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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Meet the New Boss: Big Data (WSJ) – Techaisle Take

Wall Street Journal Article

This is an interesting article from the WSJ concerning how we are slowly allowing decision-making processes to move away from people and be handled by algorithms instead. It caught our attention at a time when we are completing survey work for Business Intelligence report. As discussed in an earlier post, one of the key trends in BI is how deeply it is being embedded into all kinds of applications , and this article is a good example. Please let us know what you think: comment, like, tweet or forward.

Laying the Foundation


Analytic software has evolved through several generations over the last 70 years from around WWII, when a series of unprecedented number-crunching challenges gave rise to Decision Support Systems (DSS) designed to solve problems such as best equipment production mix given material constraints, how to logistically support the Allied invasion of Europe, split the atom, or break the Japanese code. These kinds of problems tended to be monolithic, using stochastic models to find the best answer – and were a major catalyst to development of the mainframe computer.

Business Intelligence (BI) followed this linear and iterative approach with one that supported solving business problems, mostly operational, within divisions and departments of large commercial organizations, using more distributed equipment within a wider audience, i.e., Finance, Operations and Distribution. In the late 1990s there was an explosion of data resulting from widespread adoption of CRM, the killer app of the Client/Server era, adding mountains of Sales and Marketing Data to the volumes of operational information. There was a growing need to get a top down view of how performance in one area of the organization was impacting the others, to begin taking a more structured approach at understanding cause and effect, setting objectives and consistently measuring performance to improve results. BI was evolving into Enterprise Performance Management (EPM) - which is where market leaders are today.

EPM is characterized by using Business Intelligence software to understand the best performance scenarios, measure actual performance indicators (KPIs) and determine how to close the gaps, using exception reporting for most front office functions (CRM/SFA) and rules-based processing for the back office (Process Manufacturing/Real Time Bidding, SCM/Advanced Web Analytics).

Optimization Nation


Equally important as the individual BI technology advances are some of the underlying rules that have accompanied the evolution: Moore’s Law, Metcalfe’s Law, the Law of Accelerating Returns all drove exponential growth in production, adoption and utility. Over a 20 year period, these have resulted in a slow-motion Black Swan event based on the cumulative effect of technology investments, and having huge impacts on our society, including but not limited to the following optimization activities:

Law of DisruptionEconomy – development of consumer mortgage products designed to optimize sales volume regardless of risk, bundling them into bonds to optimize profit on the debt, creation of derivatives to optimize transactions and create demand for increasingly suspect debt, development of new financial instruments that have no underlying value such as  synthetic derivatives that truly have nothing but conceptual paper profits behind them, etc. By 2008 these financial instruments had optimized leverage to create risk greater than the combined GDP of industrialized world.

Employment – The WSJ article goes into depth about how algorithms have already replaced a hiring manager's decisions based on probabilities of how the employee might behave under certain circumstances. Employer choices have also been optimized by a flattening of the market caused by oceans of virtually unlimited supply from sites like Monster.com, 100K Jobs, Dice, etc. Middle management has been optimized out of the organizational chart and replaced with productivity tools, more efficient communications and a lower ratio of managers to workers. And the actual number of staff required to hit the bottom line has been optimized while CEO salaries have been optimized. If we look a little further down the line, Andrew McAfee's POV is deep on this subject, and more technical than mine.

Industry – We all know that manufacturing was moved offshore en masse over the past three decades to optimize production costs, but several other industry segments have been optimized as well, including Retail which has optimized through consolidation and healthcare which has optimized revenue per patient. Retail has been optimized at a structural level, to provide one-stop shopping for almost everything you need in a single location while volume has been optimized to produce the absolute lowest price and any cost, including optimizing the number of worker hours to keep an optimal ratio of full time to part time employees and save the resulting benefit costs. And it has also optimized the number and variety of retail outlets and small businesses required to service an optimized population in square miles. Healthcare prices have been optimized to take advantage of tax structure, potential law suits, healthcare insurance gaps, maximizing federal matching funds, Board and C-Suite compensation, pharma industry profits, and many more.

Government – Automation has also enabled a profitable business model that optimizes the use of Federal Government funds and ensures that every available dollar is spent, whether it is to make sure everybody gets a state-of-the-art mobile wheelchair, their 120 monthly catheters, a speaking glucose meter, maximum disability benefits, etc.  “Don’t worry - we’ll handle all the paperwork.”

Set it and Forget it


Complex SystemsThe imminent next generation of analytics involves truly “optimized” complex systems with human intervention largely removed from the process. Not to single out Wall Street, but they offer one of the best examples of unbridled application of technology in the singular pursuit of optimization, in their case, profit for themselves and their shareholders. The Financial Services industry has invested billions into technology and employed thousands of physicists and Ph.D.-level mathematicians to achieve a couple-millisecond transaction advantage, and programmed algorithms to use the advantage and change the rules (i.e., share price represents perfect information is no longer true). This has not proved to always produce predictable results, and the ghost in the machine has put us back on the precipice more than once, as seen in this TED video by Kevin Slavin. As we move into a brave new world that combines optimization software with networks that operate too fast for human intervention, more of our lives will be controlled by how rules are programmed into the system than what we do as individuals to impact the results. One of the best examples of where this is heading is the IBM’s Smarter Cities Initiative, which combines intelligent networks that manage Traffic, Water and Electric Utilities, Transportation, Healthcare, Public Safety, Education and others into an overall “Intelligent City”. Everyone hates traffic, so the video example from the IBM innovation site does more to explain this than I can by writing more on the subject.

Whether you agree with it or not, we are on a direct course to this future that is almost impossible to divert. This is a philosophical question and everyone will have their own opinion about the cost/benefit of chasing optimization. Comments and Opinions are welcome, please let us know what you think.

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Mobile Apps: Forget About Content. Context is King

As of March of this year, half of all US mobile phone subscribers had a Smartphone. This in my opinion is more than just a number. It is a tipping point for applications. It is safe to say that we are now in an app economy as far as mobile phones are concerned. But the number has significance beyond just being a tipping point because it is a tipping point for thinking about applications.

What do I mean by that? Applications designed for the desktop or enterprise environments typically exist in a sandbox. That sandbox can be as small as a user’s desk or the entire enterprise but nonetheless a sandbox. Their function and focus is to provide the tools needed to complete a task within the confines of that sandbox. But these apps for the most part ignore user contexts. For example, a CRM application typically does not take into consideration a user’s location nor does an app like MS Office (other than language localization). But mobile apps need to be different because mobile is different. A mobile phone is not just another device. It is a beacon in your pocket that is constantly aware of where you are, what’s around you. It is also aware of your preferences and social network and what transactions you prefer. And one more thing – mobile identifies the user uniquely, not just from a device standpoint but as an aggregate of all the factors mentioned above. So it follows then that Context must define Content. But what are these contexts that app developers should consider? There are fundamentally three.

    • Location

 

    • Contacts/social network

 

    • Calendar/time



Not all apps can take advantage of all three but should take advantage of at least one. It is hard to say that one of the above mentioned contexts is more powerful or more important than the others. Each can be powerful depending upon the app or the content. For example, ecommerce applications benefit significantly from taking advantage of location while for a CRM app, contacts and calendar are more critical than other contexts.

Context = Creative Destruction

The use of contexts in app development is not just about driving new user experience and value for users; it is about driving new business models as well. The use of contexts increases the app’s value to the point where in many instances a new revenue model can be implemented. For example, wireless phone companies that by design are able to capture user locations can monetize this “data” in a variety of ways, advertising being one of them. Similarly apps that used to be sold on a per license basis can shift their revenue models to leveraging contextual data as opposed to per user charges. In that respect, context is not only valuable, it is disruptive. The first wave of context aware apps we see have typically been those that would anyway have been free - Apps such as Instagram, Pinterest and Zoomingo (local shopping application).

Increasingly, I predict that we will see whole industries that shift their business models to take advantage of contexts. Newspapers and media are a prime example. While many newspapers are experimenting with paywalls, I believe that a larger opportunity exists for them to exploit user contexts. News publishing today uses what could be termed as an “in-out” model, that is publishers and editors decide what content should be created, publish it and hope that readers will find it interesting. It is the traditional content first driven approach. But what is relevant to me as a reader depends upon my current context. And what is relevant for me today may not be relevant tomorrow. It calls for a more dynamic approach to presenting content, where content to be presented is selected based on a combination of contexts. In other words, an “out-in” model. Doing so improves their ability to deliver advertising thereby potentially increasing revenue.

The same is true for retail. Most mobile retail websites are mere reproductions of online properties but should they be? Online retail websites suffer from the same contextual ignorance as other apps. For example, a mobile retail app would be much more powerful if it could detect a person’s physical proximity to a store. Imagine how small business retailers could benefit from such capabilities. Think about applications like Endomondo that track your physical fitness activities. Well over 5 million users have downloaded and use Endomondo. Consider how useful that data would be to an outfit like REI for targeting and creating customized offers. Here’s another example and a personal one. I am an avid photographer, but not a very good one. I try to learn about photography but that typically happens before or after I am out taking photographs. But the most appropriate context for me to quickly learn tips is when I am taking photographs. Cameras already track locations and embed them in pictures. They already sense light conditions. But this data is not used to educate the photographer! Could it be used to provide tips at the time the photo was being taken? Or could suggestions be given as to how to improve the photograph with examples of the best possible settings? Would it make amateurs like me to more likely to buy a particular camera brand? Would it facilitate brand loyalty? I believe the answers to all of the above are a resounding yes!

Context = Engagement

Indeed, most websites retail or not suffer from the same issue. Even corporate, customer facing websites are mere one-way information dispensing media rather than a context aware, interactive medium that facilitates two way engagements. In fact the very term “engagement” needs to be redefined in the mobile age.  Engagement was largely defined in terms of giving users the content they want/need. But in the mobile age, I believe that engagement should be about the interaction users want and need. It follows then that if context defines interaction then adding contexts fuels a more powerful engagement that can impact costs and revenue.

In Conclusion

Successful mobile applications need to score high on relevance. Relevance is a function that takes into consideration not just content but also all the factors that surround and influence the appeal of that content. This means that app developers have to re-think their applications for the mobile age. And not just re-think but they have to get mobile DNA into the entire organization.

 

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Mobile and Touch: A new interaction formula takes hold

Every decade or so, the tech industry experiences a tectonic shift. Over the last 40 years, we have seen changes in hardware, software, communications, networking, development tools, languages and platforms. Each has been significant in its own right. Some are incremental and though touted as game changers, they impact a narrow slice of technology users. It is arguable whether the shift to mobile is the most important of all but it has been as impactful as the arrival of the PC, if not more because of the pace at which the change has occurred.

Most readers of this blog are well aware that the most impactful changes in technology are those that ultimately change user behavior and disrupt how people interact with information that affects their daily personal and professional lives. A technology such as that changes the entire eco-system around it. When Apple introduced the world to GUIs and the mouse followed subsequently by Microsoft, it broadened the market for PCs and changed how people interacted with information. The combination of mobile and touch
technologies is having the same impact.

Take Instagram for instance. I must admit that I never gave Instagram a fighting chance of success. When I first heard of it I thought what possessed these guys to build a photo sharing app given the presence of huge success of Flickr and Picasa – both properties of
large companies. Similarly, Pinterest is but a feature of Facebook, right? Wrong! And I am glad to have been proven wrong. These and other apps prove a simple reality – Mobile IS different. What these and other success stories prove that it is possible to reinvent existing applications and indeed markets in an increasingly mobile centric world.

Emerging Mobile Interaction Formula
When one analyzes the characteristics of these apps a few things become evident.

    1. Goal completion – Successful mobile apps must be responsive and allow users to complete the task quickly and with the least amount of friction. This seems elementary but is critical in mobile scenarios.

 

    1. Context – Apps must be contextually aware and on the flip side make easily make evident to the user what the context is. Again, elementary but of heightened importance when thinking mobile apps.

 

    1. Relevance – Limitation of screen size means that developers must be clever and super sensitive to how an app communicates relevance. There is no room to explain what an app does or is supposed to do, no room to guide the user in a systematic manner.

 

    1. Entertainment – Even productivity apps must provide some form of entertainment even if it takes the form of simply taking engagement to a new level. Immersive games do this as a matter of necessity but so do apps like Path and Evernote.

 

    1. Communication – Communication is central to all successful mobile apps. People don’t use mobile devices in a vacuum. While apps like Path present a simple elegant UI, its central value lies in being able to share one’s life with others. Regardless of the genre an app might fall into, communication has to be a central tenet of the app whether it is one-to-one or via social networks.



Touch technology is an important component of this and also presents some challenges. It has its advantages but also has limitations. It allows for a more natural interaction with information but for that to happen applications must be redesigned and rethought impacting even the most basic applications used every day.

    • What does a spreadsheet optimized for mobile platforms look like?

 

    • Does it (should it) even look like a spreadsheet?

 

    • What about graphics applications?

 

    • What is the best way to create a presentation on a touch optimized mobile platform?



Historically these apps have been designed and optimized for specific operating systems and devices. Compared to successful mobile apps they take on the status of silos, operated by individuals and content created within these apps is shared in the most rudimentary ways (think email). Touch interfaces aren’t just a way to replace mouse clicks and apps that do just that are foregoing the opportunity to drive new value for their users. For example, take a look at the following concept emerging out of MIT’s Fluid Interfaces lab.

This is Swÿp and this is how MIT describes it.



With Swÿp you can transfer any file from any app to any app on any device: simply with a swipe of a finger. Swÿp is a framework facilitating cross-app, cross-device data exchange using physical "swipe" gestures. The framework allows any number of touch-sensing and collocated devices to establish file-exchange and communications with no pairing other than a physical gesture. With this inherent physical paradigm, users can immediately grasp the concepts behind device-to-device communications. The prototype application “Postcards” explore touch-enabled mobile devices connected to the LuminAR augmented surface interface. Postcards allows users to collaborate and create a digital postcards using Swÿp interactions. Swÿp enabled interfaces can support new generation of interactive workspaces possible by allowing pair-free gesture-based communications to and from
collocated devices. (Source: http://fluid.media.mit.edu/people/natan/current/swyp.html)

Another interesting concept is “Sparsh” (means “to touch” in Sanskrit).



'SPARSH' lets one conceptually transfer media from a digital device to one’s body and pass it to another digital device by simple touch gestures. The digital world -- laptop, TV, smart phone, e-book reader and all are now relying upon the cloud, the cloud of information. SPARSH explores a novel interaction method to seamlessly transfer something between these devices in a real fun way using the underlying cloud. Here it goes. Touch whatever you want to copy. Now it is saved conceptually in you. Next, touch the device you want to paste/pass the saved content. SPARSH uses touch based interactions as just indication for what to copy, from where and where to pass it. Technically, the actual magic (transfer of media) happens on the cloud.
(Source: http://fluid.media.mit.edu/people/pranav/current/sparsh.html)

What this means for businesses – Embrace “Mobile First” Approach

Businesses Should Embrace "Mobile First" Approach
IT departments are already dealing with an onslaught of devices that their constituency is asking them to support. The so called BYOD (Bring Your Own devices) trend has stressed IT managers and many resist the trend citing security concerns. But any platform shift causes some pain for some amount of time. Progressive IT managers should look at this as an opportunity to add new and more value to employees. The shift to mobile and touch platforms will eventually force IT departments to embrace a “Mobile First” approach to IT strategy and the sooner IT managers do it the better because ultimately, the growth in mobile isn’t about devices or software or networks. Those will continue to evolve. It is about how we interact with information in a way that enriches our individual experiences and productivity.

 

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Dell confirms its position as an end-to-end solutions company

End-to-End Solutions Company
Convincing conference, unified messaging from all executives, substantial customer success stories including SMBs, considerable partner alliance conversations, convergence showcase, expanding geographic footprint, emerging technologies, mid-market design point, and end-to-end solutions story. What can I say?

At the recently held Dell Annual Analyst Conference, in Austin, the centerpiece of messaging was Dell’s relentless pursuit to be an end-to-end IT solutions provider and a trusted partner. Michael Dell in his conversation with the analysts proved that Dell has changed the conversation from product to services.

“Many new change vectors are going on - Data centers are becoming server centric/compute centric, networking is being combined with computing and storage and security are becoming one – Dell has the ability to understand where the puck is going”, said Michael Dell. To that extent Dell is busy building products and solutions from which customers can capture value.

Dell has made 20 acquisitions since 2008 to build a solutions delivery capability. Its R&D, which is increasingly being focused on storage, server, security and networking convergence went up by 40 percent in the last year alone.  A key aspect of the strategy is to develop converged solutions that include storage, security, servers and wrapping it all together with services and deliver end user solutions that help customers compute in environments with pervasive data access.



 

 

 

 

 

 

 

 

Since his return as CEO, Michael Dell has steadily moved Dell into new areas for higher growth and profitability. Although Dell’s revenue has remained within a narrow margin, growing by only 1.5% from 2008 to 2012, its net income after taxes has grown by 18.5% within the same time period. Dell today has greater diversity in its solution offerings and broader geographic footprint. Both storage and security are higher margin products and with the acquisition of EqualLogic, Compellent and recently SonicWall, Dell’s margin story continues to improve.

Dell’s end-to-end solutions story is also beginning to look complete with portfolio having evolved from PCs and servers to services. Dell’s software portfolio is not where it should be but Dell is building out its capabilities for on premise software, cloud applications and software embedded in hardware. Consistent with the overall theme it wants to offer software solutions that are easier to buy, easier to use and easier to extract value.



 

 

Even the channels organization is perfectly aligned and focused on continuing to grow its PartnerDirect program that was started five years ago and is now approximately US$14 billion business for Dell. The channel’s organization headed by Greg Davis is continuing to make its rules of engagement very partner friendly and empowering and training its channels to provide value to their customers. Greg is ensuring that there is consistent
channel engagement across both mature and emerging markets with deal registration, compensation neutrality and executive priority. With over 135,000 training modules delivered in the last year alone it aims to provide simplicity, enablement and a strategy to win datacenters together. To take advantage of new social media networking platforms, Dell has also launched a new social media training program for its channel partners. The training program, developed based on Dell’s own experiences, provides its channel partners access to a number of useful social media tools and tips, including links to all of PartnerDirect’s social media platforms, a Q&A forum, registrations for both a live virtual training session and on-demand refresher courses.

Executing on its vision
Dell’s vision is being driven by five key market dynamics:

  1. Emerging markets growth

  2. Consumerization of IT

  3. Explosion of data

  4. Alternative computing platforms

  5. Corporate IT complexity



Dell has not only been able to integrate the businesses it has acquired but also has successfully scaled them. Dell Boomi, a middleware for cloud, originally acquired for its ability to bring cloud integration to SMBs, is equally at home in large enterprises. A  recent example is OneWorld Alliance which has implemented a new information technology (IT) hub based on Dell Boomi AtomSphere cloud integration, designed to substantially reduce complexity, cost and time involved in linking new member airlines into the alliance.

SMBs' "CIO in a box"
Whenever an IT vendor presents customer stories I look for sincerity in the customer’s dialog and contribution of the IT vendor to customer’s success. Current Motor, an Ann Arbor, Michigan based SMB stole the show and my heart. With only 12 employees it uses full end-to-end solutions from Dell in the most interesting yet fundamental ways. Remember that it is only a small business; nevertheless Dell put a team together to bring to fruition integration with salesforce.com and digital dashboard enablement of Electric Scooters six months sooner than expected. Solutions used – mobility, cloud, hardware, software, services. As Laura Flanagan, Executive Chairman, Current Motor put it, “Dell is her CIO in a box.” And it all started with Laura approaching Dell with a business pain point. The result -- sincerity in dialog and value-add by Dell.

As Dave Johnson, SVP, Corporate Strategy said in his presentation, the “heart of the customer is the CIO.” No worries, SMBs, if you do not have a CIO, Dell can play that role for you.

Next Steps for Dell

  • The entire Dell team has to work harder to get its messaging and capabilities heard by its current and potential customers because I feel Dell’s end-to-end
    solutions story has not yet reached the crescendo it deserves

  • By focusing on mid-market design point Dell should not forget that small businesses have different needs and the last thing they want is a scaled-down version of product meant for mid-market businesses. Other IT vendors have tried in the past with zero to limited success

  • Dell should formulate and articulate its mobile strategy beyond its planned introduction of tablets and smartphones, especially for the SMB segment that are adopting mobility solutions faster than enterprises

  • Technology pain points have now overtaken business pain points for SMBs. Dell can be that unique IT Vendor that helps SMBs sort out and identify relevant technology options (cloud, mobility, infrastructure, managed services, virtualization, social media, business intelligence, marketing automation) by becoming a trusted advisor and business consultant


Anurag Agrawal
Techaisle
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