Tuesday, October 14, 2014

Uber won't want drivers in the future

I'm an Uber user, its a great service outside of cities with decent public transport.  But I have been thinking about where they will justify the $17bn valuation and give people a return on that $1.2bn investment.  At the same time I've been following the autonomous car pieces with interest and I think there is a pretty clear way this can end, especially as Uber have already said they are going to buy 2,500 Google cars.

If Uber do push local taxi firms to the wall leveraging that huge cash pile then it gives them a great 'front-window' in terms of the services they offer.  Now a the moment part of the beauty of the model is that they don't need to pay benefits to the drivers.  But what if you could get rid of the drivers?  Suddenly it made me think of the net impact of this.  Firstly with a driverless bus you could look at ad-hoc public transport style pricing.  Change the app so you put in where you are and where you want to go to and Uber can start ride-sharing to maximise utilisation of larger vehicles.  This reduces the cost to the consumer and also increases the profitability.  It also would put Uber into direct competition with the public transport systems in many countries, again leveraging that $1.2bn war chest to initially under-price and building on the political climates in some countries that see private transportation as the best way to go.

This all leaves Uber drivers being squeezed out.  Right now Uber take a 20% cut, but don't have the risk around the driver and the car.  But with electric autonomous vehicles much of that risk is going to be reduced which enables Uber to start offering UberAuto where they use some of that war chest to buy electric autonomous vehicles and have them compete in the UberX type of market, potentially directly with Uber X drivers or at a lower price as Uber could take the full revenue from the fare.  A franchise model where people buy 'official' Uber autonomous vehicles and have them added to the pool would spread the risk but essentially change the model away from human drivers.

To get this position of strength though what Uber really needs today is to push taxi firms out of the way so they are see as the obvious first place to get a ride in a city.  They are already doing that with their pricing, and having that $1.2bn means they are far from being a little startup company.  They are a leveraged market approach where the war chest gives them the ability to out compete local competitors.  Uber are doing this by leveraging cheap (to them) labour from the 'shared economy', or in reality are creating a business based around zero hours contracts and no benefits.

Longer term though its hard to see why Uber would keep sticking with people as autonomous vehicles become more cost effective.  By cutting out drivers they reduce a degree of risk and also increase the share of revenue that they can take.  Uber are clearly thinking this way with the purchase of the Google cars and its something we can expect to see increase over time.  This shift will bring Uber into the local public transport market where it can provide more flexible routing (at a price) than traditional bus and train services, but still provide a degree of cost sharing.  The 101 in San Francisco would be a great example of a profitable 'bus' route for Uber where people are dropped and picked up from home and work but where 80%+ of the journey is shared.

When looking at Uber lots of people talk about the 'sharing economy' but my prediction is the future of Uber is as an autonomous vehicle fleet, the sharing economy (and that war chest) just positions it ready for that future and helps remove some of the competition so its a clearer market when the shift happens.

Thursday, August 07, 2014

Whistler, Microsoft and how far cloud has come

In six years Microsoft has come from almost zero corporate knowledge about how cloud computing works to it being an integral part of their strategy.  Sure back in early 2008 there were some pieces of Microsoft that knew about cloud but that really wasn't a corporate view it was what a very few people inside the company knew.

How do I know this? Well back in 2008 I was sitting on the top of a mountain with Simon Plant in Whistler.  The snow wasn't great that season but there are few places that I'd rather take a conference call.  The conference call was with Microsoft's licensing folks discussing how we can license their technology, SQL Server, Sharepoint etc on AWS.  It was a rather interesting conversation to say the least.

We were asking how they'd license for virtual machines, and how things like license portability worked in virtual environments.  A typical exchange would go something like

Simon: "So what we need is a virtual core price"
MSFT: "That will be the same as the physical core price"
Simon: "But its ok that it might move physical machines?"
MSFT: "As long as its less than once every 90 days yes"
Simon: "It could be more than that"
Me: "It could be every hour"
MSFT: "No problems, you'll just need to license every core it goes on"
Me: "We don't know what physical cores it runs on"
MSFT: "Why not?"
Simon: "Because its a cloud platform, we don't care about the physical boxes"

Then the conversation included one of the finest lines to ever come out of a software companies mouth

"Well to be safe you just need to ask Amazon how many cores they have in the Data Centre and license for that"

The reason I re-tell this story is to make the point at just how far we've come in 6 years.  I don't think any licensing person would suggest today that you'd need to license for every physical core in an entire data centre.  There really wasn't an understanding that we couldn't just ask Amazon for its core count in every data centre or that we didn't even know physically lived, the bit they really couldn't get was the idea that we didn't care and not knowing those things was actually a positive.

The call continued and by the end we were actually getting somewhere with a general acceptance that physical to virtual licensing needed some wording changes to get it working on AWS.  The Microsoft guys were pretty receptive and keen to learn but it was clearly a new set of concepts for them.

Then Mr Plant blew their mind

Simon: "What about scale down?"
MSFT: "What do you mean?"
Simon: "Well the point of cloud is to scale up and down, so what do we do when we scale down?"
MSFT: "You just need to license at peak usage"
Me: "But that destroys the whole idea of dynamic scaling"
MSFT: "Why?"
Simon: "Well if you scale once a year for a peak for a couple days, say for financial reporting, the rest of the year that just remains idle which is wasted money"

The concept of temporary licenses and dynamic scaling was clearly one that went way beyond what they were able to do at that stage.  There were more conversations then explaining about what cloud really meant and the sorts of things customers would be asking them for in years to come.  This whole call took place with Simon at 12,000ft and him about 12 feet further up the mountain so we wouldn't get interference.  The Microsoft team commented that we appeared very co-ordinated given we were dialing in from UK and US numbers and we just didn't think saying 'actually we are sitting with snowboards on our feet' was terribly professional.

The above conversation was repeated with pretty much every single software vendor over about 3 months with the same misunderstanding and same suggestions of 'license the whole data centre', I'm just singling out the Microsoft example as they are probably now one of the biggest proponents of cloud and it sits at the core of their strategy... oh and doing a conference call on a snowboard was cool.

Six years is what its taken to go from there to here, a world where cloud is now practically the default approach, whether public, private or hybrid and those questioning cloud are effectively the uneducated minority, just as Microsoft were back in 2008.  Now the challenge for enterprises is understanding just how they take on these challenges at enterprise scale, and that is what Simon has been doing since then, leading to him setting up his own business Dual Spark which specialises in exactly that.

Simon Plant: doing cloud computing for longer than Microsoft.


Monday, July 14, 2014

Big Data doom mongers need to look outside of the marketing department

In every change there are hype machines that over play and sages who call doom.  Into the Big Data arena steps David Searls to proclaim that Big Data is a myth and simply hype which is set to burst in an article over at ZDNet.
But big data, he said, is nothing more than the myth that collecting vast amounts of data can help companies know customers better than those customers even know themselves.
 The boogie men in this story are IBM and the consultants who have hyped it all up.  There another sage jumps in
Dr Matthew Landauer, co-founder of OpenAustralia, is equally sceptical about big data. "All it allows you to do is optimise your current business," he told ZDNet. "It's never going to tell you that you're doing business wrong or need another model.
There then moves forward a complaint about privacy and security (which I'm not disputing) but the key point is that Big Data is a bubble, and I really have to disagree with the definition of big data, the lack of innovation it can drive and that its a bubble.

Firstly I don't agree that marketing and customer data is what Big Data is about.  The vast majority of my conversations on Big Data have nothing to do with an explosion of customer information (e.g social media) but are instead about machine data, trading data, weather data and other massive data sets that historically companies couldn't cost effectively do analytics on.

Social Media and customer information is just one part of the challenge and its probably the most fluffy bunny and liable to be a bubble but to infer from there that Big Data is just hype is like assuming all swans are white because you see a single white swan.

Secondly is the assertion is that it cannot tell you that you are doing things incorrectly.  I'm not sure what sort of machine learning and other data science work Matthew Landauer has done but I am surprised that someone with a PhD in Physics from Cambridge hasn't seen examples from his own field at just how much change becoming data driven can deliver in terms of insight that causes disciplines,  companies and industries to make dramatic changes and have new approaches (the LHR at CERN for instance is quite clearly a Big Data application).  Finance is covered with examples where smarter algorithms identified that things were done wrong and that new ways would make more money.  By analysing and simulating you can absolutely find that there are new ways that can work significantly better.

Thirdly I disagree about who started the big data hype, IBM were far from being the leaders, that job goes to two industries.  Firstly the internet giants, Amazon, Google, eBay, Yahoo etc who created entire new business models based on information, and secondly on engineering companies who saw new business models based on information.  Sure the 'marketing/social media' has come to be the default story used by the lazy but that is far from saying that it is actually the story.

Big Data marketing might pop, that doesn't mean that Big Data is hype.  Saying so would be like claiming the failure of Association Football to become the dominant sport in North America means that Association Football is failing.  Big Data is already delivering benefits in engineering in particular and the challenges associated with the Internet of Things are not going to result in a reduction in information anytime soon.  Claiming that its all just hype doesn't help move the state of the now forwards and certainly doesn't serve all those use cases which really are Big Data challenges.

But then the roll of doom-mongering sage has never been to be fair and balanced, but instead to take a specific example and declare 'We're all doomed' or 'the end is nigh'.  Where would the book deals be in 'Big Data has many specific use cases but some vendors are using it to hype sales of their technology in places where it doesn't really add value' or to give it a book title 'Salesmen - not always looking out for your best interests'.

Friday, June 27, 2014

Open Source as religion - when the Bazaar becomes a Cathedral

The seminal book on Open Source development "Cathedral and the Bazaar" talks eloquently about the difference between commercial software development and open source development.  In the past few years however there has been another shift, a shift where companies are actively releasing their technology into Open Source as a competitive differentiation.  A claim of 'we are open' because the source code is open.

The selling point then is the number of 'committers' (developers) that the company has on the open source project, this being their selling point because it means they can get your bugs fixed quicker because they have the inside track.

The competition between vendors using exactly the same open source distribution then becomes a question of who is the 'purest' the the vision and who has the most bodies contributing to it.  If an external company takes that source and releases their own version they are not simply frowned upon then are actively prevented from engaging in contribution as this would dilute the corporate messaging of the commercial companies who first established or who mainly contribute today to that open source program.

This isn't an entirely new thing, we used to see it quite a bit with some of the Java pieces and some would argue its related to what Linus does with Linux.  There is however a very big difference.  In those previous cases it was normally a single individual who made the original release and its that individual who then managed that control.  In Linus' case he isn't the commercial arm behind any of these things.

Its natural for this to have happened in the Open Source community as its become a commercial competitive weapon but it does really mean that Open Source is ceasing to become that historical bazaar and is instead in many cases now simply a different cathedral into which rigid company approaches are applied.  Its extremely hard for companies that have locked down millions in VC funding to enable their core market message "we own the code" to be diluted as their Open Source project becomes popular as this would reduce their differentiation and thus their market multiple as they look to IPO.

Open Source remains a strong approach and one that gives companies a level of security if a company ever goes bust, in that the code is still available.  But its quite clear to me that the VC funding that has flooded into the space has really destroyed the previous ad-hoc bazaar approach and instead simply re-created the Cathedral approach but with an Open Source release management system.

Tuesday, May 27, 2014

MDM isn't about data quality its about collaboration

I'm going to state a sacrilegious position for a moment: the quality of data isn't a primary goal in Master Data Management

Now before the perfectly correct 'Garbage In, Garbage Out' statement let me explain.  Data Quality is certainly something that MDM can help with but its not actually the primary aim of MDM.

MDM is about enabling collaboration, collaboration is about the cross-reference

Why do you do an MDM project?  The answer is to join information between multiple systems and multiple parts of the organisation.  Its so the customer in SFDC is the same as the customer in SAP and in Oracle Financials and when that customer hits the website you know who they are.  Its so the sales person can see all the invoices, orders and other elements related to their customer.  Its so you can see how a product goes through the various parts of the R&D and supply chain processes and track it all the way.

If everything was in one big system with a single database then you wouldn't really need MDM you'd just need data quality to make sure the single record was a good one.  You need MDM because you are attempting to join across systems and business units.  So the real value from MDM is that cross reference that tells you who the customer is and where all the information about them lives in the various systems... even if you never clean any of it.

So this is how you sell MDM to the business, not about data quality which is a secondary benefit, but as something that will enable the business to better collaborate and function more effectively.

Sometimes Quality doesn't count

The reality is that total quality isn't always what the business wants, they know some data is dodgy so the question is how dodgy and knowing that when you use it to make decisions.  Lots of social media is amazingly poor quality, but taken in volume trends can be seen.  What makes it more valuable though is when you can enable that cross-reference between the high-quality and the lower quality so you can see the trends of your customers and products not just trends in noise.

Focus on collaboration, focus on the cross reference, quality will follow

So having said that Data Quality isn't a primary focus it is actually how you enable that pesky cross reference, but you do so only on the information that matters, the core information required for the cross reference.  Thus you get a higher quality core identification of the customer and everyone understands why they are doing it, the quality enables the cross reference which enables the collaboration.

If the business don't care about quality why do you?
Now once you have that quality core, a minimum set of attributes required to uniquely identify the customer, then often you want to expand that quality to more attributes but stop and think.  Have the business asked me? That is quite an important point.  You might think its an absolute disaster that a given attribute isn't used in a standard way, but it could be that no-one in the business gives a stuff, so tell them about the issue but let them decide if they want to spend the money making it better.  If they don't document that they don't so if they come back you can say 'great so lets re-prioritise it' which is much better than 'oh so I spent money doing something that doesn't matter'.

The more you federate the more collaboration matters
The reason that MDM matters is that more and more business is about collaboration, both internal and external, this means that the business value of MDM has really shifted from being about the data quality in reports to being an integral part of how a business works.  Data Quality isn't irrelevant in this world but its turned from being the goal of MDM to being a tool that helps enable the primary goal which is collaboration.  As the need to digitally collaborate with partners and customers increases so the business value of that MDM cross reference increases both in operations and as the bit that helps you link up all of those big data sources to create a global view.

MDM is the Rosetta Stone that enables people to collaborate, so focus on collaboration not quality. 

Thursday, May 22, 2014

Lipstick on the iceberg - why the local view matters for IT evolution

There is a massive amount of IT hype that is focused on what people see, its about the agile delivery of interfaces, about reporting, visualisation and interactional models.  If you could weight hype then it is quite clear that 95% of all IT is about this area.  Its why we need development teams working hand-in-hand with the business, its why animations and visualisation are massively important.

But here is the thing.  SAP, IBM and Oracle have huge businesses built around the opposite of that, around large transactional elements, things that sit at the backend and actually do the running of the business.  Is procurement something that needs the fancy UI?  I've written before about why procurement is meant to be hated so no that isn't an area where the hype matters.

What about running a power grid? Controlling an aeroplane?  Traffic management? Sure these things have some level of user interaction and often its important that its slick and effective.  But what percentage of the effort is about the user interface?  Less than 5%.  The statistics out there will show that over 80% of spend is on legacy and even the new spend is mainly on transactional elements.

This is where taking a Business SOA view can help, it starts putting boundaries and value around those legacy areas to help you build new more dynamic solutions.  But here is a bit of the dirty secret.

The business doesn't care that its a mess behind the scenes.... if you make it look pretty

Its a fact that people in IT appear regularly shocked at.  But again this is about the SOA Christmas, the business users care about what they interact with, about their view for their purposes. They don't care if its a mess for IT as long as you can deliver that view.

So in other words the hype has got it right, by putting Lipstick on the Iceberg and by hyping the Lipstick you are able to justify the wrapping and evolution of everything else.  Applying SOA approaches to Data is part of the way to enable that evolution and start delivering the local view.

The business doesn't care about the iceberg... as long as you make it look pretty for them.