach. Lundgren asked Rometty what to make of it and what retailers can do to prevent all this data from being exposed. “These aren’t going to be technology decisions,” Rometty said. “They’re policy decisions you [retailers] will have to make.” Retailers will have to put plans in place to manage data securely and establish guidelines for how a company’s own employees interact with that data too.

In the future, we may see a new role in the form a sort of chief data officer that will be responsible for managing how the company uses all this data and keeps it safe, Rometty said.

The time for big data is now and retailers won’t be able to remain competitive if they don’t know how to use and implement it well. But it’s not a “leap frog” process, Rometty said. Retailers will get better at this with time.

“This is not just a new era of technology, it’s going to be a new era of commerce.”