Inside Intel's $US740m punt on Cloudera

In March this year Intel paid $US740m for an 18 percent stake in Hadoop software company Cloudera becoming its largest strategic shareholder. According to Cloudera founder and CTO, Amr Awadallah, it's a sign that Intel believes the Cloudera approach could revolutionise the data centre and the way large organisations manage their massive data bases.

Intel's investment was made at the time Cloudera raised $US160m in a round of venture funding but it seems that Intel bought most of its shares on the market, so Cloudera didn't get the money.

That however does not diminish the significance of the move, the largest single investment in data centre technology in Intel's history, according to Intel. Intel said: "The deal will join Cloudera's leading enterprise analytic data management software powered by Apache Hadoop with the leading data centre architecture based on Intel Xeon technology. The goal is acceleration of customer adoption of big data solutions, making it easier for companies of all sizes to obtain increased business value from data by deploying open source Apache Hadoop solutions."

Awadallah likens the move to a number of other landmark initiatives over the years that have helped Intel become the dominant chipmaker. "Intel historically has been very clever in surveying their customers and seeing which new workflows are growing very quickly within data centres," he told me in an interview earlier this week. "So Intel now has a 96 percent market share in the data centre: Ninety six percent of the servers run Intel CPUs."

He identifies the earlier landmarks as being: The 'Wintel' alliance some 20 years ago; the alliance with RedHat about 15 years ago; the backing of virtualisation leader VMware about a decade ago. "Intel saw Cloudera growing very quickly and wanted to make sure that whatever they did was optimised for Cloudera," Awadallah said.

So just what is it about Cloudera and its Hadoop distribution that has merited Intel making the company the target of its largest ever investment in data centre technology?

It all centres on Cloudera's concept of the Enterprise Data Hub. According to Awadallah, a traditional data centre architecture comprises dedicated, and costly storage systems and processors connected by a network. Data is by and large dedicated to each application and, where necessary, replicated to serve different applications.

Cloudera's Enterprise Data Hub is made up of low-cost, commodity 'pizza box' servers containing both CPU and disc, and open source software. This software manages a single pool of data and serves data up to applications as needed. For redundancy data is replicated across multiple pizza boxes and the management software automatically isolates any device that fails.

According to this Cloudera white paper on the EDH, "An enterprise data hub (EDH) is one place to store all data, for as long as desired or required, in its original fidelity; integrated with existing infrastructure and tools; with the flexibility to run a variety of enterprise workloads—including batch processing, interactive SQL, enterprise search, and advanced analytics—together with the robust security, governance, data protection, and management that enterprises require. With an enterprise data hub, leading organisations are changing the way they think about data, transforming it from a cost to an asset."

Awadallah contrasts the EDH approach with a data warehouse built on relational database technology and claims that the costs of data storage are 30 to 100 times lower. "With relational systems you are looking at average cost of $30,000 per terabyte, $30 million for one petabyte. The cost with the Enterprise Data Hub is anywhere from $300,000 per petabyte to $1 million per petabyte. We are 30 to 100 times cheaper."

This is only part of the story, according to Awadallah. The power of Hadoop is that it enables analysis of and insights into both structured and unstructured data. The lower cost means that much more data can be simultaneously available for analysis than with a data warehouse, where costs dictate that old and little used data must be archived. This in turn enables organisations to completely re-engineer the way they operate and enables them to extract many more valuable insights from their data.

This Awadallah says, represents "the highest level of maturity of the hub vision," and is "when you have achieved enlightenment as an organisation, what we refer to as converged analytics.

This is where you have a single place with all your data and your workloads all come to the data, as opposed to the data going to the workloads. This is typically a four-year journey for some organisations it can be a ten-year journey and for some organisations it can be a one-year journey.

An organisation's path to enlightenment with the Enterprise Hub, Awadallah says, must pass a hiatus where the technology moves from being the domain of IT to being in the domain of users within the business, how it manages that transition is yet another example of the challenges organisations face in 'becoming digital', but that's a story for another day.

Why CMOs are getting excited about WiFi

Last week I interviewed David King, chairman and CEO of WiFi technology company, AirTight Networks. He's in Australia for a retail trade show, which begs the question: what's the CEO of a global WiFi company doing at such an event? The answer demonstrates yet again how digital technology is pervading every aspect of business.

AirTight Networks is a decade old company that started life focussed on wireless intrusion prevention systems. These were based on a WiFi sensor, essentially an access point but one that provides no communications services. Instead it monitors the airwaves for rogue hotspots, honeypots and any other attempts at compromising a network's security.

The company's market was high-end enterprises - those for which the security technology built in to even enterprise grade WiFi products was inadequate. In 2008 it introduced a cloud-based version of the management software in a bid to garner customers among smaller enterprises.

That move was not particularly successful but, then according to King, "The PCI standard came along in 06 or 07 and in 08 they added a WiFi scanning requirement because this guy named Albert Gonzalez managed to hack into 10 different retail networks driving around Miami and was able to steal 170 million identities."

Now, King says, to maintain compliance with PCI companies using wireless technology for their eftpos terminals must scan for rogue access points and other wireless intrusion events every quarter.

This generated demand for AirTight's cloud based intrusion prevention technology and on the back of that it AirTight entered the mainstream enterprise WiFi market by evolving its WIPS sensing device into a combined access point and sensor. It also added functionality to the cloud-based monitoring software to provide additional analytics functionality - essentially repurposing information from WiFi devices that it was already gathering for security purposes.

This enables retail and hospitality organisation to establish direct links with customers once they can be persuaded to access the in-store WiFi. Then every time they return if WiFi is active on their device it will automatically log onto the network. Organisations can set up loyalty programs, offer coupons and promotions and generally know when and for how long customers are on the premises. The AirTight system enables a network comprising WiFi hotspots in multiple locations to be monitored from a single console.

You probably won't see much of this in Australia yet. It's early days. King says the company is "in the throes of winning several customer facing organisations, chains of coffee shops, etc. The same type of customers that we now have in the United States." There it has been deploying such installations for about two years.

One of its first customers to use the technology for marketing purposes was Noodle & Company, which operates a chain of 300 fast food outlets. According to King, "In every shop that installed WiFi the signup to loyalty programs increased 50 percent. They found that the people in the loyalty program spend on average 25 percent more. So when you do the maths, the system pays for itself in a store in a day and a half." There's a case study here. 

As a result, AirTight has switched its marketing focus, hence its presence in an Australian retail show. "Our go to market strategy is now targeted at CMOs instead of the IT shop," King said.

"We were trying to empower the networking people and the CIO in an organisation to add some value to bring to marketing, but we found that getting the digital marketing team or the CMO involved early on it makes the sales cycle move a lot faster. And we found that, for a lot of our customers, CMO has more budget dollars for IT than the CIO: for digital advertising, email blasts etc.

"Typically the IT shop will see WiFi as a cost of doing business, but the business case now is that companies have to engage the customer, not just online but when they come into the store. And in the bricks and mortar environment they have no other way to engage them other than through WiFi."

Maybe, but there's another technology hovering in the wings that has equally interesting possibilities. It's called LTE-Direct, but that's for another day...

CMO and CIO struggling with their new relationship

Today I received an interesting news item from Accenture Interactive that makes a timely follow-on to yesterday'sarticle  where I talked about a company embracing digital marketing, quoting comments made by John Travis, Adobe's VP brand marketing, on how his relationship with Adobe IT has changed in response to the demands of digital marketing.

Accenture has released Cutting Across the CMO-CIO Divide, a survey of more than 1,100 senior marketing and IT executives around the globe. The press release was headlined "Divide Between CMOs and CIOs Narrows, but Companies Still Struggle To Deliver Integrated Digital Marketing Solutions." Because it was a rerun of one conducted a year earlier, Accenture was able to pick out some interesting trends.

Collaboration is increasing.

 "Nearly one-quarter (23 percent) of respondents believe collaboration between the two teams is currently at the right level, up substantially from last year’s CMO-CIO Insights survey that stated only one in 10 respondents felt collaboration was at the right level."

But so are the tensions as digital marketing ramps up.

 "40 percent of CMOs believe their company’s IT team does not understand the urgency of integrating new data sources into campaigns to address market conditions – an increase of six percentage points from last year’s survey."

"43 percent of CMOs now say that the technology development process is too slow for the speed required for digital marketing, compared to 36 percent who held that view a year ago."

"43 percent of IT executives said that marketing requirements and priorities change too often for them to keep up, an increase of three percentage points from last year’s survey."

"25 percent [of CIOs] now believe that CMOs lack the vision to anticipate new digital channels, compared to just 11 percent who expressed that view last year."

Accenture Interactive says that, in the four years it has been conducting the research, it has "never seen CMOs and CIOs as interested in working together as they are now. A sea change is happening as more and more CIOs put marketing IT at the top of their agenda."

But also CMOs are putting IT high on their agenda I've just interviewed David King chairman and CEO of US based Wifi vendor AirTight Networks who told me that sales of WiFi gear are increasingly being made through the CMO not the CIO, hat getting the CMO involved can often shorten the sales cycle significantly and that CMOs often have a bigger IT budget than CIOs.

Why are CMOs getting so interested in WiFi? Because AirTight's technology does more than just WiFi, making it particularly relevant for a new development in 'digital marketing'. I might say something about that tomorrow.

Becoming digital is quite a challenge

I've been to a couple of briefings this week that reinforce the need for businesses to undergo a major transformation and, as research firm Forrester puts it, become 'digital at the core', and heard how much of a culture change is required.

First up came a press briefing from Sitecore - which claims to be "the global leader in customer experience management ... [delivering] highly relevant content and personalised digital experiences that delight audiences." It released the results of a survey of Australian and New Zealand businesses 'The Role and Use of Personalization', saying, "Personalisation is a common practice among Australian and New Zealand marketers, but it's a practice that remains simplistic and which is largely limited to email." In this case by personalisation they mean simply addressing an email "Dear Stuart" - that hardly qualifies.

Yet survey respondents reported significantly improved results from even a modest level of personalisation, for example those that used the target market's previous purchase history achieved significantly better results.

Personalisation is just one example of leveraging digital technology in marketing. If the Sitecore survey is to be believed, Australian companies aren't doing too well at it. If they are struggling with personalisation then switching marketing from traditional channels to digital channels will be a real challenge, it takes the exploitation of digital technology in marketing to a whole new level.

But if the results of a survey by Adobe, also released this week, are any indication getting to grips with digital marketing pays good dividends.

Adobe released the results of the Adobe Digital Index Best of the Best Benchmark for Australia and New Zealand, with Tamara Gaffney, principal analyst, Adobe Digital Index, saying, “For conversion rates alone, the ‘best of the best’ websites in industries that sell online deliver nearly double the average conversion rate. They are proving that making a commitment to digital excellence can result in a significant increase in revenue.”  But, she said, success at digital marketing required a culture change. When I asked if that was really the case, John Travis Adobe's VP brand marketing, gave a very compelling answer.

Adobe is a company that claims to spend 75 percent of its marketing budget on digital but Travis came from the 'old world' of pre-digital marketing and had make his own transformation to digital. This is what he said.

"You have to change the entire culture. I was taught, and many marketers are taught, around the culture of 'the campaign'. You're going to invest time and money to make sure everything is perfect. You plan for five or six months and then you run the campaign for maybe three months. All the processes were built around that campaign structure.

"And now with digital marketing I'm changing my campaign day-to-day. For example, a year ago we had built a whole campaign around Photoshop and one of the features was this antiblur technology that enables you to deblur a photograph. We just put it out there but it became a phenomenon and within a week we changed our campaign. We created new advertising.

"So now I review my plan every week. We test and we iterate. That is completely different. And the other thing is relationships. Because, to make digital work I have to be [really close] with my IT department and [really close] with the e-commerce department and the sales team. Ten years ago I probably would have spoken to IT once a year. Now I am meeting the head of IT the team once a week.

"That is a culture shift. We didn't speak the same language. We had to learn how to work together and that is the talent we look for now. When I'm hiring I am looking for team builders. It is critical we have to get along with and cooperate with and to talk these other teams."

Digital marketing, he said, was becoming increasingly sophisticated "We are always testing new layouts. Sometimes that requires coding. I need IT right there. I need them to understand my goal and they need to be there with me and they have to sign up to the same goals that I have."

So that is just the change involved when one area of an organisation, marketing, becoming truly digital. And I wonder if all companies fully appreciate the culture change involved.

Take Qantas for example. Mumbrella reported today that Qantas is understood to have lost 40 percent of its broader marketing team in the recent savage round of job losses, with the carrier flagging a more concerted focus on digital marketing strategies going forward."

If Travis's comments are any guide that focus won't come easily.

In praise of APIs

I've come across the term API (application programming interface) a gazillion times and never thought too much about it - it's simply how one piece of software specifies that other software should talk to it. Important, essential even, but not something to get excited about. It seems I was wrong.

I was rather surprised last week to receive an invitation to a press briefing at which Will Bosma, vice president Asia Pacific, MuleSoft promises to "discuss the rise of the API and why a company’s competitive advantage is no longer in the applications used but in the platform with which you choose to connect them."

APIs, the invitation said: "started out as simple tools designed to help share information over the Internet. Yet APIs are evolving so quickly, they'll soon know more about us than we do. APIs are the key enablers of the current mobile and web application revolutions and with more personal data being stored in cloud-based services like Facebook every day, APIs can be used to find out everything from what we like, watch and buy to what we might do with our friends later."

It went on to say: "Everyone, from energy companies and car manufacturers to insurance firms, telcos and banks, is co-opting APIs to create new services. A new breed of enterprises is emerging, which unlock data to create new services for consumers and partners through APIs. Social networks were just the beginning for APIs. As enterprises start to open up their data (over secure channels), the possibilities for automating the mundane and creating new innovations are unbounded."

No sooner had this arrived in my mailbox than in one of those weird examples of synchronicity, this came along: "Why Uber—andwhatever is coming next—is really about the rise of APIs," a blog on the Boston Globe website. It quoted Michael Skok, a general partner at North Bridge Venture Partners, saying: “The whole [Uber] app would be impossible without the cloud."

APIs, it explained "are the underlying technology used by developers to enable services such as mapping and payments over the cloud. APIs let apps communicate with other software — requesting data and providing a standard way for that data to be delivered."

Well, yes we know that, but what this means, it argued, is that APIs let tech startups "focus on what they’re really good at. Because of APIs, Uber can focus on getting drivers and users, finding the right pricing model, and expanding to new cities."

But it's not only startups that can benefit from APIs. According to ABI Research, established telcos can boost revenue significantly by paying attention to, and exploiting APIs. It has just published a report "TelcoAPI Landscape and Developers”  and says, "telecom carriers must focus their attention on securely exposing services internally and to external partners and applications. Turning network services into resources easily accessed via APIs is the future for enterprises, including telcos."

ABI Research analyst, Sabir Rafiq said: “APIs can be used to generate new sources of revenue, to drive innovation, increase competitiveness, and retain and attain new customers.”

I'll never look at APIs in quite the same way again.

Digital disconnect on Australia's ecommerce capabilities

Two reports this week present starkly different pictures of Australia's capabilities in the area of eCommerce.

First off came the eBay sponsored Economist Intelligence Unit's report The G20 e-Trade Readiness Index "a quantitative index ranking of countries on the degree to which they encourage—through policy, regulation and infrastructure—cross-border trade using the Internet."

The index comprises more than 40 indicators across five thematic categories: investment climate, Internet environment, international trading environment, regulatory and legal framework, and the environment for e-payments. These categories are weighted according to EIU assumptions of their relative importance in facilitating cross-border trade using the Internet, especially for small and medium-sized enterprises (SMEs).

And, surprise, surprise, Australia came out on top. "Australia is best prepared to grow global ICT-enabled commerce," the EIU concluded. "Australia ranks top in the e-Trade Readiness Index based on strengths across all five categories measured, particularly in the Internet environment and e-payments environment. Australia has affordable Internet access, a well-developed regulatory framework for commerce, high usage of electronic payment methods and high smartphone penetration."

Its explanation for this was in part that "Geography and history ... seem to encourage the development of e-trade—three out of the top five countries (Australia, the UK, Japan) are both developed and island nations whose economies have long relied on international trade." It added: "Australia can continue to improve should it have more competitive domestic and international shipping systems."

The logical extension of these findings is that Australian businesses, especially retailers, should be at the leading edge of digital especially in the export market. Alas the opposite is true, at least according to Australian Digital Commerce, a report from the Australian Digital Transformation Lab, a joint venture between The University of Sydney Business School and Capgemini Australia.

Its key findings make depressing reading.

- Australian retailers face a double relational gap; not only is building lasting customer relationships the weakest aspect among Australian retailers, a large gap also exists between the relational capability of Australian retailers and that of their counterpart international market leaders.

- Given the strength of international competitors in building relationships, there is a real risk that Australian retailers will lose its customers, and will lose them permanently. While excellence in digital execution has become a strategic necessity for Australian retailers, engagement in relationship building and social commerce is where the competitive game is now played.

- Thirty eight percent of all Australian retailers are classified as ‘Laggards’, who show poor implementation of digital commerce functionalities in both the execution and engagement dimensions.

- Only twenty-six percent of Australian retailers share the ‘High Achievers’ category with international market leaders, displaying excellence in both execution and engagement.

- Closing the gap will require improvements in omni-channel integration and effective utilisation of customer data, in order to foster execution and drive engagement.

The report does not offer any explanation as to the underlying causes of these conclusions and its recommendations are really in the "must do better" category.

"While some Australian retailers are catching up with their international competitors, the majority have work to do in all aspects of digital commerce. ... The key to excellence in execution is effective omni-channel integration. ... The key to excellence in engagement is the utilisation of customer data to derive individualised offerings."

LivePerson is a US based company that plays in this space - it operates a cloud service that adds web chat functionality to web sites and Dustin Dean, VP and general manager for Asia Pacific and Japan - who has run the Australian arm since it was set up three years ago - sees some more fundamental problems, although he admits to having no real data to back up his observations, made by contrasting the local scene with that in the US and elsewhere.

"Especially in the retail vertical I see a relative lack of execution expertise in the e-commerce sector in Australia. It is pretty hard to find people who are knowledgeable and upskilled in the execution of digital strategies." He adds: "If you find any validation to this I would be interested to know."

I also would be interested in any comments. In the meantime, if retailers are struggling with digital expertise - Dean's advice is for them to look overseas, recruit a high level executive and then "their expertise will percolate down through an organisation, but it will take time to educate people in general."

Software defined networking - it's Intel inside.

The recent rapid development of software defined networking and network functions virtualisation may owe more than you might think to the world's leading chipmaker.

On several occasions I've talked to vendors of firewalls, intrusion detection devices, applications controllers etc who've told me they have virtualised a product that was once dedicated hardware so that it is now software running in a virtualised environment.

I've asked them how they have managed to achieve comparable or adequate performance from such a configuration and never received an explanation, only reassurances. Now Brocade subsidiary, Vyatta, has provided one: it's thanks to the increased packet processing power of Intel chips.

Vyatta (the name comes from Sanskrit, it means 'open') hit the market in 2005 with the launch of a software router based on standard x86 hardware. The company was acquired by Brocade in 2012 and now forms the core of Brocade's software defined networking technology. Former Vyatta executives Scott Clark - now senior director, worldwide business development, software networking at Brocade - and EJ Dath - senior software engineer, worldwide business development, software networking - briefed journalists this week in Sydney on the Vyatta platform and Brocade's view of software defined networking.

According to Clark, "Intel has continued to enhance its chipsets and the performance has got better and better. We saw a tipping point in about 2010 when there was enough throughput that a virtualised machine could adequately do routing, firewall and some of these network services on an x86 box along with the applications themselves."

He observes that this coincided with the terms software defined networking and network functions virtualisation starting to gain traction "because now you had enough performance and throughput and capability to shift from proprietary systems to open x86 systems."

Clark conceded that custom silicon would still hold the edge over standard chipsets but said, "With the application of Moore's law you get to the stage where it's good enough and that is where we are right now. A lot of vendors, including Brocade are now starting to ask what are we going to continue to build on ASIC and what can do by leveraging x86?"

According to Clark Intel then looked at what it could do to make its generalised processor more suitable for packet processing, and came up with its Data Plane Developers Kit (DPDK). "Through utilising special command calls you can take advantage of these special opportunities within the Intel chipset to push packets faster," Clark explained.

He said that, prior to exploiting DPDK, Brocade had been able to achieve throughput of 1.9gbps per CPU core, but no more. "Even though you could add more cores the performance was not changing because of the way it had to be architected."

Then DPDK came along. "We were one of the first companies to get access to DPDK and we started to write our software to take advantage of it and now we are getting 10gig throughput per CPU core."

According to Wikipedia, DPDK is "a set of data plane libraries and network interface controller drivers for fast packet processing on Intel Architecture platforms." It "provides a programming framework that scales from Intel Atom processors to Intel Xeon processors and enables faster development of high speed data packet networking applications." It is provided and supported under the open source BSD license.

CONCLUSION

The continued evolution of software defined networking and network functions virtualisation is clearly dependent on semiconductor development continuing to obey Moore's Law. According to Clark, there are no signs from Intel that this will not be the case.

Intel, of course, would be the last to sound the alarm on this one, but others are already seeing portents. In June Wired magazine published an article  Is the End ofMoore’s Law Slowing the World’s Supercomputing Race? It was about a list of the most powerful computers on the planet, compiled every six months by a team of supercomputing academics. Wired reported little change in the list in the past 12 months and quoted Jack Dongarra, a computer science professor with the University of Tennessee who has long been involved with the list, observing: “Things seem to be slowing down. You might characterise it as maybe a sign that Moore’s Law is having some issues.”

Is this list an early warning? Intel of course says no. The article quoted a company spokesman saying “We expect Moore’s Law to continue to provide benefits for the foreseeable future across a broad range of computing segments."

Time will tell.

When network management meets customer experience management

At the CommunicAsia show in Singapore in June I caught up with Mike Ropicky vice president Asia Pacific for Tektronix Communications. The company has an interesting approach to customer experience management that is underpinned by its network monitoring and service assurance technologies.

This might seem an odd field for a company most often associated with oscilloscopes and test gear, but while Tektronix and Tektronix Communications (TC) have a common name and common ownership they are in fact two largely separate entities.

The origins of TC go back 10 years to when Tektronix acquired Inet Technologies, a company that had developed service assurance technologies that enable the identification of specific customers or subscriber groups impacted by network or service issues.

Tektronix was acquired by Danaher Corporation in 2007 and Ropicky said the new owner decided that the test equipment business and the network management and monitoring arm did not sit well together, so created Tektronix Communications.

He explained TC’s journey to the present day: “We owned a bunch of troubleshooting and diagnostic applications which helped operators see what was right and what was wrong with the network and those probes were collecting a lot of relevant information that was useful not just for troubleshooting and diagnostics but that could be used for customer experience management.

“So we bought a Dublin-based company in 2009 called Arantech, because we recognised that we had to have the customer’s view. Their product is called Touchpoint, and they were one of the first companies to do customer experience management. So now we have our probes at the core of the network feeding information into the Touchpoint application to give the specific customer view.”

He summed up how TC’s technology can be used to identify and resolve specific customer issues. “When customers are having problems they call the contact centre but their calls fall on deaf ears. The people in the call centre cannot see the problem so they go to the engineers, and the engineers cannot see the problem, but since our probes can see into and through all vendors’ networks we can start to link up the call trace and we can link the customer experience to where the network is breaking and send the trouble ticket to the right people who can use the same data to see and correct the problem.”

To extend this capability into the radio access portion of mobile networks - where 70 percent of the problems occur according to Ropicky - TC recently acquired Newfield Wireless, a company that, he says “has the capability to understand what was going on in the radio access network.”

And better still than simply being able to identify the root cause of a customer’s problem when they call in is being able to forestall that call, saving the operator the cost of responding to customer queries.

But this, according to Ropicky, is just the beginning: being able to combine vast amounts of data about the performance of the network and linking that to information about a specific customer’s experience of that network opens up a huge range of possibilities.

“We can combine information from the core of the network and combine that with information from the billing systems and the CRM systems and from the radio access network and when you start pulling these levers you find ways to do things you never thought of.”

He talked of “filling a data lake” with all kinds of meaningful information that could be correlated. One example he gave was that the technology could enable an operator to prioritise areas for network upgrades from 3G to 4G. “You could look at what the 3G users were doing, what apps they were using and how much they were spending.”

CONCLUSION

Delivering an optimum customer experience, and using net promoter scores to measure progress towards that goal has now become almost an obsession for telcos. So too has the notion of serving each customer individually.

Back in 1997 Frank Blount, the high level US telco executive brought in to steer Telstra into the era of untrammelled competition, gave a speech to a conference in Sydney entitled "The Segment of One", the one in this case being the customer.

He unveiled a new mantra for Telstra’s marketing, "customer intimacy", telling the conference: "The determining convergence in our industry will be the convergence between customer demands or desires and the service offerings of companies who cross any necessary boundary or tradition in order to wrap around those demands and therefore establish crucial advantage."

Over several years Blount's successors re-iterated his theme, with variations, but there was one major obstacle to Telstra realising that vision: determining the demands and desires of that "segment of one". Telstra went to great lengths to come as close as possible to doing so. In 2006 the then CEO, Sol Trujillo, announced that Telstra had surveyed 22,000 residential and SME customers. "We have identified seven needs-based segments, 18 product segments and 126 microsegments. No segmentation work like this has ever been done in the industry," he said. "It’s going to enable us to be very, very targeted in terms of how we interact with our customers, how we sell to our customers, how we define a customer experience and then ultimately how we operate our business.”

Today it looks like the synergy between network management and monitoring, customer experience management and data analytics might be making the achievement of a customer segment of one a reality.

Deconstructing the Respect Network

There seems to have been a deal of confusion this week around a new concept, the Respect Network, following a global roadshow promoting the network that passed through Sydney. So I’m going to try and dispel some of that.

Reactions seem to have been a mixture of cynicism, scepticism and suspicion, which is a pity because, I believe, the underlying idea is sound and if the vision as described by the founders, can be realised, it will radically change the way we use the Internet.

The essence of the scheme is to enable consumers to participate in the online world, sign up to web sites, avail themselves of a range of services and for all their personal information, preferences etc to be shared only as needed with individual service providers, or with others at the consumer’s discretion.

The trouble is there are a few different ways of looking at what the Respect Network does and what it will offer and focussing on each in isolation tends to obscure the whole.

The first manifestation of the network is federated identity. It is fairly simple and easy to grasp - which is why it is being pushed initially. If you sign up and pay $30 you will get an ID like a Twitter handle but preceded by =, eg =stuartcorner, that you will be able to use to log in to web sites that display the ‘Respect Connect’ logo just as you can do that today with your Facebook, LinkedIn or Twitter ID. The difference being that no other organisation will know what services you have signed up to, unless you choose to tell them.

Your Respect ID and password, and down the track much other information about you, will be held in the cloud by cloud service provider partners of the Respect Network; the one in Australia is Onexus.

The networking that will enable sites using the Respect Connect logo, and other partners of which more later, to retrieve and verify user IDs will be operated by Neustar, a company which provides number portability services to a number of US telcos.

That’s all pretty straightforward but it does not seem to bear much resemblance to how the Respect Network is describing itself in its bid to make the concept simple to understand.

Respect Network CEO, Drummond Reed likens the network to the credit card system. A credit card company, eg Visa, simply operates the network and enables users to have credit cards and merchants to accept payments on these. The actual service is provided by participating banks. Merchants pay a percentage of each transaction as a fee for service. Banks may also charge customers a fee or may offer the service free because it gives them an opportunity to lend money to the cardholder at usurious rates.

That explanation introduces, but not in a very helpful way,  the other - and perhaps the most important - group of players in the Respect Network game, those companies that will provide services to Respect Network users based on their identity and preferences. These players will be identified by the handle +companyname in the Respect System.

So how will it all work? There are two key components, one technical and one contractual. The contractual component is set out in the Respect Trust Framework, a set of documents lodged with the Open Identity Exchange that commits all participants to protecting members’ information and to ensuring that any information created through the provision of services is fully portable within the Respect Network.

This portability will be achieved through the use of XDI (eXtensible Data Interchange), a data interchange format and protocol by the XDI Technical Committee of OASIS, (formerly the Organisation for the Advancement of Structured Information Standards) which is co-chaired by Respect Network CEO, Drummond Reed.

Because data on individuals will not be generally available, even anonymised and aggregated, there is no opportunity to fund the system by exploiting that data (the Facebook model). Instead Respect Network believes that businesses will pay for access to consumers. The fee they pay, annually will be split equally three ways: one third to the consumer, one third to the provider of the consumer’s ‘base cloud’ (eg Onexus) and one third to the intermediary service providers.

CONCLUSION

So that’s the essence of it. There are many questions to be answered about how it will work, particularly around security, data integrity and how adherence to the Respect Framework will be maintained. All these are essential to its successful operation.

Using the federated identity to get the ball rolling seems like a good idea - it is easy to understand. However early adopters who have paid their $30 for a =name might be a little disillusioned to find there is little they can presently do with it (this was the reaction of a friend of mine who signed up).

Make or break for the Respect Network will likely come through the emergence of service providers that are able to exploit the network and the structures it has set up to offer compelling services, and it may well be that the functions and features of those services per se will be the driver of success for the Respect Network, rather than the attractions of privacy.

Yes, Facebook is somewhat on the nose with users at the moment (see the results of this survey What would make you quit Facebook? on the Sophos Nakedsecurity blog), but I suspect there is still a long road to go before most people are actively seeking greater online privacy.

Mu Sigma: taking big data to the next level

Mu Sigma, a company I knew nothing of until I interviewed the company’s head of products and strategy, Deepinder Dhingra, is a Bangalore-based global enterprise employing some 3500 decision scientits that’s taken the principles of big data, or more correctly data analytics one step further to what it calls ‘decision science’.

And really it was well ahead of the current wave of enthusiasm for big data, it was founded in 2005 and the term ‘big data didn’t really enter the lexicon until about 2008-2009.

Mu Sigma, Dhingra says, is “about helping organisations make better decisions using data and helping them institutionalise the use of data-driven decision-making.” It doesn’t work with clients on a project basis only through long term, ongoing relationships and it has about 20 percent of its staff at any one time located on client premises. The company has been active in Australia for a little over a year and has a handful of clients, including a major telco, but none that it will name.

It’s not much more forthcoming with names of its globalclients, except that of number one client, Microsoft. Others include “one of the world’s largest retailers” and the “world’s largest pharmaceutical company.”

So what exactly does it do that? Dhingra says Mu Sigma doesn’t set you to solve specific problems for its clients but “To help our clients institutionalise the use of data to solve not only their current problems but also enable them to solve their future and ongoing problems.”

It does this, he says, through an ecosystem that “brings together technology platforms plus processes plus people - our 3500 decision scientists. It is this combination that helps is institutionalise the use of data for our clients.”

We focus on three things that we call our core belief systems or commanding principles. One is that a business needs to rely on learning more than knowing. Knowledge is becoming obsolete. Yesterday’s companies competed on knowledge, today companies compete on learning and tomorrow they will need to compete on ‘rate of change of learning’ and we don’t even have an English word for that yet.

The other aspect you have to bring a multidisciplinary approach to help organisations learn from data to make better decisions. If you just focus on maths or technology you don’t get a holistic perspective. Big data itself brings more noise and signals. You need a holistic perspective of business, plus maths, plus technology to help you extract the relevant insights to make better decisions.

Thirdly, innovation nowadays is more function of experimentation and if I can reduce the cost of experimentation for clients I can increase the chances of innovation.

He adds: “Those are the three principles we started with ten years ago and they still stand us in good stead, even with the big data hype those principles are still valid.”

CONLCUSION

What struck me about this approach is how well it aligns with the mantra of research firm Forrester that every business must become digital at its core if it is to survive. You can find this viewpoint in multiple Forrester documents, but this recent blog from principal analyst Nigel Fenwick sums it up neatly

“Your company is likely to face an extinction event in the next 10 years. And while you may see it coming, you may not have enough time to save your company,” Fenwick wrote.

“Business leaders don't think of digital as central to their business because in the past, it hasn't been. But now your customers, your products, your business operations, and your competitors are fundamentally digital.”

He argues that many companies are under the illusion that they are truly digital.

For the past few years, companies have been bolting ‘digital’ onto their existing business like teens paint go-fast stripes onto their cars. ... But the piecemeal strategy of bolting digital channels or methods onto the business is no longer sufficient. Instead, you must think of your company as part of a dynamic ecosystem of value that connects digital resources inside and outside the company to create value for customers.”

Mu Sigma’s approach seems to align perfectly with that view.