What Makes IBM Watson Valuable to IVK?
IBM Watson Analytics is a subscription-based program that does not
give customers purchasing or leasing options. With a variable cost of $480,000
and the natural depreciation that technology takes on at 20% per year, a straight-line
depreciation method shows the estimation that IBM Watson will give IVK a useful
life of five years.
Considering Watson’s option of
subscribing monthly, IVK would have the advantage of being able to change their
subscription based upon company needs, thus directly contributing to IVK’s
tangible benefits. These benefits include reduction in resources contributed to
time spent on documents, compliance and regulation adherences, decreased order
turnover time, increased streamlining of internal processes. Based on the
Return on Investment, IVK is projected to save $591,360 annually through these
tangible benefits. This number is configured by using the following assumptions
and cogitation:
1. The
average savings per year from the cost analysis was used to calculate yearly
gross savings over a period of 5 years.
2. Using
the depreciation method delineated above, the total yearly savings was
calculated.
3. The
taxed portion of the savings was removed from the total savings and the net
profit was found.
4. The
total return for each year was cumulatively found from the summation of the
previous returns plus initial cash flow.
A
major benefit of IVK’s utilization of the Watson system is the increased
security that the software would bring to the company. Watson works with
both financial and operational risk (Groenfeldt, 2018) and as IVK has had a
recent security incident (Austin, Nolan, & O’Donnell, 2016), the onboarding
of an Artificial Intelligence system to bolster security would bring a positive
light onto the company from a public relations standpoint. It would be
invaluable to IVK’s operations to have the ability to quickly and simply analyze
information without needing to know how to write algorithms or scripts
(IBM-Watson, 2014) and apply these to large quantities of data. Watson also allows for new data to be easily
added as the company grows and thrives, enhancing the abilities and organizational
efficiency provided by those systems already in place. Additionally, the
ability to showcase such analytics to the layperson will better enable critical
data to be sent up the chain of command (analysts to managers to C-levels) much
swifter and more transparently then before.
These abilities sum up the type of streamlining that many businesses are
working towards for end to end processes (Akella, Gargi, & Mehrotra, 2015).
https://youtu.be/dXgNEG6wh60 - this is a video for how Watson learned cybersecurity
Quantitatively,
the savings are clear to see from the ROI project which is a savings projection
of $591,360 each year alone. This still tops the automation costs of $149,910
that the analysis has projected IVK using (shown in the previous page). This is
also not taking into account the non-quantitative increase in sales and public
image to be cashed in using advanced technology in both operations and
security. By announcing the company’s partnership with IBM’s Watson for
use in the world of finance should draw attention from any issues cropping up
in the public or professional outlook of the company due to the recent crisis
(Austin, Nolan, & O’Donnell, 2016).
By using Watson, IVK can spread the role of risk management to the
entire company by putting the tools into the hands of everyone on staff
(Groenfeldt, 2018), allowing for the prevention of errors and future security
risks. This is part of the new approach to system security that IVK needs to embrace;
a holistic approach to security (Bauer, Scherf, & Tann, 2017).
Finally, Watson will provide IVK with help regarding regulations and
compliance for areas where they are applicable, such as the Gramm-Leach-Bliley
Act which regulates financial data (Gallaugher, 2018).
References
Akella, J., Gargi, N.,
& Mehrotra, T. (2015, July). Putting digital process innovation at the
center of organizational change. Retrieved from
https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/putting-digital-process-innovation-at-the-center-of-organizational-change
Austin, R. D., Nolan,
R. L., & O’Donnell, S. (2016). The adventures of an IT leader.
Boston, MA: Harvard Business Review Press.
Bauer, H., Scherf, G.,
& Tann, V. V. (2017, August). Six ways CEOs can promote cybersecurity in
the IoT age. Retrieved from
https://www.mckinsey.com/featured-insights/internet-of-things/our-insights/six-ways-ceos-can-promote-cybersecurity-in-the-iot-age?cid=other-eml-alt-mip-mck-oth-1810&hlkid=73e96499cf6a4bd78a0a30077fa53553&hctky=10583833&hdpid=a6bc2628-197a-46fd-a1ae-992f013cccd3
Gallaugher, J. (2018).
Information systems: A managers guide to harnessing technology. Boston,
MA: Flat World.
Groenfeldt, T. (2018,
June 21). IBM's Watson Takes On Risk And Regulation In Finance. Retrieved from
https://www.forbes.com/sites/tomgroenfeldt/2018/06/21/ibms-watson-takes-on-risk-and-regulation-in-finance/#6482557a3b3d
IBM-Watson. (2014,
September 16). Retrieved from
https://www.youtube.com/watch?time_continue=94&v=IV7mVOI5Gug
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