Three things to watch and one to ignore during 2015

Big Data, IoT, Digital, Wearables, Drones. 2014 had a lot of really cool tech emerging and evolving. I have found myself trying out a lot more new stuff this year then previous years. While being cool though, most of it is really hype. Very little of it has been tangible or shown value beyond it’s hype-factor.

2015 will be the year of de-hyping some of the recent hypes. It will also bring a shift in focus on details in the hypes when we gain more insights in what the hype’s actually are and where the value lies. Overall, 2015 will be the year of showing value and making things real.

Digital will show it’s true face

Everybody are prefixing everything with “Digital” these days. Much like social in the latest hype and dotcom before that; Digital has become synonym to “current IT evolvement”.

At Avanade we are as guilty as the next guy. We talk about Digital Customer (which is the always on consumer), Digital Workplace (which is the always on employee) and Digital Innovation (which is innovation to transform any organization to a digital business).

During 2015 the conversation will be about figuring out what digital actually is and what it isn’t. To put it in the words of Gartner: 2015 will push “Digital” to “Trough of Disillusionment”

Less Big Data more Insights

In the data and analytics community, Big has been the word on everybody’s tongue. Much like Digital it has been everywhere where data has been mentioned, and much like Digital nobody really has a clear distinction of what Big really means. During 2015 this won’t matter. This is the year we’ll talk more about how to gain insights in current and future events, no matter the size of the data.

With Microsoft, among others, commoditizing machine learning and event processing (“event stream reporting”), the tools to gain insights in small, big and complex data is available for any organization.

2015 will be the year we’ll see others following NetFlix’s footsteps to utilize data as a the key driver for future business development.

Internet of Things will be less things and internet

Internet of Things, Connected Everything, Internet of Everything – No matter what you call it, the discussions around IoT has primarily been around one, maybe two, of the three “C’s” in what makes up IoT: Connect, Compute, Communicate.

We’ve seen and heard a lot about sensors and machine to machine communication. Kickstarter have numerous projects like the Thingsee One that Connect and Communicate. There are less communications on the actual intelligence, the compute, of IoT. Making things communicate over the internet is not a new paradigm shift, neither are sensors that can connect to it’s surroundings.

The shift is in the complete CCC and the technology that makes all three cheap and available. During 2015, this will be the theme; how do we actually makes sense of what the things are saying and how do we realize value from that.

Wearing Wearable’s
Microsoft Band, Samsung and Apple watches, Google glass, intelligent clothing – the list of wearable’s launched in 2014 can be made long. But yet we see very little traction outside of the geeky “must have” feelings. We are still waiting for the breakthrough of usability and value add. The Apple watch created a lot of ooooh and aaaaah among the already Apple saved, but I have yet to see someone actually wear it or even find an useful application. I believe wearable’s will leave us waiting passed next new years as well. They are cool – but not particular useful at this point.

2015 – year of value

So, 2015 will be the year where we see more focus on value creation on the current hypes. In the words of Gartner; we’ll move a lot of hypes to Trough of Disillusionment and even some to slope of enlightenment. If you work with Digital, Big data or IoT this is good news; this will move these things from the whiteboard to actual projects creating not only cool appliances but actual value paying your bills.

Smart Farmers

Last week I held a presentation on urban evolution and the digitalization of our cities at the Swedish TechDays it was a conversation on the drivers behind the smartness or our cities. On how internet of things was enabling this.

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If internet of things can digitalize our famers. Our cities can’t be far behind. The above image is from my technology vision talk, I shared this in the smart cities talk because I believe that what is happening here is important. We are not seeing robotic cows, but we are seeing the blur of the physical and digital worlds.

When a farmer painlessly can put a chip into cow and let it transmit data. Correlate that with data on milk quality, weather, food and all other data possible to capture. The farmer will embark on a journey that makes his business digital.

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Similarly to what I discussed in my post about smart vending machines the farmer can draw insights and get a better understanding of his business. He can use these insights to optimize his farm and ensure the best quality of milk.

But this digitalization opens up for other business models as well. What if this farmer sold his insights to other farms? He could be rewarded for the effective way he runs his farm in more then one way. He could create new revenue streams. For a non-digitalized farmer this would be unthinkable.

For a digitalized farmer, this is just the art of the possible realized.

Internet of Concrete – Urban Evolution

Today at TechDays I held a session on Internet of thins and what it means for cities. I argued that sensors are easy to deploy with the existing infrastructure, that data are easy to gather using cloud services and that cities will turn this from raw data to information products that they can use and sell.

During the talk I promised to link the research and here they are:

Accenture Research on Smart Cities

Microsoft CityNext

City Protocol

I will write a separate blog post outlining my own conclusions and predictions.

MicroControllers are fun

I am preparing for my participation in TeliaSonera M2M symposium and the Swedish TechDays. Since my focus is internet of things I am playing around with the Arduino and Microsoft Intelligent System Service. This took me way back to school and the old Motorola 6X000 controllers. Back then everything had to be burned onto a PROM. Today it is more or less a computer.

This post will serve as guide for anyone that want to replicate some of the stuff I am showing at the mentioned events. It wont dive into the details on the electronics nor will it discuss the underlying architecture and design.

The Ardunio is quite simple to get running. All you need is the Arduino Sketch Editor or the Visual Studio Plugin: Visual Micro. A little bit of C++ knowledge and a lot of cool electronics and you can get going. For me it was about getting three things running:

  • Temperature readings
  • Motor control
  • Bar code scanning (this i ended up faking)

The temperature reading took a while to get running. But there are a huge amount of libraries that you can reuse. For temperature I used the OneWire and DallasTemperature and after a few calculations on resistors I got it to run and reading the sensor data is easy:

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For this scenario all the data was relayed through the surface serving as the vendor machine screen. To do this I added the CmdMessenger library which made it easy to send events back and forth. Basically you add handlers and send evens through a bus that manages all the communication required:

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The C# Code uses a similar pattern:

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A very simple and straight forward model that will make it easy to send events from Arduino to C# and back. In the end the board was up and running and the vendor machine UI successfully sent and received events all the way back to Azure.

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And as stated in the title. MicroControllers are fun. I just got accepted into the Windows For Devices preview and will replicate this on the Galileo board. When I do, I will write a series of posts with all the required details to build your own smart vending machine.

A smart vending machine

The second week of November I will be at TeliaSonera M2M symposium and the Swedish TechDays. I will be bringing some of Avanade’s thinking in the retail space. I will be bringing what we call the smart vending machine.

imageI won’t be bringing an actual vending machine unfortunately. But a concept that we built together with our customers.

Our showcase solution utilizes a Microsoft Surface as the touch point, an Audrino as microcontroller and Microsoft Intelligent System Service as a backend.

It sends all events to the ISS and store them in Azure. In it’s essence this is an IoT solution with all the bells and whistles. The tech is really cool from a geek stand point and I am looking forward to prepare it for the events.

But where is the real value here? The tech is cool. But what would make a business pay for it? I will focus on two technologies Microsoft have been talking about:

Both these solutions is about turning events and data into insights. It is these insights that gives our vending machine the potential of being smart.

Getting insight in event streams

A machine sharing it’s temperature over and over and over again are usually not useful. I want to know when the temperature is below a certain threshold. With stream insight I can query the stream of temperature readings for an abnormality and can react when there is an issue instead of monitoring the actual temperature.

There are other things a vending machine could query for; abnormal transactions that could be fraud, unusual amount of transactions that could disrupt the logistics. And so on.

Predicting the future

By storing all the events about sales, environment, clients, transactions; Machine learning can draw insights about the data and try to predict the future. This is extremely useful when predicting refill. The image below shows how the vending machines inventory levels would look like in a months time based on past sales.  image 

The new smart is based on insights like this. This is where the true value of internet of things and BigData come into play; When you can convert it to value. The new services in Azure will make this happen.

When the services this solution is based upon are made publicly available I will try to post a few examples on how to realize what I’ve discussed here.

The need for digital innovation in the service sector

A few weeks ago we discussed with a client on the possibility to replace their point of sales system with a modern solution built on Dynamics AX for Retail and a customized device UI’s. They provide a service to their customers with a POS and logistics of goods. Their current solution was very near end of life and they had heard that we built something in their industry they wanted to see.

For this client, service innovation is not luxury. It is what they offer to their clients. Today they deliver a single service and feel the pressure from other vendors. Even their customers demand more, something I discussed in my post on digital innovation and the bear experience. By not bringing new services and innovations to their customers, the market opens up.

If you are a service company, what you bring is unique value. At the moment you can be replaced, you will. To ensure that this doesn’t happen you need to create a chain of services. This client need to start innovate, start bringing more of digital to their customers or they will soon be out of business.

This could be thought as a simple product or service development. But as long as they just create monolithic services that can be replaced, they will. Service by service.

This is where we as technologists can help them. By bringing the latest in technology and marry that with their business knowledge – it is possible to create strong service chains that helps them bring new value to their customers.

For this client we discussed that in the addition of bringing our solutions and technical knowledge we could bring our iDays methodology. By embedding an innovation methodology into their processes we could aid them staying ahead of their customers.

I believe that this is the future of the consultant industry. It will not be in answering RFP’s, but to co-create value in a process where we bring technology insights and cross market experience to a business that wants to move a head.

Technical debts are not really debts – they are risks

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A large part of what I do is quality assurance for our clients. I help them understand where their solutions are in the *-ability spectra and I help them lay out roadmaps on how to move from where they are to somewhere new.

Technical debts can be horrific

The hardest situation with technical debt I’ve been in was a solution one of our client was building with another vendor. They had spent a lot of resources in terms of time and money to replace an old system, built 2001, with only one 70-year old man alive that understood it. The reason I and my team was brought in was because of failure to deliver and my client wanted to understand if they should bring the solution into their own care and finish it themselves.

Doing the investigation we discovered something very unsettling;

The core solution was built in Visual Basic 6.

So to replace an old dead technology the vendor introduced another old dead technology. My client had correctly identified their old platform as a risk to the business, their vendor hadn’t identified theirs as such. Or as I was told:

“There hasn’t been a reason”.

This happens everywhere. This is not a unique situation.

Technical debts are really business risks and issues.

Managing technical debt is hard. Knowing what to do when is a huge challenge. Especially in the face of the two speed IT where business demand IT to respond quickly to new requirements. What do you prioritize? How do you argue for your prioritizations?

To help me with this I use a simple model for technical debt where I call manage it as risks and issues. The model is quite easy to use and the real trick here is to use the vocabulary of issue and risk management; for the business this is what it boils down to.

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It is a simple model and the important thing for the business are “Business impact” and Impact”. If you can quantify this you will have a much better conversation with the stakeholders.

There is a lot of organizations that have great models for this. It all boils down to how risk savvy the company is. How far into the future they try to look and what importance they put into their IT-systems.

This model is really simplistic. It won’t stand up to the risk management requirements in a fortune 500 company. But if you don’t have a model in place, this can be a great place to start.

Manage your technical debts as risk

The main point to take away is that technical debts are not debts, they are risks and should be managed as such. When you do, you will have a lot easier arguing for what you know is the right decision. Even in the face of two-speed it.

From Software as a product to Software as a service

This is a reflection I’ve done as an assignment for a class I am taking at Karlstad University on Service Innovation.

How does the shift to service dominant logic affect the software industry? Is it possible for the software giants to provide value in use instead of value in exchange? How can they bring innovation to their customers and how do they work with networks to do so?

This text examines how service dominant logic is changing how software vendors are approaching their business, their partners and their customers.

The force in SalesForce.com

In 1999 SalesForce.Com declared “The end of software”. What they really meant was “The end of software as a product”. Since then the software industry has increasingly moved towards providing their software as a service and customers are applauding this shift.

This makes business push software companies to deliver a higher value faster. They expect new features, new services and new value without the requirement of running IT-projects.

All the major software vendors have had to adapt and are now focusing on providing the function, not the binary bits. Which gives their customers value in use.

Enter software as a service

SalesForce.Com is a pioneer in providing software as a service. In the late 90’s they had, correctly, identified that the real value to their customers where not the product but the functionality, the use. They also identified that CRM is moving at a high pace, innovation is happening all the time and it is hard for companies to keep up. The CEO Mark Benioff’s vision is to help their customers to transform into, what he calls, “a customer company”. Clearly using their software as just the platform, a piece in the service chain, to help their customers achieve their end goals.

There are several examples of this today. Companies like Adobe with Creative Cloud – Creativity as a Service, Amazon with infrastructure as a service – Hardware as a service, and Microsoft who has set out to deliver the complete IT as a Service experience to their customers.

Microsoft has changed their business strategy and today their mantra is “lead with cloud” which is an IT synonym for delivering as a service. For them it started delivering infrastructure for web sites as a service in 2008 and today they are offering their complete office suite and Microsoft Dynamics CRM as online services on top of a complete stack of infrastructure services. This strategy is transforming the company not only in how they deliver the software, but also how they recognize value for their customers.

Microsoft is transforming their value metrics from value in exchange to value in use. During their fiscal 2015, sales will no longer be measured in sold licenses but in the extent their customers uses their software.

To achieve this, they are reaching out to their network of partners to find innovative solutions for their customers on top of their service offerings. Avanade is an example of a partner that is doing this together with Microsoft and their customers. Partnerships that has created business innovations like the connected fitting room and predictive health analytics using Microsoft’s software.

The new norm.

Some critics claim that this is just a different packaging. That the software companies are still thinking in terms of products and that the addition of value in use is limited.

Microsoft’s shift to metrics based on usage and the vision of SalesForce.Com CEO Marc Benioff clearly shows that this is much more than just a shift in packaging.

This is a shift in business models for software companies to adapt a service dominant logic over a goods dominant logic.

It is quite clear that software companies are thinking more in terms of service then products. There are several reasons why we are seeing this shift but the common theme for them all is that business wants to see value in use of their IT investments and have no interest in running costly IT projects without predictive results.

It is also quite clear that they will not be able to deliver on this shift by themselves. To understand what services to deliver and to understand what value can be realized, they need to partner with others.

This shift has been more rapid the last few years and in a few more we will have seen a large portion of the software industry transformed to a truly service dominant industry.

Read more:
Digital Innovation and the Bear Experience (blog post)

The cloud is not what you think it is

Talking with technologists, customers and business it seems that most of them are hanged up on the possibilities to save money by leveraging the price pressure that comes with hyper-scale. A valid reasons indeed. But what I see get’s lost is the possibility to disrupt their markets, to create new revenue streams and earn a buck.

Why the cloud is really amazing.

While Amazon started it’s journey into the cloud with Infrastructure as a Service they, Microsoft and others have not stopped with providing easy and quick provision of geo-distributed virtual machines. They have added services that gives businesses access to advanced platforms that would require huge up-front investments and long implementation projects would they build it themselves. For software as a service this even more true.

What is amazing with the cloud is not the cost cut that hyper-scale will give you, but the things you can do on a hyper-scale platform. Technologists should focus on creating services and applications that not only run on the cloud but leverage the possibilities it brings. What can you build with the power under your fingertips that you couldn’t before? What business models could follow?

Cloud as an enabler

9There are several services that rely on the cloud to realize it’s value. NetFlix are using more then storage from AWS, Skanska is utilizing Azure Service Bus and Electronic Arts extended beyond CRM with force.com service cloud. These are all examples where cloud services gave agility into the creation of these companies client solutions.

That this is disruptive to the IT-industry is evident if you discuss the term “rogue IT” with IT-departments. Today business can hank out their credit card and buy a CRM solution or Office suite without even involving IT. Consultant firms can offer to provide solutions as a service and circumvent IT all together.

For businesses this is a dream come true. IT is more often then not seen as a road block and most of us technologists have felt the frustration.

In the conversations I have with my customers today – saving money on cloud is not their main priorities. They questions they ask are things like:

  • “Can cloud help me come closer to my partners?”
  • “Can I be more agile and respond quicker to industry changes using the cloud?”
  • “Can I get smart insights on my customers using cloud technology?”

Admittedly, the price point of storage and virtual machines are extremely attractive. Moving machines into the cloud will quickly save money and this is easy to communicate. IaaS will continue to be part of the cloud offerings. But to enable new business models and new solutions that was not feasible before, this is where the true power of the cloud is,.

Earn money on the cloud

Start asking other questions. Ask the same questions as my customers do. Start to think about how architecture could benefit from actor-based programming in a cloud setting. What is it that makes media services appealing? How could the Azure service bus be a disruptor?

It is when you ask these questions that you will find ways to earn money for the business, not only save them a buck.

Digital Innovation and the Bear Experience

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Everyone is talking about innovation and digital. The words are getting washed up completely and it’s fair to ask if this is a hype that will pass. I’d argue that it won’t. I’d argue that this is the new norm and it will be commoditized just like having a “home page” or an “app” have.

The driver behind this is our expectation of experiences. We do not want to exchange money for things anymore, we expect that for what we pay, companies should give us an experience.

Build a Bear

Build a bear is a prime example where a simple product becomes an experience. They have turned the cuddly bear from a toy you buy and play with to a toy and a service.

As a customer you start by going to their store and build your bear. You go through the experience of selecting body, head and accessories. You pay more for fancy stuff of course.

Image from careers.buildabear.com

What is unique is that the bear then get’s a virtual persona where you can play with your bear online, send it to the north pole and you will receive post cards from it’s trip.

Build a bear has been innovative around the cuddly bear. They’ve turned a toy product into a service they can charge a premium for.

Moving from products and services to experiences.

We expect experiences with what we buy. No matter if it is a product or a service. This can range from your café experience to buying a car.

A business that wants to stay relevant and not get into a price war needs to start building these experiences for their customers. They need to shift from product innovation to service innovation.

Build a bear does this beautifully. They are not throwing themselves into a price war where the only increase in margin can come from lowering their cost of manufacturing. They create experiences that are unique. Experiences they can charge a premium for. By adding more services to the experience they make it hard for a competitor to copy their service chain without a huge investment up front.

At Avanade we see this shift in most of our consumer goods clients. They are all trying to figure out how add to the experience and turn their products into services. In our services clients we see a push to chaining services together to make their unique experience hard to copy. Banks are investing heavily in this now. Moving deeper into your household economy with apps and online services.

This is only logical. We as consumers, or buyers, are lazy. We want our experiences to be easy. If my travel agency takes care of everything for me, I’ll pay for that service. If my coffee machine maker calls me when I need to cleanse my machine, I’ll pay a premium for the machine. If my phone gives me all the services I need. I’ll never switch.

Same old, same old?

We have of course always loved it when the customer service is great. We gladly tip our waiter if we had good service. In that sense, turning products into services and chaining them together is nothing new. What is new is that companies that aren’t pure service companies are investing into this. They are switching from gaining value in the exchange of goods to gaining value in creating experiences.

There is an opportunity for you here.

One of the most important enablers of this is technology. As developers, architects and technology leaders we play a huge role in creating these services. Build a bear wouldn’t be successful without the technology component, nor would the banks.

The shift from product dominance to service dominance is a huge opportunity for us as technologists to truly disrupt and create unique values. Most businesses do not understand technology as well as you and have a hard time to turn technical advancements into innovation for their market.

There is a huge amount of cool work to be done. Go fetch.

Read more:
Service Dominant Logic (wikipedia)
Service Innovation – A Service – Dominant Logic Perspective (research paper)
Competing in a service economy (eBook)
From Software as product to Software as a Service (blog post)