Weather analytics: A new dimension for business

Global Leader for Technology and Data in the Business Analytics and Strategy Practice, IBM

Each of us interacts with weather every day, planning work weeks and weekends around it. But the weather forecast is more than just a three-minute segment of the evening news or a swipe of a smartphone. Indeed, weather is a significant driver of business.

When I joined Paul Walsh, The Weather Company’s vice president of weather analytics, on an episode of Weather Geeks, we discussed the emergence of weather analytics. IBM and The Weather Company are partnering together to harness the big data of weather, allowing analytics to help businesses of all kinds make insight-based decisions.

We are seeing the advent of weather analytics—and not a moment too soon. Indeed, considering that 3–4 percent of the US GDP is weather-sensitive, business decisions must be informed by weather analytics. Weather’s effects on business are real, and they cannot be ignored.

Going beyond forecasting

IBM aims to take weather data and mash it up with other data—Facebook data, pollutant data, purchase data—from a myriad of other sources to figure out how to translate weather data into business actions. Such an approach goes beyond pure forecasting to assist businesses and their customers. As Paul said, “we use weather analytics to see how weather is shaping consumer demand—what people are needing—and with the advent of high-speed technology and the ability to grab all sorts of data sources, we're now able to be really, really smart in terms of being able to interpret that and take action based on that.”

Weather data has a variety of uses. For one thing, weather analytics can help stimulate the business climate for companies—only consider how weather informs retailers’ inventory planning. For example, when a market-leading retailer correlated weather data with inventory, it discovered that when hurricanes approached, customers cleaned store shelves of strawberry Pop-Tarts, anticipating power outages and lack of refrigeration. By discovering such a correlation, the retailer was able to act—and profit.

Staying afloat in a flood of data how can organizations handle the flood of data generated by weather analytics? The Weather Company alone provides 15 billion forecasts a day, and the soup of economic, social, purchase and telematics data that drives demand analytics only complicates the situation. Indeed, clients may wonder how they can ever store—let alone access—the data they need.

But businesses need not fear the weather. Anticipating such concerns, IBM enables clients to access their data entirely through the cloud or through a protected server-based infrastructure, as Paul and I touched on during the first segment of our Weather Geeks episode.

As we continued our discussion of weather analytics, Paul and I considered how weather analytics can help protect citizens from the dangers posed by approaching weather disasters. In particular, combining weather data with social data can create opportunities for public safety. Indeed, many countries that lack a mature emergency management infrastructure use social networks, in conjunction with weather data, to protect their citizens.

Applying weather analytics across industries

Paul and I ended our Weather Geeks discussion by looking at how weather plays an integral role in business decisions across a wide range of industries, from insurance to utilities:

  • Insurance
    Insurers pay about $2 billion each year in compensation for vehicles damaged by hail. However, in a welcome turn of events, weather analytics performed with the aid of advanced Doppler radar data provided by The Weather Company can warn people about impending hailstorms, allowing homeowners to protect their property. Not only can such alerts help insurers save on claim payouts, but they also create goodwill among policyholders.
  • Healthcare
    Of the 50 million people who suffer from allergies, 88 percent are able to correlate changes in their symptoms with changes in the weather. Using weather analytics, IBM and The Weather Company can help pharmaceutical companies and healthcare providers alert patients to developing adverse weather conditions that could initiate or intensify allergic episodes, giving people a chance to use medication to pre-emptively alleviate symptoms before they occur.
  • Utilities
    Weather is the cause of 90 percent of variability in energy demand, as well as the cause of 80 percent of all outages. By using weather data in conjunction with the Internet of Things, utilities can decide where to deploy solar and wind farms, monitoring distribution infrastructure to predict where outages might occur—allowing quick, efficient restoration of service.

Something Paul said brought home to me just how much weather analytics has to offer businesses and individuals: “The old paradigm for weather was to cope and avoid. The new paradigm is to analyze and anticipate.” To learn more about how IBM and The Weather Company are partnering to harness the power of the weather for your business, attend the IBM Insight 2015 conference, scheduled for 25–29 October in Las Vegas. While you’re there, be sure to take part in a live broadcast hosted by The Weather Channel’s Weather Underground.