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IBM CEO explains why the company dumped Watson Health • The Register

IBM Chairman and CEO Arvind Krishna said he fired Watson Health this year because he lacked the required vertical expertise in the health sector.

Speaking at stock market analyst Bernstein’s 38th Annual Strategic Decisions Conference, the big boss was asked to describe the background to the sale of the company’s health data and analytics assets to the provider of private equity Francisco Partners for $1 billion in January.

“The divestment from Watson Health has nothing to do with our commitment to AI and to the Watson brand,” he told the audience. The “Watson brand will be our support for AI.”

Two examples of technologies still embedded under the brand include Watson Order, which is being rolled out across a number of fast-food chain McDonald’s drive-throughs to automate order taking; and Watson AI Ops, designed to make IT operations more efficient.

“So why sell Watson Health? Krishna asked. “It’s a matter of verticals versus horizontals. We think we’re in the best position to take these technologies. We’ll still have a sectoral view, but through our consulting team. We want to work on horizontal technologies in all sectors.”

He added: “Verticals should be owned by people who really have all the expertise in the field, they have credibility in that vertical. And so I think healthcare companies, people in medical devices, they will have the credibility to realize how AI is being applied to deep health.”

Perhaps Oracle should take notice after its $28 billion-plus purchase of Cerner. Maybe not.

In 2016, IBM bought financial advisory firm Promontory, commissioning its employees to train Watson on regulatory information in a bid to automate business compliance with rules in a highly regulated industry. It also purchased other healthcare assets.

When asked if the vertical marketing strategy hadn’t worked for Big Blue and if it had struggled to gain traction, Krishna replied:

“I’m completely convinced that AI applied to healthcare, financial services, compliance, in this case regulatory compliance, is going to be a huge market. That said, it’s going to be, I think it’s a decade, maybe two decades of journey to get there. And the people who get there? I think the world has shown [they] are the ones that have massive depth in the field.

He said that to be successful in healthcare, “you’re going to need doctors and nurse practitioners to talk to Watson Health buyers. That’s not IBM’s marketing force in the field, it’s so there’s a lag. Same at Promontory, you “I’m going to need ex-regulators and accountants to go talk to people who are worried about financial compliance. So it’s a bit different from us.”

It’s also a little different from what IBM said almost six years ago, when Bridget van Kralingen, a senior veteran of IBM’s industrial platform team, said, “What Watson does to transform oncology by working with the world’s leading oncologists, we will now for regulation, risk and compliance. »

IBM still sells Watson solutions in financial services, advertising, business automation, streaming and video hosting.

When it comes to AI in the enterprise, the IBM chief said inflation, labor costs and a “changing demographic” world mean “there are fewer people qualified” and that AI and automation will therefore be “applied to more and more areas”.

Krishna added, “I don’t believe this trend will reverse in the next few decades.” ®