IBM seeks to master disaster

September 19, 2007

Big Blue has developed a computer modeling service to predict the economic and social impacts of pandemics that could help companies prepare for and react to crises.

Big Blue has developed a computer modeling service to predict the economic and social impacts of pandemics that could help companies prepare for and react to crises.

Pandemic Business Impact Modeler (PBIM) Service counters what strategists at IBM believe are overly simplistic and, therefore, unrealistic assessments of potentially disastrous outbreaks of disease.

The World Bank's estimate that a flu pandemic could cost $800 billion worldwide, for example, does not consider network effects, such as supply chain disruptions, distribution problems, communications breakdowns, and failures in financial systems. PBIM takes all these factors into account as a way to help companies develop and test crisis management plans.

Like many industries in the global economy, medical imaging relies on a global web of materials, components, and services. Vendors assemble and ship CT, PET/CT, and MR scanners, as well as x-ray, ultrasound, and PACS products, from locations around the world. In addition, many of their research and service centers are in different countries. Any or all of them could be affected by a pandemic.

"We try to understand how a disease might propagate and when it would reach key clients' key facilities," said Steven Smeltzer, an associate partner in IBM's strategy and change practice.

In order to tailor the new service to specific corporate situations, IBM's global business service consultants gather relevant company data from clients and then run the data on IBM computers.

Computer modeling provides the basis for gauging the potential impact of a pandemic on product manufacturing and shipping and on financial and social networks essential to logistical support. PBIM can predict how different crisis management strategies might play out, allowing organizations to assess possible response strategies and select the one most likely to minimize adverse effects from a pandemic, Smeltzer said.

"If the disease is impacting production at a given factory, the model will look at what would happen if production was shifted to other locations, based upon where the disease is at any one time," he said.

Decisions would depend on the different stages of the outbreak. A pandemic will strike different places at different times with varying effects. Modeling, therefore, is dynamic and multifocal.

One part of the model estimates the impact on demand for products and services and on the availability of resources. This component might help determine the ability of the company to deliver products and services and to help identify vulnerabilities in the supply chain, while another one examines how demand might be affected.

"So we help map out how much you can produce and look at the effect on demand to see how much your customers will want," he said.

Epidemiological "engines" simulate the potential spread and severity of a disease, estimating its affect on populations in various locations. Others examine the effects on infrastructure, such as electricity, air and ground transportation, water, and the Internet.

"If we have people all trying to work from home, what will this do to the infrastructure?" Smeltzer said.

Computer modeling also projects gross economic output across multiple industry sectors as they relate to the economic health of individual countries. Organizational, social, and even psychological reactions to a spreading disease can be simulated and analyzed.

"Our behavior model looks at the fear factor and how it impacts what customers would want to buy, where they would go, and how they would change their habits," he said.

The globalization of industry has made this new service an essential consideration in the business world, according to Smeltzer.

"It's a kind of morbid science, but it's the kind of thing we think is necessary," Smeltzer said. "It's an ounce of prevention."