IBM Smarter Planet Strategy Florence D Hudson Energy

IBM Smarter Planet Strategy Florence D. Hudson Energy & Environment Executive Cloud Computing Strategist IBM Corporate Strategy A Smarter Planet © Copyright IBM Corporation 2010

Building a Smarter Planet Agenda Personal Career Path IBM Smarter Planet Solutions IBM Energy

Building a Smarter Planet Florence Di. Stefano Hudson – Personal Career Path Education: - Elementary and Secondary school on Long Island, New York - Princeton University, BSE in Mechanical and Aerospace Engineering - Executive education at Harvard Business School and Columbia University School of Business Summer Internships at Grumman and NASA Jet Propulsion Lab Hewlett Packard in California 1980 -1981 IBM since 1981 – living in New York State with global travel to 20 countries 3 - Sales, marketing, development, channels, strategy, human resources - Executive since 1999 in strategy and marketing - Energy and Environment Executive 2008 -2010, and Cloud Computing Strategist 2010 - SWE Executive on Loan 2005 -2006, SWE Board of Directors 2006, SWE Board of Trustees 2010 © 2010 IBM Corporation

Building a Smarter Planet A Smarter Planet: The Next Leadership Agenda Prime areas to consider for improvement How much energy we waste: 6% to 10% lost because grids are not smart How gridlocked transportation in cities is: $78 B annual loss in U. S. in wasted gas and time How our water supply is drying up: 6 fold increase in demand at twice rate of population growth How antiquated our healthcare is: no linkage from diagnosis to providers to insurers to employers Inefficiency of our supply chains: $40 B annual loss in CPG & Retail industries, 3. 5% of sales Crisis in financial markets: inability to track risk has undermined confidence “The digital and physical infrastructures of the world are converging. We must make the mundane processes of business, government and life sustainable. ” Source: Sam Palmisano remarks to the Council on Foreign Relations, New York City, November 6, 2008 4 © 2010 IBM Corporation

Building a Smarter Planet Many of IBM’s smarter planet initiatives are interconnected – www. ibm. com/smarterplanet 5 Water Buildings Whether too much or not enough, the world needs a smarter way to think about water Given their environmental impact, it's time we designed from the earth up Cities Oil Safe neighborhoods. Quality schools. Affordable housing. Traffic that flows. It's all possible. Get to the "first" oil faster. Increase recovery rates. Sense and solve problems before they start. Intelligence Traffic Smart thinking about data analysis How we get from point A today to point B tomorrow Energy Work Products Public Safety Oil Buildings Banking Government Cities Water Retail Traffic Intelligence Rail Healthcare Food Infrastructure Telecom © 2010 IBM Corporation

Building a Smarter Planet Energy & Environment Focus The Bad News: IT accounts for 2% of global CO 2 emissions The Good News: IT can significantly contribute to control and reduce the 98% of CO 2 emissions caused by other activities and industries “… you can’t make a product greener, whether it’s a car, a refrigerator or a traffic system, without making it smarter — smarter materials, smarter software or smarter design. ” - Thomas L. Friedman Sources: Gartner, Green IT, October 12, 2007; “The Green Road Less Traveled” by Thomas L. Friedman, The New York Times, July 15, 2007, http: //select. nytimes. com/2007/07/15/opinion/15 friedman. html? scp=2&sq=thomas%20 l%20 friedman%20 july%202007%20 greener%20 smarter&st=cse 6 © 2010 IBM Corporation

Building a Smarter Planet Tackling climate change is good for the climate and economy Information and Communications Technology (ICT) can significantly improve energy efficiency and reduce GHG emissions, driving potentially $1 Trillion in energy savings per year by 2020 and 7. 8 Gigatons CO 2 e abatement Smart Logistics: $442 B/year Smart Buildings: $341 B/year Smart Industrial Automation: $107 B/year Smart Grids: $125 B/year 7 Source: The Climate Group, “Smart 2020: Enabling the Low Carbon Economy in the Information Age. ” 2008 © 2010 IBM Corporation

Building a Smarter Planet What does it mean to become Smarter? Measuring, Monitoring, Modeling and Managing Virtually all things are becoming INTELLIGENT 8 Feedback to user and data source; Incentives and actions to change behavior Our world is becoming INTERCONNECTED Sensing Metering Real Time Data Integration Real Time + Historical Data Modeling + Analytics Feedback to user and data source; Incentives and actions to change behavior Our world is becoming INSTRUMENTED Data collection Data Integration Comparison of historical data, with newly collected data Data modeling and analytics to create insights to optimize smarter decisions Visualization + Decisions Source: IBM Corporate Strategy © 2010 IBM Corporation

Building a Smarter Planet IBM innovations address energy & environment challenges Smarter IT Infrastructure IT and data center facilities energy Mobility Services Reduce traffic and Green IT and Data efficiency Centers Monitoring & verification of efficiency pollution goals Retain and attract Energy Efficient, Virtualized, Dynamic talent IT/DC Cut facility Cloud computing costs/impact Smart Grid Smarter Transportation IBM and client case studies: 40% to Reduce energy usage Systems Reduce traffic 80% energy use reduction, up to 85% Improve grid management, reduce congestion less floor space Reduce CO 2 emissions outages Increase mass transit usage U. S. case study: 10% energy use reduction, up to 50% reduced load on Improve environment Smarter Water Management electric grid Stockholm case study: Reduced Flood avoidance traffic congestion 25%, Carbon Reduce water usage emissions 15% Sustainable Business Solutions & IBM case study: 27% reduced water usage, with Services Strategy 30% increase in manufacturing output, saving $M Corporate Social Responsibility in energy and water cost Green Sigma TM Alternative Energy Research Green SNOW - Supply Chain IT to ET: Applying IT cooling technologies to Network Optimization Workbench concentrator PV Smarter Cities IBM know-how in thin films, advanced photovoltaic Smarter Buildings materials Cap and Trade Systems Nanomembranes for desalination 9 © 2010 IBM Corporation

Building a Smarter Planet Energy, Environment and Sustainability Initiatives help Build a Smarter Planet – Delivering Innovations that matter to business, government, people and the planet • Energy Efficient Technologies and Services • Intelligent Transportation Systems • Intelligent Utility Networks • Advanced Water Management • Sustainable Solutions & Services – Green Supply Chain – Green SNOW – Green Sigma TM – Smarter Buildings – Cap and Trade Systems – Smarter Cities • Alternative Energy Research © 2010 IBM Corporation

Building a Smarter Planet Energy Efficient Technologies and Services Energy efficient solutions: Green IT and Green Datacenters Servers and storage continually more energy efficient New and retrofit equipment Rear Door Heat Exchanger Measurement & Management Technology Monitoring & verification of efficiency goals through Energy Efficiency Certificates Virtualization, consolidation Benefits and studies: 40% to 80% energy use reduction © 2010 IBM Corporation

IBM Cloud Computing “Cloud” is a new consumption and delivery model inspired by consumer Internet services. Cloud enables: Self-service Sourcing options Economies-of-scale Ecosystems creating economic value Cloud represents: The industrialization of delivery for IT supported services Multiple types of clouds will co-exist: Private, Public and Hybrid Workload and / or Programming Model Specific 12 © 2010 IBM Corporation

IBM Cloud Computing IBM uses cloud computing to meet internal and external challenges and opportunities, saving millions of dollars Analytics Blue Insight: Smart Business Analytics Cloud 109, 000 IBM users growing to 200, 000 Collaboration Development and Test Lotus. Live Handling 75% of all IBM web conferencing CIO Dev/Test Cloud • Build time for dev/ test environment from 1 wk to 1 hr • Clients reduce labor costs 3050% Desktop Workplace Cloud • Estimated savings up to 30% • 1200 China Dev Lab users plus Call Centers Storage Business Services Network Storage Production Cloud • 1, 000 applications Cloud identified • Up to 40% savings in storage costs Fit for purpose middleware platform Common Compute Platform (Compute/ Network/ Storage) Base Enterprise Platform 13 © 2010 IBM Corporation

IBM Cloud Computing Cloud enables global industry transformations – Creating new centers of economic activity fueled by an information supply chain Industry Vertical Business Services Workload Optimized Industry Cloud Platforms On a platform of robust Infrastructure Services 14 Medical Image Archive Service Public Health Services Collaborative Clinical Development Health Care Services Healthcare Industry Cloud Platform e. Demand Commerce Replenishment Services Retail Industry Cloud Platform Industry Services Additional Industry Cloud Platforms Compute and Storage Clouds Enterprise-class Infrastructure Services © 2010 IBM Corporation

Building a Smarter Planet Intelligent Transportation Systems Integrated transportation solutions: Road user charging Congestion pricing Integrated fare management Benefits: Reduce traffic congestion Reduce CO 2 emissions Increase mass transit usage Improve environment Stockholm case study with clear results: Reduced traffic congestion 25% Reduced carbon emissions 15 -40% $120 M/yr in revenue to City, 4 yr payback © 2010 IBM Corporation

Building a Smarter Planet Intelligent Utility Networks Pacific Northwest National Lab (PNNL) PNL Shadow Market Application Web Server Energy Market Internet Invensys Application/ Web Server 125 Residential Homes Invensys Home Gateway IBM: Event Bus & Event-based Programming Model Application Server Control/ Application Server LCM Mete r GFA Drye r Thermost at Additio nal DR Load Sheddin g LCM Water Heater Space Heater Residential Home 600 HP Water Pump Port Angeles Water Supply 150 & 350 KW Power Generator PNL Heat Storage Smart Grid Solutions: Smart grid management Smart meters Smart appliances Smart integration Real-time energy market Dynamic response to constraints on the grid Benefits in PNNL case study Reduced peak load demand on the energy grid 15% to 50% Reduced consumer © 2010 IBM Corporation

Building a Smarter Planet Smarter Water Management ¥ REON- River & Estuary Observatory Network Strategic Water Information Management Solutions – SWIM Sensing and Monitoring Data Integration, Workflow, Management Deep Thunder – Advanced Micro-weather prediction Storm Impact and Response Prediction IBM Advanced Water Management Centers of Excellence Amsterdam, Netherlands Dublin, Ireland Benefits Flood forecasting, predictive modeling Environmental analysis & prediction Reduced water usage and costs IBM case study: 27% reduced water usage, 30% increase in manufacturing output, saving $M in energy and water © 2010 IBM Corporation

Building a Smarter Planet Green Sigma™ grew from IBM’s deep internal experience in facilities and manufacturing process improvement Green Sigma™ is aimed at reducing energy & water, waste generation and CO 2 emissions throughout a company’s operations, resulting in: – Lower environmental impact – Increased efficiency – Reduced costs The key components are: 1 Metering and Monitoring 2 Management through the Green Sigma™ Dashboard 3 Applied Statistical Techniques “If you can measure it, you can manage it” 18 © 2010 IBM Corporation

Building a Smarter Planet The Green Sigma™ Dashboard for Energy proactively monitors KPI data,

Building a Smarter Planet Similarly, the Green Sigma™ Dashboard for Water monitors KPI data,

Sustainability on a Smarter Planet: What are smarter buildings? Smarter Buildings are well managed integrated physical and digital infrastructures that provide optimal occupancy services in a reliable, cost effective, and sustainable manner. Smarter Buildings… Are more cost effective by reducing energy and operating costs. Use active and designed-in techniques to achieve efficiency and environmental responsibility. Have the ability to interact with occupants inside them as well as the environment around them. Maintain a safer and more secure workplace. Communicate in real-time to supporting infrastructure ( i. e. smart grid, broadband, etc. ). 21 © 2010 IBM Corporation

Sustainability on a Smarter Planet: How does a building become smart? Smarter Buildings Water Energy Elevators Smart Meters, Use / Flow Sensing Smart Meters, Demand response Maintenance, Performance Current Predictions Asset Mgmt Fire Lifecycle Functionality checks, Detector service Energy Use HVAC Fans, Variable Air Volume, Air Quality Passive/Active Maintenance Occupancy Space Mgmt Tenant Services Help Desk Lighting Waste Mgmt Access/Security Trash/Water/Recycle Badge in, Cameras, Integration Perimeter, Doors, Floors, Occupancy Compliance Environmental reports Industry Specific Hospital, hotel, etc. 22 Emergency Services Alerts, Actions Analytics and Optimization Building Services Weather 24/7 Monitoring Condition Monitoring, Parking Lot Utilization Voice/Video/Data Occupancy Sensing External Integration Portfolio Estates Mgmt Utilities Demand Mgmt, Cost Control Community Services Transportation, Traffic, Events Commercial Potential Advertisement Integrated Building & Communications Services © 2010 IBM Corporation

Sustainabilitydoes on a Smarter What it. Planet: mean to be a Smarter Building? Smarter Buildings The interconnection of physical assets and information technology can optimize efficiency, production and consumption in many types of buildings. Smarter Commercial Building Smarter Cell Tower Provides integrated facilities operations information for owners/operators in order to optimize energy usage and services based on tenant’s needs. Integration of active and passive management enables optimized operations to reduce truck rolls. Smarter Data Center Smarter Campus Integrated facilities and IT insight to energy efficiency of datacenter and the correlation of IT and facilities information. 23 Intelligent infrastructure platform and tools to manage plug-in electric vehicle stations, buildings, badging, central utility plant © 2010 IBM Corporation

Sustainabilitydoes on a Smarter What it. Planet: mean to be a Smarter Building? Smarter Buildings The interconnection of physical assets and information technology can optimize efficiency, production and consumption in many types of buildings. Smarter Hotel Smarter Airport Integration of all the guest subsystems of hotel that welcome guest according to their preferences and adds to convenience during stay. Provides efficient passenger and cargo services, climate control, wi-fi access, track maintenance tasks and help achieve security and safety compliance Smarter Hospital Smarter Government Building Sensor instrumentation used in real-time for asset location and automated workflows such as medical equipment maintenance. 24 Utilize fully serviced office hubs and mobility tools to improve public services. Match occupancy levels with portfolio wide estates data to optimize building utilization. © 2010 IBM Corporation

Sustainability on a. Buildings Smarter Planet: Smarter applications and benefit examples. Smarter Buildings SMART IS Holistic energy mgmt that enhances the efficiency of buildings and other assets. SMART IS Integrated communications and building services that support intelligent operations. SMART IS Integration of energy and asset management to lower operating cost. St. Regis Hotel: Designed for 4. 9% energy cost to revenue compared to average for 5 star hotels average at 8%. Reduced energy cost / revenue 40% vs. similar 5 Star hotels. Saint Barnabas Medical Center: Improved asset utilization and staff response times by 90%. Reducing overhead paging by 94%. Enhancing HCAHPS scores by eliminating communication barriers between care teams and patients. Ave Maria University: Converged 23 systems to single IP network. Integrated JCI Metasys with IBM Maximo. Saved $1 M in building costs and $350 K/yr in combined operating costs. 25 © 2010 IBM Corporation

Building a Smarter Planet China Hangzhou Dragon – Smart Hotel Reference Integrating more than 20 sub-systems using IBM’s integration skills and latest technology. “In the hotel industry, technology can make a real difference by significantly enhancing the customer experience and maximize their comfort and satisfaction, " said Eric Du, General Manager, Dragon Hotel. "Through the cooperation with IBM, Dragon Hotel would be able to build a Smart Hotel system to improve significantly the operational efficiency and productivity, the response time to client demands, and most of all, the client experience. " 26 26 Page Self check in / check out Kiosk Electronic Peephole Equipped with Passport / ID reader Equipped with Hotel key card dispenser Saves time for client for check in/out Better views of hallway Connect directly to the TV in the guest room Source: http: //www. reuters. com/article/id. US 124088+14 -Jul-2009+PRN 20090714 <Document Title> | <Date> © 2010 IBM Corporation

Building a Smarter Planet Smarter Building Entry Points and Value Initial focus areas on expense / efficient operations – Maximo: facilities and asset management integrated with energy management – Integrated Communications Services, Green Data Center – Property Performance Management Solution, Asset Management and Asset Analytics including portfolio analysis – Aggregation and analysis of data across multiple buildings – performance management dashboards, building data visualization, real-time monitoring – IBM's Green Sigma. TM coalition – partnerships to integrate the physical and digital infrastructure 27 © 2010 IBM Corporation

Building a Smarter Planet Carbon Reporting and Trading – Cap and Trade Systems Government Creates and regulates the scheme Exchanges Run the Trading platform Enterprises Manage and Report Carbon Emissions Players and participants Government Exchanges Brokers Enterprises and Utilities Carbon Credit Creators – CC&S Evolution EU Emission Trading Scheme Asian interest US evolving – voluntary, regulated, regional, national? Solutions today for Carbon reporting software Potential benefit: Reduced GHG © 2010 IBM Corporation

Building a Smarter Planet Smarter Cities Bring it All Together – with intensive use of information technologies for sustainable developmnet Intelligent Transportation Systems - Road Usage Charging/Congestion Pricing - Integrated Fare Management - Traffic Information Management Energy Management - Smarter Building Management - Automated Meter Management - Smart Grid – Demand Management - Energy Network Monitoring & Stability - Proactive management of the alternative energy mix Water Management - Water purity monitoring - Water use optimization - Waste water treatment optimization Public Safety - Smarter Surveillance Systems - Emergency Management Integration - Micro-Weather Forecasting - Cyber-security Telecommunications - Fixed and mobile operators - Media Broadcasters Environmental Management - City-wide Measurements - Key Performance Indicators (KPI’s) - Energy, Water, Waste, CO 2 Management - Scorecards - Reporting © 2010 IBM Corporation

Building a Smarter Planet Energy Management in a Smarter Planet The interconnection of physical assets and information technology can optimize energy production, efficiency and consumption Smarter Buildings Integrated and optimized physical and digital infrastructures to create cost effective and operationally efficient buildings and micro grids – energy, water, waste, GHG management Homes Energy and Water Management - Central control and connection of home systems - electronics and community micro grids Industrial Plants Appliances Automatically adjust power usage based on grid status Meters Digital link with power company to enable energy optimization and time-of-use savings Commercial and Government Buildings Distribution Company Distribution management Energy supply chain Network operation Electric Company Customer account management Time of use management Energy management Vehicle Charging Central Power Plant Solar and Wind Farms Smart charging of hybrid & electric vehicles at home and at commercial locations Energy Exploration, Production and Generation – Coal, Oil, Gas Nuclear, Hydroelectric Solar, Wind, Geothermal © 2010 IBM Corporation

Building a Smarter Planet IBM Energy and Environment Research • Leverage know-how in thin films, semiconductors, silicon, materials science, cooling for photovoltaics including concentrator photovoltaics • Energy Storage Research – Lithium/Air • Nanomembranes for Reverse Osmosis filtration of salts and other toxins from water for desalination • Modeling analytics for optimization in energy efficiency and renewable energy © 2010 IBM Corporation

Building a Smarter Planet IBM has a long history of environmental tradition and leadership. 1976: Think!, the company magazine, devoted an entire issue to IBM’s energy conservation and environmental 95 programs % 1971: T. J. Watson Jr. issued IBM’s first corporate policy on 1989: IBM offers environmental its first product protection take-back program 2006: Amount of IT product and 96% 1990: Think! Devoted an entire issue to product waste processed by IBM’s environmental programs – product End-of-Life Management 2006: IBMers beginning IBM’s annual Corporate operations Environmental Reporting that was reused or recycled “Jam” on 1991: Established innovation for a IBM’s Product better planet, 1997: IBM becomes the first major multi. Stewardship and IBM national to earn a single global registration Program invests in Big to the ISO 14001 environmental Green management system standard Innovations 44 1990 - 2006: Between 1990 and 2006, IBM’s global energy % conservation actions reduced or avoided CO 2 emissions equal to 44% of its 1990 emissions 1987 - 2006: Reduction in hazardous waste generation since the 1987 base year of this pollution prevention metric 1992: IBM becomes charter member of Energy Star Program 1994: Established Global Materials Recovery Center Network for product re-use and recycling 2007: Invested in Intelligent Utility Networks, Intelligent Transportatio n Systems, Project Big Green Collaborating to develop solutions … 32 © 2010 IBM Corporation

Sustainability on a Smarter Planet: IBM’s Commitment to Energy Efficiency – Actions and Results Smarter Buildings IBM develops and deploys Green projects to save Millions of $ per year – Green IT – Green Datacenters – Smarter Buildings – Smarter Water Management – Smart Grid – Renewable Energy Between 1990 and 2009, IBM saved over $370 M through energy conservation actions – Saving 5. 1 B k. Wh of electricity consumption – Avoiding nearly 3. 4 million metric tons of CO 2 emissions – Annual energy conservation/efficiency goal is 3. 5%+ per year – First established IBM Corporate Policy on Energy Conservation in 1974 In 2009, IBM energy efficiency projects saved 5. 4% energy use and $27 M in energy costs 33 © 2010 IBM Corporation

Building a Smarter Planet The Green Sigma™ Coalition Working together to co-create a Smarter Planet, Smarter Cites, Smarter Buildings - 34 Accelerating the move toward sustainable enterprises Collaborating on showcase projects to drive quick ROI & continuous improvement Enabling public & private enterprises to reduce energy, water, waste and GHG Emissions… across the value chain. Saving money, time and resources. © 2010 IBM Corporation