IBM on How Computing Will Change Us in 5 Years

Since 2006 at about this time IBM comes out with five predictions, dubbed 5-in-5, about how technology will affect the world within five years.  Each year the predictions look at how technology innovations will change the way people work, live, and play within the next five years. They are based on market and social trends combined with ideas from the thousands of biologists, engineers, mathematicians and medical physicians in IBM research labs around the world.

Last year the 5-in-5 predictions focused on how systems would augment human senses. It looked at sight, hearing, smell, touch, and taste. For example, a machine that experiences flavor could determine the precise chemical structure of food and why people like it. Or, computers might smell for chemicals in urban environments to monitor pollution or analyze the soil.

IBM’s 5-in-5 predictions for 2013 go in a different direction. This year the researchers looked at how innovations in computing allow us to interact with the meaning that lies in data. The researchers, taking a distinctly benign view, suggest that systems will emerge that treat us as individuals, adapt to us, and look out for our interests. Others, of course, might see this as the tyranny of Big Brother.

Here is this year’s 5-in-5:

  1. The classroom will learn you.  Teachers will work on device that can monitor and interact with the student and ultimately create a unique persona for each student. Teachers will use that persona, which changes over time, to guide the student on his or her learning path. They will know, through the student’s device, what the particular student is struggling to learn and will provide the right help at the right time.
  2. Buying local beats online.  The combination of cloud technology and in-store display will enable local stores to act as a showroom for the wide variety of products available online and enable customers to interact with a product. Of course the store will recognize you and know your preferences. In short, IBM is predicting the convergence of online and brick and mortar retail.
  3. Doctors will use your DNA to keep you well. This already is happening how. But it goes beyond DNA to using the data analytic power of computers to diagnose patient ills and guide doctors in treatment. IBM’s Watson is doing some of this today. How quickly this will evolve remains to be seen; healthcare is a minefield of conflicting interests, most of which have nothing to do with patient care and successful outcomes. You can, for instance, have your personal genome assessed and analyzed today but few have opted to do so. Do you want to know you have a strong genetic inclination toward a disease for which there is no cure?
  4. You city will help you live in it. Sitting at consoles in operations centers connected to myriad sensors generating massive amounts of real time data, city administrators will be able to, say, manage traffic lights interactively as traffic flows or dynamically adjust the arrival and departure of various transportation. All things we as citizens probably want. The city also could become a huge social network where policies are developed based on clicking likes. Big brother, anyone?
  5. A digital guardian will protect you online. The retailer Target just compromised tens of millions of personal identifications at the end of the year. We truly need an effective digital guardian. As IBM notes, this requires continuous, sophisticated analytics, to identify whatever activity in your digital life varies from the norm and flags any sudden deviation of behavior. This guardian needs to shut down bad things proactively before it reaches you and also provide a private safe fortress for your data and online persona. As one whose email was recently hacked, this blogger is ready to sign up today. BTW: my apologies to any readers who received a desperate message purportedly from me saying I was stranded in Turkey, my wallet destroyed, and in immediate need of money to get home. Hope you didn’t send any.

Best wishes for a peaceful and prosperous New Year.

New Year Resolution #1: Follow this blogger on Twitter: @mainframeblog

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Fresh Toys Help IT Open New Business Opportunities in 2014

Much of what to expect for IT for 2014 you have already glimpsed right here in BottomlineIT although some will be startlingly new. The new stuff will address opportunities in many cases that businesses are just starting to consider. Some of these, like 3D-printing or e-wallet, have the potential to radically change the way business operates.

Let’s start with what you already know: 2014 will be cloud everything; which is being steadily absorbed into business DNA as it evolves into the predominant way companies go to market, relate with their customers and partners, find employees, and deliver increasing aspects of their products as online services.

Also expect the continued hyping of big data, especially the unstructured data found everywhere, and analytics, which is necessary to make sense of the data. In 2014 analytics will be augmented by real-time analytics and predictive analytics, both of which can indeed deliver measurable business value.

In 2014 everything will be virtualized. In the process it will become defined by software. That means it will be programmable, allowing you to change its capabilities almost at will. Virtualized, software-defined capabilities will be in the products you acquire and the appliances you buy. You next car will be software-defined and Internet (cloud) connected. Your video-enabled car will be able to park in a tighter space than you can park it yourself.

Mobile, in the form of smartphones and tablet devices, will be the devices of choice for more and more people worldwide. Your mobile device will increasingly handle your communications, shopping, purchasing, socializing, entertainment, and work tasks even as it take over more of the functions of your wallet. Eventually the e-wallet will contain your identification, memberships, subscriptions, credit and debit cards as security gets bolstered,

On to the completely new: business drones are coming; mainly in the form of smart, software defined and programmable devices that can do errands. Basically they are taking robotics to a new level. Amazon hopes to use them to deliver items to your doorstep within hours of your purchase. What might your business do with a capability like this?

3D-printing is BottomlineIT’s favorite. Where the Internet disintermediated much of the traditional supply chain and distribution channel, 3D-printing can disintermdiate manufacturers by producing the physical product at your desk. Now software-defined, customizable mass products can be cost-effectively manufactured at scale for a market of just one. With 3D-printing you can deliver a customizable version of your widget to a customer as readily as you send a fax. Can you make some money with that capability?

Finally, smart, wearable, cloud-connected computers in the form of wrist watches (remember old Dick Tracy comics) and eye wear. Google Glass will become increasingly commonplace. Exactly what will be the business value of Google Glass remains unclear. Right now you buy it for the extreme cool factor.

So expect new IT goodies around the digital Xmas tree starting to arrive this year but in quantity by the end of 2014. Some may be a bust; others may be late in coming. As CIO, your job is to figure out which of these help can you meet your organization’s business goals. Best wishes for 2014.

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Five Reasons Businesses Use the Cloud that IT Can Live With

By 2016, cloud will matter more to business leaders than to IT, according to the IBM Center for Applied Insights. In fact, cloud’s strategic importance to business leaders is poised to double from 34% to 72%. That’s more than their IT counterparts where only 58% acknowledge its strategic importance.

This shouldn’t be surprising. Once business leaders got comfortable with the security of the cloud it was just a matter of figuring out how to use it to lower costs or, better yet, generate more revenue faster. IT, on the other hand, recognized the cloud early on as a new form of IT outsourcing and saw it as a direct threat, which understandably dampened their enthusiasm.

IBM’s research—involving more than 800 cloud decision makers and users—painted a more business-friendly picture that showed the cloud able to deliver more than just efficiency, especially IT efficiency. Pacesetting organizations, according to IBM, are using cloud to gain competitive advantage through strategic business reinvention, better decision making, and deeper collaboration. And now the business results to prove it are starting to roll in. You can access the study here.

IT, however, needn’t worry about being displaced by the cloud. Business managers still lack the technical perspective to evaluate and operationally manage cloud providers. In addition, there will always be certain functions that best remain on premise. These range from conformance with compliance mandates to issues with cloud latency to the need to maintain multiple sources of IT proficiency and capability to ensure business continuance. Finally, there is the need to assemble, maintain, and manage an entire ecosystem of cloud providers (IaaS, PaaS, SaaS, and others) and services like content distribution, network acceleration, and more.  So, rest assured; if you know your stuff, do it well, and don’t get greedy the cloud is no threat.

From the study came five business reasons to use the cloud:

1)      Better insight and visibility—this is the analytics story; 54% use analytics to derive insights from big data, 59% use it to share data, and 59% intend to use cloud to access and manage big data in the future

2)      Easy collaboration—cloud facilitates and expedites cross-functional collaboration, which drives innovation and boosts productivity

3)      Support for a variety of business needs by forging a tighter link between business outcomes and technology in areas like messaging, storage, and office productivity suites; you should also add compute-business agility

4)      Rapid development of new products and services—with  52% using the cloud to innovate products and services fast and 24% using it to offer additional product and services; anything you can digitize, anything with an information component can be marketed, sold, and delivered via the cloud

5)      Proven results –25% reported a reduction in IT costs due to the cloud, 53% saw an increase in efficiency, and 49% saw improvement in employee mobility.

This last point about mobility is particularly important. With the advent of the cloud geography is no longer a constraining business factor. You can hire people anywhere and have them work anywhere. You can service customers anywhere. You can source almost any goods and services from anywhere. And IT can locate data centers anywhere too.

Yes, there are things for which direct, physical interaction is preferred. Despite the advances in telemedicine, most people still prefer an actual visit to the doctor; that is unless a doctor simply is not accessible. Or take the great strides being made in online learning; in a generation or two the traditional ivy covered college campus may be superfluous except, maybe, to host pep rallies and football games. But even if the ivy halls aren’t needed, the demand for the IT capabilities that make learning possible and enable colleges to function will only increase.

As BottomelineIT has noted many times, the cloud is just one component of your organization’s overall IT and business strategy.  Use it where it makes sense and when it makes sense, but be prepared to alter your use of the cloud as changing conditions dictate. Change is one of the best things at which the cloud is best.

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Bitcoin Means for Micro-Transactions for IT

Bitcoin may be the world’s newest currency. If not, it is certainly the most unconventional. But, it is catching on. As Reuters wrote recently: “Venture capitalists show no sign of shying away from investing in startups related to Bitcoin.”

Think of Bitcoin as electronic money, or maybe virtual money since no government backs it or controls it. Yet, businesses already are doing business with bitcoins. According to Reuters, there are 11.7 million bitcoins in circulation, with a market capitalization of over $1.7 billion. The price (value) fluctuates, but so does the value of conventional currencies although bitcoin fluctuations may be less well understood.

Wikipedia describes Bitcoin as a cryptocurrency—a type of currency that relies on cryptography to create and manage the currency—specifically, the creation and transfer of bitcoins is based on an open- source cryptographic protocol that is independent of any central authority.  Bitcoins can be transferred through a computer or smartphone without involving an intermediate financial institution. The concept was introduced in a 2008 as a peer-to-peer (P2P), electronic cash system.

For IT, Bitcoin promises to the way financial transactions, especially very small (micro) transactions, can be conducted fast and securely with little or no overhead.  Today, about the best you can do is PayPal, but with a slew of middlemen it is not very efficient when it comes to micro transactions.

A product or service selling at a micro price today isn’t really feasible from either an IT perspective or a financial perspective. But, with Bitcoin it might be since it removes a lot of financial and technical overhead.

The same big name investors that invested in Facebook Inc, Twitter, Groupon Inc, and Founders Fund, which includes three founders of PayPal, are putting serious money into Bitcoin investments even though the currency exists solely in cyber form. Proponents see it as the future of money, and in some investing circles, according to Reuters, it has created a buzz reminiscent of the early Internet.

For IT, Bitcoin may be the currency you will need as the global digital economy ramps up big. The benefits on bitcoins or something like it may be tremendous.  For starters, Bitcoin appears to address the problem of micro-transaction payments, where the cost of processing a credit or debit card transaction greatly exceeds the value of the transaction.  If you can do a lot of micro-transactions at almost no cost, the payback adds up.  The value of, say, 10 million half-cent transactions adds up to real money.

Then there is what Bitcoin itself says about the product.  For example, Bitcoin’s high cryptographic security allows it to process transactions in a very efficient and inexpensive way. You can make and receive payments using the Bitcoin network with almost no fees.

Furthermore, any business that accepts credit card or PayPal payments knows the problem of payments that are later reversed because the sender’s account was hacked or they fraudulently claimed non-delivery. The only way businesses can defend themselves against this kind of fraud is with complex risk analysis and increased prices to cover the losses. Bitcoin payments are irreversible and wallets can be kept highly secure, meaning that the cost of theft is no longer pushed onto the shoulders of the merchants.

Accepting credit cards online typically requires extensive security checks in order to comply with PCI compliance. Bitcoin security, however, makes this approach obsolete. Your payments are secured by the network and not at your expense. OK, maybe that is not completely reassuring, but it is as good as or better than you have now.

Finally, there is what Bitcoin calls accounting transparency. Many organizations are required to produce accounting documents about their activity and to adopt good transparency practices. Bitcoin allows you to offer the highest level of transparency since you can provide the detailed information you use to verify your balances and transactions.

OK, it isn’t perfect, but when Europe was precariously balanced on the edge of insolvency and countries like Greece, Cyprus, Italy, and Spain were in grave financial danger interest in bitcoins apparently soared and their value rose dramatically. Bloomberg Businessweek reported that Spaniards apparently were active buyers of bitcoins during the crisis, viewing the currency as a safe hedge against their own government seizing bank accounts and savaging their own conventional currency.

Maybe the most important thing to say about Bitcoin is that it is the future as the digital economy ramps up to rival the conventional economy. As users all over the world turn to smartphones for online commerce, IT will need something like Bitcoin. Besides, you don’t want some all-powerful government dictating even more regulations and issuing compliance mandates. Several governments are skeptical, to say the least, about the idea of Bitcoin but none apparently have shut it down.  As a P2P technology, Bitcoin is governed by the people that ultimately use it, maybe that will even be your own organization, and not by Big Brother.

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Make Your Digital Presence a Valuable Asset

Do you recognize your organization’s digital presence as a valuable asset?  You probably are familiar with some aspects of it, less familiar with others. The organization’s website forms a core component of your digital presence. So do any information or blog portals your organization deploys. Do you conduct webcasts to educate customers or prospects? Webcasts are part of your digital presence too. Your digital presence, in short, is all you do in the digital sphere.

IT probably didn’t initiate the organization’s digital presence way back when the scramble was on to stake out a web presence. Probably marketing agitated for it and IT assigned someone as webmaster. Things have changed dramatically in the decade or two since.

 “Digital is the future and a critical component of business strategy in many industries,” notes Howard Tiersky, CEO of Moving Interactive, which specializes in digital innovation consulting.  In other words, Tiersky tries to increase the value of companies’ digital presence, whatever pieces it may include.

To Tiersky, digital represents the largest transformation the media world has seen in decades—the old rules and ways of launching new products no longer apply. But your digital presence probably extends far beyond the digital media world.

According to Kennedy Consulting, “digital strategy, the integration of digital technologies into companies’ strategies and operations in ways that fundamentally alter the value chain, is emerging as a significant source of competitive advantage.” It is driving dramatic changes in the products and services companies bring to market, as well as how they do business. What we really mean when talking about digital is the entire digital landscape: the Internet, Web (World Wide Web), the Cloud, and all they contain; mobile even plays a key part of it.

Every organization today operates in this rapidly expanding digital landscape. Some have a small digital presence there, maybe just a website that is little more than a static information portal or electronic brochure. Others digitally engage their customers, partners, and other stakeholders much more extensively through social business, online collaboration, webcasts, video, and more.

At this point, the extent of an organization’s involvement in the digital landscape generally mirrors its industry. “In some industries, digital has become the primary way to interact with customers,” says Tiersky.  For customers in media, entertainment, travel, and financial services an effective digital strategy is a critical requirement. In other industries the need is less urgent right now, but before not too long every company in every industry will need a digital strategy that shapes its digital presence.

Most companies began a decade or two ago with a simple static website. Marketing usually was driving the bus with IT lending technical support as needed.  Over the years it grew and expanded; IT increasingly became involved, often reluctantly.

The budget for these kinds of digital initiatives also grew, and the recipient of the budget began to shift. According to Gartner, marketing is purchasing significant marketing-related technology and services from their own capital and expense budgets – both outside the control of the internal IT organization and in conjunction with them.  The upshot, Gartner predicts that by 2017 the CMO will spend more on IT than the CIO. And the volume and value of transactions being generated through the organization’s digital presence has likely become substantial.

The digital landscape and the performance of the organization’s digital presence within that landscape has grown in size to such an extent, as reflected by the increasing amounts of budget allocated to it, that neither IT nor marketing can handle it alone. The scope and complexity of the digital landscape and its many disparate elements has evolved and expanded fast. In addition, the importance of the organization’s digital presence grown even faster; that’s why every organization needs outside help.

And this is why digital consultants, content delivery networks, and cloud-based services providers of all sorts are in demand.  It is time for you as CIO to sit down with the CMO and put together a team that can efficiently optimize your digital presence as a valuable asset going forward.

 The digital landscape is not going away. “We are going through a multi-decade transformation process; every business will shift significantly into digital world,” says Tiersky.  As that happens you want to make sure IT is playing a key role.

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Sorting Out the Data Analytics IT Options

An article from McKinsey & Company, a leading management consulting and research firm, declares: “By 2018, the United States alone could face a shortage of 140,000 to 190,000 people with deep [data] analytical skills as well as [a shortage of] 1.5 million managers and analysts with the know-how to use the analysis of big data to make effective decisions. Might this be your shop?

Many companies today are scrambling to assemble an IT data analytics infrastructure to support data analytics. But before they can even begin they have to figure out what kind of analytics the organization will want to deploy. Big data is just one of many possibilities and the infrastructure that works for some types of data analytics won’t work for others.

Just off the top of the head this blogger can list a dozen types of data analytics in play: OLAP, business intelligence (BI), business analytics, predictive analytics, real-time analytics, big data analytics, social analytics, web analytics, click stream analytics, mobile analytics, brand/reputation analysis, and competitive intelligence. You’ve probably have a few of these already.

As advanced analytics pick up momentum data center managers will be left trying to cobble together an appropriate IT infrastructure for whatever flavors of analytics the organization intends to pursue. Unless you have a very generous budget you can’t do it all.

For example, big data is unbelievably hot right now so maybe it makes sense to build an infrastructure to support big data analytics. But predictive analytics, the up and coming superstar of business analytics, is an equally hot capability due to its ability to counter fraud or boost online conversion immediately, while the criminal or customer is still online.

BI, however, has been the analytics workhorse for many organizations for a decade or more, along with OLAP, and companies already have a working infrastructure for that.  It consists of a data warehouse with relational databases and common query, reporting, and cubing tools. The IT infrastructure, for the most part, already is in place and working.

On the other hand, if top management now wants big data analytics or real time data analytics or predictive analytics you may need a different information architecture and design, different tools, and possibly even different underlying technologies. Big data, for example, relies on Hadoop, a batch process that does not make use of SQL. (Vendors are making a valiant effort to graft a SQL-like interface onto Hadoop with varying degrees of success.)

Real-time analytics is just that—real-time—basically the opposite of Hadoop. It works best using in-memory data and logic processing to speed the results of analytic queries in seconds or even microseconds. Data will be stored on flash storage or in large amounts of cache memory as close to the processing as it can get.

A data information architecture that is optimized for big data’s unstructured batch data cannot also be used for real time analytics.  And the traditional BI data warehouse infrastructure probably isn’t optimized for either of them.  The solution calls for extending your existing data management infrastructure to encompass the latest analytics management wants or designing and building yet another IT data infrastructure.  Over the past year, however, the cloud has emerged as another place where organizations can run analytics, provided the providers can overcome the latencies inherent in the cloud.

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Use Mobile Transactions to Drive E-Commerce Revenue Growth

If management is serious about increasing transaction volume this year, the organization needs to add mobile transactions to its strategy fast.  Mobile turned out to be a major factor in driving Thanksgiving and Black Friday sales last year, according to a study by IBM, and you can bet it will be even bigger this year.

Through March of this year smartphones and tablets accounted for almost half of digital time spent on retail websites and applications according to comScore, a research firm. Since 2011, mobile sales have increased almost three fold to $38.4 billion annually. According to estimates provided by eMarketer, mobile sales could double by 2016 to $86.9 billion.

Gartner takes a more global view, reporting worldwide mobile payment transaction values will reach $235.4 billion in 2013, a 44% increase from 2012 values of $163.1 billion. It estimates the number of mobile payment users worldwide will reach 245.2 million in 2013, up from 200.8 million in 2012.

“We expect global mobile transaction volume and value to average 35% annual growth between 2012 and 2017, and we are forecasting a market worth $721 billion with more than 450 million users by 2017,” said Sandy Shen, research director at Gartner.

Mobile commerce—transactions conducted via smartphones and tablets—is too important to be left to the marketing group or CMO alone. As transaction activity shifts to the mobile channel the CIO needs to get a handle on how to deliver efficient mobile transactions that facilitate customer purchases.  “Adoption of mobile is unprecedented, surpassing even email adoption a decade ago,” says Carissa Ganelli, CEO, LightningBuy, Bridgeport, CT. “More people than ever are accessing the Internet today, and it is driven mainly by mobile,” she adds.

Mobile commerce is different and the mobile buyer is different.  Many companies still don’t realize that. They try to retrofit their conventional e-commerce website for mobile marginal success at best.  “Sorry, the mobile experience is not the same as the desktop or laptop experience,” says Ganelli. The devices are smaller but the consumer behavior as a result is dramatically different.

 An IBM study found that consumers put, on average, 5.5 items in their desktop/laptop shopping cart. On their mobile devices, they put 1.2 items.  This tells you that consumers use their mobile devices for serious shopping.  They aren’t just browsing around. They are looking for one thing and prepared to buy it right then.  As a result, organizations need to rethink their e-commerce strategies in terms of stimulating conversions and maximizing revenue and profit. With mobile consumers, skip the loss-leaders and other low (or no) margin transactions and go for your best sales.

To win the mobile commerce game, companies need to think in terms of mobile behavior, notes Ganelli.  For example, a large party favors retailer’s typical order consists of 22 items. Forget that for mobile sales, even laptop sales average only 5.5 items per shopping cart. But thinking mobile, the retailer packaged those items into a single bundle, a Star Wars pack or a Superman pack. The mobile shopper, whose typical shopping cart contains 1.2 items, could then buy the entire package as one item.

Any transaction processing gateway can handle mobile payments these days. LightningBuy, however, offers a transparent, frictionless mobile commerce gateway to organizations wanting to ride the mobile wave without any new development work on their part. All that is required is adding one line of code (a cut and paste job) for the url. For the mobile customer it’s even better:  no account registration, no password needed, and no long and painful checkout process. On the seller side all the transaction processing, for better or worse, remains the same.  LightningBuy doesn’t touch your internal processes except to transparently expedite the mobile buy.

LightningBuy costs seem minimal: a one-time set up fee, a monthly fee, and a small transaction fee, 5-10%. There is no limit to the number of products you can add to your commerce pages. Still, it makes sense to shop around. An article in Business News Daily offers help sorting through the pros and cons of 14 different mobile payment services and that’s just a handful of what’s out there.

Right now mobile commerce remains primarily a consumer phenomenon but that could change as procurement and supply chain folks adopt smartphones and tablets.  There is no reason, notes Ganelli, that it couldn’t handle B2B transactions.

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