CIOs keen to drive consequential-innovation

A couple of weeks ago I chaired a Global CIO Institute conference, hosting a dinner, various talks, and round table discussions with CIOs.

What has struck me during all these interactions was the marked contrast between these CIOs at the coalface and the topics obsessed upon by LinkedIn/academic/journalistic style discussions. While CIOs are interested in topics like digital transformation, AI, robotics, data-lakes and lakehouses, the API-economy and the rise of ChatGPT (the usual LinkedIn fare) these were not what drove them. Their interest was much more on safely driving consequential innovation within their company’s line of business.

Of significant interest within this was the need to manage various forms of risk. Risk was not to be “avoided” – or as Robin Smith (CISO) at Aston Martin put it, we need to promote “positive risk taking” for innovation. All intervention generated risk. For some this manifested as needing guard-rails around IT innovation so creative and innovative staff were not constrained by the risk of a catastrophic failure. This was particularly true as low-code and citizen development expands. For CIOs, developing a culture of innovation demanded systems that allowed innovations to fail safely and elegantly.

Risk-taking behaviour within innovation was only one risk they face. Sobering conversations concerned external sources of risk and the need for business resilience in the face of pandemic, war, and cyber-security challenges. Any innovation in digital technology increases the potential surface-area that companies can be attacked through. This demands ever more sophisticated (and expensive) technical countermeasures but also cultural changes. While attention is driven towards the use of AI (like ChatGPT) for good, nefarious actors are thinking about how such tools might be used for ill. For example, attackers can use emails, telephone calls, and deep-fake video calls to sound, and even look, like a company’s CEO or top customer asking for help[1]. How can CIOs ensure their staff do not fall foul of these and various more technical scams? How can trust be established if identity is hard to prove? What happens when AI is applied to exploring possible attacks through Public APIs?

Also of significant concern was keeping-the-lights-on with their ever more demanding and heterogenous estate of products, platforms and systems. One speaker pointed out the following XKCD cartoon which captures this so well. The law of unintended consequences dominated many of their fears, particularly as organisations moved towards exploiting such new-technologies in various forms.  

 Source/: https://xkcd.com/2347/ (cc) XKCD with thanks).

What was clear, and remains clear, is that we need to have a view of the enterprise technology landscape that balances risk and reward. While commentators ignore the complexity of legacy infrastructure, burgeoning bloated cloud computing estates, and the risks involved in adding more complexity to these, those tasked with managing the enterprise IT estate cannot. 

These thoughts are obviously not scientific and are entirely anecdotal. The CIOs I met were often selected to attend, the conversations were steered by agenda etc. But they did remind me why CIOs are not as obsessed with ChatGPT as everyone might think.


[1] An executive from OKTA gave the example of this for Binance exec says scammers made a deep fake hologram of him • The Register

Header Image “Business Idea” by danielfoster437 is licensed under CC BY-NC-SA 2.0.

The 5-Es of AI potential: What do executives and investors need to think about when evaluating Artificial Intelligence?

I spent last week in Berlin as part of a small international delegation of AI experts convened by the Konrad-Adenauer Foundation[1]. In meetings with politicians, civil servants and entrepreneurs, over dinners, conferences and a meeting in the Chancellery[2], we discussed in detail the challenges faced in developing AI businesses within Germany.

A strong theme was the difference between AI as a “thing” and as “component”. Within most commercial sales-pitches AI is a “thing” developed by specialist AI businesses to be evaluated for adoption. Attention is focused on what I will term efficacy. Such efficacy aligns with pharmacology definitions as “the performance of an intervention under ideal and controlled circumstances” and is contrasted with effectiveness which “refers to its performance under ‘real-world’ conditions.[3]. AI efficacy is demonstrated through sales-pitch presentations based on specially tagged data or upon human-selected data-sets honed for the purpose.

As a “component” however, AI only becomes when it is incorporated into real-world consequential and ever evolving business processes. To be effective not just efficacious, AI must bring together real-data sources in real-world physical technology (usually involving cloud services, complex networking and physical devices) for consequential action. AI “components” then become part of a complex digital ecosystem within the Niagara-like flow of real businesses rather than a “thing” isolated from it. Since business processes, data-standards, sensors and devices, evolve and change so the AI must evolve as well while continuing to meet the needs of this flow.

To be effective (not efficacious) AI components must also be:

  • efficient in terms of energy and time (providing answers sufficiently quickly as to be useful.
  • economic in terms of cost-benefit for the company (particularly as the cost of human tagging of training data can be extreme),
  • ethical by making correct moral judgements in the face of bias in data and output, ensuring effective oversight of the resultant process, and transparency of the way the algorithm works. For example resent research shows image classifier algorithms may work by unexpected means (for example identifying horse pictures from copyright tags or train types by the rails). This can prove a significant problem when new images are introduced.
  • established in that it will continue to run long-term without disruption for real world business processes and data-sets.

The final two of these Es are particularly important: Ethics because business data is usually far from pure, clean and will likely include many biases. And Established because any process delay or failure can cause a pile-ups and overflow to other processes, and thus cause disaster. In my opinion, only if all these 5Es are achieved should a business move AI into core business processes.

For business leaders seeking to address these Es the challenges will not be in acquiring PhDs in AI-algorithms but instead in (1) hiring skilled business analysts with knowledge of AI’s opportunity but also knowledge of real-world IT challenges, (2) hiring skilled Cloud-AI implementors who can ensure these Es are met in a production environment and (3) appointing AI ethics people to focus on ensuring bias, data-protection laws, and poor data quality do not lead to poor ineffective AI. Given the significant competition for AI skills, digital transformation skills and for cloud-skills [4] this will not be easy.

So while it is fun to see interesting wizz-bang demos of AI products at industry AI conferences like those in Berlin this week, in my mind executives should remain mindful that really harnessing the potential of AI represents a much deeper form of digital transformation. Hopefully my 5Es will aid those navigating such transformation.

(C) 2019 W. Venters

[1] https://www.kas.de/ also https://www.kas.de/veranstaltungen/detail/-/content/international-perspectives-on-artificial-intelligence

[2] https://en.wikipedia.org/wiki/Federal_Chancellery_(Berlin)

[3] Efficacy : https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3912314/  Singal AG, Higgins PD, Waljee AK. A primer on effectiveness and efficacy trials. Clin Transl Gastroenterol. 2014;5(1):e45. Published 2014 Jan 2. doi:10.1038/ctg.2013.13. I acknowledge drawing on Peter Checkland’s SSM for 3Es (Efficacy ,Efficiency and Effectiveness) in systems thinking.

[4] Venters, D. W., Sorensen, C., and Rackspace. 2017. “The Cost of Cloud Expertise,” Rackspace and Intel.

[5] https://en.wikipedia.org/wiki/Industry_4.0

UK Cloud Awards 2018

I am pleased to be a judge for the UK Cloud awards again this year.  https://www.ukcloudawards.co.uk/

If your company is keen to apply for the awards the closing date for entries is the 23rd February 2018. And hopefully I will then see you for the awards ceremony at County Hall in May!

 

Cloud Expertise Report with Rackspace and Intel

For a number of months I’ve been working with Rackspace and colleague Carsten Sorensen to undertake a study of the impact of skills and expertise on cloud computing. The report “the cost of cloud expertise” has just been published here. The headline figure is that $258m is lost a year through lack of cloud expertise.

Cost of cloud expertise report

In the press release I am quoted as saying; “Put simply, cloud technology is a victim of its own success. As the technology has become ubiquitous among large organizations – and helped them to wrestle back control of sprawling physical IT estates – it has also opened up a huge number of development and innovation opportunities. However, to fully realize these opportunities, organizations need to not only have the right expertise in place now, but also have a cloud skills development strategy to ensure they are constantly evolving their IT workforce and training procedures in parallel with the constantly evolving demands of cloud. Failure to do so will severely impede the future aspirations of businesses in an increasingly competitive digital market.”

The report also explores the requirements for cloud skills, and discusses the strategy businesses can adopt to mitigate the risks of the cloud skills shortages:

  • Split the IT function into separate streams – business focused and operation focused.
  • Develop a cloud-skills strategy.
  • Assess the cloud ecosystem and ensuring a balanced pool of skills.

Take a look!

https://blog.rackspace.com/258-million-year-cost-enterprises-lack-cloud-computing-expertise-says-rackspace

Some early press coverage below…

Only 29% of IT leaders have the skills needed to fully embrace the cloud TechRepublic Sep 21, 2017
Rackspace asked organization execs around the world about cloud IT — here’s what they found San Antonio Business Journal Sep 21, 2017
Cloud Skill Shortage Costs Large Enterprises $258 Million Each Year: Report Windows IT Pro Sep 21, 2017
Cloud skills shortage holding back some Aussie businesses CIO Australia
Is cloud computing a victim of its own success? Computer Business Review Sep 21, 2017
Two-thirds of businesses losing money over poor cloud skills Cloud Pro
Here’s what’s costing businesses a lot of money London Loves Business
UK organisations lose millions a year due to lack of cloud technology skills Bdaily
Lack of cloud expertise costing companies $258mn per year The Stack
UK businesses losing revenue due to lack of cloud expertise ITProPortal

Platforms for the Internet of Things: Opportunities and Risks

I was chairing a panel at the Internet of Things Expo in London today. One of the points for discussion was the rise of platforms related to the internet of things. As, by some estimates, the number of connected devices is predicted to exceed 50bn by 2020 so there is considerable desire to control the internet based platforms upon which these devices will rely. Before we think specifically about platforms for the Internet of Things it is worth pausing to think about platforms in general.

The idea of platforms is pretty simple – they are something flat we can build upon. In computing terms they are an evolving system of software which provides generativity [1]: the potential to innovate by capitalising on the features of the platform service to provide something more than the sum of its parts. They exhibit the economic concept of network effects [2] – that is their value increases as the number of users increases. The telephone, for example, was useless when only one person had one, but as the number of users increased so its value increased (owners could call more people). This in turn leads to lock-in effects and potential monopolisation: once a standard emerged there was considerable disincentive for existing users to switch, and, faced with competing standards, users will wisely choose a widely adopted incumbent standard (unless the new standard is considerably better or there is other incentives to switch). These network effects also influence suppliers – App developers focus on developing for the standard Android/iPhone platforms so increasing their value and creating a complex ecosystem of value.

Let’s now move to think further about this concept for the Internet of Things.  I worry somewhat about the emergence of strong commercial platforms for Internet of Things devices. IoT concerns things, whose value is derived from both their materiality and their internet-capability. When we purchase an “IoT” enabled street-light (for example) we are making a significant investment in the material streetlight as well as its Internetness. If IoT evolves like mobile phones this could lock us into the platform, and changing to an alternative platform would thus include high material cost (assuming , like mobiles, we are unable to alter software) as, unlike phones these devices are not regularly upgraded. This demonstrates platforms concern the distribution of control, and the platform provider has a strong incentive to seek to control the owners of the devices, and though this derive value from their platform over the long term. Also for many IoT devices (and particularly relevant for critical national infrastructure) this distribution of control does not correspond to distribution of risk, security and liability which many be significant for IoT devices.

There is also considerable incentive for platform creators to innovate their platform – developing new features and options to increase their value and so increase the scale and scope of their platform. This however creates potential instability in the platform – making evaluation of risk, security and liability over the long term exceedingly difficult. Further there is an incentive on platform owners to demand evolution from platform users (to drive greater value) potentially making older devices quickly redundant.

For important IoT devices (such as those used by government bodies), we might suggest that they seek to avoid these effects by harnessing open platforms based on collectively shared standards rather than singular controlled software platforms.  Open platforms are “freely available, standard definitions of service outcomes, processes, or technology that encourage multiple users to converge on utility consumption of services based on definitions – which in turn encourage suppliers to innovate around these commodities.”[3, 4]. In contrast to Open Source, Open platforms are not about the software – but about a collective standards agreement process in which standards are freely shared allowing the collective innovation around that standard. For example the 230v power-supply is a standard around which electricity generators, device manufacturers and consumers coalesce.

What are the lessons here?

(1) Wherever possible we should seek open platforms and promote the development of standards.

(2)  We must demand democratic accountability, and seek to exploit levers which ensure control over our infrastructure is reflective of need.

(3) We should seek to understand platforms as dynamic, evolving self-organising infrastructures not as static entities

References

  1. Zittrain, J.L., The Generative Internet. Harvard Law Review, 2006. 119(7): p. 1974-2040.
  2. Gawer, A. and M. Cusumano, Platform Leadership. 2002, Boston,MA: Harvard Business School Press.
  3. Brown, A., J. Fishenden, and M. Thompson, Digitizing Government. 2015.
  4. Fishenden, J. and M. Thompson, Digital Government, Open Architecture, and Innovation: Why Public Sector IT Will Never Be The Same Again. Journal of Public Administration, Research, and Theory, 2013.

What is Fog Computing?

I read an interesting article on Fog Computing and thought readers might like a short precis:

Applications such as health-monitoring or emergency response require near-instantaneous response such that the delay caused by contacting and receiving data from a cloud data-centre can be highly problematic. Fog Computing is a response to this challenge. The basic idea is to shift some of the computing from the data-centre to devices which are closer to the edge of the network – so moving the cloud to the ground (hence “fog computing”). The computing work is shared between the data-centre and various local IoT devices (e.g. a local router or smart-gateway).

“Fog computing is a paradigm for managing a highly distributed and possibly virtualized environment that provides compute and network services between sensors and cloud data-centers” (Dastjerdi et al. 2016)

While cloud computing (using large data-centres) is perfect for analysis of Big Data “at rest” (i.e.  analysing historical trends where large magnitudes of data are required and cheap processing necessary) fog computing may be much better for dynamic analysis of “data-in-motion” (data concerning immediate ongoing actions which require rapid analytical response).  For example an Augmented Reality Application cannot wait for a distant data-centre to respond when a user’s head it turned. Similarly safety-critical and business-critical applications such as health-care remote monitoring, or remote diagnostics cannot rely on permanent availability of internet connections (as those in York know when floods knocked out their internet for days this year).

Privacy concerns are also relevant. By moving data-analysis to the edge of the network (e.g. a device or local mobile phone) which is often owned by, and controlled by, the data-source the user may have more control over their data. For example an exercise tracker might aggregate and process its GPS data and fitness data on a local mobile phone rather than automatically uploading it to a distant server. It might also undertake data-trimming so reducing the bandwidth and load on the cloud. This is particularly relevant as the number of connected devices increases to billions. This gain should be balanced with the challenge of managing an increasing number of devices which must be secured to hold sensitive data safely.

Another challenge is the climatic damage this new architecture poses. While data-centres are increasingly efficient in their processing, and often rely on clean-energy sources, moving computing to less efficient devices at the edge of the network might create a problem. We are effectively balancing latency with CO2 production.

For more information on see:

Dastjerdi, A. V., Gupta, H., Calheiros, R. N., Ghosh, S. K., and Buyya, R. 2016. “Fog Computing: Principles, Architectures, and Applications,” in Internet of Things: Principles and Paradigm. Elsevier / MKP. http://www.buyya.com/papers/FogComputing2016.pdf

(Image Ian Furst (cc))

Videos on Innovating Information and Digital Infrastructures…

The following link provides access to the panels and videos of the 4th Innovating Information Infrastructure workshop from earlier this year.

I attended the workshop which was excellent – can I particularly recommend my friends Ole Hanseth and Carsten Sorensen’s presentations which were great.

http://www2.warwick.ac.uk/fac/soc/wbs/subjects/ism/workshop

Enjoy!

 

CWF: Will Venters – EM360 PodcastEnterprise Management 360°

I was interviewed by Enterprise Management 360 at the cloud world forum – the podcast of the interview is now available on their site:

CWF: Will Venters – EM360 PodcastEnterprise Management 360°.

My interview for the Financial Times on Cloud Regulation…

Follow this link for the video an interview I did for the Financial Times on regulation of cloud computing:

Understanding Cloud Computing – Financial Times.

 

Double trouble – why cloud is a question of balance |My New Blog on Cloud Pro

I have been invited to Blog on CloudPro – don’t worry I will keep posting here as well – but if you want to read my first posting see:

Double trouble – why cloud is a question of balance | Cloud Pro.