Big…Bigger…Biggest! - making sense of world data.

There have been numerous articles and publications on the volume of data across analog and digital forms that exist in the world and how these could be put to constructive use. The estimates are that the total volume of data stored by the end of this year would be in the 2.7 zettabyte range and growing at a rate of just under 50% year-on-year. To the uninitiated, a zettabyte is a trillion gigabytes (GB) and a billion terabytes (TB). Now that sure sounds like the next biggest business opportunity that everyone should latch on to, right?

The answer is yes, but with a note of caution. Here is why.

Over 90% of all the data that exists (and over 99% of the new data that is being created or will be created in the future) is unstructured media data including video, audio and images. Take this out of the equation and we still are talking about around 220-230 exabytes of existing data and another 170 exabytes being created additionally through to 2017. Analog data, in one form or the other, was around 6% of the total data of 220-230 exabytes that was available in 2007. However, that would only be growing infinitesimally, so we will take the total analog data as around 3.5% of all data, on an average, and take that piece out of this calculation!

The new denominator is therefore in the 375 exabytes ballpark!

A closer look at this data would reveal a whole bunch of realities that are mind-boggling and help you put the numbers in the right perspective. We will, over the course of this discussion, make some assumptions to help the math, some of which may be incorrect (though no one would be able to prove it one way or the other, despite big data!), but will not thematically challenge the hypothesis. Here’s one. The total amount of storage for non-user data (system and application software, for example) is assumed to be around a third of the total data. That seems a fair assumption when you take the Forrester view that we will have around 2 billion computers in the world by 2015 and that the minimum that each such device would need is around 50 GB only for OS, office, security and networking tools. That would throw a further 125 exabytes out of the window (no pun intended!). That leaves us with around 250 exabytes of user data!

Now that media files and system/application software are out of the equation, we will assume that 90% of the total remaining data is corporate in nature (the other 10%, or 25 exabytes, is not necessarily personal data, it could even be, for instance, data generated in Office tools, mail data etc). And I cannot think of a corporate that does not back-up its data. So the minimum redundancy at the transaction data level itself would be 50%. Take that out of the equation because the same data analyzed twice over would not yield any greater intelligence than doing it once! That would take out 45% of the total data we started with at the beginning of this paragraph. Also, most organizations of a size where the data volume should matter for this calculation would have a data warehouse, an operation data store or a bunch of denormalized data stores at the least to introduce a further 50-67% redundancy. That would translate to another ~30% of the data not to be considered in the equation. This leaves us with 25% of the 250 exabytes of data or ~60 exabytes.

A significant part of the non-corporate data (the 25 exabytes) is essentially generated and consumed with a view to sharing and communication with other data/information stakeholders. I cannot think of someone creating a file locally and sending it to someone for consumption and then diligently removing the redundancy of storing it in their file systems and again in their mail folders. This also happens at the receiver’s end. And not all communication is one-on-one. I cannot think of communication that ends with the first receiver either! Assuming a two-step average communication and a storage redundancy of 50% at each of the 3 players, we are talking of a mere 16% of the data that is unique. It would be significantly lesser in personal data given how much of what you send in your mails is stuff you generated – think about the number of forwarded mails and messages in all your personal mailboxes, accounts etc!! Giving a benefit of doubt and taking a conservative 20% of the non-corporate data as being unique, this part of the data only contributes 5 exabytes taking the total data that we can derive intelligence from down to 40 exabytes.

Assuming there is not much of information worthy of analysis in data that is over 5 years old, effectively the amount of data we are likely to deal with over the next few years, with a view to extracting intelligence and drive decision making is closer to a 30 exabytes magnitude. Now, to put this into perspective, half of this data would be residing in transaction or operational systems and the rest would be in one or the other form of data warehouses already. That would mean around 15 exabytes of data or around 15 million terabytes of data. Imagine the above in the context of what your take on the number of existing relational and dimensional data stores and what your take on the average size of an installation is.

That surely should help put Big, Bigger and Biggest data into perspective. The need is to be pragmatic about what is the real volume of data that we are dealing with and how effectively we could use the intelligence we can derive from it and put it to profitable use. And how far does it push the current data paradigm, therefore! 

You may also find some interesting perspectives on this theme in

http://www.forbes.com/sites/ciocentral/2012/05/01/big-data-the-hidden-opportunity/

http://www.fastcompany.com/1811441/why-big-data-won%E2%80%99t-make-you-smart-rich-or-pretty

 http://www.technologyreview.com/news/427786/is-there-big-money-in-big-data/

Note: The views expressed here and in any of my posts are my personal views and not to be construed as being shared by any organization or group that I am or have been associated with presently or in the past.

Back to Basics – the CIO rediscovered.

Those were the times! Majority of the CIO’s time and in turn, the behavior the CIOs drove within their IT organizations, was focused on the next big possibility for the business to expand. What was hitherto not possible was being made possible thanks to the advances in information and communications technology. From green-field automation for increased capacities and throughput of the business to enabling the globalization of economies and business operations, the CIO organization was a critical enabler to business growth and expansion. They did so with a never-seen-before speed to market that made mega-businesses nimble-footed and agile from strategy to execution. And in the entire scheme of things, the fact that they did so at increasingly lower costs was an added plus.

This was, arguably, the golden phase when the ICT spend of organizations leaped from the fractional existence of yore aligned to running data processing departments (some old dinosaurs would remember this) to the single-digit percentages that are the norm today.

Somewhere down the road, however, the original purpose, though not entirely lost, got sidetracked. The entire emphases started moving towards optimizing this spend. This was hardly surprising given that now the ICT spend was a meaningful percentage of the total costs of running the business and was being viewed exactly like all other business functions and processes that existed as an enabler or support function and not directly involved in the larger cause of doling out the service or product the business was meant for. Instead of being treated like a R&D, business innovation or value engineering function, the function was being likened to business enabling functions like the HCM, F&A or the MRO. In fact, in many businesses, the CIO function was being rolled up or aligned into the CFO agenda.

The CIOs and their organizations, ever so imperceptibly, started optimizing their resource supply chains to source globally, focus on TCO optimization projects that cut down cost of operations and sustenance (run the business, keep the lights on, whatever you want to call it!) and even the little bit of money that was indeed being spent on a new initiative started being in areas like governance, security, risk, compliance et al. Nothing wrong with that unless that is the only thing on your agenda! In the midst of all this, the cost of storage, processing power and communication dipped exponentially making it an extended comfort zone for optimization initiatives.

Life, proverbially as well as in reality, goes a full circle. Any bit of optimization today based on the overarching themes of the previous paragraph, and indeed the past decade and a half, would ring in infinitesimally small incremental benefits that would not sustain the interest of businesses to pump in investments with the same enthusiasm and vigor as in the past. There are some exceptional applications of those themes that still do carry the whack, especially where the order of magnitude of the requirement of those dimensions is humongous. These are in a minority in the larger context of this discussion and, well, prove the rule anyway.

This has necessitated a revisit of the objectives and the larger purpose of the CIO organization, perhaps even to the extent of a need to rechristen the function and the roles thereof. Like any change of this nature and magnitude, this will be evolutionary and may play out over a good part of this decade. But, it is inevitable. An inward focus on ICT optimization would be a self-centered and self-defeating strategy. The urgent need is to realign to the business expansion and growth agenda and what better time to embark upon it than now, when businesses and the larger world economy are at their lowest in decades.

It is a welcome ‘back to basics’ for the CIOs and my take is that the vast majority of them and their larger teams are resilient and fully capable of rediscovering their true roles. It is only their acknowledgement of this situation and urgency to act on it that will separate the boys from the men.

You may also find some interesting perspectives on this theme in

http://www.cioupdate.com/careers-and-staffing/the-cios-role-morphs-yet-again.html

http://www.techrepublic.com/blog/tech-manager/the-cio-is-dead-long-live-the-cio/1416

http://www.cio.com/article/603965/The_New_New_CIO_Role_Big_Changes_Ahead

   

Note: The views expressed here and in any of my posts are my personal views and not to be construed as being shared by any organization or group that I am or have been associated with presently or in the past.

Sounds a no-brainer to invest during troughs and reap dividends during peaks?

There is enough historical and mathematical evidence to prove that return on investment is maximized when the investment is made at the troughs of the business cycles instead of at the peaks. Mathematically, this must sound fairly obvious considering that returns come from business benefits that are directly or indirectly a function of the business volume.

Why then, do some parts of the investor and business leadership community get overly obsessed with bottom-line improvement in a downturn? When there is a dire need to generate cash on a day-to-day (ok, that was an overkill, read short-term) basis because of an intent to cash-out at the earliest or you’ve already made the mistake of investing at a peak, you are likely to have no choice but to focus on the bottom-line. The latter is reality that you can live with if you have a long-term vision and a sound strategy for volume uptake beyond the market on a revival but the former could be a real danger if the underlying reason is that you have run out of ideas to improve volumes beyond the market even on revival.

You would be surprised just how many people and organizations demonstrate this behavior and what their underlying reasons are. I recommend trying this hypothesis out in your own ecosystem or with businesses you watch closely and see the results for yourself.

Am extracting some stuff from my blog http://saysmuraliaboutlife.blogspot.in/ that are more relevant in a business scenario than otherwise. Here's one...

THE IMPORTANCE OF GREY

The first and most important step towards building consensus in a multi-party scenario is to establish the presence of grey. If the view remains binary till a decision is to be made, the only way to decide would be to have the majority prevail if the process is to be kept democratic. That is, often, the worst outcome in a multi-party discussion or negotiation since all parties in the minority have been provided infinitely more time to prove the decision wrong, and that too at the time of carrying out the action following the decision!

Leadership lingo and mindset – the most common faux-pas

A job well begun is half the job done. If the leadership mindset is incorrect or its messaging is unclear, it puts at risk the entire task at hand. Right posturing and positioning, they say, is the all-important first step to a product’s success. Putting together a winning team to work towards organizational success is no different.

I am attempting to call out some of the most obvious leadership mindset and messaging faux-pas that one comes across in routine day-to-day corporate lives. I know there would be countless others, more commonly used and starker in their incorrectness. I am just attempting to kick-off the topic with a small list of five – would really appreciate if readers could contribute their own observations and stuff they have experienced or come across, that are along similar lines.

So here goes…

Employee engagement – I am sure the original semantics of the phrase was centered on the concept of making the entire process of running a business, participative, by involving more and more people that make up the organization from ideation to implementation. However, the latest interpretation of this phrase is akin to co-curricular activities in academics. Employee engagement in most organizations has become the generic buzzword for cultural, social, sporting and similar activities involving a cross-section of employees.

Inclusive growth – This is another classic case of trying to convey the participative culture and that the employee is a key stakeholder in the business and its growth. It is all very well till you start contemplating the corollary - what would non-inclusive growth mean? That your contribution is not seen as worthwhile or that you contribute and I grow!

The 30-60-90 day plan – There are some who would have us believe that if there is no 30-60-90 day plan attached to a piece of work, independent of it being creative or demure and routine, it cannot be meaningful and relevant to the organization. More often than not, if you can put something into such a plan, it is likely to be something that ought to have been done anyway, plan or no plan, because you could think through every bit of what needs to be done!

Empowerment – Another term used in leadership messaging which means everything and nothing all at once! You constantly hear that you must feel empowered to make decisions and conduct your business in your own way. Well the only catch is, you have to keep the leadership ‘informed’, you should ‘operate within the set boundaries’, you should seek ‘approvals for exceptions’, et al. The operating word in actual empowerment is ‘trust’. If trust is at a premium and found lacking, there is no real empowerment. It is like ‘you can decide alright, but you can act only after I have approved’!! Empowerment, in such a scenario, would be the delegation of decision-making and not the delegation of work. Real empowerment would be to provide the flexibility to influence process changes, at times even work around them on ‘exception’ basis without compromising the goals, values and the fabric of the organization.

The Comfort zone – You would often find leaders propagate the mindset and message that when folks get into a comfort zone, their productivity and creativity would suffer. Hence the mantra for organizational efficiency and effectiveness is to prevent anyone getting into a comfort zone – the corollary being everyone should operate in a zone of discomfort. This is the biggest faux pas you would come across. It is a simple law of nature that resonance is constructive and has the characteristic of enhancing the combined output beyond the sum of individual outputs. This is true with humans and teams in resonance as well. Put folks in a comfort zone and you are likely to find greater productivity and enhanced outcomes.

   

Note: The views expressed here and in any of my posts are my personal views and not to be construed as being shared by any organization or group that I am or have been associated with presently or in the past.

Business reviews – how much is not too much?

This is a question that all leaders must have asked themselves at some point in time in the process of conducting business. The entire business cycle - ideation, simulation, conception, planning, execution, delivery, feedback and back to ideation – must be reviewed periodically along multiple themes and viewpoints and across multiple levels of detail – strategic and tactical down to transactional. Reviews could be for financial performance, customer satisfaction, employee productivity, sales forecasts and fulfillment planning, name the thing.

It is important to take a step back and understand the fundamental need for business reviews.

It could be to –

·         track and monitor progress and status against a plan (review of performance), for e.g.

o   business plan for the organization, a function, a process, a charter, a project

o   employee performance

o   customer experience / satisfaction

·         review the output of a business process (review of a deliverable), for e.g.

o   proposal, quotation, contract review

o   design review

·         ensure compliance to procedures, statutes, rules, policies et al, for e.g.

o   process quality reviews

o   legal/statutory audits

Well, the intent was not to put together an exhaustive list but to give insights into what kind of reviews are typically done in any organization and to zero-in on the particular category that we are trying to address here. For the purpose of this discussion, we will confine ourselves to the first sub-bullet of the first category and just call it, business reviews.

At one end of the spectrum, there are people and businesses that just believe in and focus on doing things. They do not have formal review mechanisms and are fairly ad-hoc in their method and periodicity of reviews. Not all of them summarily fail in their businesses but the element of predictability, sustenance and people-independence of such a business’ outcome and results is suspect. At the other end of the spectrum are people and organizations that are, simply put, either ‘control freaks’ or ‘consensus committees’. There is, in such cases, an elaborate process to review with set periodicity, not only the business and its performance, but the review process themselves, the policies, procedures, people, everything! There are preventive reviews and when they fail, corrective ones; proactive and reactive reviews, reviews of the review process where its effectiveness and efficiency is reported, consolidated and reviewed!!

There are many organizations where business metrics like revenue forecasts, sales and opportunity pipeline, hiring performance etc are measured, reported and reviewed on a weekly basis. There are systems being built to have a general ledger view across businesses and geographies on a daily basis. There are monthly account reviews and quarterly business performance reviews with 30-60-90 day action plans which are reviewed, you guessed it right, every 30 days. There are week-long annual business strategy and planning meets, a month of preparation before and another month of communication after, quarterly employee performance feedback, annual performance and compensation reviews. The entire business reporting cycle is on a weekly basis with the preparation, review and action plan spanning a day. Such organizations spend more management time reviewing what was done and the plans of what is to be done, often more than 50% of their time! And they would report their low productivity numbers periodically, review them, have an action plan to improve it and review that diligently all over again!!

So, jokes apart, what is the ideal periodicity of a business review? Is there an absolute answer across businesses, organizations, cultures, and the product-process-people ecosystem? How do you determine what to review, when to review and how to review?

There are no absolute answers but here are some pointers to what may or may not work for you…

1.       Try to find a correlation between action items that emerge from your reviews and their significance to the business. If there is a positive correlation, the review is a value-add.

2.       Recap what was reported in the previous review – if the numbers, issues, line-items, trends haven’t changed much, you should revisit the periodicity of your reviews – it is, perhaps, too often?

3.       Drop into the reviews conducted by your direct reports – if the content (and indeed, the template) of the report is similar to your reviews, ask yourself if there is any value in the same facts being reviewed twice and at what level in your organization are the action items owned. One of the reviews is, obviously, redundant!

4.       Revisit the objectives and process of your reviews – are you using these as mechanisms for you to understand what’s happening in your business? Does everyone just run through the data in standard reports that are brought into the meeting or is there an opinion, perception, value beyond the data? Could you be gathering this information offline? Do you really need a meeting to comprehend data?

5.       In the worst case, if you are unable to figure out if there is a value-add or otherwise, cancel a review but still call for and track the data. This will be most revealing!

6.       The 10-20-30 rule. And finally, as a golden rule – if you are spending more than 10% of effort at any level of the organization in reviews (of any kind), you’ve tipped over. If you are spending more than 20% of that review effort in tracking and monitoring business that has already been conducted (as a corollary, at least 80% of your reviews have to focus on business that is likely to come in the future), you’ve tipped over.  If you are spending more than 30% of that effort in audit-mode or finding-holes-mode of reviews, you’ve tipped over.

Note: The views expressed here and in any of my posts are my personal views and not to be construed as being shared by any organization or group that I am or have been associated with presently or in the past.

The Great Mobility Magic Show – abracadabra!

Some of the predictions and estimates about the size of the mobility market are so grand that the average eye would pop-out at the suggestions. There are claims of the mobile apps market being a $30bn market (again contestable if you take the published numbers from Apple’s AppStore and do the math given Apple and iOS has an approx 20% market share, in which case the market size would be half the number we have assumed) that will grow 250% by 2015. The total mobile user base is likely to equal the world population, approx 7bn by 2017. Total smartphone sales are tipped to touch 1bn in 2015. The number of app downloads that happened in 2011 is upwards of 10bn! The average number of apps in a smartphone is ~65. Well, there are ever so many numbers to this equation that someone would have you believe that this is all that will happen in one’s life 5 years down the line.

I wanted to take a closer look at some of these claims and hence size up the market. The mobility market could be broadly divided into

-          Hardware or device-related spend (note that this would included all bundled software)

-          Ongoing communication services spend

-          Mobility apps spend (these are non-commercial, non-enterprise software apps typically available for downloads)

-          Enterprise mobility apps spend (commercial and enterprise applications tailored to mobile devices)

The average cost of a smartphone is $135 today and to be able to make the claims that the smartphone market will be 70% of the total mobile phone market within 5 years, the price point will need to be significantly lesser than $135. Let us assume that the average smartphone will be priced at ~55% of what it is priced today and hence will be priced at approx $75. The sales figure is supposed to be a billion phones a year in 2015, so the total smartphone market is likely to be $75bn that year (and more beyond!). The Total Cost of Ownership of a smartphone device needs to take into account around $100 per month (actually much more if you go by current averages) of rentals et al that you pay for the voice and data communication services. So this translates to a total of $1,200bn on communication services spend. The mobility paid apps downloaded statistic puts the current size of that market at approximately $15bn. This constitutes around 40% of gaming, entertainment and sports apps and the rest being 60%. This contests the $30bn figure we started with but let us run with a $20bn current market size and with the 250% growth projection, this is another potential $50bn market. The last of the claims is that the enterprise mobile apps market would be in the $165bn ballpark in the same timeframe.

Now, that’s a big market with significant upside potential for everyone to be seriously interested, right? Well, let us take a look at some of these numbers from a different perspective altogether.

From the above calculations, the average cost of ownership of a smartphone device without any apps would be around $1275 a year in 5 years or approximately $3.50 per day. The total world population is just over 7bn and is growing at around 1.4% annually. This would translate to the world population being 7.5bn, 5 years from now. As on date, 5.1bn of this 7bn population (72.8%) earns less than $10 a day. More than 3.1 bn folks among them earn less than $2.50 a day. Assuming these folks would focus on eating, drinking, clothes and shelter, before using a smartphone; this shrinks the potential customer base by around 45%. I am also making a small assumption here that the 500 million folks we would add to the population over the next 5 years would all not be the privileged few but would be in the same ratio as the current distribution of the population. Seemingly the least amount of money you would need on a PPP basis to stay above the hunger (read starvation) line is $1.25 a day. This is the precise point where I would like to hazard a guess on what percentage of the population that earns between $2.50 and $10 a day would spend the $3.50 per day on owning a smartphone. My take is 0 but for the benefit of the hardcore optimists (HOs), let us say 10% of these folks would actually own a smartphone, whatever it takes. That would still shrink the potential base by a further 26%. This leaves us with a solid 29% customer base! There are around a billion folks out of the 7bn who are under 7 years of age. I know the kids are really getting smarter, they would probably be using smartphones during these particular ages, but I am not sure all of them would have a dedicated smartphone with a mobile (voice + data) connection in their individual names! Again, for the sake of the HOs, let us assume 10% of this lot would also contribute to making up the market! That still rules out a further 13% from participating in this relentless mobility march. So we are down to some 16% of the folks that make up this world that is the potential market! So 1.2 billion folks would keep buying 1.2 billion smartphones on a yearly basis 5 years from now to make the numbers we assumed. For the product, that is a 100% market penetration with a 100% annual churn! I hope I could take these kinds of ideas to investors and get some funding for my next whacky dream!

The best 4G connections seem to be giving around 20mbps data rates as we speak. Let us assume everyone has them for this analysis. The average mobile app of the future is likely going to be sized at 50-100 MB and we could assume that the average download times for an app would be in the 1 minute timeframe. Assuming the total number of downloads goes up to around 50bn paid apps (assuming a dollar an app and the size of the market we assumed). Paid apps make up for around 12% of the total apps downloaded, so the total number of downloads would need to translate to 825bn to achieve the magic mobility dream! That is 825 billion minutes to download stuff. Assuming 16 hours of waking time for an average person in this world and take some ablutions out of the way, half a million people would spend their lives downloading stuff!! The average smartphone user spent around 11 hours each month playing games!! This would increase to about 20 hours a month to support the download stats in the end-game scenario for our time range.

Now, let us turn our attention to the claim that the Enterprise mobility apps market is seen to be at $165bn in the same timeframe. The services and software spend within the ICT spend currently adds up to approximately $1200bn. Over $300bn of this spend is in the Infrastructure Management space and another $300bn on system software, internal FTE costs et al. The growth of the software and services spend has gone down dramatically and in the past 5 years averages an annualized 4%. The denominator representing the total market therefore is around the$ 730bn ballpark. To hit the $165bn market size, the mobility spend would need to be a fourth of the total software and services market!

Somewhere, in the midst of all this, I am sure the implication is that people around the world, 5 years from now, would do pretty much everything on the go, no matter where they are headed!  Pretty much every 2^nd person above the poverty line will carry a smartphone. At least 10% of all kids born would take to the smartphone within a couple of years of leaving pre-school. People are likely to be spending a day each year downloading and 20 days each year playing games on their smartphones. And this loss of productive time will have zilch impact on the economy or the affordability of the smartphone itself.

Well, I do not bite this as it appears at face value. There certainly is a market out there for mobility. It is far closer to saturation than one may want to believe. I would tend to look at some business case claims far more closely than the industry currently does. In my view, customer base expansion is likely to be less of a play than re-cannibalization of the existing base itself through more value in the product and services offered.

Till we have greater clarity and the story unfolds to reveal the reality, let’s WATCH THE MAGIC SHOW, ON THE GO! ABRACADABRA…

Note: The views expressed here and in any of my posts are my personal views and not to be construed as being shared by any organization or group that I am or have been associated with presently or in the past.