“We are introducing something this tax season that is totally new, and is in fact, a first in the tax preparation category.” Last week, Bill Cobb, the H&R Block’s President and CEO, was quoted as saying in reference to his company's recent annoucement.
Despite what you may be hoping for, Bill has not come up with a way to make taxes fun. Instead, H&R Block will be teaming up with IBM to make sure that each individual is likely to get the best possible tax return with the help of IBM’s artificial intelligence system - Watson.
“By combining the human expertise, knowledge, and judgment of our tax professionals with the cutting-edge cognitive computing power of Watson, we are creating a future where our clients will benefit from an enhanced experience and our tax pros will have the latest technology to help them ensure every deduction and credit is found.”
Clearly the CEO and other important company decision makers think that the computer processing power of Watson will help make their tax services the best for their clients.
For those still wondering what Watson is, the IBM website describes it as cognitive technology that can think like a human. In short, Watson is a supercomputer that is able to take in mass amounts of data, learn lessons, perform logical reasoning and interact with its users. Watson is even famous for his performance on Jeopardy - where he won his audition in 2011.
Why would this interest companies?
H&R Block’s tax professionals must understand the requirements of the US tax code that is close to 70,000 pages long - an impossible task for anyone. However Watson is able to digest the information contained in these page and ensure that H&R Block’s clients are receiving all the tax refunds they are owed. A win-win for the company and its customers.
Watson’s power extends well beyond tax filing. Imagine how effective Watson would be at creating a better grocery shopping experience by using WiFi, GPS and sensor data to determine how consumers shop the aisles? Or, how Watson would be able to analyze the customer services calls of a major telecom to help frustrated consumers and service agents get the right answers more efficiently. Big data can help with these problems - if it can be analyzed.
IBM is clearly ecstatic about the possibilities for the applications of Watson’s artificial intelligence capabilities. If and when partnerships, such as the one with H&R Block, create benefits for Watson’s users - companies will be lining up to get their hands on the power of IBM’s new product.
This is great news for IBM investors. IBM has a storied history of being a leader in the computer, IT and consulting industries. The company has managed to reinvent itself numerous times - pivoting from hardware to software and now to artificial intelligence. In recent years the company has struggled to increase its operating income. Struggles in other segments, from hardware to software, have hampered on the company’s performance.
Watson represents another transition from IBM, and one investors should pay close attention to. Companies are always looking for a competitive edge and will be willing to pay for tools, like Watson, to help them find these advantages.