Consumer Technology enables SCALE and RAPID INNOVATION

Consumers enable SCALE and RAPID INNOVATION in Technology. As I walked around the Consumer Electronics Show (CES), I could see how the technology will “bubble up” into business and into enterprises quickly. Initially, technology came from business to consumers – think PCs. The sheer size of consumer market, hunger for new functionality, and its willingness to put up with beta releases makes the consumer world the ideal proving ground for the less fault tolerant enterprise world. Companies that span both world can leverage the consumer world for its SCALE and RAPID INNOVATION and bubble those innovations into the enterprise world for higher profits.

Drones are an example of bubbling up. While they started in the military, they are now a 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. First it was movies, then multi-million dollar homes and now you see mid-market homes with drone footage. It has become a toy for teenagers, too.

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 (Drone Market Map)( https://www.droneii.com/top20-drone-company-ranking-q3-2016)), DJI’s basic drone is just under $500, flys for ~25 mins, includes GPS tracking, tracks subjects based photo recognition using a 1080 camera for photos and stills. Lots of knock offs are even cheaper.  “Toy Drones” are just $50! Five years ago, the DJI basic drone 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 and relatively low liability costs. The consumer world is an agile one where cycles occur very quickly. A typical enterprise development cycle is 18 months. In the same time in the consumer world, you’d see a major hardware, firmware, and at least 30+ releases of software.

The demand for new and the tolerance for risk is high in the consumer market. Recent releases of drones from reputable consumer companies come with lots of complaints on the internal boards of them not flying well, not following waypoints, and simply flying away. In the business world, failure to perform 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 letter, a coupon, award you status on their web site as hero or pioneer, or at worst – replace the drone. It’s a trivial price enabling those dipping into the consumer world to advance faster than those in the business world.

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. They grew up fast by being adopted and depended on by IBM’s business.

What else might bubble up? Virtual Reality has real possibilities for training. Augmented Reality with heads up displays and glasses will be welcomed the field. Giving schematics, UV and Infrared vision, and more to workers. What will make it become easily affordable and useful – another Pokemon Go that plays with glasses pushing it onto millions of users’ foreheads.

3D printing is coming of age, but I can see point where 25% of households have plastics printer and your hardware store has a metal one. No inventory of 500K parts – just print it. Lots more like LED lights, Home Automation, Sports Fitness, etc. will bubble up.

Finally, Artificial Intelligence (AI) may be the biggest winner from the bubble up effect of the consumer. The key to AI is having huge knowledge base or corpus and lots of training. Where better than the consumer market with a potential of 7 billion users – the population of the world – to train your AI. Whether it is Siri, Alexa, Cortana, Watson, or Google, these companies’ AI programs will benefit from the consumer training it. You get a voice interface and they get you to train their AI.

What do you think will be the next big bubble up technology from the consumer world to the enterprise world?

 

 

Our 2 fears of Artificial Intelligence (AI)

We have two (2) overarching fears of AI. AI domination is the most irrational fear where AI becomes smarter than organic intelligence and wipes out or subjugate the organic life forms. This plays out in number of number of science fiction works like “Transformers”, “Terminator” and “I, Robot”. In “I, Robot”, the AI unit is claiming to do it in service of humanity. I’d argue AI domination is the least likely scenario of doom and maybe in dealing with our second fear, we can solve our AI domination fear, too.

The second fear is that of misuse of AI. I’d argue that is the same argument has been used against every technological advancement. The train, automobile, nuclear fission, vaccines, DNA, and more have all been cited for ending the world. I suspect someone said the same thing against the lever, wheel, fire, and bow. Each has changed the world. Each has required a new level of responsibility. We’ve banded together as humans to moderate the evil and enhance the positive in the past. Ignoring it or banning it has never worked.

Amazon, DeepMind/Google, Facebook, IBM, and Microsoft are working together in the “Partnership on AI” to deal with this second fear as described by the Harvard Business Review article “What will it take for us to trust AI” by Guru Banavar. It is a positive direction to see these forces coming together to create a baseline set of rules, values, and ethics upon which to base AI. I’m confident others will weigh in from all walks of life, but the discussion and actions needs to begin now. I don’t expect this to be the final or only voice, but a start in the right direction.

I hope the rules are as simple and immovable as Issac Asimov’s envisioning of the  3 laws of robotics on which the imagined, futuristic positronic brains power AI robots. Unfortunately, I doubt the rules will be that simple. Instead they will probably rival international tax law for complexity, but we can hope for simplicity.

The only other option is to stop AI. I don’t think it is going to work. The data is there and collecting at almost unfathomable rate. EMC reports stored data growing from 4.4ZB in 2013 to 44ZB in 2020. That is 10^21 (21 zeros) bytes of data. AI is simply necessary to process it. So unless we are going to back-out the computerized world we live in, we need to control AI rather than let it control us. We have the option to decide our fate. If we don’t then others will move forward in the shadows. Openness, transparency, and belief in all of human kind have always produced the best results.

In the process of building the foundation of AI, maybe we can leave out worst of human kind – lust for power, greed, avarice, superiority. Maybe the pitfalls in humans can simply NOT be inserted in AI. It will reflect our best and not become the worst of human kind – a xenophobic dictator.

Putting the AI genie back in the bottle will not work. So I think the Partnership on AI is a good first step.

 

Releasing innovation from non-innovators

Innovaton Lightbulb EarthHow do you get innovation out of people whose job is not innovation thereby generating the most meaningful innovation. Most of us think how do we inspire our design team, our coders, or even our consultants. These groups all are expected to innovate and I’ll admit to mixed results. It seems to be bell shaped curve on these teams where a few are always innovative, most are sometimes innovative, and a few that seem to be allergic to innovation and think mobile phones are a fad.

I met my friend, eBay‘s Innovation Leader, Bala (http://linkd.in/1welbjf) before I flew out of San Jose, CA and we had a wonderful discussion on innovation. Even if I didn’t care about innovation, and I do strongly, watching Bala talk about innovation is a delight because he lights up with energy. His idea is not to make innovative teams innovative, but to make the whole world innovative. The only requirement is you have an idea and he will even help you find that!

He holds a series of workshops to help groups or companies innovate. He has a multi-step process that draws the potential innovators and resources along a flowing stream until the idea becomes real. He makes it easier for non-techies to join the process. I’ll point out a few steps, but I’m including a link to his non-profit company’s web, Innovationbala, site so you can dig in further.

Play-a-thon: In this step, Bala and team, bring in lots of the latest gadets, gizmos, and software where everyone is invited to play with all the “stuff”. People, even non-techies, can play and try all the cool stuff in the market ranging from robots, to designer computer boards, to software development tools in a non-threatening environment..

Date-a-thon: In this step, idea holders are paired with many developers in speed dating model to find their ideal team. Not sure speed dating works for finding true love, but it does seem to work for finding your true team and again gives non-technical people an opportunity to get in on innovating Silicon Valley style.

Shark-a-thon: This is more of corporate commitment step, but each team pitches its idea to a team of SVP’s who can elect to sponsor the idea. What is cool about eBay is that if you are on team that gets sponsored, you are now given 4 months off your current job, no questions asked, and put on the team to deliver the idea.

There is lots more at innovationbala (http://www.innovationbala.com/) if you’d like to see the whole process.

Overall, I’m impressed by the commitment of eBayPayPal, and hopefully to both companies post split up, to their culture of innovation. I suspect a lot has to do with Bala’s commitment and vitality he brings to the topic. Now I have to challenge myself, what am I going to do to make my company more innovative?

Mary Meeker Report

Mary Meeker Report

What is going to happen in the future?  Honestly, no one knows which is what makes it exciting, but a lot of us try to look at current trends and project the future.  It is not a crystal ball.  One of the best for politics is Nate Silver (http://fivethirtyeight.blogs.nytimes.com/author/nate-silver/) from the NY Times (http://www.nytimes.com).  His recent predications on the elections have been spot on.  In his book, Signal to Noise (http://www.amazon.com/dp/159420411X), he looks at how people ignore the data based on their own bias.

The Mary Meeker report really doesn’t draw any conclusions.  It offers more of pure data view, but you get the picture of where it is pointing.  You certainly can see the new expanding power base in China and India.  It warns us to learn from our past, which is why we all need to study some history.  I encourage you to spend some time with it and put aside your biases so you see the “signal” and can shut out the “noise”.  It is a fun filled 110+ page ride.  

Let me know what you see in the data.

I hate it when corporate security is correct!

My laptop runs slow due to encryption.  I can’t use public file sharing sites like dropbox, google drive, etc.  Only some of the mobile functionality is enabled on my smartphone and it is not evenly distributed by operating system such Blackberry, iOS, and Android (due to security).  I don’t even know what we do with Windows Mobile OS?  All of this overhead, oversight, and security is cramping my style and agility and they are correct!

“When everyone is out to get you, paranoia is only good thinking. – Dr. Johnny Fever – WKRP in Cincinnati.

Corporate Security was correct in their thinking.  It looks like there are not just individual criminals and some less than ethical corporations out to get our corporate secrets, but the Chinese Government is actively working to steal them.  I found the NY Times article below unnerving.

I fully understand why governments feel they have the right to protect themselves from other governments.  And I’m willing to acknowledge that technology is part of warfare, but it appears China has bonded its defense strategy to its corporate strategy.  To me, a line has been crossed.  If you want to read the full Mandiant Security report, it is available, but I don’ think you sleep any better at night.  (http://intelreport.mandiant.com/).

Chinese Army Unit Is Seen as Tied to Hacking Against U.S.

On the outskirts of Shanghai, in a run-down neighborhood dominated by a 12-story white office tower, sits a People’s Liberation Army base for China’s growing corps of cyberwarriors.

:

Mandiant’s report does not name the victims, who usually insist on anonymity. A 2009 attack on Coca-Cola coincided with the beverage giant’s failed attempt to acquire the China Huiyuan Juice Group for $2.4 billion, according to people with knowledge of the results of the company’s investigation.

As Coca-Cola executives were negotiating what would have been the largest foreign purchase of a Chinese company, Comment Crew [Chinese Army Hacker Unit] was busy rummaging through their computers in an apparent effort to learn more about Coca-Cola’s negotiation strategy.

http://www.nytimes.com/2013/02/19/technology/chinas-army-is-seen-as-tied-to-hacking-against-us.html?pagewanted=all&_r=0

It appears to me, that if you are going to approach cloud for your corporate assets, you better be very sure that your cloud provider is as focused or even more focused on security measures as your own company.

Losses due to hacking have big dollars associated with them. According to HotForSecurity site, recent reports showed hackers earned $12.5 billion in 2011.  The top 5 incidents that were known are below.  I’m sure many others went unreported.

  1. $171 million – Sony
  2. $2.7 million – Citigroup ($4B in total losses)
  3. $2 million – Stratfor
  4. $2 million – AT&T
  5. $1 million – Fidelity Investments, Scottrade, E*Trade, Charles Schwab

http://www.hotforsecurity.com/blog/top-5-corporate-losses-due-to-hacking-1820.html

I can’t say what other cloud providers do or don’t do.  I can say that IBM, we always take security very seriously and push it down to the seemingly innocuous layers not just in the cloud data centers, but throughout the company.  And yes, that even means my laptop, iPhone, iPad, etc.  Keep in mind, it only takes one nasty e-mail or one invaded file from shared site to start the rift in your corporate security.

Yes, I still believe the future is cloud – IaaS, PaaS, and SaaS.  We just need to make sure we do it responsibly.  Later, I’ll discuss what we are doing at high level with our two public cloud solutions – SmartCloud Enterprise and SmartCloud Enterprise+ – to make them secure for enterprise computing including SAP.

SAP SaaS marches on

SAP is laying out a strong SaaS program and has keen view of the future.  They’ve organized themselves into upper domain areas of: People, Money, Customers, Suppliers, and Special.  They then have their horizontal glue layers of Social and Integration.  Finally, they have supporting layer of SaaS ERP in 2 flavors: Business-By-Design and Business One.  This clearly laid out in the illustration below.

Image

Most of the SaaS attention has gone to People with SAP’s acquisition of SuccessFactors.  Indeed, success factors is leading the SaaS charge at SAP both in terms of ideation and management with Lars Dalgaard heading the cloud unit.  SuccessFactors brings a SaaS pedigree to SAP.

All “legacy” or pre-SaaS software vendors including those like IBM, Oracle, Computer Associates, etc. all face the same challenge.  How to use a usage base metric to drive revenue and determine re-investment.  In addition, legacy vendors often haven’t built in cloud capabilities and multi-tenancy which is the key scaling and upgrades leading to lower costs.  I think you’ll see legacy software vendors buy some of the skills.  I also think as the whole market shifts to cloud, SaaS will simply become the pervasive model and vendors will adapt.

Tersely put, how do you change your revenue stream?

  • Old Revenue Formula  = Licenses + Support
  • New Revenue Formula  = Utilization metric (i.e. per user, per month, per incident, etc.)

Honestly, I think the non-cloud and even non-SaaS type application will become the exception.  So like all creatures faced with drastic environmental changes, software vendors have 3 choices:

  1. Move (find business that can’t use cloud or won’t adopt as fast)
  2. Die (easy, just don’t change)
  3. Adapt (move to more efficient modes such as re-architecting for SaaS)

One of SAP’s other big SaaS applications is Ariba.  In addition to being a substantial procurement software product with huge numbers of consumers and suppliers in their network, they are the model of moving to cloud and SaaS to survive.  They have already made the adaption.  If SAP is smart, they will take the lessons learned from the trial by fire of Ariba and apply it to their own journey. 

I think the movement to cloud, and mostly to SaaS, is one that all vendors will need to follow to remain viable.  Keep in mind there are companies today that will join the Fortune 500 in the next 5 years and will have never purchased an enterprise class server or purchased enterprise software.  As an industry, How are we going to provide value add services?  How are we going to morph our products to meet their non-procurement cycles?  Are we going to be part of the company that: 1) Moves, 2) Dies, or 3) Adapts. 

Next blog, I’ll talk more about the lower layers of Social, Integration, the two ERP SaaS options which will yield a new way to do roll-outs via 2-tier ERP.

When will Sybase ASE be FREE for all SAP system users

I am surprised SAP has not announced that the standard database from the Sybase acquisition is free to all SAP system users.  I will even be more surprised if they do not make the announcement at Sapphire 2012.

Why would SAP give away Sybase ASE?  They could make some amount of revenue by selling it, but by giving it away they improve the ROI of the migration.  Migration costs are the biggest barrier to any DB or OS change under an SAP system.  In addition, they take away the 20% maintenance and enhancement (M&E) fees their number #1 competitor, Oracle, is gaining from every SAP system running on Oracle.  I wonder how much of the reported $12B Oracle reported of support revenue in 3rd quarter is driven by SAP systems running on Oracle RDBMS.  That is potentially billions of dollars that Oracle does not have to attack SAP, develop new applications, or build a cloud business.  Oracle’s M&E, like everyone in the software business, is a substantial part of the revenue and more importantly profit stream of the business.

In addition, SAP can optimize the ASE database for SAP.  In fact they could make all other vendors’ database versions a port.  The best and brightest capabilities would be in found in the latest release of ASE coupled to SAP.  In addition, they can up sell Sybase Replication Services (SRS) as an Extract, Translate, and Load (ETL) engine, Disaster Recovery (DR) solution, and high availability (HA) solution.  They also can  up sell to HANA for higher performance.

Pushing out ASE will cost something.  SAP will have to support, develop, and move ASE forward.  They should have those resources from the acquisition and from previous DB efforts like mySQL.  Most of that cost is already accounted for excluding the go forward actions to stay on par with other major DB vendors in the SAP world; however, Sybase is are major player in the financials arena today, too.

SAP is going to break some glass with the big database providers, Oracle, Microsoft, and IBM.  While I’m sure they don’t care about Oracle’s opinion, they are strongly partnered with Microsoft and IBM.  It may be taken very poorly by IBM and Microsoft; however, I’m not sure either of them can let go of all the other areas they are linked into SAP especially IBM who has the world’s best (my opinion and Forrester’s) largest SAP practices.

HANA may be getting all the headlines, but the world is not done with RDBMS.  There is still a need.  There are still companies making lots of money, especially Oracle, on RDBMS software.  When is SAP going to give its clients something FREE to smile about and at the same time take so much away from their biggest competitor, Oracle.  Seems like a win-win for SAP and its clients.