Digital Transformation Digest: IBM and AWS on Collision Course, Tableau Invests in NLP, Larry Ellison On Best-of-Breed

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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Doug Henschen

Former Vice President and Principal Analyst
Constellation Research

Doug Henschen is former Vice President and Principal Analyst where he focused on data-driven decision making. Henschen’s Data-to-Decisions research examines how organizations employ data analysis to reimagine their business models and gain a deeper understanding of their customers. Henschen's research acknowledges the fact that innovative applications of data analysis requires a multi-disciplinary approach starting with information and orchestration technologies, continuing through business intelligence, data-visualization, and analytics, and moving into NoSQL and big-data analysis, third-party data enrichment, and decision-management technologies. Insight-driven business models are of interest to the entire C-suite, but most particularly chief executive officers, chief digital officers,…...

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IBM lawsuit reveals plans to take fight to AWS: Former IBM CIO Jeff Smith is trying to take a job with rival Amazon Web Services, but a lawsuit filed by Big Blue this week is tryiing to put the kibosh on his move.

IBM says Smith is in violation of his noncompete agreement, which would prevent him from working for a direct competitor until May 2018. The suit argues that Smith was far from merely in charge of internal IT at IBM. Rather, he was a high-level executive who spent ample time meeting with customers and marketing IBM products, while being privy to secret details of the company's product strategy—in particular, a next-generation cloud computing service set for delivery in the near term.

Smith's knowledge of the infrastructure, speed, security and cost of IBM's forthcoming IaaS would be extremely valuable to AWS, the suit argues. Without giving specifics, the suit suggests that IBM intends the new service to be highly competitive with AWS on cost. IBM is asking the court to enact an injunction against Smith barring him from working for AWS until May 2018, along with assorted damages.

POV: The full text of the lawsuit goes into much more detail and is well worth a read. (Huge tip of the hat to the Register, which spotted and posted the document.)

As for the competitive implications it spells out, AWS is probably not too worried about IBM's upcoming cloud service, says Constellation VP and principal analyst Holger Mueller. "But IBM has enterprise access, something that AWS wants more of," he says. "If AWS hired 100 of the best IBM salespeople and they then succeeded in selling AWS, the damage would be big."

Tableau gains NLP with ClearGraph buy: Data-visualization specialist Tableau is adding natural language processing capabilities with the acquisition of ClearGraph. The move will give Tablea users a familiar and easy way to interact with data, the company says:

ClearGraph makes it easy to analyze data using natural language. It brings a consumer-like experience to users by connecting disparate data sources and making them accessible and intelligible through simple conversational style search. ClearGraph’s unique natural language query technology stores semantic data in knowledge graphs that can expand and learn over time. Accessing and analyzing data using ClearGraph requires no technical training, as the system can infer users’ intent through natural language. For example, people could ask questions such as, “Total sales by customers who purchased staples in New York,” then filter to, “orders in the last 30 days,” then group by, “project owner’s department.”

POV: Buying ClearGraph ties into Tableau's goal of making data analysis more accessible to everyone, says Constellation VP and principal analyst Doug Henschen. "Business intelligence and analytics vendors have been experimenting with natural language querying for years, but with advances in NLP and voice-to-text translation, we're seeing big advances in human-to-machine interaction, as demonstrated by popular consumer services such as Amazon Alexa and Google Now," he says. 

Querying is often a multi-step process of refinement, and ClearGraph appears to have made progress in retaining the context of an initial query to support drill-down analysis, Henschen adds. Its capabilities will benefit a coming wave of smart recommendation and analysis features Tableau has in the works.

Legacy Watch: Larry Ellison's best-of-breed screed, revisited: The 2004 book Softwar by Economist writer Matthew Symonds was and remains a must-read for anyone interested in knowing the inner workings of industry legend Larry Ellison and Oracle. One of its many remarkable passages contains the following comments from Ellison, who was discussing the release of E-Business Suite 11i:

It was, Ellison boasted, the only integrated suite that could do everything that most business customers would ever need it to do.

The consequence, Ellison argued, was that it was no longer necessary to hire expensive systems integrators from IBM or Accenture to glue together market-leading applications from different software vendors—the practice known as bringing together best-of-breed. "Building an integrated system out of several different software products that were never designed to work together is a very difficult task. At Oracle, we used to sell and deliver these best-of-breed systems; selliing was easy, delivering was hard. IBM has thousands of consultants eager to help you make it work. The more complex the integration project the more likely it will be late and over budget. It may even fail completely.

The best-of-breed software product assembly approach is absolutely unique to the computer industry. If Detroit ran like Silicon Valley, nobody would sell cars—just parts. Customers would have to figure out which were the 'best' parts—a Honda engine, a Ford transmission, a BMW chassis, GM electrical system—and buy them and try to assemble them into a working car. Good luck. I know it sounds crazy, but that's how companies put together business systems today.

POV: The best-of-breed vs. integrated suite question is a bit different today, given the rise of SaaS, dedicated integration players such as Dell Boomi and SnapLogic, and the consolidation of smaller SaaS vendors by large vendors including Oracle. Still, Ellison's comments have a resonance that still sustains nearly 14 years after he made them. 

Hyperledger Sets Out Reference Architecture: What It Means

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Andy Mulholland

Vice President and Principal Analyst, Constellation Research
Constellation Research

Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems. Coverage Areas Consumerization of IT & The New C-Suite: BYOD, Internet of Things, IoT, technology and business use Previous experience: Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...

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Steve Wilson

Former Vice President and Principal Analyst
Constellation Research

Steve Wilson is former VP and Principal Analyst at Constellation Research, leading the business theme Digital Safety and Privacy. His coverage includes digital identity, data protection, data privacy, cryptography, and trust. His advisory services to CIOs, CISOs, CPOs and IT architects include identity product strategy, security practice benchmarking, Privacy by Design (PbD), privacy engineering and Privacy [or Data Protection] Impact Assessments (PIA, DPIA). Coverage Areas: -  Identity management, frameworks & governance-  Digital identity technologies-  Privacy by Design -  Big Data; “Big Privacy”-  Identity & privacy innovation Previous experience: Wilson has worked in ICT innovation, research, development and analysis for over 25 years. With double…...

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The Linux Foundation's Hyperledger consortium has gained steady momentum over the past year, growing to well over 100 members and releasing the 1.0 version of its Fabric platform in July. Now the Hyperledger Architecture Working Group has released the first in a planned series of formal papers outlining the consortium's approach. The first paper's goals are summarized as follows:

• Outline the overarching Hyperledger design philosophy for permissioned blockchain networks.
• Explain how our approach optimizes the development of flexible, interoperable enterprise blockchain technologies.
• Identify the core permissioned blockchain network components that the Architecture WG has been and will continue to define through its work.
• Provide a generalized reference architecture for consensus.
• Explore how each Hyperledger business blockchain framework manifests the reference architecture.

In the future, the working group will release papers focused on blockchain components, including the smart contract layer, communication layer, data store abstraction, crypto abstraction, identity services, policy services, APIs and interoperation.

POV: The group's decision to publish the paper series is a welcome move, says Constellation VP and principal analyst Andy Mulholland. "Anything published on the topic of blockchain seems guaranteed to get attention, yet very little is published about the requirement to develop solution architectures that allow blockchain, or more correctly distributed ledger technology, to achieve its primary purpose of being a shared functionality between and across a wide variety of different enterprises, functions and enterprise applications," he says.

"All too often, current debate on distributed ledger technologies has been at cross-purposes due to lack of consistent understanding, causing the confusion that has long been a hallmark of blockchain," he adds. "Constellation Research welcomes this work and urges those working on deployments for digital business and IoT to read this paper."

The material is of good quality and it's also good to see the maturation of ledger technology and terminology, says Constellation VP and principal analyst Steve Wilson. "But I would state that the term blockchain is stale and obsolete," he adds. "With so many advanced ledgers now superceding the original public blockchains, I find the term misleading, and more so when one consortium attempts to standardize a reference architecture with certain services."

For one thing, it's too early to standardize a smart contract layer, as the concept remains debatable and will likely be settled over the next few years, Wilson says. The same goes for identity services. Some ledgers need an identity service while others actually implement identity as a service. That means identity layers will vary from one technology to another, Wilson says. "It cannot be a standard layer."

Digital Transformation Digest: IBM Claims Victory In Deep Learning Arms Race, Salesforce Aims Einstein at Image Recognition, Privacy Research Misses the Mark

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Steve Wilson

Former Vice President and Principal Analyst
Constellation Research

Steve Wilson is former VP and Principal Analyst at Constellation Research, leading the business theme Digital Safety and Privacy. His coverage includes digital identity, data protection, data privacy, cryptography, and trust. His advisory services to CIOs, CISOs, CPOs and IT architects include identity product strategy, security practice benchmarking, Privacy by Design (PbD), privacy engineering and Privacy [or Data Protection] Impact Assessments (PIA, DPIA). Coverage Areas: -  Identity management, frameworks & governance-  Digital identity technologies-  Privacy by Design -  Big Data; “Big Privacy”-  Identity & privacy innovation Previous experience: Wilson has worked in ICT innovation, research, development and analysis for over 25 years. With double…...

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Doug Henschen

Former Vice President and Principal Analyst
Constellation Research

Doug Henschen is former Vice President and Principal Analyst where he focused on data-driven decision making. Henschen’s Data-to-Decisions research examines how organizations employ data analysis to reimagine their business models and gain a deeper understanding of their customers. Henschen's research acknowledges the fact that innovative applications of data analysis requires a multi-disciplinary approach starting with information and orchestration technologies, continuing through business intelligence, data-visualization, and analytics, and moving into NoSQL and big-data analysis, third-party data enrichment, and decision-management technologies. Insight-driven business models are of interest to the entire C-suite, but most particularly chief executive officers, chief digital officers,…...

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Cindy Zhou

CMO
Level Access

Cindy Zhou is a practicing CMO.  Prviously, she was Vice President and Principal Analyst at Constellation Research covering Digital Marketing Transformation and Sales Effectiveness. With over 18 years of practitioner experience in corporate marketing, product marketing, product management, and sales operations, Zhou has spearheaded marketing transformation at multiple technology companies. She advised Constellation’s clients on strategies to light-up demand generation, prove revenue contribution, and maximize sales productivity. Prior to joining Constellation, Zhou was Global Senior Vice President of Marketing and Sales Operations at BackOffice Associates, a global provider of data quality and information governance solutions to the Fortune 1000 and SAP SolEx partner. Before…...

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IBM researchers achieve record deep learning benchmark with GPUs: Big Blue says it has achieved a big milestone in deep learning software, through the use of a 64 IBM Power system servers containing 256 NVIDIA GPUs. The key advancement was that scale-out architecture, as most deep learning software frameworks make effective use of single systems containing multiple GPUs but don't do as well running the same jobs across multiple servers, IBM fellow Hillery Hunter said in a blog post.

IBM says the new software achieved 95 percent scaling efficiency with the Caffe deep learning framework, besting a previous record by Facebook's AI research group using Caffe2, its homegrown framework that was inspired by the original Caffe project out of UC-Berkeley:

IBM Research also beat Facebook’s time by training the model in 50 minutes, versus the 1 hour Facebook took.  Using this software, IBM Research achieved a new image recognition accuracy of 33.8% for a neural network trained on a very large data set (7.5M images). The previous record published by Microsoft demonstrated 29.8% accuracy. 

The new code is available as a technical preview in IBM's PowerAI 4.0 distribution for Caffe and TensorFlow, the latter of which is considered the most popular deep learning framework overall.

POV: Hunter's post is in-depth and well worth a read. However, there is a practical question to keep in mind when considering IBM's new benchmark, says Constellation VP and principal analyst Doug Henschen: Namely, where and how customers can take advantage of the PowerAI architecture.

That's because while IBM Power servers have long held certain performance advantages over "industry-standard" Intel x86 servers, the latter now rule the leading public clouds, Henschen says. "The race is on to bring graphical processing units into the picture, and indeed, the bottlenecks will be in the intersections between conventional software and systems and these far more powerful processors," he adds. "IBM's answer is PowerAI, and the achievement of higher efficiency is important and laudable."

It remains to be seen, however, if this will motivate leading-edge AI researchers and the businesses funding their research to move their deep learning experiments into IBM's cloud or to invest and even reinvest in IBM Power for on-premises data centers going forward, Henschen says. "The longstanding, mainstream trend has been to accept slightly lower performance and efficiency and throw more low-cost, commodity capacity at computing challenges."

Salesforce rolls out AI image-recognition tool for marketers: The CRM giant is continuing to release AI applications under the Einstein brand, with the latest being Einstein Vision for Social Studio. The tool's purpose reflects the fact that social media has become a largely visual medium over time, with the explosive rise in photo-sharing, Salesforce says:

Photos on social media represent many consumer behaviors, preferences, wants and needs that are going undetected by marketers. If a person posts an image of a new product, but doesn't include text including the product's name, it's likely that social media monitoring won't capture it.

The new application includes four image libraries, which among them contain 2 million brand logos, 200 foods, 1,000 objects and 60 scenes, Salesforce says.

POV: The technology looks like it's based on Salesforce's MetaMind acquisition and is an excellent addition to the Marketing Cloud, says Constellation VP and principal analyst Cindy Zhou. "It has been challenging for brands to track and monitor images for social sentiment, and Einstein Vision gives them a simple way to manage this in their existing Marketing Cloud Social Studio environment," Zhou says. Beyond marketing, the application's use case for customer service is strong, as brands can be more proactive in serving customers based on the images they post, she adds.

Privacy research may miss the mark: Researchers at MIT and Stanford conducted a study in which they offered a group of students a free pizza in exchange for them giving up three of their friends' email addresses. Here are two key conclusions of the report, as summarized by a Stanford news release:

The study raised two policy implications.

Since the findings show consumers’ actions don’t align with what they say, and it’s difficult to gauge a consumer’s true privacy preference, policymakers might question the value of stated preferences.

On the other hand, consumers might need more extensive privacy protections to protect consumers from themselves and their willingness to share data in exchange for relatively small monetary incentives.

POV: There are some questions worth raising about the research's conclusions, and the topic of privacy in general, says Constellation Research VP and principal analyst Steve Wilson. For one thing, there's the matter of data quality—were those email addresses real? "Leaving that aside, even if they're giving up their buddies' addresses the tone of this research has some serious victim-blaming," Wilson says.

"It is wrongheaded to call this a paradox," he adds. "The human condition is all about people making bad choices. What I'd like to see here is a bit more sophistication around behavior change with respect to security."

Wilson points to social media, describing it as "a seductive environment where people are spilling their guts." Facebook has essentially gamified surveillance through features such as photo tagging, which is then coupled with facial recogition software on the back end, improving the social networks ability to track users and target ads.

"Security researchers turn around and say there's a paradox in people's behavior, but they're being suckered into bad behavior." Meanwhile, the researchers' second conclusion is half right, Wilson says: "This is not to protect consumers from themselves, it's to protect themselves from businesses. They need to be saved from these digital magnates."

Legacy watch: Homeland Security CIO out after three months: The recently appointed CIO of the U.S. Department of Homeland Security is leaving the agency after just three months on the job, ZDNet reports. Richard Staropoli had reported to former DHS head John Kelly, who is now President Donald Trump's chief of staff.

It's not clear why Staropoli is going, but in his short time on the job he has called for major reforms to the way the department's IT operations are run. He previously served as CISO and managing director of the Fortress Investment Group hedge fund, and in a June speech said he was remaking the department to reflect the faster pace of a hedge fund's operations, as Fedscoop reported:

“We’ve moved out all these deputies and all these directors from their offices located all over these different buildings that DHS occupies,” he explained. “We now occupy one floor, once space in a trading floor concept, so when I need to get something done or a vendor needs to come up and we need to address a problem, I’ve got every entity I need in one spot. That cuts down on bureaucracy and allows me the maximum benefit of maximizing my time, so we can achieve results.”

POV: Deputy CIO Stephen Rice will serve as acting CIO until a permanent appointment is made. That candidate could well be Rice, who sources tell Federal News Radio was a key player in executing on the vision Staropoli set out for the agency's IT operations.

It's not clear where the DHS ranks on the IT dysfunction scale among federal departments, but it certainly has a crucial remit, being responsible for domestic cybersecurity matters. A steady hand at the CIO wheel will be more than welcome in an era of ever-heightening malicious cyberattacks.

Digital Transformation Digest: Lawmakers Rail Against Proposed Net Neutrality Rollback, Microsoft Takes Covers off Ignite, Apple's Turnabout on Progressive Web Apps, and More

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Net neutrality debate heats up on Capitol Hill: A public comment period for Federal Communications Commission rules changes that would roll back net neutrality has been ongoing since May and will end on Aug. 17. Now, as the deadline approaches, a group of congressmen have submitted a lengthy missive of their own that blasts the proposed changes. It's 20 pages long and available at this link, but here are a few of the key points:

Since we voted for the Telecommunications Act in 1996, Americans rejected the curated internet services in favor of an open platform. Now, anyone with a subscription to an ISP can get access to any legal website or application of their choice. Americans’ ISPs no longer pick and choose what online services their customers can access.

While the technology has changed, the policies to which we agreed have remained firm—the law still directs the FCC to look at the network infrastructure carrying data as distinct from the services that create the data. Using today’s technology that means the law directs the FCC to look at ISP services as distinct from those services that ride over the networks.

The FCC’s proposal contravenes our intent—the FCC should tread carefully before interfering with content creation. While some may argue that this distinction should be abandoned because of changes in today ’s market, that choice is not the FCC’s to make.

POV: Net neutrality bans ISPs from blocking or slowing Internet traffic related to legal content, and in turn from favoring traffic based on payments or other considerations.

The FCC is led by chairman Ajit Pai, a staunch critic of net neutrality who says the rules go too far and are anti-competition. Meanwhile, the FCC's board has a Republican majority; all 10 congressmen who signed the new letter are Democrats, which symbolizes how the outcome of the net neutrality debate may fall on partisan lines. 

That's not to say there isn't a chance for compromise, and enterprises—not just Internet companies such as Netflix and Google—should be concerned about the outcome amid macro trends such as IoT and cloud computing.

Microsoft lights up schedule for Ignite: Microsoft's Ignite conference kicks off next month and is typically a very newsworthy event. While the biggest announcements will likely be kept under wraps until the event, Microsoft has just opened up the online schedule builder for Ignite and a cruise through the session list reveals some interesting news nuggets. Here are a few highlights:

• A new version of the on-premises version of Skype for Business. "Learn where we are making investments in Skype for Business Server vNext and how to decide where Microsoft Teams, on-premises and hybrid play roles in meeting your strategic goals," the brief session description reads. (h/t to Mary Jo Foley of ZDNet.)
• An all-flash Azure Stack appliance based on Intel Xeon processors. There will also be a session outlining a number of customer use cases for Azure Stack, which brings the software from Microsoft's Azure cloud on-premises.
• Details on how customers have moved Dynamics GP and Dynamics NAV ERP implementations from on-premises to Azure.
• Heavy emphasis on IoT and AI. There are currently about 20 sessions at Ignite related in various ways to IoT, and no fewer than 56 touching upon AI. It's safe to say both will be high-level themes during Ignite's keynotes.

POV: Ignite dates to 2015, when Microsoft combined a number of conferences geared toward IT professionals into a single event. Along with the business-user oriented Envision, which happens earlier in the year, Ignite is a must-see-or-attend event for anyone with an interest in Microsoft's enterprise products.

After criticism, Apple embracing standards for more powerful web apps: A Philadelphia web developer's impassioned critique may have influenced Apple's decision to support "service workers," a core component of Progressive Web Applications, the standard backed by Google, Mozilla, Opera and Microsoft. Service workers are written in JavaScript and make web apps faster and more responsive, as well as the type of features enjoyed by native applications, such as push notifications. 

Apple has been largely silent on the topic of PWAs until recently. On July 24, developer Greg Blass wrote a lengthy blog that ended up going viral. In the post, he drew a stern conclusion: "Apple treats web apps like second class citizens because they don’t generate money like native apps in the app store."

But now, service workers have shown up as under development in WebKit, the open source engine that underpins Apple's Safari browser. It's not clear when the feature will become GA, but it's officially on the roadmap.

POV: Other indications are that Blass's blog wasn't the key driver for Apple's change of heart, but whatever the reason, its move to support PWAs more explicitly is a good thing for enterprises. In many cases, a web app can fulfill the purpose of a particular project as well as a native app, freeing up time and money for additional feature development instead of maintaining multiple code bases for native mobile apps. Safari remains a relevant browser, particularly for Apple tablet users, and its embrace of PWAs will fill a hole in the landscape. 

Legacy watch: Software update enabled money laundering scheme at Aussie bank: AUSTRAC, Australia's financial regulator, is set to level potentially massive legal fines on the country's Commonwealth Bank after uncovering $77 million in ATM transactions related to a money laundering scheme. The agency alleges that the bank failed to take proper measures even after detecting suspected money-laundering activities, as well as provide reports back to AUSTRAC regarding thousands of transactions larger than $10,000.

Commonwealth Bank issued a statement this week saying that the ATMs are working properly now, and blaming the shortcomings on an "unrelated software update" applied in late 2012. Our Intelligent Deposit Machines (IDMs) are now providing the correct Threshold Transaction Reports (TTRs) to AUSTRAC, and have been since September 2015:

This error became apparent in 2015 and within a month of discovering it, we notified AUSTRAC, delivered the missing TTRs and fixed the coding issue. The vast majority of the reporting failures alleged in the statement of claim (approximately 53,000) relate specifically to this coding error. We recognise that there are other serious allegations in the claim unrelated to the TTRs.

In an organisation as large as Commonwealth Bank, mistakes can be made. We know that because we are a big organisation, these mistakes can have significant impact.

POV: Indeed, they can, particularly in the case of AUSTRAC. As the Register notes, each violation of the reporting failure can result in an AUS$18 million fine. Depending on how many are ultimately levied, Commonwealth Bank could be brought to its knees.

Digital Transformation Digest: Facebook's Neural Net, Accenture Grabs Digital Talent, and Philly's IT Disasters

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Facebook goes neural for translations: Machine translation has come a long way over the years, but the rise of neural networks as the favored method for processing translations stands to up the ante significantly. To that end, Facebook recently completed the shift of its translation services from phrase-based models to neural networks.

Underpinning it all is Caffe2, the open-source deep learning framework Facebook announced in April. Caffe2 tackles problems that phrase-based translation models have difficulty with, such as context, slang and abbreviations, the company said in a blog post:

Our previous phrase-based statistical techniques were useful, but they also had limitations. One of the main drawbacks of phrase-based systems is that they break down sentences into individual words or phrases, and thus when producing translations they can consider only several words at a time. This leads to difficulty translating between languages with markedly different word orderings. To remedy this and build our neural network systems, we started with a type of recurrent neural network known as sequence-to-sequence LSTM (long short-term memory) with attention. Such a network can take into account the entire context of the source sentence and everything generated so far, to create more accurate and fluent translations.

With the new system, we saw an average relative increase of 11 percent in BLEU — a widely used metric for judging the accuracy of machine translation — across all languages compared with the phrase-based systems.

POV: Facebook handles 4.5 billion translations per day. Given that massive corpus of data and ongoing training of the underlying models, you'd expect Caffe2's accuracy to get even better over time.

Accenture shells out for digital transformation talent: As enterprises look to hit the gas pedal on digital projects, the war is on among consultancies for in-demand talent. Accenture has made two more moves in this direction with the acquisitions of Search Technologies and Brand Learning for undisclosed sums. 

Search Technologies is a consultancy focused on big data analytics and search projects. With the acquisition, Accenture gains about 200 experts in these areas spread across the U.S., Costa Rica, Phillipines and Europe. Search Technologies' staff will be rolled into Accenture Analytics and its proprietary Content Processing Framework is to be integrated with Accenture's Insights Platform.

Meanwhile, Accenture has also purchased Brand Learning, a consulting firm focused on marketing, sales and human resources. Brand Learning has about 120 employees and will be added to Accenture's Customer and Channels arms. Here's how Accenture describes its bona fides:

Brand Learning has served leading organizations across consumer goods, retail, life sciences, automotive, resources and financial services industries and has capability experts in 16 countries.

Brand Learning helped one retailer build its marketing capabilities and establish a common way of marketing in its Foods division, increasing its customer experience Net Promoter Score (NPS) by 14 percent in recent years. Work with a large consumer products company’s program for sales and commercial leaders focused on enhancing the capabilities of teams on the ground and building sales, commercial and leadership skills.

POV: Accenture has been on a bit of an acquisition tear of late. In June, it bought life science specialists LabAnswer and mobile design firm Intrepid. While none of the deals on their own appear to be massive in scope, Accenture is nonetheless moving aggressive to fill and shore up holes in its lineup of talent. The question, as is the case with all boutique consultancies swallowed up by the Big Five is whether their unique cultures will be retained or homogenized into the mothership.

Legacy watch: Not always sunny in Philadelphia: These are unhappy times in the City of Brotherly Love's IT department. No less than four major IT projects are running well over time and budget, and those woes are reflective of a deeply dysfunctional environment overall, as the Inquirer newspaper reports:

Three-and-a-half years ago, then-Mayor Nutter announced the city would spend $4 million to implement a computerized licensing and inspection system that would let people apply for permits online and enable inspectors to more easily track applications and violations.

“We’ll spend some money, we’ll save some money, and we’ll make a lot of money,” Nutter said at the 2014 news conference.

The program was supposed to be fully functioning by the end of 2015. Instead, it is only halfway done and the bill has topped $10 million.

Around the same time, the city hired a company for $15 million to replace its 30-year old payroll system and sync it with pensions, benefits, and time management under the same computerized system, all by mid-2015. Already $23 million has been spent on the project — and it’s far from complete.

City officials also wanted to move away from the thousands of Excel pages used to create annual budgets. A $3 million contract was signed to digitize the city’s budgeting system and make it more efficient and transparent. After shelling out $1.6 million, they now want to scrap it.

POV: There is much more detail in the Inquirer's full report, which is well worth a read. It includes comment from one city official who says that delays and overruns are simply to be expected. One wonders how that would go over if said by a CIO delivering a progress report to his or her board of directors. But it's also reflective of the built-in obstacles government IT projects face, such as a culture of bureaucracy and the whims of the political winds, which can blow new leadership in and out of power and with them, different priorities, awareness and levels of oversight.

Digital Transformation Digest: Congress Proposes IoT Security Law, Oracle Revamps Cloud Apps, and IBM Sees Tape in the Cloud

Chris Kanaracus

Managing Editor, Constellation Insights
Constellation

Chris Kanaracus is managing editor of Constellation Insights.  Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members.  Prior to joining Constellation, Kanaracus spent seven years covering the enterprise software industry for IDG News Service, where he frequently broke exclusive stories with a focus on end-customer issues. Kanaracus has also held various managerial and reporting roles at newspapers in New England since 1998. Twitter: @chriskanaracus , Title: Big IdeasConstellation Insights Insights delivers exclusive, daily analysis of breaking news across Constellation’s eight business research themes to Constellation Executive Network members. ...

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Bipartisan push for IoT security: One of, if not the most vexing challenges facing the Internet of Things (IoT) is security. Millions of devices are flooding the market while lacking the type of security needed to preserve user privacy, thwart cyberattacks and resist infections and takeovers from botnets. Now a bipartisan group of U.S. senators wants to pass legislation ensuring that IoT devices bought by the goverment meets a set of strict security standards.

Companies who sell IoT devices to the goverment would ensure  their devices can be patched, do not employ hard-coded passwords that can’t be altered, and are "free of known security vulnerabilities," Sens. U.S. Sens. Mark R. Warner (D-VA), Cory Gardner (R-CO), Ron Wyden (D-OR) and Steve Daines (R-MT) said in a statement.

A wide array of academics and tech companies have endorsed the bill. They include the Berklett Cybersecurity Project at Harvard, the Center for Democracy and Technology, Mozilla, Cloudflare, Neustar, the Niskanen Center, Symantec, TechFreedom and VMware.

While the lawmakers describe the bill as a modest measure, it does contain one crucial component. IoT vendors wishing to sell to the government would have to adopt a set of disclosure guidelines, under which researchers could independently probe the devices for vulnerabilities without fear of prosecution under the Digital Milennium Copyright Act or Computer Fraud and Abuse Act.

The full text of the bill is available here.

POV: It's a common-sense piece of legislation that one could convincingly argue is a couple of years overdue, given the rash of IoT-related security disasters in the recent past. However, it doesn't go nearly far enough. While the U.S. government spends many billions on IT purchases each year, it still represents just a small fraction of IoT device sales overall. What the industry needs is legislation—and not just in the U.S.—that sets stringent and enforceable ecurity standards for all IoT devices coming to market. Until that happens, consumers lack sorely needed protections.

Oracle pushes out updates across cloud suite: This week, Oracle introduced Release 13 of its Cloud Applications family, with key new features including a revamped user experience and enhancements across SCM (supply chain management), CX (customer experience, ERP (enterprise resource planning), SCM (supply chain management) and HCM (human capital management).

SCM appears to have gotten the most investment, with the addition of more than 200 "major" features and six new SKUs targeting sales planning, demand management, supply planning, collaboration, quality management and maintenance.

The CX suite gets improved mobile and data visualization features, as well as a new app called Engagement Cloud that combines sales and service.

ERP Cloud updates focus on industry support for higher ed, financial services and manufacturing, as well as new functionality for dynamic discounting and multi-funding.

On the HCM front, Oracle says 80 percent of the new features were driven by direct customer input. Updates include broader UX personalization and added support for customers with unionized work forces.

POV: Oracle is keeping to a biannual cadence for updates to the cloud application suite, which is a less frequent pace than some SaaS vendors but likely one it has judged its customers prefer. While Oracle is still selling on-premises application licenses, the clear emphasis has been on cloud. In its most recent quarter, Oracle said SaaS revenue jumped 67 percent to $964 million. That's still a small fraction of its overall revenue but the strong growth can't be denied and is much less attributable to acquisitions than in the past.

Oracle is also having luck selling into new accounts; two-thirds of the 868 cloud ERP deals it signed in the most recent quarter were with companies who never had Oracle ERP before.

As for the Release 13 announcement, it's interesting that Oracle led with SCM, which has lagged as a category in the cloud era, says Constellation VP and principal analyst Holger Mueller.

Oracle's Cloud Applications stem to the mid-2000s when it began working on Fusion Applications, which were supposed to be a superset of capabilities from its existing on-premises suites. Fusion's development took much longer than planned, but they ultimately went GA in 2011. A key component of Fusion was the availability of both on-premises and cloud deployment options. Those still exist for many but not all Oracle enterprise applications, but the Fusion branding has pretty much been dropped altogether.

"The overall state of Oracle's SaaS products is stronger than ever in scope, vertical support and customer adoption," Mueller says. But it's a stretch to call them next-generation enterprise applications unless they employ big data, deep neural networks, voice as a UI and other cutting-edge features, he adds.

IBM, Sony report stunning new tape storage record: Digital tape may not be the sexiest or most flexible storage medium out there, but boy can you fit a lot of data on tape. IBM and Sony say they've set a record of 201 Gb/in2 (gigabits per square inch) in areal density on tape developed by Sony. That's a 20x increase over currently used tape, the companies say, and equates to 330 terabytes of uncompressed information on a tape deck the size of a human's palm.

IBM's release used a colorful metaphor to express the sheer size of this information set, comparing it to "the text of 330 million books, which would fill a bookshelf that stretches slightly beyond the northeastern to the southwestern most tips of Japan."

The test used a prototype sputtered tape. This variety costs more than standard barium ferrite-based tape, but the capacity makes it attractive for tasks such as cold data storage in the cloud, IBM says.

POV: IBM is clearly banking that tape can help it compete in the cloud archiving business with the likes of Amazon and Google. There's a lot of money to be made there, with legitimate customer needs driving demand. Having another big-name choice in the market will be a good thing to have.