First Look: IBM Decision Optimization solutions

IBM has a portfolio of decision optimization products that are integral to their smarter analytics strategy, aimed at both the hard-core optimization experts as well as targeting line of business markets. IBM sees optimization expanding, expanding from the traditional optimization technology market to a more mainstream decision optimization platform with an increasing focus on specific business solutions that revolve around optimization. This means there needs to be more interaction with business decision-makers and more complete solutions. As a result IBM is focused on a threefold strategy:

• Driving Operations Research innovation for the technical user
• Delivering more end-to-end support for business decision-making
• Developing more tailored solutions for individual client’s unique business challenges.

This means needing to support decision-makers, analytics experts, business analysts, OR experts and IT architects as well as their wide range of OEMs and resellers building solutions based on optimization.

Optimization examples can be found in basically any market segment or industry field.  Some  examples of optimization solutions include:

• Better rolling stock allocation (an example of better use of fixed and mobile assets). Optimization is being used as part of capital investment decisions as well as part of a more regular scheduling and crew allocation process.
• A trade settlement organization uses optimization to find chains of trades that “cancel out” to speed settlement and so reduce the amount of cash required.
• An independent system operator for a power network uses optimization to evaluate power generator bids to select those that optimally meet power demands in the day-ahead and real-time markets.
• A hotel chain uses optimization for revenue management, optimizing prices based on demand and competitors. The system uses predictive analytics to evaluate customers’ price sensitivity as part of the offer management process.
• A global auto parts manufacturer uses optimization as an enterprise platform to plan annual capacity allocation, with a view to synchronizing production schedules of specific runs at specific plants on a more ongoing basis.

Many organizations have had one or two areas in which optimization was being used, but IBM now sees more customers expanding their use of optimization – moving from a single use to a more systematic focus on using optimization in multiple processes across their planning, allocation and scheduling. This parallels a similar growth in analytics – from a single focus driven by a particular group of experts to a broader, cross-company, business focus.

IBM’s Optimization portfolio contains three main slices:

• CPLEX Optimization Studio
  This is the technology element of the portfolio. CPLEX Optimization Studio is a modeling system for building optimization models using constraint or mathematical programming.  It includes an Integrated Development Environment (IDE) as well as the Optimization Programming Language (OPL), the modeling language for both mathematical and constraint programming. It supports multiple solvers (CPLEX for Mathematical Programming and CP Optimizer for Constraint Programming). The Eclipse-based IDE provides different services such as  data integration, model management and tuning, profiling, conflict detection and resolution, and a connector to SPSS Modeler. Optimization models can be deployed and accessed through CPLEX Enterprise Server, ODM Enterprise or directly using APIs (either for desktop or client/server architecture). Recent updates have increased performance, support for distributed computing resources, multiple goals and cloud-enabled development.
• ODM Enterprise
  ODM Enterprise is the platform element of the portfolio and grew out of the realization that packaging up the standard components of optimization solutions would make it quicker and easier to get to a working solution. ODM Enterprise is focused on developing and deploying tailored applications designed to interact with business users, specifically decision support applications supporting what-if/scenarios, graphical visualization of data and drill-down etc. It provides out of the box client/server set up, data modeling/schema import tools, additional visualization tools, automatic set up of scenarios and business user interfaces for all this and for configuring parameters for optimization models etc. The aim is to enable business decision makers to get value from optimization without needing to become experts on the technology.
• Assets
  IBM also has configurable assets for rapid development of tailored business solutions built on ODM Enterprise around container repositioning, complex project scheduling, mining supply chain, rail operations, and production planning/scheduling. These can be and are customized, by IBM or by clients, and leverage ODM Enterprise.

IBM sees its differentiators in this space as rapid development and deployment of tailored solutions, powerful  solvers and the ability to deliver all of this in a broad analytic framework. Plus they have broad global coverage with services and expertise around optimization solutions and in specific industry segments. The integration of optimization into a broader Decision Management platform with business rules and predictive analytics (one might use predictive analytics to predict a likely parts failure that triggers rules for proactive maintenance that drives a new schedule task into a schedule optimization solution for instance) as well as a continued focus on decision optimization and scheduling are driving the market forward.

IBM’s CPLEX Optimization Studio and ODM Enterprise are part of our Decision Management Systems Platform Technologies Report and you can get more information on IBM’s optimization portfolio here.