Why is weather data important to companies?
Statistical Data Analysis

Why is weather data important to companies?

When IBM paid a reported $2bn plus for The Weather Company last year, a few eyebrows were understandably raised but a year on and the mist is starting to clear a little. Although it was always obvious that weather data lay at the heart of the decision – particularly the potential for it when you consider the developing autonomous vehicle industry – there was still a sense of what more could it do? Was there anything else in the pot? Like any acquisition, the acquired have to start justifying the price tag, a little like a star footballer being under pressure to perform and justify a large transfer fee, so it’s perhaps not surprising that the business is in launch mode again.

A gathering of existing and potential customers at IBM’s Southbank offices next to the River Thames in London in August got a glimpse of a new Operations Dashboard for Retail, a sort of weather and traffic command centre for shopkeepers. It joins the growing list of industry-focussed weather data products the business is pushing and according to EMEA MD Alex Rutter, the retail dashboard is a direct response to customer demands.

Retailers, it seems, want to understand more about how weather affects shopping habits in different regions and across different shop locations. On the surface, the idea seems a little like garnish, great to look at but not completely necessary and then you see the numbers. Rutter talks about one retailer (which incidentally was a key reason behind the company developing the dashboard) and how a store lost out on around £1m ($1.3) in potential sales because it didn’t predict the recent warm spell in London. Also, according to retailer Next plc, which released a trading statement in early August, the better than expected weather in June and July this year boosted sales by nearly seven percent.

For Rutter and The Weather Company this is fertile ground. Logistics too. The Weather Company’s Beth Padera cited a National Academies of Sciences, Engineering and Medicine statistic that 28 percent of crashes and 19 percent of fatalities are apparently weather-related. Transport also makes sense, given this stat, particularly airlines.

“We’re taking Watson into the airline industry to cut the workload of pilots in pre-flight briefings,” says Rutter, revealing a new product to be launched later this year. He wouldn’t give any more details but this is a first for the company, using Watson beyond its advertising business.

To date, The Weather Company’s main use of IBM’s ‘cognitive’ computer system is for advertising, where the ads are interactive and listen to questions to personalise results, such as in the recent Toyota Prius ads. Watson is not used in the company’s weather data analytics and probability forecasting – it has its own Deep Thunder machine learning engine for that. Crunching data and using the company’s own probability model to develop meaningful results for customers, it is, says Rutter, “pure science” although not in the putting people out of jobs automation way. There are over 160 meteorologists on the books too.

So what do the customers think? To date, the company boasts a mixed bag, from large utilities through to transport, agriculture, insurance and retail and given that weather knowledge does not come cheap - prices start at around $25,000 a year – the reasoning behind IBM’s acquisition becomes more evident. But is it really a must-have?

“Yes, it is crucial for us,” says Alan Peasland, Red Bull Racing’s head of technical partnerships swilling a glass of New Zealand white wine (the one with the Guava notes) courtesy of Streatham Wine House. “We are all about data and it’s finding that needle in the haystack to make a real difference.”

Peasland’s argument is that weather can impact not just every race but also logistics, making sure all the car parts arrive together to ensure no time is lost in building and testing the car in the week before a race. Given that weather can affect tyre choice and pit stops, it clearly becomes a source of tactical information that can ultimately determine whether a race is won or lost.

For the fashion industry, the impact of weather is very different. For a trend forecasting and analytics business, such as WGSN, it’s not a necessity, at least according to its head of retail Francesca Muston, who said it was a nice-to-have but that it could give the business competitive advantage in the near future.

Clearly accuracy of weather forecasting is key to having this kind of impact. The Weather Company claims it is the world’s most accurate forecaster, issuing forecasts for 2.2 billion locations every 15 minutes. This amounts to around 400 terabytes of data sourced from more than 250,000 weather stations around the globe, mainly from The Weather Underground - a collection of around 180,000 weather nerds, all gathering data and helping to produce hyper-local weather information.

Rutter says the data and accuracy will only get better, with more data and more analysis, especially as the business digs deeper into Watson and the IBM Research centre. The company has a lot of powerful tools at its disposal, to improve analysis times across existing, as well as historical data, something which will add greater context and forecasting to any business solution. Carrie Seifer, The Weather Company’s recently appointed vice president and chief revenue officer joked that perhaps they should try and control the weather? Both the American and the Chinese have already failed at this one. For now at least, they should stick to predicting the future. There’s more money in it.


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Marc Ambasna-Jones

Marc Ambasna-Jones is a UK-based freelance writer and media consultant and has been writing about business and technology since 1989.

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