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Section 6: IBM Shared Value Model in Taiwan
6-1. Redefine Products and Markets
Taiwan is also facing problems that are somehow similar to the problem of Maltese government that was facing. On the other hand, the citizens of Taiwan are also very demanding when it comes to environmental issues. Let’s not talk about whether they understand the meaning of smart grid just yet. But we know that Taiwan is highly aware of the importance of being environmentally sustainable at least the government has spend tremendous amount of effort on sending out messages through the use of social media on telling people that is important to save energy. Much attention has also been addressed on the fact that most of the Taiwanese people believe that it is a good way to save money by choosing home appliances that are environmentally friendly. So the main concern of the citizens in Taiwan is still around the issue of how much money they would be able to save by being environmentally responsible. But that’s not enough, this is not SVM is about. SVM is to help business and society to advance as a whole. But this requires the work of all stakeholders. Most of the Taiwanese people have lost their hope in the government as the government constantly shows the lack of ability to make sensible decisions. This is probably one of the reasons why the government wanted to deploy the smart grid. Just like in the situation of the U.S, Taiwan government needs to start to do things the right way in order to regain the trust of its people. Smart grid seemed to be a good solution to rebuild its reputation at the same time providing meaningful values for the people of Taiwan. This could be seen as in the Smart Cities Challenge initiated by the IBM. Two Taiwanese cities of New Taipei City and Pingtung have asked IBM to help them to introduce big data
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analytics to solve societal issues that are effecting the life quality of Taiwanese people. It was reported that IBM has to pay $1.2 billion NTD as cost of personnel send to Taiwan to solve the policing issues in the New Taipei City. It is to help the city to be able to predict crimes and to help to improve the social security in the city. In the case of Pingtung, issues like promotion of renewable energy plan.
This is pretty good business for IBM as now they have the reasons to come to Taiwan and to from the social aspects to help these two cities to become a better place but on the other side to also enter into the smart grid market in Taiwan. Most of the technologies used are based on the big data analytics so it is to achieve the economy of scope in Taiwan. While entering into the Taiwan smart grid market, IBM has chosen TATUNG to my best guess is because it has good reputation in Taiwan as been technologically innovated and with good renown. It would be in IBM’s best interest to partner with corporations that know about the Taiwan market from the technological point of view. TATUNG also happens to be the producer of smart meters in Taiwan and is one of the main supplier of smart meters to help to develop the smart grid system in Taiwan by producing the most essential equipments for the roll out of smart grid , smart meters. As in the case with AcBel Polytech is has become the major power supply parts for IBM’s server since the year of 1985. This could be seen as another alliance made by IBM and AcBel Polytech. Once IBM start to get into the operations of Taiwan smart grid, obviously more server would be needed to support the big data analytics to take place. This is a good opportunity for IBM to get a better deal when it comes to think of a more reasonable collaborative relation with AcBel Polytech, in the sense that IBM
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would be able to sell more of its servers and AcBel Polytech would be able to sell more of its power supply equipments to IBM. IBM has already announced that they are going to increase the procurement of server power supply equipments from AcBel Polytech due to a high demand of big data analytics from the industries. AcBel Polytech is also deeply involved in the LED business in China, this also happens to be common energy solutions. IBM might use the opportunity of its partners to enter into the Chinese market in the years to time.
IBM has already made its move in China by working closely with the local utilities. It is certain that IBM is also thinking about the economic value that China could provide for itself. First to secure the market in Taiwan might be a good strategy for IBM. As it is relatively smaller in size, therefore the deployment could be easier in the sense that less budget is required. Also the fact, that the market is more developed in terms of regulations, pricing, the transmission and distribution grids. If IBM succeeds in helping Taiwan to become more energy efficient it might provide the basis for IBM to launch demonstration projects with the local Chinese utilities from the lessons learnt in Taiwan. There are also the South-East Asia countries that are experiencing rapid economic development. How to make energy more efficient certainly will become their major concerns sooner or later. The experience from Taiwan and China will better prepare IBM for the South East Asian markets.
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6-2. Redefine Productivity in Value Chain
Unlike, Google, Microsoft and Cisco, IBM has also focused its business development in Taiwan by making alliance with the Taiwanese companies of TATUNG and AcBel Polytech Inc. to secure the low voltage smart grid solutions. It is estimated that this market is worth a total of $150 billion NTD throughout the next 20 years. According to the Hui-Chzu Huang, IBM’s General Manager for Taiwan Area, Taipower has already adapted IBM’s Big Data solutions to test run the grid operations, as well as simulating and analyzing diverse real use situations. Big data is used specially to deal with the analytics of data. In order to make meaningful interpretation of enterprise data held by a company; the company needs to have big data to support the entire data collecting and processing functions. Information clearly has become the next wave of business opportunity; it allows companies to become more data oriented and act innovatively.
As I have said before that as the world is becoming a more difficult place to live in. Environmental concerns have become the top priority of many nations. Taiwan is located in a very strategic place could be said as like the heart of Asia. If IBM wants to enter into the Taiwan marker then it would have to think of a good strategy to help it to expand. Clearly, from making strategic alliance with TATUNG and AcBel Polytech Inc. has made guessed some of IBM’s strategy to enter into the Taiwan market.
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If the smart grid is able to be developed this would be a economic feasible schemes for Taiwan as Taiwan is going to introduce more and more free economic area which means that Taiwan is focusing on gaining more orders from other countries to help to save its manufacturing industries. In order for the industries to stay competitive, as Taiwan usually like to adapt the cost-leadership then the energy efficiency would be necessary. IBM’s smart grid solutions would be able to enforce the industries to become more energy efficient as we know that they have the solutions that can terminate the electricity to endpoints. Industries must improve the energy efficiency of the machineries and might encourage industries to install their own renewable energy. Utilities would have to also stop subsidizing industries with the use of electricity in order for them to be aware of the real cost of electricity. It is time for the industry to reconsider the value of electricity in relation to their competitiveness.
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6-3. Enable the Local Development
On July 2012, with TATUNG, AcBel Polytech Inc., IBM has won the bid for procurement of AMI from Taipower.52 Taipower planned to procure 23,500 sets of low voltage AMI as pre-steps for the realization of smart grid. This was the first procurement of AMI executed by the Taipower and will continue in the following years. IBM has gotten itself the chance to enter into the Taiwan smart grid market partly because it has made itself a name with the analytical expertise on the international market as well as in the Taiwan market. In the Taiwan smart grid market classification, IBM is one of the chosen system providers for data analytics. To this matter, IBM has provided its rich experience in the big data for business. It is worth to mention that, information companies like IBM, Google, Microsoft, Cisco has long planned to get a share of the smart grid market in both Taiwan and China. IBM’s big data solution has made its part of contribution by providing service of data analytics to interpret the mass amount of data that will be generated once smart grid began to come into shape in Taiwan. It is also estimated that the outcome of Taiwan Smart Grid will create domestic monetary value of up to $ 100 billion NTD and the creation of up to 25,000 jobs.
This might drive the next wave the renewable energy and industry revolution in Taiwan. As more and more countries are focusing on the use of smart grid. Taiwan cannot ignore the benefits that it would bring.
Demonstration projects have been set in place to show regional results of the smart grid. Electrical cars have also start to receive the attention from the local
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Taiwan business. There are already companies that have already been in the business of the energy storage option like batteries in Taiwan. If the government is able to see the value of the smart grid and all the aspects of it, perhaps more invest would be made to support to create more charging posts to allow the development of EV cars in Taiwan. Renewable energy would also be the area that needs vast development as the Taiwan government and Taiwan Power Company talks about retiring the nuclear power plants. This would lead to the need to search for alternative energy. The price for coal is still too high and Taipower continue to make losses from subsidizing electricity.
Renewable energy could expect a strong growth for the years to come. Smart grid technologies and equipments providers are also under way to take active parts on the development of Taiwan smart grid.
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