Blockchain – enabling true digital transformation

Blockchain will significantly change how we hold and transmit items of value. The business process can finally be designed from the ground up as a digital process – truly transformed. The record of choice for the last 100+ years has been paper. Even when you scan a record, if the paper exist, it is the legal record.

We have birth and death certificates, laws, deeds, bank statements and even money (bills) on paper. The problem is we are becoming a digital society and paper is hugely inefficient. In addition, the processes for handling paper have stayed in place even with digital systems and are highly error prone. How likely is it that an error occurs upon copying or reading a document. Blockchain offers the opportunity for  processes to become 100% digital, secure, and low friction from birth to destruction.

The simplest definition of a blockchain is a digital ledger that is not terribly different from an old fashioned paper accounting ledger. A well implemented blockchain has 3+1 key characteristics. It is immutable meaning once a transaction is entered, it can’t be removed or altered. It is sequential in that each transaction is tied to the one before it and after it. It has consensus based peer nodes that can be distributed. I’ll add a fourth for a “well implemented” blockchain, that it has inherent security with multiple levels and is highly resistant to attack.

A blockchain is not Bitcoin or any single crypto-currency. Crypto-currencies like Bitcoin do run on blockchain technology. The data entered in the ledger for crypto-currency are financial transactions representing value. What fascinates me, and is the subject of this blog, is what else can you do with a Blockchain.

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In 3 recent experiences with obtaining a mortgages, I’ve had a 10%, 50%, and 90% paper based process. I’ll exclude the closing process which is still done on paper thanks to the government being nearly 100% paper based.

Bank 1 was 90% paper based. Everything went to the branch office as paper which they put in a box and shipped to the home office where it was processesed. Only the communication via e-mail was electronic.

Bank 2 was about 50% paper based. They allowed us to submit our documents via an upload, most documents were e-signed, and a few that presumably the government required wet-ink signed, we’d print, sign, and then upload them.

Bank 3, actually a mortgage service, never gave us a piece of paper, but I’d argue it was still only 90% digital. Someone was still transcribing from the uploaded images into the lender’s databases. Even if all of the paper was eliminated, Bank 3 still was working workflow designed for paper. It took limited advantage of the fact that everything was now digitized.

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Blockchain will change the above mortgage process. There will be no transcription and therefore less chances of error. Hypothetically, you’ll upload your information from a digital store on blockchain of IDs which will include multiple biometric authentication methods to confirm it’s really you. You’ll permission your lender to do research on your credit worthiness in various financial blockchains. It may even eliminate the need for the credit scores and credit bureaus as credit data can be gathered directly and relatively quickly (more on that later). At the same time, they will review your deed and other documents with the government making sure you are lien free.

All of the approvals, audits, and additional documents will be kept in the lending agency’s blockchain, but can link with permissions to other blockchain’s or simply make copies with reference to the source. Finally, your signatures will cause the down payment to be transferred along with the signatures of everyone involved from the bank, regulators, attorneys, auditors, county and state tax authorities, county court records, insurance agencies, buyers, and sellers. In theory, from discussion of the mortgage to the completion of the mortgage a day or few day process.

The biggest issue with blockchains, besides they are new and we are just starting to build applications for them, is that they are slow in terms of computer transactions. The slowness is mostly due to the consensus element. For all the nodes (computers) to agree it is valid entry, it can take up to a few minutes. While this is huge leap forward in terms of recording a legal records which can now take weeks or months, it far is too slow for sub-second transactions like purchasing on the internet or recording an entry at help desk. So for now, it is best applied to large block type transactions of higher value which fit the characteristics of blockchains.

Here are a few areas where blockchains are a natural:

  • Medical records (individual, hospital, doctor, etc.)
  • Government documents (deeds, judgments, laws, titles, licenses, etc.)
  • Financial documents (bank ledgers, investments, statements, etc.)
  • Supply Chains (farm to fork, inspections, transportation, etc.)

Where else might blockchains fit? What other technologies like AI might be integrated?

If you like to learn more about how you can build on the blockchain, IBM provides FREE tutorials on the Hyperledger, an open sourced blockchain.

 

If IBM Watson (AI) is so smart, why isn’t Watson able tell IBM how to make billions dollars?

“If IBM Watson (AI) is so smart, why isn’t Watson able to tell IBM how to make billions dollars? Can’t you just ask Watson how to make more money?” It was an earnest question from a skeptical client. We all want an oracle we can ask.

I answered “IBM Watson can’t just know how to make money. It has to be taught first by humans. A person must teach Watson the knowledge and then Watson can expand on it.” The simple answer is IBM Watson is similar to all Artificial Intelligence (AI) tools. It is just a tool and not an all-seeing, all-knowing oracle. Buying a chef’s knife does not make me a chef. The old saying is “a fool with a tool is still a fool.” Watson, or any AI, can’t just imagine ideas, create new solutions, or create new solutions. While it isn’t an oracle, it is highly useful tool.

The real purpose of this tool labeled as Artificial Intelligence, Cognitive Intelligence, or Assistive Intelligence is to provide computers with more human like interactions and understanding. Reading, writing, speaking, listening, seeing, and feeling are very human experiences. We define our world this way via our senses and sense of self being. At IBM, we have Watson focus more on the cognitive (thinking and feeling like a human) and being more supportive via assistive intelligence. The cognitive capability provides the computer a better and more natural way to move, communicate, interact, and learn in our human focused world.

A good example is Watson Cancer Diagnostics. It first was taught how to diagnose and treat cancer. The cognitive capabilities allowed it to speak, listen, write, and read both questions and answers. I even learned to read radiographs (visual). That gave the solution a baseline capability. Now it is moving onward by reading printed journals. We as humans think of it as nothing to extract information out of reading a book, but this is unstructured data which only a few years ago, computers couldn’t understand. Now with Watson, they can. Today Watson Cancer Diagnostics can work with doctors and suggest treatments, but ultimately, we still rely on the doctor to make the final diagnosis and treatment.

Water is the universal solvent. Humans are the universal problem solver. Computers are wonderful tools to enable humans. By adding cognitive capabilities, computers become even better and easier to use tools to assist us in shaping our world and hopefully for better.

 

Move, Adapt, or Die

Change is eternal in life, nature, business, and technology and you only have 3 options:  1) Adapt; 2) Move, or 3) Die.  I learned this truism in my 7th grade from my social studies class regarding animals response to ecological change, but the same is true for changes in our business environment.  The technology environment has forever been changed by CLOUD (IaaS, PaaS, and SaaS).  The software business and the systems integration (SI) will never be the same and is now presented with 3 simple options: 1) Adapt; 2) Move, or 3) Die.

As humans, especially business people, engineers, etc. who populate a lot of technology field, we believe we can overcome or stem the tide.  While this may work for short term or against small storms of change, it will not defeat real, substantial change any more than you can push back on walls of water from hurricanes.

IBM recognizes the power and importance of Cloud, even if it got off to slow start. Look at the emphasis. Less than 10% of IBM’s revenue is now from hardware. At the same time, everything from IBM is now on the cloud. IBM is even beating back its latest foe – Amazon Web Services (AWS). IBM Beats Amazon In 12-Month Cloud Revenue, $15.1 Billion To $14.5 Billion.

SAP has made a massive shift around SaaS and is adapting.  In 2013, Jon Reed, noted that even SAP executives would love to go on selling traditional on-premise perpetual licenses when he paraphrases the executive with ‘Hey, if we could continue to sell software to customers the way we’ve sold it to them for the last 40 years, we would. But they want new options.’  (more from Jon Reed’s Diginomica blog). Fast forward to 2016 and about 80% of SAP’s revenue is from 4 acquired SaaS products: SuccessFactors, Fieldglass, Concur, and Ariba. If SAP could figure out S/4 HANA cloud, they might even become a dominant SaaS ERP player.

Cloud and specifically SaaS to the software industry is a category 5 hurricane force of change driving a wall of water.  Remember when virtualization was only for non-proction. Now, most systems depend on virtualization.

Moving and adapting take time. So while almost everything will go cloud, it will take time. It will have to make IT and financial sense to move. The argument that some applications will not run well on the cloud will be a moot point when they are rewritten for the cloud.

The hurricane of cloud  in all forms is coming here. What are you doing to make sure your ready to move or adapt (and not die).

 

Terrific Practical 10 step path for success with Analytics from Jerry Kurz.

Thirty years of experience talking. Worthy of 15 minutes of your time.

Folks, I am very proud and happy to have my dear friend Jerry Kurtz do a guest blog on my site. Jerry runs the Cognitive and Analytics businesses in my portfolio, and is a long time IBMer. He has been in this field for 30 years across SAP, Managed Business Process Services and Analytics and […]

via And Jerry Says : A Path to SUCCESS with Advanced Analytics — Vijay’s thoughts on all things big and small

WordPress vs. LinkedIn

Which site is best for business blogs? I prefer WordPress’s powerful editing tools. I seem to get better “following” on LinkedIn. What is your advice, comments, suggestions, or ideal solution?

WordPress is a content management tool service that is excellent tool for writing blogs and creating consistent, stylistic web pages. It has basically eliminated much of the need for IT departments to create standard variable content for their websites. For example companies like CNN, Forbes, Vogue, MTV news, The Rolling Stones, Facebook , NASA use it to create content for their websites. There are 17 blog post every second of every day from WordPress and it’s wired into everything with over 45K plugins. All of this comes from a company with 449 employees.

Alternatively, LinkedIn blogs are simple with a single style sheet, text, pictures, and video. It is more of an expanded status than a blog and definitely not a content management service. LinkedIn is popular with over 500M users with about 40M being students. That is an impressive journey from being 4,500 members in 2003. LinkedIn is big with over 10K employees in 30 cities around the globe and providing 24 languages. They’ve made a long journey from being just “business Facebook.” That doesn’t even include the impact from the Microsoft acquisition.

I liked LinkedIn because their blogs seem to get the most notice and response. Even when I link my WordPress blogs to LinkedIn, they don’t get the same notice. I think it is because WordPress blog looks no different than any other web link on LinkedIn. I like WordPress because it is a great writing and content tool. I like having my own style, colors, indexes, and other features. For me, the ideal solution would be to have WordPress as the blog engine inside of LinkedIn. Maybe it’s a plugin that I just haven’t yet found. Something else for my “to do” list.

What do you suggest?

References below:

LinkedIn: About LinkedIn

WordPress Online Support: WordPress Interesting Facts

SkillCrust: WordPress Facts

Forbes: Microsoft acquires LinkedIn

Now technology bubbles up to the Business Enterprise level from Consumers

The technology at the Consumer Electronics Show (CES) will bubble up into business and into enterprises quickly – far quicker than IBM, HPE, Cisco, or any of the enterprise strength IT companies would like. Initially technology came from business to consumers – think PCs. The sheer size of consumer market and its willingness to put up with beta releases makes the consumer world the ideal proving ground for the less fault tolerant enterprise world.

Drones are bubbling up. While they started in the military, they now are big segment of the consumer market. Drones or autonomous flying vehicles have been improving including automated stabilization, 4K cameras, enhanced flying times, etc. Many of them have dozens of computers on board and some rather impressive programming to make them simple to use.

Due to the wide-spread usage of drones in the consumer market, they are vastly improved and far less expensive. One of the leader’s in the industry, DJI’s basic drone, Phantom 3 Standard, is just under $500 flying for ~25 mins, includes GPS tracking, tracks subjects based photo recognition using a 1080 camera for photos and stills. Refurb is $329 and knock offs are even cheaper.  Just 5 years ago, this would have been a top of the line $5K drone, if even available.

Part of the attractiveness of the consumer world is scale. The other factor is that the consumer world is filled with willing beta testers. Recent releases of drones from reputable companies come with lots of complaints on the internal boards of not flying well, not following waypoints, and simply flying away. A drone that loses its signal is supposed to fly back to the point of origin and land. In the business world, this would be a breach of contract and might result in loss of property or life. In the consumer world, the drone manufacturer can just send a firmware update, a coupon, or at worst replaces the device.

While scale makes the money, it is the willing beta tester that enables advancement. Haven’t you signed up to be a beta or an alpha tester. I know I am for many of IBM’s early release programs. We have marvelous internal site called “Technology Adoption Program” where individuals submit their software inventions. Many have become key enablers of IBM’s business.

What else might bubble up? Virtual Reality has real possibilities for training. Consumer IoT devices will make it into manufacturing. Fitness IoT devices will make it into Medical IoT devices. Home IoT devices by Amazon, Google, and Apple will rapidly make both IoT device and cognitive (AI) advances as we all beta test their devices for more hardened uses. I know send in correction reports regularly and in general they do a good job following up. The list is endless as people gobble up consumer technologies.

We used to make fun of 3rd world countries using the computers out of toys to steer their weapons. Maybe they were just ahead of their time.

Grammar saves lives & numbers can hurt

Pasta should be cooked in salty water even if the numbers say otherwise. Olive Garden in order to get lifetime warranties on their pots, eliminated salt in the water  and they still don’t salt the water as of today (April 2016). As a decent cook, and others agree, you need salt in the water if you want the pasta to taste good. Only some junior analyst who thinks Olive Garden is the pinnacle of Italian food would think saving about $80 a year, the price of pot or the loss of 3 customer meals, would have no impact. Plus to cover the lack of taste in the pasta, you have to add more salt and sugar, often corn syrup in commercial products, to the sauce.

When we use numbers, we need to make sure the numbers, analytics, or metrics correspond to a meaningful output. I’ve seen consulting companies cut consultants to increase savings, not recognizing that if you have fewer consultants, you’ll have less revenue since consultants are the product. In a classic case, the US government made selling ice cream and visits to beaches illegal in an effort to stop polio.  The increased ice cream sales and visits to the beaches was due to the heat. The same heat that enables the polio virus to stay alive long enough to  spread.

At SAP TechEd a few years ago, I watched with fascination as Nate Silver kept telling the interviewer that the thing we really needed was to have highly knowledge analyst who understand the complexity of real life topics – actual experts. The interviewer kept wanting him to expound on SAP tools, but Mr. Silver held his ground. It is not the tool, the metrics, or anything that is technical. Some tools are better or easier than others, and SAP has some great tools was all he’d say, but paraphrasing the interview, he said “you have to understand the subject,  the relationships, and why a number might go up or go down”. Once you know the basics of the real system, you can use the numbers to look deeper, but not until.

If grammar can save lives (“let’s eat, grandma” vs. “let’s eat grandma”) then analytics can ruin them. Many decisions, such as layoffs or substituting equivalent products, are made on the basis of numeric analysis. As responsible analyst, we must make sure our metrics of success, failure, and our discoveries makes sense. Does the data really explain the results? Is it reasonable? What is scientific, logical reason for the outcome?

As we make more data available online and accessible, we must make sure it is clear what the data represents. Finally, we have a duty to be ardent guardians of proper use of analytics and be aggressive prosecutors when others misuse data and analytics. Numbers, and the conclusion we derive from them, directly impacts people’s quality of life. Number’s can hurt.