Wednesday, June 24, 2015

Understanding the Value Chain of the Internet of Things

#InternetOfThings Unfortunately, I shall be unable to use my ticket for the Unicom conference in London next week. (Any reasonable offer considered.) So here are some thoughts in absentia.


Many of the popular examples of IoT suggest a fairly conventional data collection and monitoring process, in which internet-enabled "things" send signals to a central point, from where an intelligent response can be mobilized.

For example, a car manufacturer installs devices to monitor car performance. Or a warehouse installs temperature monitoring and control devices into every fridge. Or a healthcare provider implants a device to monitor's the patient's blood sugar.

In some cases, the devices may be programmed to perform certain actions automatically - for example, to adjust the fuel mix or temperature, or administer a dose of insulin - but these actions are ultimately the responsibility of the provider of the device.

Who is the "owner" of this device? Although the driver or the patient may have paid for the device and will want some benefit in return, the device is also serving the purpose of the organization that provided it, which should have a clear business case and cost justification to cover all the direct and indirect costs incurred.

Some marketing experts are seeing the Internet of Things as a way of reasserting control over the consumer. J Walker Smith talks enthusiastically about what he calls the Pivot to Passive.

"The pivot to passive automates activities that consumers used to do themselves, from monitoring, to researching, to reporting, to deciding. The fundamental nature of this pivot is a shift from screens to sensors. Consumers are better able to tailor their experiences, but they do so through less, not more control, relinquishing influence and authority to technologies. In turn, these are the very same technologies with which marketers are regaining control in the marketplace."
J Walker Smith, The Pivot to Passive (pdf) (Market Leader Q3, June 2014) 


More complex situations may introduce greater multi-sidedness. For example, the monitoring devices in the car may also be sending signals to an insurance company, as part of a Pay-As-You-Drive policy.

Here's the challenge. In a multi-sided situation, the business case may only turn positive when you aggregate the benefits across multiple purposes. So the innovation requires a new business model to orchestrate the costs and benefits (and risks) between all the stakeholders. A new business model introduces changes to the value network, and typically involves the creation of some kind of commercial platform.

Many of the most interesting innovations of recent years have been characterized by radical disruption to the value network. If the Internet of Things proves to be as disruptive as many people expect, I expect it to be the network where the most fundamental disruption will take place.
"In our time, things are not even regarded as objects, because their only important quality has become their readiness for use. Today all things are being swept together into a vast network in which their only meaning lies in their being available to serve some end that will itself also be directed towards getting everything under control." 
Heidegger, The Question Concerning Technology



Understanding the Value Chain of the Internet of Things will be at the London Kensington Hilton on Thursday July 2nd.

Monday, May 25, 2015

Calculating the Potential of Cloud Computing

A recent Bain and Company report claims a number of insights about the move to cloud computing
  • Enterprises are realizing only 35% of the value from their workloads already in the cloud. 
  • Leading enterprise cloud adopters have migrated nearly two-thirds of their workloads to the cloud, yet the average company has only 18% there. 
  • Up to 50% of the value of cloud investments is predicated on streamlining and improving company operations.

How do they calculate that, asks IanCohen (@coe62)

The Bain report asserts some analysis and shows some graphs, but doesn't explain its calculation. The evidence cited comes from a survey of future intentions, together with a couple of IDC reports on the benefits achieved by an unstated (presumably very small) number of companies from some very specific technological changes (implementing Salesforce, replacing AWS). This doesn't appear to be a vast amount of relevant historical data.

Elsewhere, a 2011 survey for the European Commission estimated that, as a result of the adoption of cloud computing, 80% of organisations reduce costs by 10-20%. A similar figure is quoted in a KPMG paper published in 2014.

Calculating the potential of cloud computing presumably means projecting forwards from historical data (how much has already been achieved) to estimating the future opportunity (how much remains to be achieved). This kind of calculation typically makes a number of simplifying assumptions.
  • For example, when a typical organization has moved 20% of its workflow to the cloud, it has realised 20% of the potential benefits. 
  • Furthermore, the 20% of organizations that have moved 20% of workflow to the cloud are assumed to be similar to those that haven't.
Based on these assumptions, we could estimate the remaining benefits for the remaining organizations by simple multiplication.

However, both of these assumptions are implausible. Obviously the projects that are carried out are not selected at random, but are precisely the ones that have the highest payoff and the highest confidence level, so we shouldn't expect all potential projects to have the same payoff as the actual projects. 

More importantly, the people making the technology adoption decisions don't have this expectation. Nor are they likely to be persuaded by a graph, however beautifully drawn. However, if they want to adopt Cloud Computing for other (strategic) reasons, a few white papers like this may provide some intellectual cover.

Meanwhile, the European Commission sees Cloud Computing as a way of both reducing ICT costs and increasing ICT jobs. I don't see how companies are supposed to employ more people without increasing costs, but then I'm not a politician.



Syed Ali, Steve Berez, Paul Callahan and Vishy Padmanabhan, Tapping Cloud’s Full Potential. (Bain and Company, 2015) A downloadable version of the study is available here (8 pp, free no opt-in).

Jeff Atwood, Hardware is Cheap, Programmers are Expensive (December 2008)

Louis Columbus, Tapping Cloud Computing's Full Potential (Forbes, May 2015)

European Commission, Unleashing the Potential of Cloud Computing in Europe (September 2012). See also European Cloud Computing Strategy.

KPMG, Cloud Economics: Making the Business Case for Cloud (2014)


Updated 25 May 2015

Wednesday, December 10, 2014

Have you got big data in your underwear?

Apparently, women's breasts aren't all the same. (Who knew?) True&Co. uses an algorithm based on customer feedback to recommend comfortable and flattering bras for its customers. A visitor to the website completes a questionnaire, and the website recommends some suitable bras. If the customer orders the bra, she then completes another questionnaire providing feedback on comfort and appearance. To date, over a million women have completed the questionnaire, providing 15 million data points.

@tetradian reckoned this is a great example of #bizmodel #bigdata for mass-uniqueness. But I didn't see this example the same way: I don't see anything here that turns Mass Customization into what Tom likes to call Mass Uniqueness.

Tom's favourite example of "mass uniqueness" is Picasso. I bet the algorithm couldn't find a bra for the breasts of Picasso's Demoiselles (NSFW).
Breasts of Picasso’s Demoiselle (NSFW)…

A single questionnaire, even from a million women, doesn't get into the big data league. Maybe it would when they start analysing pictures and videos of customer breasts, rather than relying on a simple questionnaire.

Or if the company were to fit sensors to its underwear, monitoring stretch during a range of activities, collecting millions of data points every minute via the Internet of Things.

Do you think I'm joking? Microsoft is working on a Smart Bra, which will monitor the mood of the wearer and detect stress. The Daily Mail suggests that this will help women to lose weight.

"To stop women reaching for the cookie jar when things hit a low, Microsoft's new prototype bra predicts when the wearer is likely to comfort eat and warns against it. The software company's high-tech undergarment features sensors in the cup pockets and side panels that detect changes in heart rate, skin temperature and stress levels - apparent precursors to overeating. All of the data is then streamed via Bluetooth to a smartphone app providing real-time 'mood-triggered eating' alerts."

Now that's what I call big data. Scary, huh?




Jillian Goodman, Cup Size Isn’t Everything (Fast Company, October 2014)

Tom Graves, On Mass Uniqueness (23 May 2014)

April Joyner, Big Data: Coming Soon to Your Bra? (Fast Forward, 6 September 2014)

Hayley Krischer, The underappreciated artistry of the professional bra fitter (Guardian 4 June 2015)

Sadie Whitelocks, Supporting your body in more ways than one! The high-tech bra designed to stop women from comfort eating (Daily Mail, 28 November 2013)

Microsoft working on a smart bra to measure mood (BBC News, 3 December 2013)



Updated 4 June 2015

Thursday, November 27, 2014

Misunderstanding CRM and Big Data

Listening to @peter_w_ryan, @markhillary and Alexey Minkevich talking about #CRM and #BigData at the Institute of Directors, sponsored by IBA Group.

Peter cites an Ovum survey showing that Customer Satisfaction is now the number one concern of management, and argues for what Ovum calls Intelligent CRM. (CA announced something under this label back in October 2000. Other products are available.)

Mark says that CRM and Big Data are widely misunderstood, which is certainly true. My own opinion is the first misunderstanding is to think CRM is about managing THE relationship with THE customer, and I completely agree with Clayton Christensen (via Sloan) that this isn't enough. What we really need to focus on is the job the customers are trying to get done when they use your product or service.

Who is good at CRM? Peter cites an example of a professor of marketing who got a personalized service at a certain chain of hotels and has been talking about it ever since. (That's a pretty good coup for the hotel, if we take the story at face value.) Mark cites the video game market, where both the console manufacturers and the large game publishers are able to collect and analyse huge quantities of consumer behaviour.

Is CRM with Big Data merely a new way of taking advantage of customers? Although most people seem oblivious to the privacy and trust risks, the Wall Street Journal this week suggested that the consumer is becoming more savvy and less susceptible to exploitative loyalty schemes and promotions. This might help to explain why Tesco, once a master of the science of retail, now seems to be faltering.

If there is a sustainable business model based on CRM and Big Data, it must surely involve using these technologies to engage intelligently, authentically and ethically with customers, rather than imagining that these technologies can provide a quick fix for stupid organizations to take advantage of compliant customers.



Related Blogs

Customer Orientation (May 2009)

The Science of Retail (April 2012)

Other Articles

Martha Mangelsdorf, Understanding your customer isn't enough (Sloan Review May 2009)

Shelly Banjo and Sara Germano, The End of the Impulse Shopper (Wall Street Journal 25 November 2014)

Intelligent CRM

AI-CRM "An intelligent CRM system with atuo-learning-tunning engine (sic), Aichain offers the most widely used open source business intelligence software in the world." Last updated March 2013

CA rolling out customer relationship management software (ComputerWorld October 2000)

IBA Group "maintains its focus on IT outsourcing that has become a strategy for many organizations seeking to improve their business processes"

Wednesday, November 05, 2014

Inside the Whale

The ethics of "pay-to-play" are being explored in the video games market. Some "free" games are funded by optional in-game purchases, such as extra weapons. There are several problems with this. Firstly, the availability of ever-more-powerful weapons might distort the game. Obviously a wealthy player could beat any chess grandmaster in the world, if the game of chess allowed you to buy an extra queen from time to time. In which case, what is the point of playing at all?

Secondly, a small minority of players are funding everyone else. In the video game world, these are known as whales. Video games often come out in multiple (overlapping) editions, and some whales can be persuaded to buy every edition. So the game developers and the majority of the players are exploiting the whales. That's fine if they can afford it, but some of the whales may be tempted to spend more than they can afford.


Some software vendors have accused industry analysts of operating a "pay-to-play" system, which allegedly favours those vendors who are willing to buy into the latest jargon (hype). And some analyst firms have a tendency to fragment any given technological marketplace into subdivisions in order to sell more "editions" of expensive reports, and to provide more differentiated opportunities for vendors to earn (or allegedly purchase) a good rating.

So if one were to produce a 2x2 matrix based on Commercial Ambition and Willingness to Invest, then the top right quadrant could be called Whales.



"If you're not familiar with how the analyst industry works, here's a very short summary. Companies brief analysts on their plans, the state of their businesses and the products they are bringing to market. Some companies pay the analyst firms to have a two-way conversation and get advice from the analysts. Then the analysts write up information-rich reports about some important business trend or another, based on all the briefings they've done. They sell those reports for hundreds or thousands of dollars to consumers wanting to benefit from all the research performed by the analysts." (Source ReadWrite Web August 2009)

Is there a pay to play problem in the analyst industry?, You told us which analyst firms were most, and least, independent (Influencer Relations, February 2014)

Tuesday, May 13, 2014

What shape is the internet (continued)?

@ironick and I have been arguing about the shape of the internet since my September 2010 post on this subject. Over the past few days, we have returned to this topic on Twitter. Nick has captured the latest tweets in his Storify piece The Shape of the Web - Database Wars Redux.

The argument was triggered by @djbressler's observation that some new browsers (including an experimental build of Chrome) were hiding the URL from the user. This is a reflection of the fact that users increasingly type "Amazon" into the browser rather than "amazon.com" let alone "http://www.amazon.com". Presumably, hiding the URL will further encourage this trend.

Google and other search engines appear to benefit from this in two ways. Firstly, it increases the already heavy dependence of the ordinary internet user on the search engine. And secondly, every time an internet user navigates via search rather than via URL or hyperlink, the search engine gets another opportunity to present some advertising, as well as collecting more information about that user.

Obviously, Google itself depends on URLs and hyperlinks. As Nick points out, Google still relies on links to construct its index, and still uses a version of the original PageRank algorithm to influence what you see when you search for a given term. But indexing and search ranking are only loosely coupled to one another.

And nowadays, the search order is not solely determined by PageRank. Instead, the search order is increasingly influenced by browsing behaviour - of others as well as our own. If you ignore the first two items, click briefly on the third item, and then immediately return to Google to look at the fourth item, Google may conclude that the first three items weren't very relevant to you. In other words, this counts as a "vote" against those items.

Meanwhile, Google only had exclusive rights to the original PageRank patent (which belongs to Stanford University) until 2011.

Obviously Google is not completely open about these algorithms, because it is perpetually at war with SEO and spammers who want to get some commercial advantage by "gaming" the system. So there is a degree of speculation involved in working out what exactly Google is up to. Sometimes Google merely seems to appeal to the lowest common denominator, as David Auerbach suggests in his review of Metafilter search results ("Deranked"). However, it is beyond speculation that Google's behaviour has become increasingly sophisticated over the past decade, and that what we see is increasingly "personalized".

Nick accuses me of "confusing the use of behavior IN the ranking algorithm itself with using behavior to verify the quality of the algorithm". However, there is some evidence that Google initially trials new factors in parallel with the existing algorithm, before integrating these factors into the algorithm itself. (See for example, Google Panda.) In any case, the total behaviour of Google can be thought of in terms of the collective intelligence of human brains AND algorithmic software, and it may not be possible for outsider observers to be exactly sure where the boundary lies at any point in time. (We can detect "momentum", but not "position".)

Obviously URLs are not going to disappear entirely. For my part, I have always made an effort to use links and bookmarks rather than pander to the commercial interests and cognitive distortion of search engines. I don't think this undermines my general point - that the Internet-in-use (based on majority habits) is taking on a different shape. Obviously it is still possible to use the Internet in a disciplined and self-conscious manner, which Nick (always) and I (sometimes) practise, but the fact that this requires effort and intelligence makes it likely that it will never become mainstream.

In the long-term, Google may face a paradox. If people stop using URLs, then Google's ability to index and rank pages across the internet might possibly be compromised. But I'm sure that the clever people at Google have thought of this paradox, and already have a cunning plan.

Meanwhile, the internet (as experienced by ordinary users) is gradually becoming less web-shaped and more star-shaped, with your favourite search engine or social network at the centre. (Please note the word "gradually".)


Sources

David Auerbach, Deranked - Why has Google forsaken MetaFilter? (Slate May 2014)
Bill Slawski, The New PageRank, Same as the Old PageRank? (March 2012)
Daniel Sour, It Knows (LRB October 2011)


Related posts

What shape is the internet (September 2010)
What shape is your intranet (May 2014)

Updated  17 May 2014

Bring Your Own Expectations

Once upon a time, there was a clear separation between Work and Home. This separation has been undermined by two phenomena.

1. Working at Home - in other words, allowing work to invade the home environment
2. Bring Your Own Device (BYOD) - in other words, allowing personal devices to invade the work environment

In this post, I want to talk about a third phenomenon, perhaps more invisible but no less important. Bring Your Own Expectations means that we have all become accustomed to getting what we want from the Internet, and therefore expect to get the same things (or "affordances") from corporate systems and platforms.

One of the most obvious gaps between our expectations and corporate reality is the failure of search. The Internet has an uncanny knack of guessing what we want, and there are strong commercial incentives for Amazon, Facebook, Google and the rest to improve their "mind-reading" capabilities.

In comparison, your company intranet is simply not in the same league, and therefore cannot anticipate your needs in the same way. Some people see this as merely a technical lack, to be addressed by some functionality inside the company firewall that roughly resembles the way Google worked ten years ago. But this is far more than a mere technical shortcoming.

And search is just one difference. There are also expectations about interoperability. For example, do we expect to use one network for linking with colleagues and customers, and a different network for linking with friends and family? Most people are still learning how to manage these different worlds without getting muddled - for example, people who automatically put kisses onto private messages may find themselves carrying this habit into corporate communications. Maybe sometimes our expectations lead us astray.

Some service providers (including notoriously Facebook) insist that you have a single identity for personal and business use. Other service providers accept that people may wish to have two or more accounts, in order to keep personal and business use separate, and are happy to design premium services largely for the business user. A good example of this is DropBox for Business, which allows multiple accounts (e.g. a business account and a personal account) to be synchronized to the same computer. However, people will still expect to have at least as much affordance in the business sphere as in the personal sphere, and will be unhappy if their employer provides (for example) corporate file-sharing services that are not as good as (say) DropBox. (Other file sharing services are available.)


Related Posts

BYOD Bring Your Own Device (Feb 2012)
On Working At Home (March 2014)
What Shape is Your Intranet (May 2014)


Updated 5 November 2014

Saturday, May 10, 2014

What shape is your Intranet?

@djbressler tells us he is work­ing on a thought-piece about the bifur­ca­tion of the intranets from the Inter­net. In the meantime, in a post called Burying the URL (May 2014), he comments on an experimental build of Chrome, which continues the trend of hiding the URL and encouraging people to use search instead. Obviously it benefits Google when people rely exclusively on search. But it's not just Google's Chrome that is doing this; Firefox and Mobile Safari are also going in this direction.

In my post What shape is the internet (September 2010), I said that shifting the emphasis from URL hotlinks to search undermines the idea of the internet's being web-shaped. This point is also made in a post by @apike, referenced by David and also called Burying the URL (April 2014).

URLs are the essence. They make hypertext hyper. The term “web” is no accident – it refers to this explicitly.
See also an excellent Twitter debate following @apike's tweet.


When David talks about bifurcation, he means that "enter­prise IT is diverg­ing enter­prise tech­nol­ogy from con­sumer tech­nol­ogy in a way that’s cre­at­ing two irrec­on­cil­able branches of tech­nol­ogy". He observes that most company intranets have a pretty lousy search facility.

But most company intranets have pretty lousy cross-linking as well. They are mostly just pdf graveyards stuffed with documents of indeterminate pedigree, which people are often reluctant to waste time searching (even if the search facility were better) because they don't expect to find anything of value.

Actually, you can't always find what you are looking for on the Internet either, and that has a lot to do with the limitations of search, but there are enough amusing distractions to conceal this fact. Surely we don't want our company intranets to copy the internet too closely?

And remember that the data revealing Enron's problems were cheerfully displayed on the Enron website. But nobody important had bothered to look at these documents properly. (Actually, a bunch of students had analysed them years previously and concluded that Enron was bankrupt. They probably got low marks for that assignment!)

There is an increasingly common belief that the tech­nol­ogy used inside com­pa­nies should work the same way as outside, should provide the same "affordance". This is not Bring Your Own Device but Bring Your Own Paradigm Expectations. I guess I should work on a thought piece about this.


Related posts

What shape is the internet (September 2010)
Bring Your Own Expectations (May 2014)

See also Steven Poole, The pdf graveyards can only expect an increase in their undead populations (Guardian 9 May 2014)