A lesson in explaining why you have to consider the whole chain and not just the part you control

Good morning. I hope you’re enjoying my newsletter, I would love to get your feedback as I think it would be great to continue the conversation on some points and additionally help me better align content to your desires. I’m planning to open a Slack channel in the near future — acting as a discussion forum. It will be invite-only for the moment, but if you’d like to be on this list drop me an email at thefutureisdigital@substack.com and I’ll get back to you.

On to this weeks issue, which is about the difficulties in Digital Transformation when we are only able to control or influence parts of the value chain.

Reducing waste

Paper, as we all know, is bad for the environment. Much research shows this which was a seminal idea for the application I analyse in this week’s newsletter.

For many places around the world and particularly in the Caribbean, many shops and supermarkets design, print and deliver prospectus magazines designed to inform us of special offers and incite purchases. It’s a marketing tool that has worked for decades and a practice that doesn’t show too many signs of abating in the near future. It produces much paper waste and requires physical delivery that itself has an impact on the environment via CO2 emissions.

Enter Iléco, an initiative in the French West Indies. Iléco was designed and produced through a startup incubator with the aim to reduce wastage of paper by digitalising those catalogues and making them available on mobile. An honourable and worthy cause. Only it is flawed, and it won’t make any significant difference anytime soon unless there is a fundamental change in the entire distribution process. Additionally, its format is less than optimal and prevents it from being the first block in the building of an aggregator.

Let’s take a look at the application and its components and why it is precisely these that will condemn it to failure in the long run.

The value proposition of Iléco

The application is essentially an index of catalogues, presented on your smartphone or tablet computer, whereby you choose the shop you’re interested in, to peruse the catalogue presented in a digital copy of its paper form.

We go from this — that’s 8 catalogues:

To this:

In the first image, I weighed the pile of prospectuses and measured it as 300 grams. I get a delivery like this around two times per week. That's 600 grams per week, 2.6Kg per month and startlingly, over 30 Kg per year! There are easily 100000 habitations on Martinique, so we’re talking about something like 3 million Kg per year thrown into recycling or straight to trash, 7.5 million Kg alone in the French West Indies. I dread to calculate that figure for the entire Caribbean and frankly, it’s a disgrace in 2019! 

Iléco itself boasts of a 14 times reduction in CO2 usage for an A4 sized double-paged catalogue, which is impressive and definitely where things should be headed. However, I still feel as though this is more rearranging the deck chairs on the Titanic rather than addressing the fundamental issues, but we’ll get to that shortly.

One of the most frustrating aspects is a jerky interface when scrolling which is a problem I’d noticed from the very early versions released to the public. Diving further into the application, it offers other functionalities, like a shopping list (things I'd like to buy) and, bizarrely, a list of things I’ve bought. Presumably, things go from one list to the other if you manually say so. I haven’t tried it. Adding things to the buy list is also a manual affair with, as far as I can tell, no way to get from a specific item in a catalogue to the list. Although not necessarily the fault of the application, it is undoubtedly a fundamental design decision that prevents this feature from being possible.

As I mentioned earlier, the catalogue is presented as a digital facsimile of the paper catalogue received in your postbox, essentially a pdf. To open a catalogue you click on the image and a web view is opened linking you directly to the representation of the catalogue on joomag.com. As a pdf equivalent, the assets are not digital and therefore unavailable for use in another context, for example, to click on an item to add it to the shopping list or open an order page. I suppose appropriately positioned hot links could be added to what is essentially an image to allow a callback URL link to populate the buy list. It would work but would be fiddly and unwieldy for the user, who would need to constantly move context from image to list and back again. For a handful of items it is possible, even if undesirable, but for a weekly shopping list, it is untenable and unacceptable. Additionally, given that most catalogues are around A4 sized, with text and images designed for that format, squeezing this down to popular smartphone dimensions leaves usability to be desired.

Critiquing the choice to use a third party to actually stock and present the magazines, Joomag is a digital publishing platform and stores the static images on their servers, they are based in California. There is no mention of where data is stored. Presumably personally identifiable data of those who created a profile is stored somewhere too. I’m not suggesting anything untoward, just that a lack of clarity is notable. From a business perspective using another's platform introduces a risk to the core product, in that a change in policy, functionality or cost by the third party places pressure on the developer, and that is utterly out of his control. Joomag is not free either, so someone is paying for it. It’s not clear to me who is paying, although I suspect that burden is being placed on the suppliers rather than Iléco, i.e., you buy in to put your catalogue on Iléco.

Other functionalities exist, like geofencing, that allow notifications when in proximity to shops with promotions currently running, however a stark warning about battery life — even when the application is not running — is given if you wish to activate this feature. For no apparent reason, other than to provide the maker personal data about its users (yes that's what Facebook gives you back for using their login API), a login option with Facebook functionality exists. Considering Facebook's cavalier attitude to your personally identifiable data, I’d like to see this removed. The terms and conditions don’t explicitly state what Facebook will do with this information, preferring to punt you off to the Facebook privacy page, which is about as incomprehensible as can be.

An Aggregator in the making?

In essence, Iléco is trying to become an aggregator, whereby suppliers are being commoditised to provide the digital product (prospectuses and catalogues) and users being enticed to the platform because it's better or easier. Iléco is attempting to solve the distribution and discovery problem, that is fundamental to internet aggregators.

I don’t believe it will work because an aggregator needs to provide benefit and clearly demonstrated value add for both sides of the value chain. I question its long term success in its current business model for several reasons. Let me explain in a series of questions.

Why would suppliers (shops and supermarkets) choose Iléco where they essentially isolate themselves even further from the customers, particularly if they are footing the bill?

Sure, you can argue they already do by providing the catalogues, and in a way that’s true. However, the catalogue arrives directly to the consumer and the only logo and branding you see is that of the supplier, your local supermarket or car distributor. With Iléco you first see Iléco’s logo and branding, having then to pass through to get to the catalogue you’d like to browse. This adds friction to the process, notwithstanding that the startup is slow. Aggregators are all about reducing friction.

I would bet that most brands would be working nail and tooth to develop personalised relationships, direct to the customer, profiting on the infrastructure and marketing capabilities of the brand as a whole, economies of scale, etc. In fact, several high profile shops are still not present in the list. Who in that chain would have more customer data to exploit, the supermarket or Iléco?

Additionally, it appears that Joomag provides a tool to directly upload your pdf for it to be converted into the format ready for publishing. This trivial operation is well within the technical abilities of the suppliers, which begs the question, why couldn't they provide exactly the same thing as Iléco directly?

Why would users go to this application? As I’ve noted earlier, the interface adds friction to the process, making it less desirable than simply browsing the already-delivered-to-your-door catalogue. And that there is the essence of the promise not being fulfilled. Despite promising a reduction in the amount of paper, it does nothing to stop the inflow of magazines to your letterbox every few days. There is no opt-out of paper deliveries, much like most banks have offered for years for their statements.

It doesn't appear as though any of the signed up suppliers have stopped or reduced the amount of catalogues designed, printed and then hand delivered to us. Even a basic incentive to stop receiving the magazines, which, admittedly would require significant investment and have complications like GDPR adding to costs and would need agreements with delivery companies to ensure that the wishes were respected (and deal with complaints when they were not, both for missed deliveries and deliveries in error), would be difficult to implement.

It was first distributed on the App Store and Google Play Store in 2017. At the time I predicted that it would fail to reduce paper waste. It has and still is failing because it doesn’t get to the heart of the problem by solving the “jobs to be done” as defined by Theodore Levitt, who famously said:

People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!

The job to be done is to provide a better, frictionless way to discover offers at shops locally whilst reducing the paper waste generated by the system it is trying to replace. It’s a worthy attempt and despite my sceptical analyses I believe the problem can be solved, but in my view, Iléco requires revisiting its interface and it requires a change in the value chain (incentivising a reduction in production and offering opt-outs for physical delivery to users) to ultimately be successful.

I've only briefly touched on what I think is its business model. I'd like to revisit the application in the future to try to understand just that. I'll put it on the list of things to do.

Reading List

Environmental impact of paper - Wikipedia

Further reading at Wikipedia, on paper production and its impact on the environment, from; air, water and land pollution in the production and de-inking processes required for recycling, to its carbon impact in transporting atoms around the planet.

CXC To Issue E-Certificates Across Region - CARICOM 

This is a good example of Digital Transformation having real impacts, reducing friction for all stakeholders. It’s an example whereby the provider controls the entire value chain and therefore has direct control over its development and usage. Glenroy Cumberbatch, the CEO of CXC, said: “From inception, our primary goal was to empower students to have ownership of their records and be able to share them in a secure way, with whomever they choose.” Other countries and regions would do well to observe how this is implemented and learn from our experience.

ECCB to pilot Blockchain-based Digital Currency - CARICOM 

I have mixed feelings about cryptocurrencies, believing they are more bubble than solid. I feel they are a solution searching for a problem. Their purported security has been shown to be compromised time and again and they are clearly used to help hide nefarious activities. But blockchain, I have an entirely different viewpoint. I think that blockchain provides some very interesting use cases that could revolutionise a number of operations within companies. This pilot will be interesting to watch. Bookmarked for revisiting in a year’s time.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter.

Thanks for being a supporter, I wish you an excellent day.

It’s a journey, not a project

I hope you all had a good Carnival in your region. I know that here in Martinique it’s a pretty big affair with 5 days of festivities. On to this issue that gets to the heart of Digital Transformation. But before that I wanted to explain another component that is central in this subject.

Thanks for reading. Have a great weekend.

Follow up: “Someone is wrong on the Internet”

Listening to a podcast recently, one of the presenters mentioned that web apps were essentially down to Google. I immediately flinched and thought it would be best to explain how and where they came from, and in what context they are important to Digital Transformation. That’s what this issue is about. My thanks to Jean-François Nantel at the ESSEC Business School, for his invaluable input. Let’s get down to business.

Paradigm shifts

Much like the industrial revolutions we have been experiencing since, well, practically the birth of man, technological advances can be thought of in terms of paradigm shifts. Each shift brings about changes to the models of business and the usage of technology in business.

If we concentrate on more recent times, where technological advances have produced software, we note that software was often an afterthought to hardware. In fact the original Apple computers, the Apple I and Apple II, were first and foremost hardware solutions to burning questions in Steve Wozniak’s mind at the time. He designed ever more powerful and elegant solutions using the same or more limited hardware. Steve brilliantly made Apple computers colour, when others were still struggling to control monochrome computers at the same quality. But this revolution was contained in home computer land and didn’t arrive until later in business-land.

So what did business-land look like? I covered a large part of this in Issue 2:

Hardware

Hardware, as the name suggests, makes up the bottom most layer of the stack. Hardware is essentially the items that physically construct the IS in its entirety. Servers, routers, switches, personal computers, printers, terminals, mobile devices are all hardware regardless of their ultimate function.

Arguably, today in our cloud world, the server and its associated support hardware (routers etc.) are the most important elements of our information systems. Various categories of serveurs are in use, with the most popular being applications servers, directory servers, communications servers, communications servers, database servers, file servers, media distribution servers and more generically, web and proxy servers.

The democratisation of the server happened in the 1990’s. Something that happened on the back of the popularity of the personal computer, companies like IBM, DEC and Compaq (now HP) disrupted the mainframe and mini business by producing what were essentially souped-up personal computers that neatly fit into to businesses of all types and sizes, providing simple server-based functions for running the company.

This gave life to the Client/Server Computing model, where we see a distinction between the roles of each part of the system. Clients present results and help formulate demands, but the bulk of the work is done at the server-level. The acceleration of Intels processors only made this model more and more compelling, with even the smallest of organisations able to have a calculation power orders of magnitude higher than anything they had imagined not even a decade ago.

That article essentially covers paradigm shifts 1 and 2; from Mainframe and dumb terminal (paradigm 1) and Client/Server computing (paradigm 2). Client/Server was made possible because of the rise of personal computers which in turn allowed the development of thousands of specialised business applications (the Client part of the model) on the local device to use the back-end data bases on the Server.

Paradigm 3 and beyond is all about Cloud. The Cloud era ushered in the generalisation of Web Apps that enabled millions of business applications on both desktop and mobile. These were, and still are, being produced and adopted at ever increasing speeds. Largely because they require lower upfront costs and offer businesses the capacity to be up-to-date with minimum fuss. Updating a legacy Cloud/Server ERP application was akin to a 50-man expedition to the North Pole, expensive, slow, disruptive with almost no guarantees that it would be successful.

Web Apps

Although Web Apps are absolutely of the same ilk of applications in the Client/Server paradigm they are fundamentally different in implementation. At its most basic a Web App is a Client in the Client/Server model, running some code locally and searching for data on the big bad back-end server.

Where they are different is that the client evolved into being a disposable piece of software itself. No installation is required, no updating, no conflict management with other locally installed applications.

Web Apps became a reality with the advent of dynamic web pages, around 1995. Previously web pages were delivered as static pages from the server in basic HTML, Hyper-Text Markup Language, which was the way to format a text file, transport it across the Internet using http (see Issue 2) and display it on a client, often called a browser. Netscape changed all of that with the introduction of client-side scripting using a newly minted programmable language (Java) invented by Sun Corporation in 1999, called JavaScript. 

This allowed the dynamic inclusion of information and the validation of input by the user by running various scripts locally in lieu of re-sending a whole new page each time a change was registered.

Then Macromedia got involved and released Flash in 1996, to be subsequently bought by Abode in 2005. Flash was a revolution for the web in that it allowed not only for dynamic text but additional real media to be integrated to a web page. We’ve all seen those old splash screens saying “Loading…”, in the late 90’s and early 2000’s they were all Flash-based. But it wasn’t until 1999 that the term Web App was officially coined under the new Java Servlet specification. 

It is only after this point that Google enters the world, being incorporated in 1998. Google developed what has become the definitive web app, search, winning on technical merit and a business model aligned to extract profit from that value chain, Advertising. Everything else Google does is either a “moonshot” or a distraction.

Why Digital Transformation is different

The title of this issue correctly explains why Digital Transformation is different, it’s a journey and not a project or destination, if you will.

Traditional IT and digitalisation is predicated on the understanding of a simple or single need, researching the solution to that need, then developing a project to procure the right hardware, software and talent to buy, install, integrate and maintain. There is a clear beginning, a clear goal and a clear end, nobody in the project is unaware of these elements. In fact in most situations these goals a clearly defined in a specifications document and signed off by all stakeholders.

Digital Transformation more closely resembles a penalty shootout whereby not only the goalposts move, but the participating teams are constantly changing and the rules of the shootout are modified in relation to the who scored or not, when and how. That’s extremely frightening for a business as the risks of failing are high. However, as I’ve previously mentioned opportunity costs are to be taken into account too. What is the risk of doing nothing?

Where Digital Transformation goes much further than traditional IT, is in the implication and necessity to change over the whole organisation and the entire value chain, from suppliers, through production and operations all the way to sales and service. Simply keeping up with technological advances — newer faster computers, mobile devices, new applications be them traditional or SaaS and new management structures — is not enough.

As you’ve no doubt spotted the biggest difficulty for an organisation is the resistance to change, which is why I personally believe that Digital Transformation is essentially one big change management exercise. Bringing people with change management skills in to the organisation — even if on a temporary basis — is key to succeeding in Digital Transformation.

One thing is sure, without C-level support in your organisation, it’s going to be extremely difficult to successfully transform your company. Many C-level executives already have too much on their plate and are woefully under educated or aware of the implications of Digital Transformation. Fortunately some recognise this and appoint specialists in those positions. Often called CDO, Chief Digital Officers, they have the responsibility for (although not limited to), driving digital adoption, culture change, change management and value chain development for their business. Again, bringing in help from outside the organisation is beneficial when their remit is specifically targeting to Digital Transformation.

Reading List

Digital in 2019: Global Internet Use Accelerates - We Are Social UK

Regularly We Are Social and Hootsuite publish a comprehensive study on the state of digital in the World. 2019 is no exception, with fascinating statistiques such as;

..more than one million people coming online for the first time each day since January 2018

There are now 5.112 billion unique mobile users in the world, which represents a penetration of 67% of the entire world. Interesting, is that you can drill-down to individual countries, yes, including the Caribbean to get a snapshot of the importance of the internet and most importantly, mobile. For example, internet penetration in Western Europe is at 94%, the Caribbean lags substantially behind at 51% with only Sub-Saharan Africa behind, excluding South Africa. I highly recommend you take a look at your country to understand where people are on the internet and what it is they do.

Saint Lucia Tourism Authority Launches its New Interactive Website - OECS

The Saint Lucia Tourism Authority has launched a new interactive website with better ergonomics and better search capabilities. Users wishing to discover the island and what it has to offer can find out what’s going on — from events, tours, accommodations and eateries. It is more integrated than the previous website, allowing users to go directly through to booking excursions, etc. The site is trying to aggregate suppliers (hotels, restaurants, entertainment providers) with customers (tourists and locals). In order for it to work it needs to become ‘the’ place to go to learn about Saint Lucia, and that is a tall order when you consider the competition from the likes of Expedia, Airbnb and the already internet-enabled tour operators.

Calls for more investment in statistics systems, focus on literacy - CARICOM

From a Digital Transformation point of view, this call for more investment in teaching around the importance of statistics and the development of better statistics around the Caribbean is very encouraging. Data is the basis of good decision making, but that can only happen if there is competence to better interpret that data. Basic statistics knowledge can go a long way towards achieving that goal.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter.

Thanks for being a supporter, Have an excellent day.

Understanding its components

Good morning, I hope you had an excellent week.

I was listening to a podcast and heard something that immediately made me think of this xkcd cartoon :

Source : https://www.xkcd.com/386/

I’ll be writing about that soon, it is all about web apps, but today’s issue is a follow up to Issue 3. If you haven’t read it yet go ahead and have a look, as this issue heavily leans on the information in that issue.

Thank you for reading. Let’s get on to this issue.

The Digital Transformation Model

As previously mentioned, Venkatraman and his colleagues developed a model for Digital Transformation in the shipping and logistics industry. Their model discussed 5 levels of transformation whereby the increase in the range of potential benefits to a business corresponded to the degree of business transformation implemented within the organisation.

To recap, the five levels are named as: Localized Exploitation, Internal Exploitation, Business Process Redesign, Business Network Redesign and Business Scope Redefinition.

Builtin to the model is an additional notion that at a basic level of exploitation, transformation is only evolutionary and limited benefits are accrued. It is only when an enterprise commences its Business Process Redesign that the level of business transformation and hence, its potential benefits become ‘revolutionary’.

Looking at each level in detail gives us an idea of not only our current situation in our own businesses but also helps us understand and develop a plan to move to the next level. This is strategic thinking. This is hard to do and I don’t wish to minimise its complexity in any way. Let’s take a look at the five levels.

Source: An Analysis of Digital Transformation in the History and Future of Modern Ports, Heilig, Schwarze, VoS, 2017

Localized Exploitation

The first level, localized exploitation, describes the decision most companies have started or about to start, that is, develop and deploy IT systems in a manner that can only be described as isolated. Examples are applications to track sales, internal messaging systems like Microsoft Exchange, applications that produce quotes and help print invoices. These applications are usually extremely focalised on the task at hand and are useful uniquely to the person or groups to whom it is their responsibility. The Sales Director would no doubt be uninterested in the specialised HR application in a direct manner, preferring to defer to the HR Manager to obtain information. They are first and foremost requested by and in large part funded by the heads of the various divins in the organisations, HR Manager, Sales Manager, Stock Manager etc. 

As a result, their benefits are limited in scope — to the department concerned — and not shared throughout the organisation. This type of deployment is considered as standard, with information systems being deployed simply, inexpensively with little to no thought of the impact outside the scope of the projet. Change is minimal within the organisation and in fact often, the type of systems are chosen precisely because they impact little to no change to the status quo. Returns are quick but severely limited. Change management is often ignored in its totality, and considered unnecessary as the system perfectly fits the current way.

It is here that Opportunity Cost should be considered. I’ll discuss this notion in a different issue.

Internal Exploitation

The second level, Internal Exploitation, is defined by the process in which organisation attempt to integrate the different silos of information systems and datasets with the aim to produce a ‘whole’. Integration is difficult, slow and often results in failures when starting out from a base that is not adapted to integration. Just how do you get the Accounts, Stock, HR, Sales systems integrated?

There are two types of integration, technical and business process interdependence. According to the model most enterprises spend more time on integrating on a technical level than on the business processes. This is understandable because of the sunk cost fallacy.

The sunk cost fallacy explains why, when faced with difficulties to complete a given project, we have a tendency to stick to the original plans in proportion to the amount of time and money invested. That is to say, that having already spent a ton of money on a project that is clearly destined to fail (where the evidence is there to prove it), the scope is often revised in order to finish a project, even if it isn’t the project.

It’s at this level we see the emergence of Enterprise Resource Planning (ERP) and Data Warehouse (DW) systems. These systems align business processes with informations systems at a much deeper level than at level 1, Localized Exploitation. 

Business Process Redesign

Business Process Redesign, as its name suggests, defines how businesses restructure their organisation to maximally exploit the capabilities of their information systems to achieve better outcomes. This is driven by an ongoing sentiment in the organisation that, despite the integration efforts that have been implemented at the level 2, the benefits of that integration are not fully realised and clearly something more is required to achieve more efficiency and productivity and usually, by extension, profit margins.

It is a realisation that simply superimposing information systems on existing and often dated business processes, does not generate the desired benefits easily. Emerging technologies create the tension for an organisation still using old principles. Examples are seen today in support systems. Organisations that have completed level 3 are often better and quicker at resolving queries using social networks like Twitter than through traditional channels as email and the telephone. Some are even explicit and tell you so when you are on hold for an agent, stating that you’ll get faster support if you tweet.

Business Network Redesign

Things start to get difficult (not impossible) and an order of magnitude more complex at the fourth level, Business Network Redesign.

Up until now, the organisation has been preoccupied with its own systems and processes in which it has complete control over its strategy and development. Level 4 requires us to think about the interactions outside the organisation. What has been up to this point, a local exercise, now turns in to a macro exercise whereby all stakeholders are included in the study. Business processes at this level, need to be fully integrated internally, but also externally with the necessary partners we do business with.

There is confusion at this step that simply standardising the communications protocols or the dataset definitions for document transfer is enough, false. An interconnection is required at the very heart of the interactions with the partners systems so that they appear to be one system within the scope of the project.

We see examples emerging from the traditional actors like Microsoft. Office 365 licenses can be purchased from the reseller directly using the resellers web ordering system, which is in turn directly linked to the distributor’s order processing system with ultimate coupling straight to Microsoft’s license delivery system. This is automatic and invisible to the end user who simple selects the software, pays and receives the right activation keys, all in a matter of seconds.

Business Scope Redefinition

The final level is often the most disruptive. Sure, it has negative connotations but disruption theory is important to understand in digital transformation. Simply because disruption will happen, it is a given. It will however, either be at your behest or someone will disrupt your business for you, and there you are in the danger zone. But I’m getting ahead of myself.

The Oxford Dictionary of English defines redefinition as :

Redefinition : noun, the action or process of defining something again or differently, example: the redefinition of the role of financial advisers

At this level, business processes are often eliminated, substantially modified or even outsourced to allow the creation and/or expansion of new business processes entirely based upon the specific capabilities of new and emerging technologies — Digital Transformation in short.

New Business Models, new Strategies are the hot topic when we discuss Business Scope Redefinition. What does a new business model mean? Simply put, new products and services are imagined and innovated within the organisation, that take advantage of the fact that it may now be possible to exploit and that the supporting business models need to be developed to underpin those.

When music was delivered on atoms, the subscription business model was not practically possible. When the technology to distribute music as bits emerged, the music industry — albeit kicking and screaming — developed new business models to better support that transformation. The music industry is now a healthy business and on target to equal or beat previous sales and income records of decades ago, thanks to the likes of Spotify and Apple Music.

Netflix did it too, but for different reasons. Firstly, music is actually a different entertainment proposition that operated in a different value chain to music. Music is much more ephemeral and driven by trends than films. Films are timeless and become the stuff of cult adoration more often than music. Second, during the time that Netflix was being built music had a massive piracy problem that forced the industry to cut off the oxygen to pirates (a futile exercise that didn’t work) only ceding eventually to Apple’s breakup of the bundle. The music industry was hellbent on selling albums — this was a package in economics terms — and not singles. People wanted singles. Films were never packaged that way, apart from special collector sets.

Reading List

Ex-Walmart exec says theft helped kill Walmart's cashierless checkout technology

A captivating look at how digital technologies and Digital Transformation can be the producer of an unexpected drawback. There’s even a law for that. Making it easier for people to just walk out of the store with products, er, did just that. The system worked perfectly but had no checks and balances to deal with the inherent ingenuity of humans motivated enough to not pay for goods. Theft is a fact of life in Supermarkets, ask any manager of a store, but this went much further. Read the article, it’s worth it.

Forget it, Data Science is not about IA, Machine Learning or data technologies

Big Data, AI, ML, Blockchain, I’ve got all the buzzwords. They are a meaningless as they are meaningful if incorrectly used or understood. The article is a good example of real world, practice advice for any organisation starting out in Digital Transformation and being overwhelmed. There is a real definition of Data Science, so don’t be too harsh, and Data Science is fast becoming a structured valuable discipline with Universities offering top notch qualifications in the subject.

Reduct - The power of video with the ease of text.

When we’re looking at Digital Transformation in organisations, we’re extremely cognisant of the opportunities and the information systems software we can deploy to make business better, but this article highlights one of the most fascinating aspect of ‘real’ Digital Transformation for me. This application takes an uploaded video and is then transcribed in to English and the output is of that transcription is now inexorably linked to the images. In other terms, as you play the video the text of the spoken word in the video is highlighted, and the magic element is that form this point you can edit video by simply cutting and pasting text or moving text around. That aspect I mentioned ? It’s taking a known way of doing something and turning it on its head to come up with a completely different way of solving the same puzzle, ensuring that there is benefit to the end user.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter.

Thanks for being a supporter, Have an excellent weekend.

How digital technologies found their place in the enterprise

Good Morning to all and a particular welcome to all my new subscribers. Thank you!

Something for the weekend sir? Hopefully this, rather dense, article will give you something to chew on over the weekend. As promised, it is heavily research-based and is a follow on from Issue 2 — go read it if you haven’t already.

Have a great weekend. On to this issue…

The first apparitions of digital technology in business happened in the 1960’s, when IBM launched and sold specialised calculating computers — in fact the term computer was actually used to describe a person who calculates — in the research and commerce domains. The IBM System 360 was one of the world’s most popular. But its physical size and its equally gigantic proved too costly and prevented it from being sold to and used anywhere other than the biggest of Institutions like NASA and well-off universities.

Then in August 1981, IBM launched the IBM Personal Computer, or the IBM PC as it became more widely known. In less than 10 years the IBM PC entered into a large number of companies, not only because of its attractive price at the time ($1565 equivalent to around $4000 in today’s money), but its near miraculous flexibility and simplicity as compared to previous systems.

IBM also made available help and development tools for application production. This allowed other organisations outside IBM to create, distribute and sell accessory programs such as VisiCalc (the first spreadsheet which became the basis for all subsequent applications of the same nature like Excel, Numbers etc.), text manipulation programs (think something like Microsoft Word) or more specialised applications that businesses needed to be competitive for example ERP (Enterprise Resource Planning) applications and HR (Human Resources) Management Systems.

The common element in digitalisation is the optimisation and subsequent automation of manual processes, with the overall aim to become faster, more efficient, if you will, better. Enterprises jumped at the chance and made the IBM PC the most popular computer ever after a short period of time on the market. Time being money, to steal a phrase, meant that businesses were always striving to save costs by reducing the time spent on internal processes.

Not only did the IBM PC become popular in business, but a parallel revolution took hold. Many startups — often from the Bay Area — created computers that could be bought for the home (the IBM PC was initially too onerous for a modest family). Despite these computers not being “compatible” with the IBM PC, they had a sizeable impact on people, getting their users and fans used to working with computing devices. Examples during this era were computers like the Sinclair ZX80/81, the Commodore PET — side note, Commodore’s chief Jack Tramiel had a saying “Computers for the masses, not the classes" — and later the Atari ST. 

The end result is that it is now rare to find someone in employment who has not used a computer at all, at one time in their life. By having this basic computer culture generation after generation was indirectly trained for the future, ensuring that Digital Transformation became an inevitability and not some pipe dream of a far off distant future.

The first talk of Digital Transformation

In contrast to digitalisation, which so far had been an evolution of parts to producing increasing efficiencies for business, digital transformation is a radical change that profoundly touches upon all aspects of a business from production to the finished product in sales and marketing. It is Strategy, it is the new Business Models, it is Operations, all the way through to customer touch points and the final relationship with the end user of its products and services.

Some of the earliest developments in digital transformation happened in the 1980’s with the arrival of EDIs (Electronic Data Interchange) systems and the aforementioned ERP systems. Developed by transport and logistics firms, a realisation that a standardisation of data models was necessary to allow communication between all actors in the supply chain and the lifecycle of a product designed, manufactured and ultimately transported from one country to another, sometimes multiple times.

This innovation laid the foundations of the transportation of data between Information Systems and inspired the development of specialised applications with more and more sophisticated features.

In 1994, N. Venkatraman et al., developed a theoretical model of transformation for business using Information Systems. Their model highlighted 5 levels of transformation ; Localized Exploitation, Internal Exploitation, Business Process Redesign, Business Network Redesign and Business Scope Redefinition.

In the next issue, I’ll dig into these in more detail to show how Digital Transformation is very different from simply buying a computer and some software.

Aggregator Watch

The digital economy lends itself to the creation of what are called Aggregators. Ben Thompson coined the term and has written a number of articles on the subject. In future issues I’ll be delving in to just what an Aggregator is.

However, I thought it would be interesting to create a short column about Aggregators and Potential Aggregators from the Caribbean. They could be international players entering the local market or home-grown like the example in this issue, who are looking to expand internationally.

Montserrat launches New Music Networking App : Caricom

Bodio Inc. has launched (in beta) an app called bodio, that hopes to become an aggregator of entertainment services in the Caribbean. Artists, Bands and DJ’s can list in an easy to use platform that hopes to match venues, events to entertainers. Bodio Inc. was formed in 2019 and is currently in Montserrat (its home), Antigua & Barbuda and Barbados, with plans to extend further in the future.

Thankfully this is not another iTunes Ping — Apple’s attempt at music social networking that was shutdown on the 30th September 2012 after only two years of service — despite accumulating more than 1 million users, 48 hours after its initial launch.

Bodio Inc. is hoping to become an aggregator as it is providing a simple and enjoyable route for the supply and demand to match up. Much in the same way dating platforms work, Bodio should attract artists which in turn attracts more promoters and venues, thus creating more incentive for artists to sign up, ad infinitum. Aggregators solve the problem of discovery remember, and this is the aim of Bodio, to ease discovery.

What’s interesting here though, is that unlike traditional matching systems that are 2-sided business models — match the supplier on one side to the buyer on the other and take a cut of the transaction — concerts are multi-sided. The supplier, the artists in this case, lists their services in the hope of being selected for a venue or event by the buyer, the Promotor, who selects based on reviews, reputation, etc., to produce an integrated package for the general public who are, in fact, an indirect buyer a third leg if you will, having arguably the most influence on the chosen supplier.

Bodio hopes to match all these together for the public to find artists and venues, venues to find artists and the public, and artists to find both venues and the public. If done well, and what I mean by that is, respecting artists remuneration, venues remuneration and respecting the private data of its users, it could have a really important impact on the entertainment scene in the Caribbean. If marketed well, tourism could be ‘the’ most important revenue generator and aggregating a potential market of around 30 Million tourists who visit the region not to mention the 16 Million population of the Caribbean not shy of a good night out.

Tourism accounts for 10.4% of GDP in the Caribbean and 1 in 4 jobs are either directly or indirectly attributed to tourism, according to the World Travel & Tourism Council in its 2018 report on the economic impact of tourism in the Caribbean.

What is Bodio’s Business Model?

Looking at the app, I would say that revenue is either gained, or planned in the future, from several sources : advertising, membership fees, listings fees and bookings fees.

Advertising — Bodio clearly states in its FAQ that potential advertisers can publicise their product/service to be featured on the “front of our homepage”. My question is: Does the app have enough advertising space to generate meaningful revenue? To wit, too much advertising may drive users away from the application thus weakening the attractiveness of the platform. Advertising needs to be subtlety integrated in the mobile so as not to turn off users. Additionally, what data-usage policies are to be implemented for the advertising. We’ve all seen the corrosive fallout from the likes of Facebook that play too fast and too loose with personal data. Again, that is not to say that advertising isn’t a good business model, it is, if done tastefully and intelligently.

Membership — Bodio haven’t, to my knowledge, communicated anything about membership fees. But clearly if the platform gains in popularity, membership fees would likely be a suggestion of the CFO. Remember, the digital economy is obsessed with growth and not profit. I would suspect that membership fees for venues would be first on the list, followed by artists and finally the general public. Done sensibly a subscription model could generate an important source of revenue and one that could stay reasonably priced because of the quantities involved. I’d be interested to know if there are any statistics on the number of artists and venues in the Caribbean.

Listings/Bookings Fees — To my mind, these are the most obvious and easiest to monetise off the bat. It’s a road well-trodden and something that all parties currently deal with. The opportunity for Bodio is to be able to do it better, cleaner, cheaper and for Bodio to enable more bookings and more crowds. That’s easier said than done.

Having said all this, there is a potential spanner in the works looming.

Enterprise Certificates and the potential for revocation

Recently Apple suspended the Enterprise Certificate — afforded to developers in order for them to internally test beta products — of companies as big as Google and Facebook. They were quickly restored but not without significant disruption. This distribution of applications using an Enterprise Certificate is formally prohibited for external distribution. Apple’s terms and conditions for developers clearly state this, and distribution is restricted for internal purposes only with an exception for contractors. This process is known as side-loading and is widely used to skirt around App Store restrictions. 

It was subsequently revealed that unscrupulous and unsavoury elements were also exploiting the loophole to distribute gambling and pornographic content to users with no age checks or controls in place. I’m not here to comment on the merits or the morals of such a system, only that if you sign up for a contract you should abide by it or desist or lobby to change the rules if you think they are unfair or otherwise too restrictive. 

Screenshot taken 13 February 2019 but still active as of 21/02/2019

Bodio has developed the app using the AppyPie App Maker platform, which is a sensible move in that it reduces development costs and reduces time-to-market for a working prototype or version 1.0 of the mobile app. Sadly, for Bodio and certainly of no fault of theirs, AppyPie has gone for the side-loading option, in violation of the terms of the contract with Apple. Give that there is enormous pressure on Apple to crack down on this shadow distribution, I doubt it’ll be long before the app no longer works, as I understand Apple are systematically looking through apps to identify violators and have their certificate revoked.

In a statement to Reuters, Apple said,

“Developers that abuse our enterprise certificates are in violation of the Apple Developer Enterprise Program Agreement and will have their certificates terminated, and if appropriate, they will be removed from our Developer Program completely,” an Apple spokesperson told Reuters. “We are continuously evaluating the cases of misuse and are prepared to take immediate action.”

Bodio needs to find a way to use the official channel for beta testing in public as fast as it can for it not to fall victim to an uncontrolled shutdown. This channel is called Test Flight. Test Flight was originally developed in 2010, getting acquired by Burstly in 2012 and finally ending up in Cupertino in 2014 during an acquisition of Burstly by Apple. Test Flight allows for 10000 users outside the organisation beta test software and up to 100 apps per person in beta.

A quick word about Android. Side-loading is commonplace in the Android world with Alphabet (Google) turning a blind eye for the time being, so as long as the rules and enforcement remain unchanged — unlikely, as pressure is mounting on Google too —, there is still time and a chance to develop quickly. According to IDC, the global market share split is 86.8% Android to 13.2% iOS. Extrapolating, it’s safe to assume that much of the Caribbean is on Android and not on iOS, so I may overstating the risk a little here, in that because on Android its tolerated a potential shutdown from Apple would only affect a small population. But I think it remiss of me not to mention it and expose the possibility of a similar fate on Android should this story really blows up, given that it has real potential to do so.

I wish Bodio well and I look forward to the service being available throughout the region including us in the French West Indies. 

Reading List

Paris seeks $14 million from Airbnb for illegal adverts : Reuters

Paris City is suing Airbnb for illegal listings after a new law was passed in 2018 restricting home owners from renting properties for more than 120 days per year. Additionally listings are required to provide the registration number for control purposes. It is these factors that Pairs accuses Airbnb of failing to enforce, with over 1000 properties advertised, the fine of 12,500€ per posting quickly rises to over 12 Million € ($14 Million).

With a Memorandum of Understanding being signed between Airbnb and several Caribbean destinations including Martinique — which is an overseas department of France and in the EU —, it would appear that various states have started to grasp the realities of the digital economy and implemented laws and agreements to better police, and of course tax, these aggregators.

Latest ExxonMobil Oil Finds Push Guyana Above Industry Standards : OECS Business Focus

As the world needs more and more renewable energies brought online, an American giant, ExxonMobil, extends its plans for pumping more fossil fuels offshore of Guyana. Apart from the obvious wishes for major benefits to the Guyanese economy, I hope there are previsions for the simultaneous development of renewable energy sources. The oil won’t last forever, and it’ll get more and more expensive as we wind over the coming decade, Guyana should profit from this short-term bonus to build out a more sustainable energy plan and use digital technologies for the benefit of its citizens.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter.

Thanks for being a supporter, I wish you an excellent day.

Defining Digital Transformation

In this, the second issue, I dig into the origins of digital technologies and how they name about, their uses bringing us up to the modern day discussing innovations like 5G and the Smartphone.

On to the newsletter, I hope you enjoy it.

What is Digital Transformation?

It’s a very good question, what actually is Digital Transformation?

One of my favourite definitions of Digital Transformation is one from R “Ray” Wang of Constellation Research:

“Digital Transformation is the methodology in which organizations transform and create new business models and culture with digital technologies”

But therein lies one of the difficulties associated with Digital Transformation, there is currently no standardised definition, only a bunch of aims, mantras and promises from leading organisations — mostly Tech — with a vested interest in selling you something.

That’s not to say they are inherently bad, it’s just important to understand the motivations to fully understand the products, services and information shared.

To better understand the origins of Digital Transformation we can look back at the not too distant past and what things influenced today’s digital world.

Business before Digital Transformation

The history of computerisation is relatively recent with essentially three inventions that founded pretty much everything we have today.

The first published in an article the 30 June 1945, John Van Neumann discusses a concept of storing a program in a calculating machine. The second, something even more profound to our everyday lives, developed in the notorious Parc Xerox labs, Ethernet came to life in 1973 largely due to efforts of Bob Metcalfe. Ethernet permitted, for the first time, computers to communicate between themselves. The last and arguably most important, http (Hypertext Transfer Protocol), invented by Sir Tim Berners-Lee in the Europeen Center for Nuclear Research (CERN - Centre Européen pour la Recherce Nucléaire). This 1989 innovation is the basis for absolutely everything that happens on the Internet.

As a side-note, I recently discovered that http, even at that early stage, had provisions for micro-payments built-in. We’re all familiar with the infamous 404 error messages popularised by Twitter’s Fail Whale page, but how many know that there is a 402?

10.4.3 402 Payment Required

This code is reserved for future use.

From these beginnings all Information Technology has grown with four distinct categories defining what Information Systems (IS) are: Hardware, Software, Networks and the Human.

Hardware

Hardware, as the name suggests, makes up the bottom most layer of the stack. Hardware is essentially the items that physically construct the IS in its entirety. Servers, routers, switches, personal computers, printers, terminals, mobile devices are all hardware regardless of their ultimate function.

Arguably, today in our cloud world, the server and its associated support hardware (routers etc.) are the most important elements of our information systems. Various categories of serveurs are in use, with the most popular being applications servers, directory servers, communications servers, communications servers, database servers, file servers, media distribution servers and more generically, web and proxy servers.

The democratisation of the server happened in the 1990’s. Something that happened on the back of the popularity of the personal computer, companies like IBM, DEC and Compaq (now HP) disrupted the mainframe and mini business by producing what were essentially souped-up personal computers that neatly fit into to businesses of all types and sizes, providing simple server-based functions for running the company.

This gave life to the Client/Server Computing model, where we see a distinction between the roles of each part of the system. Clients present results and help formulate demands, but the bulk of the work is done at the server-level. The acceleration of Intels processors only made this model more and more compelling, with even the smallest of organisations able to have a calculation power orders of magnitude higher than anything they had imagined not even a decade ago. Remind you of anything?

Software

As hinted at previously, the roots of software are found in that article from John Van Neumann, and like hardware many forms exist. In some respects, one could argue that an infinite number of software types could exist by definition. Software being infinitely ‘programmable’ unlike hardware, that once designed is static until the next design modification.

However, we can identify three main types of software in the foundations, system software (used to start and run the hardware), development software (in a meta manner, used to create new software) and application software (think about what you’re reading this on, probably a mail client or web browser).

The main systems software are operating systems (OSes) like Unix, Linux and Windows. Interestingly, MacOS is based on Unix, Android. But without thinking too deeply, you may notice that more than just computers are run by OSes like your TV decoder for example, and even household appliances often contain sophisticated computers booting off an OS like Linux. Development software is extremely elaborate with parts such as the IDE, the Integrated Development Environment, that contain editors, compilers and debugging software.

Compilers translate text written in specific syntax into machine readable code, ie., something the processor can execute directly to product the desired result. The editor is there to help the developer construct the instructions and the debugger, as its name suggests, aids the developer find issues and bad instructions in the code.

Application software is the most prevalent and the part of the stack that is touched directly and quite literally in some cases, by the end users.

Networks

The network links all the parts together, hardware, software and the people. Networks are of increasing importance in Digital Transformation, and network effects of the new business models will become apparent in futur issues.

Dartmouth College, based in New Hampshire, U.S.A is credited with the birth of computer networks. In 1940 a “Teletype” machine communicated (a keypress was received at the other end of the network in real-time) with another in New York. Then in 1950 a primitive network called SAGE (Semi-Automatic Ground Environment) — don’t you just love the names they had for things those days — was developed for the militaries radar systems. It usefulness was quickly appreciated and commercial purposes were rapidly developed, the first being SABRE (Semi-Automatic Business Research Environment), which was used as a reservation system for the airlines of the time.

At around the same time the Advanced Research Projects Agency (ARPA) created its concept network called the Intergalactic Computer Network. Its aim, to allow any computer communicate with any other computer regardless of its physical position on the earth. This quickly gave rise to WANs (Wide Area Networks) with the agencies own, called ARPANET. As a coincidence, it’s also important to note that telephone networks had just been computerised by the likes of Western Electric.

The first commercial use of networks happened in the 1970’s using the X25 and TCP/IP Protocols. The same ones in use today for the Internet, which is also a direct descendant of the original ARPANET.

As a side note, my first Internet experience was at a University in the UK, where I would have to log on to an academic network called JANET, hop on to an intermediary one called NIST, then finally to the Internet, availing myself of all the wonderful things and eventually using a new protocol and internet interface called Gopher.

Getting back to the subject, everything changed in the 2000’s. Broadband was born and suddenly virtually anyone who wanted fast internet was able to have it. Then on the heels of that mobile broadband arrived through technological advances like Edge, 3G and then 4G. Currently 5G is being implemented with promised speeds of around 1 to 10 Gbps, which for comprehension is the ability to download several HD films in less than a minute.

People (Meatware)

All systems are operated and used by humans, but the crucial part of the equation is that the end user needs to be supplied with what he or she is interested in, to dedicate time to spend with the system. This is where we see that most systems, from the beginning of the IS revolution right to modern day computing and social networks, are geared to pleasing its targeted public.

For a business, the CIO/CTO is the crucial role in choosing and implementing systems, and outside its the users that vote en masse, either for or against a particular piece of software engineering. The difficulty for businesses is to find and use systems that are both pleasing and efficient. But I’m getting ahead of myself and will cover this difficulty in the near future.

Other important factors

Although I singled-out only four main categories (hardware, software, networks and humans), there are two more that merit their place in being discussed about. Namely, Virtualisation and the Smartphone. Virtualisation is software, you could argue that its either systems software or application software, its unimportant to classify it so narrowly. What is important is that it has had a profound affect on IS since its inception in the 1960’s.

IBM invented virtualisation for its S/360 computer to allow it to run several things simultaneously, using a rudimentary “time sharing” algorithm. Only recently has the general IT world caught up with this idea and products like VMware and Microsoft Hyper-V have appeared in the last 10 years or so, allowing the construction of massive Datacenters around the world, giving businesses the ability to run programs on “time shared” servers. Virtualisation, being so successful at the processor and systems software end, spawned business models that allow anyone to ‘hire’ a slice of a computer for a punctual requirement or for the creation of something new, foregoing the old upfront costs of buying and setting up a server, with almost everything needed at the datacenter being virtualised to allow multiple simultaneous users and, of course, revenue streams.

Saving the device with possibly the biggest impact on society, the smartphone came along for the first time in 1994 via a concept from IBM, then called the Simon Personal Computer. It was a PDA (Personal Digital Assistant) and telephone in an all-in-one package. A couple of years later Nokia introduced its 9000 Communicator, again a PDA and phone inseparably linked. However it came with an extra that differentiated it from the rest of the bunch, it had the Internet. Quickly, as is the law, many other companies tried their stab at this new and exciting market, with the likes of Microsoft, Blackberry, Handspring, Palm etc building and selling their own take.

Then, once again and as it always does (we’ll cover disruption in the future), it all changed.

In January 2007 Steve Jobs demonstrated on stage for the first time, an incredible new device was ushered in to the public eye, the iPhone. Its worth remembering what phones looked like back then (see image), but also remember that Nokia and Blackberry owned the market at the time, and in just a few short years, Apple and Google, in a cruel 1-2 punch put both of those players out of business.

Image : Apple

Now we have a good overview of digital history, the next edition will dive in to the subject of digitalisation and its origins.

Reading List

The Story of Twitter’s Fail Whale

In theme with this weeks subject, I thought it would be good to link to this article form 2015 that, despite only coming two years after the event, looked at it so nostalgically. Things get anchored in Internet folklore so quickly, and are forgotten oftentimes even quicker. Sadly missed, even though it did highlight more of a negative than a positive.

From shopping to car design, our customers and partners spark innovation across every industry

Microsoft’s vision of Digital Transformation, worth reading. I’ll be visiting Microsoft, probably regularly, as it is an actor in the space that we simple cannot avoid, and I don’t mean that negatively. Microsoft are in their own transformation and a pivoting into something more than just a tech company. Good to see Satya Nadella moving things in this direction.

Thanks for reading. The next issue (on Friday, then every Friday after that), we’ll get into Digitalisation and why Digital Transformation is different.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter.

Thanks for being a supporter, I wish you an excellent day.