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News Analysis - SAP reshuffles Executive Board - sets up for next 5 years

News Analysis - SAP reshuffles Executive Board - sets up for next 5 years

This morning SAP surprised us with the news of re-organizing its executive board, largely initiated by the departure of Steve Singh. As often with organizational press releases – you have to read it from the bottom up, but we will follow our customary process of dissecting the press release.

 
 


Here you go – the press release can be found here:
WALLDORF — SAP SE (NYSE: SAP) today announced newly expanded responsibilities of key executives. Robert Enslin and Bernd Leukert will shift and expand their portfolios as members of the Executive Board of SAP SE. The Supervisory Board of SAP SE has named Adaire Fox-Martin and Jennifer Morgan to the Executive Board.

MyPOV – Neat summary. Good to see two women coming to the executive board.

The moves underscore SAP’s commitment to customers’ ongoing digital transformation and its effort to foster top talent.

MyPOV – Ok – important – but then how do these appointments support digital transformation?

“I am pleased that executives such as Rob, Bernd, Adaire and Jen are stepping into bigger leadership roles to transform the way we drive innovations with our customers,” said Hasso Plattner, chairman of the Supervisory Board.

MyPOV – Mandatory chairman of the supervisory board.
In addition, two new leadership assignments were announced for current EMEA President Franck Cohen and SAP Cloud Platform President Bjoern Goerke. Cohen will become chief commercial officer and Goerke chief technology officer.

MyPOV – Good to see the next level repercussions, too. I can’t assess Cohen’s impact – but Goerke’s appointment is a good move. A company of the size of SAP needs a CTO, needs the ying and yang between a development leader and a chief technologist… now it’s up to Goerke to show he is up for the job and might become a member of the executive board – some time. Cohen is key to keep the European customers happy from a representation perspective and channels is a key business for enterprise software.
 
“We have always considered it a privilege to nurture careers and leaders,” said Bill McDermott, CEO and member of the Executive Board. “SAP is a company focused on innovation, scale and growth. I’m proud of this leadership team and know they are poised to keep SAP on the rise.”

MyPOV – Good quote by McDermott. The new setup gives more scale (2 sales leaders instead of one) and has more room to streamline product development and services. I asked what it means for e.g. a SuccessFactors customer – and McDermott’s answers was ‘no change’. But I expect over time the matrix line of SuccessFactors product development to get a little stronger towards Leukert than to the SuccessFactors leader, Mike Ettling. My interpretation here.
 
The Supervisory Board has asked Enslin, head of Global Customer Operations, to be president of the new Cloud Business Group. He will oversee SAP Ariba, SAP Fieldglass, Concur, SAP SuccessFactors, and SAP Hybris solutions as well as the SMB Solutions Group organization. Leukert, head of Products & Innovation at SAP, will expand his portfolio to accelerate SAP’s platform and digital transformation strategy. Enslin and Leukert will jointly lead key growth businesses at SAP, ensuring that development teams and customer-facing teams are in lockstep with one another from the design thinking and innovation process to customer-facing initiatives.

MyPOV – Enslin gets an entrepreneurial opportunity and also gets out of the grind and pressure of the global sales role, he has done that well for a long time, in a difficult product life cycle stage of SAP. Leukert will add responsibility on the development side, as a lot of innovation e.g. in platform (see Hybris choosing CloudFoundry 3+ years ago) happens in the acquired company’s products. Good to bring it all together… as mentioned I expect the line to Leukert / his team to become more solid – possibly the only one in 2 years or so from now. And that’s the course of all successful acquisitions over time, SAP has run Ariba, Hybris, SuccessFactors, FieldGlass etc. on a long leash on the product side for a long time.
 
With Enslin’s increased focus on cloud businesses at SAP, Fox-Martin and Morgan will ascend to the co-presidency of Global Customer Operations, overseeing all SAP regions and building on their success in the Asia-Pacific-Japan region and North America, respectively. Fox-Martin will oversee EMEA and Greater China. Morgan will oversee the Americas and Asia-Pacific-Japan regions. As chief commercial officer, Cohen will lead SAP’s channel business as well as assume responsibility for all sales processes and go-to-market initiatives across SAP. As CTO, Goerke will advance the company’s technology strategy and serve as a key external spokesperson.

MyPOV – Good to see two executives in charge of SAP sales, with all the new products and solutions SAP is providing / has provided a good move to have more bandwidth on frankly, a brutal job. One question that was missed to be asked was if Fox-Martin (who is Irish) would move back to Europe. There is a long tradition of managing China directly from Walldorf / Europe – so that makes sense. And Morgan is on ‘McDermott’s track’ as he stated on the call. And of course, good to see SAP adding two women to the board, I hope and expect them to do better than two previous women appointed (and since then left) before. Finally, good to see women leadership in a key, revenue generating function.
 

All changes will be effective May 1, 2017.

MyPOV – No time to lose.

Steve Singh, president of Business Networks and Applications, will leave SAP SE at the end of this month. Singh collaborated closely with Enslin, and together they transitioned Concur solutions into the SAP product family. Singh built a strong foundation for business networks at SAP and plans to focus on other entrepreneurial interests outside of SAP.

MyPOV – And here we are to the action of the reactio (in Newton terms) – Singh retiring for a more entrepreneurial role. Frankly, I was surprised that Singh stuck around so long, his brother, Ariba co-founder ‘bolting’ right at acquisition time. Writing was on the wall, eg. with McDermott showing up at SAP Ariba Live, not Singh like last year. He will be missed as an outside SAP voice and influence, he probably holds the record (need to do some math) of hanging around the longest as a founder / CEO of a large acquisition (remember Business Objects, Sybase, SuccessFactors leaders leaving quickly).

“Steve Singh’s character and entrepreneurial spirit are greatly admired around the world,” McDermott said. “When SAP acquired Concur Technologies, we knew Steve would play a significant role in strengthening the SAP cloud portfolio. We also knew he would eventually go back to his start-up roots. We could not be more grateful for everything Steve has done.”

MyPOV – Good / nice quote for Singh. Will be interesting what he does next, we wish him a long break to recharge batteries and all the best.

 

Overall MyPOV

Gravity is a powerful force in organizations, and gravity comes back to the ‘mothership’ of SAP in the form strengthening product under Leukert and bringing all acquired ‘cloud’ properties together under Enslin. The ‘board’ structure under which e.g. SuccessFactors and hybris were gone are now making place for traditional (matrix) reporting lines. So, this comes as no surprise, as acquisitions always get somehow ‘reeled in’ to the mothership – timing is the delicate part here. Moving too early ‘brakes’ the acquired company DNA and unique value proposition, doing it too late leaves enterprise with no talent and customers with staling products. I think SAP got the timing right here, e.g. preluding the whole move with adding ‘SAP’ in front of the brands of the acquired parties, in case of doubt even let this run longer than needed separately.

For customers, it means an easier way to do business. Two sales leaders for one makes it more time with the sales leader, more product under one leader makes sure things fit better together, all acquired products under one leader makes sure synergies are tapped in. The next big organizational piece to watch is how SAP will organize the go to market of S4/HANA beyond the current stage of ‘incubation’ under Leukert. It can’t stay there ‘forever’. A focus on channels is good, as more and more enterprise software will be consumed from marketplaces and partners directly. If SAP does this right – it could mean less friction and faster software purchasing processes. Lastly good to see SAP has a CTO again, an important function for a technology vendor of the size of SAP. So, overall good news for customers, who get more capacity with sales leaders on the top, a more streamlined acquired product experience and more product synergies.

Finally – putting my career coach / succession planning / board power assessment hat on – it gives plenty of room to grow and prove themselves for all SAP leaders involved – a good setup to determine who will succeed McDermott – in a 5+ year time frame.

 
 
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Let's talk about how we talk about blockchain

Let's talk about how we talk about blockchain

In my last blog "IBM Blockchain as a Service and Hyperledger Fabric forge a new path", I mentioned how the language of blockchain technology is shifting.  Even the labels themselves are still fluid.  Debates rage over whether IBM and R3 should call their solutions “blockchains”.  For a year or two now, many writers have preferred Distributed Ledger Technologies, yet the increasingly dominant private blockchains aren’t very distributed at all.  So the thoughtful Dave Birch for one prefers to call them “shared” ledgers.  I like that, but who knows what terms will prevail? I do know that words matter and we should watch how they're used. 

The characteristics of third generation DLTs are shifting markedly, and the blockchain vernacular is losing some of its mystique.  Decentralisation distinguished the first generation blockchain, and some still say it’s essential. But let’s remember that the public blockchains don’t actually produce decentralisation; they are designed with decentralization as a starting point.  Nakamoto rejected financial institutions, and the Bitcoin blockchain was designed to handle e-cash with no central authority. Yet nothing in the original design indicated that decentralisation could fit all types of business, nor that the blockchain could decentralise anything other than e-cash. 

Immutability is another word that’s becoming a bit stale.  In my nearly twenty years experience in cybersecurity prior to blockchain, I don’t recall “immutability” ever being expressed as a requirement.  The idea seems peculiar to blockchain.  And it’s not actually a requirement so much as a means to an end.  The real need in the Bitcoin blockchain is to have a community monitor all transactions and detect Double Spends, which they do by committing all agreed transactions to a permanent record.  Immutability is a result of the massive redundancy of the network. Yet there are many ways to achieve satisfactory permanence in a file system, most of which had been immutable enough until blockchain came along. 

But if just one word was to go from blockchain discourse, I’d vote off “trust”.  I’ve long thought that trust only confuses the field of identity management, but trust is truly the phlogiston* of blockchain.  One of the worst misrepresentations of the first generation blockchain was as the “Trust Machine”, as if trust somehow gets mined from the network and imparted on its outputs.  

No, blockchain was designed to enable parties who don’t know each other and who trust no one, to nevertheless exchange real irrefutable value.

Security is generally based on a triad of Technology, People and Process. When we say that blockchain is “trustless”, we mean the system is operationally secure without relying on people or process.  And that’s a rare feat, even if it’s strictly limited to purely digital assets

Blockchain enables people to do an important thing without trust.  With Bitcoin, senders and receivers walk away from their transactions without any new conviction in one another.  Strangers before, and strangers after.  

As Distributed (or shared) Ledger Technologies continue to evolve, I can see “trust” fading away.  Expectations of DLTs are becoming more complex and more sophisticated than the utopian beginnings of blockchain and Bitcoin, as serious applications emerge in trade, logistics, finance, and supply chain.  The words we use for these things need to be precise.  

In a forthcoming Constellation Research report, I will be analysing how the blockchain’s ideals of immutability, transparency and consensus are being refined and re-engineered in fresh DLTs for complex real world applications. 

 

* FOOTNOTE Before modern chemistry, fire was explained as the result of a special essence called phlogiston, present in combustible materials being released, leaving behind depleted and lifeless ash. 

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It will take a virtual village

It will take a virtual village

In "We are hopelessly hooked" (New York Review of Books, February 25), political historian Jacob Weisberg canvasses the social impact of digital technology. He describes mobile and social media as “self-depleting and antisocial” but I would prefer different-social, not merely for the vernacular but because the new media's sadder side is a lot like what's gone before.

In reviewing four recent contributions to the field - from Sherry Turkle, Joseph Reagle and Nir Eyal - Weisberg dwells in various ways on the twee dichotomy of experience online and off.  For many of us, the distinction between digital and "IRL" (the sardonic abbreviation of "in real life") is becoming entirely arbitrary, which I like to show through an anecdote.
 
I was a mid-career technology researcher and management consultant when I joined Twitter in 2009. It quickly supplanted all my traditional newsfeeds and bulletin boards, by connecting me to individuals who I came to trust to pass on what really mattered.  More slowly, I curated my circles, built up a following, and came to enjoy the recognition that would ordinarily come from regular contact, if the travel was affordable from far flung Australia.  By 2013 I had made it as a member of the “identerati” – a loose international community of digital identity specialists.  Thus, on my first trip to the US in many years, I scored a cherished invitation to a private pre-conference party with 50 or so of these leaders. 

On the night, as I made my way through unfamiliar San Francisco streets, I had butterflies.  I had met just one of my virtual colleagues face-to-face. How would I be received “IRL”? The answer turned out to be: effortlessly.  Not one person asked the obvious question – Steve, tell us about yourself! – for everyone knew me already.  And this surprising ease wasn’t just about skipping formalities; I found we had genuine intimacy from years of sharing and caring, all on Twitter. 

Weisberg quotes Joseph Reagle in "Reading the Comments..." looking for “intimate serendipity” in successful online communities.  It seems both authors are overlooking how serendipity catalyses all human relationships.  It’s always something random that turns acquaintances into friends. And happy accidents may be more frequent online, not in spite of all the noise but because of it.  We all live for chance happenings, and the much-derided Fear Of Missing Out is not specific to kids nor the Internet.  Down the generations, FOMO has always kept teenagers up past their bed time; but it’s also why we grown-ups outstay our welcome at dinner parties and hang out at dreary corporate functions. 

Weisberg considers Twitter’s decay into anarchy and despair to be inevitable, and he may be right, but is it simply for want of supervision?  We know sudden social decay all too well; just think of the terribly real-life “Lord of the Flies”. 

Sound moral bearings are set by good parents, good teachers, and – if we’re lucky – good peers.  At this point in history, parents and teachers are famously less adept than their charges in the new social medium, but this will change.  Digital decency will be better impressed on kids when all their important role models are online.  

It takes a village to raise a child. The main problem today is that virtual villages are still at version 1.0.

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How Ensono Used Workday Finance And HR Cloud To Innovate And Save Money

How Ensono Used Workday Finance And HR Cloud To Innovate And Save Money

One Integrated, Global System For Finance And HR Delivers Business Success

This case study examines Ensono’s experience implementing Workday’s HR and Finance enterprise applications in the cloud. Ensono provides infrastructure management services for global companies. Ensono delivers next-generation IT solutions and helps organizations plan for optimized, future infrastructures. By implementing Workday, Ensono was able to save millions of dollars by replacing many software systems with just one system, and received many other tangible benefits.

Ensono, which was part of Acxiom, is now a standalone infrastructure management partner. Formerly known as Acxiom IT, it selected a new name to cement its identity as a company capable of supporting clients well beyond the mainframe. The name Ensono is a derivation of the Zen concept “enso”, which refers to strength and creativity, and the Italian expression “in sogno” which means “in dreams.” Ensono’s culture is based on looking at challenges from many different angles to arrive at unprecedented solutions and make unexpected connections. As Acxiom IT was rebranding itself to become Ensono, signifying its commitment to be innovative and to deliver on the brand promise, the hybrid IT solution leader also wanted to solve some internal challenges

Learn how Enson saved $1 million a year through consolidation and elimination of legacy systems.

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Your POV.

Are you ready to transform your ERP? Do you expect cost savings from an upgrade?  Will the shift to the cloud be in your future?  Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

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Oracle CEO Mark Hurd Weighs In on HCM, Cloud Competition

Oracle CEO Mark Hurd Weighs In on HCM, Cloud Competition

Constellation Insights

Oracle CEO Mark Hurd is generally a quotable guy, and came across no differently this week at Oracle's HCM World conference during keynotes and a session with press and analysts. Hurd took on a range of topics, from Oracle's philosophy around the HCM market to how it's competing with the likes of Amazon Web Services for infrastructure workloads. Here's a look at some of the highlights.

If you thought Oracle was only going after enterprise and midmarket customers with its HCM cloud, you'd be wrong, according to Hurd. In fact, "there is no customer too small we can't reach" with HCM cloud, he said during the opening keynote. Oracle's HCM cloud is growing three times as fast as its next closest competitor, he added, although not specifying whether that was Workday or SAP.

Oracle is learning how to do HCM better by that old standby: Dogfooding its own products. The company has 140,000 employees now and recruits about 20,000 per year. It's a highly complex process made harder by the fact Oracle is seeking out top technical talent in high demand, Hurd said. It also places great emphasis on training, particularly given the sizable numbers of workers it's been recruiting straight out of college.

Training extends to the management layer as well, in a crucial way, Hurd added. "People don't typically leave companies. They leave managers." There are 18,000 managers at Oracle today.

As a result, Oracle is battle-testing its HCM suite as much as any company could, he said. However, as he noted: "[HCM] is not an app. It's a strategy, it's a process."

Going back to the early days of Fusion Applications, Oracle has pushed a "co-existence" strategy, wherein customers with ample on-premises software implementations are encouraged to adopt cloud-based, complementary modules at their own pace. Hurd continued this messaging at HCM World, noting that PeopleSoft 9.2, which was initially released four years ago, saw many customers choose to undergo the on-premises upgrade. But those same customers have been adding cloud HCM apps to their mix, he added.

Oracle has been seeing HCM deals come together as add-ons to its cloud ERP sales, Hurd said. Fifty percent of Oracle's cloud ERP customers never had an Oracle ERP system before, and the deals are largely being driven by CFOs, he added.

While the event focused on applications, Hurd discussed Oracle's foray into IaaS (infrastructure as a service) during a session with analysts and press. The Wall Street Journal recently reported that while Amazon Web Services, Microsoft and Google collectively had more than $31 billion in capital expenditures last year, of which the bulk presumably went toward data center development. In contrast, Oracle had $1.7 billion in capex last year. 

Asked about the disparity, particularly when one considers how far behind those IaaS market leaders Oracle is at present, Hurd replied 

"It's an such an interesting thesis that whoever has the most capex wins," he said. Oracle's Gen2 data center infrastructure is so efficient that Oracle doesn't need to build out as much raw data center real estate as the competition, Hurd contended.

MyPOV: Hurd's job is to drive Oracle cloud sales and with HCM, the messaging needs to de-emphasize technical matters and focus on business value. Judging from Hurd and other Oracle executives' presentations at HCM World, they are succeeding.

It was also notable how much Oracle put HCM customers, and not corporate spokespeople, on the stage to discuss their projects. Oracle even launched an HCM customer innovation award program at the event, honoring dozens of companies spanning a wide variety of industries. Underscoring the human element, Hurd noted how important customer references are when it comes to HCM sales. "Customers would rather buy from another customer than from us."

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Google's New Approach for Machine Learning Focuses on User Privacy, Efficiency

Google's New Approach for Machine Learning Focuses on User Privacy, Efficiency

Constellation Insights

Google researchers have come up with a method for machine learning that tackles two of the technology's biggest pain points to date: End-user privacy and device and network resource consumption.

It's called Federated Learning, and while still in the labs, could have a profound influence going forward. Here are the details from Google's official blog post:

Federated Learning enables mobile phones to collaboratively learn a shared prediction model while keeping all the training data on device, decoupling the ability to do machine learning from the need to store the data in the cloud. 

It works like this: your device downloads the current model, improves it by learning from data on your phone, and then summarizes the changes as a small focused update. Only this update to the model is sent to the cloud, using encrypted communication, where it is immediately averaged with other user updates to improve the shared model. All the training data remains on your device, and no individual updates are stored in the cloud. 

Careful scheduling ensures training happens only when the device is idle, plugged in, and on a free wireless connection, so there is no impact on the phone's performance.

Google is testing Federated Learning in Gboard, the Android keyboard. Gboard offers up suggested queries to users, and Federated Learning captures whether the user accepted the suggestion. It stores and processes this information locally. 

Google notes that Federated Learning, while innovative, presented new logistical challenges to overcome:

[I]n the Federated Learning setting, the data is distributed across millions of devices in a highly uneven fashion. In addition, these devices have significantly higher-latency, lower-throughput connections and are only intermittently available for training.

These bandwidth and latency limitations motivate our Federated Averaging algorithm, which can train deep networks using 10-100x less communication . The key idea is to use the powerful processors in modern mobile devices to compute higher quality updates than simple gradient steps.
which excel on problems like click-through-rate prediction.

Google has thought through the potential benefits Federated Learning has for end-users quite thoroughly. It uses an aggregation protocol that requires 100s or thousands of users to have participated in an update before a server can decrypt the information, meaning no person's data can be exposed on its own.

There's much more detail in Google's full blog post, which is well worth a read. Here's a graphic illustrating Federated Learning's architecture (credit: Google).

 

One of the biggest challenges in machine learning is the task of collecting enough data to drive accurate predictions and decisions, and Federated Learning is aimed squarely at that target, says Constellation Research VP and principal analyst Doug Henschen.

Data federation, of course, is nothing new as a concept, but by applying a federated approach to machine learning training, Google is cleverly side-stepping the challenge of having to move data to one, centralized location for training, he adds. "The data-movement alone is a big challenge, and once centralized, data storage and analysis is a big expense." 

"This federated approach to training machine learning models seems to promise multiple advantages: eliminating data-movement requirements, taking advantage of remote computing capacity, and side-stepping privacy and security concerns all while delivering more accurate predictions thanks to the use of more data in the training process," Henschen says.

That said, there are tradeoffs, such as how long it might take to train a model, "but Federated Learning is a novel and promising approach to a big stumbling block to predictive success."

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Beyond the Seat: Future of the Ticketing Marketplace

Beyond the Seat: Future of the Ticketing Marketplace

1

I was really excited to participate on a panel at this year’s Sloan Sports Analytics Conference discussing the future of the ticket marketplace. The other panelists included:

  • John Abbamondi: Executive Vice President – Ticketing, Suites & Hospitality at Madison Square Garden
  • Jamie Brandt: Vice President, Sales and Service at the San Francisco 49ers
  • Jodi Mulkey: Chief Technology Officer at Ticketmaster
  • Zach Long: Chief Marketing Officer at PrimeSport
  • Patrick Rishe (moderator): Director, Sports Business Program at Washington University in St. Louis

We covered a wide range of topics over the course of the hour, including ticket pricing, product mix, creating personalized experiences, retention modeling, leveraging data for sales, and much more.

The video does require a paid subscription to content from 42 Analytics, but there is also a 14 day free trial option, so I hope you check out the panel and many of the other videos posted from this year’s event.

Digital Business Distributed Business and Technology Models Part Three; Distributed Services Business Management

Digital Business Distributed Business and Technology Models Part Three; Distributed Services Business Management

Digital Business takes place within distributed network-based ecosystems using interactions in the form of various ‘Services’ to create Business value and revenues. The ability to dynamically orchestrate a set of Services involving various partners within the Business Ecosystem brings the requirement for a new kind of ‘Middleware’. Distributed Service Management ensures that partners in orchestrated Business Service activities have their individual transactions recorded and settled as necessary.

Previous parts of this series started with an examination of the Business activities and actions of an Enterprise, followed by part 2 defining the need for a new kind of dynamic infrastructure. In part 3a the need for a Distributed Services Technology Management is explored to introduce this part 3b adding the Distributed Services Business Management. (It is recommended to read the parts sequentially from Part 1, though a brief overview is included in the summary at the end of this part).

Blockchain Technology is seen as the most likely solution to providing Distributed Service Management, hence the recent wave of interest in the topic. However knowledge of what Blockchain Technology is, and how it can be applied, to Digital Business is generally poor. Bitcoin tends to be seen as Blockchain, whereas it is a specific implementation using aspects of Blockchain technology.

There is considerable development being devoted to develop Blockchain Technology to create Distributed Ledger implementations that will provide transactional synchronization across a Distributed System, or Business Ecosystem, without requiring any single, or centralized control. There are some significant issues that have to be addressed that lead to some experts expressing concern as to the level of enthusiasm for Blockchain as the basis for Distributed Ledgers, and in particular IoT.

Consider a Smart City example where its many businesses and consumers interact through many Smart Services and how that creates a complex web of commercial settlements. The intention is that new developments of Distributed Ledger will ensure all financial settlements, and possibly other forms of transactions, are recorded across the community with out the need for a central brokering Service operated by the City.

There are some serious issues to be addressed in the development of Blockchain based Distributed Ledgers for wide spread use. As well as the usual constraints relating to scale and operational speed there is a complicated core issue around the issuing and management of the secure ‘keys’ that lie at the heart of the technology.

Owners of any part of the value chain covering Sensors, Services, Resources, Assets and general Infrastructure all require a reliable trusted shared decentralized service to record transactions. Smart Services has been widely used as a term to describe the Business value offered in these systems, but the underlying technology is correctly called Distributed Apps, (Dapps), in recognition of the distributed, or shared, nature of its operating environment.

AirBnB currently uses the familiar technologies of the Internet + Web, but has a stated ambition to develop their Service as a fully functional DApp to allow global levels of scale and interactions.. Other popular Smart Services are likely to migrate into DApps over time to extend their business value propositions, and scale.

The role of a Distributed Ledger, (which is itself a DApp), is to provide a decentralized trust model that prevents fraud, or assumption of control, by allowing all participants to ‘check’ every transaction. (Note that an expert on the detail of Blockchain technology would wish this term to be expanded into much greater detail). The term ‘every transaction’ means between all members of the specific business ecosystem book every transaction, even if not a direct participant in the current transaction.

A Distributed Ledger would treat each IoT Device, or set of Devices that correspond to a chargeable business Service element, as a Node with its own version of the common Distributed Ledger. Whenever a pair, or group, of such IoT Devices/Nodes carry out an interaction, ending in a transaction, all registered Nodes are provided with a copy. A distributed consensus algorithm leads to shared agreement on the legitimacy of the latest transactions and the overall state of the network At which point all Nodes will update their copy of the Distributed Ledger to include the new transaction.

As there are so many versions of the ledger being maintained and compared separately fraudulent interactions are, dependent on the quality of the Distributed Ledger implementation, somewhere between very difficult and impossible. However there are several practical difficulties around scale; firstly the number of nodes and the size of the ledger; secondly the number of transactions equating to the frequency of updates. As a comparison the Bitcoin Blockchain deployment provides ledger updates roughly every ten minutes, introducing significant latency for real time applications, and volume is limited to no more than five entries per second.

The scaling issue currently sets requirements for brand new DLT developments. Expectations are that for initial IoT deployments it will be possible to achieve acceptable operating parameters. The Business Services ecosystem covering a Smart City would be expected to operate with an acceptable number of nodes and transactions in its early years.

The development of Smart City, other IoT business networks and DApps are all driving the requirement for suitable Distributed Ledger solutions. By their very nature Open Source would seem to be an attractive proposition. Two Open Source projects; Ethereum and Hyperledger, have successfully attracted support and build sizable community support though their focuses are different.

Ethereum founded in 2014, supports an eclectic mix of activities, often with crowd funding, where the focus is on DApps that require the decentralized transaction architeure. The Ethereum name will often come into a conversation of Blockchain, or DApps, but the community is not aimed at supporting large-scale IoT requirements for Distributed Ledger solutions. A sample of Ethereum projects can be found here.

 

The focus of HyperLedger is distinctly different, aiming to support the broader needs of IoT Distributed Systems that can be served by Blockchain based technology. The HyperLedger Explorer core project defines its mission as; ‘the fabric is an implementation of blockchain technology that is intended as a foundation for developing blockchain applications or solutions. It offers a modular architecture allowing components, such as consensus and membership services, to be plug-and-play. It leverages container technology to host smart contracts called “chaincode” that comprise the application logic of the system’(sic).

HyperLedger has significant support from well-known industry names, both Business users as well as Technology Venders. Premier Members include; Accenture, Airbus Industries, Deutsche Bourse, Fujitsu, IBM, Intel and JP Morgan. (A full membership list can be found here).

There are four HyperLedger projects underway that contribute in different ways to making Distributed Ledgers a reality for commercial operations; Blockchain Explorer, Fabric, Iroha, and Sawtooth Lake. Summaries of each project and its aims can be found here. It would seem that Hyperledger Fabric is destined to become the most significant in 2017 with its stated aim;

Fabric is an implementation of block chain technology that is intended as a foundation for developing block chain applications or solutions. It offers a modular architecture allowing components, such as consensus and membership services, to be plug-and-play. It leverages container technology to host smart contracts called “chaincode” that comprise the application logic of the system.

IBM aims in 2017 to accelerate the Hyperledger Fabric project by recruiting and supporting an Ecosystem of Developers who will be offered various IBM provided Facilities. This ambitious plan highlights the value in understanding the details which can be found in a Constellation post, Why IBM’s Blockchain Plans Make Sense,.

Clearly effective decentralized transaction management using Blockchain Distributed Ledger technology is a highly important part of the development of Services based ‘Trading” Business Networks. However, this has become, thanks to the coverage on the topic, the most visible element in the overall challenge of building, operating and maintaining a new generation of de-centralized systems.

 

 

Summary; Background

This is third part in a series on Digital Business and the Technology required to support the ability of an Enterprise to do Digital Business. An explanation for the adoption of a simple definition shown in the diagram below to classify the technology requirements rather than attempt any form of conventional detailed Architecture is provided, together with a fuller explanation of the Business requirements.

 

 

 

 

 

 

 

 

 

 

 

 

 

Part 1 - Digital Business Distributed Business and Technology Models;

Understanding the Business Operating Model

Part 2 - Digital Business Distributed Business and Technology Models;

The Dynamic Infrastructure

Part 3a – Digital Business Distributed Business and Technology Models;

Distributed Services Technology Management

 

 

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Betterment Tosses Desk Phones and Moves to Cloud Communications

Betterment Tosses Desk Phones and Moves to Cloud Communications

Imagine this: You are an IT manager newly hired into one of the fastest-growing companies disrupting an entire industry. Your workforce is highly mobile, but the phone system is desk-based with complicated codes to perform simple tasks like transferring calls. User frustration is high with dropped calls and you need to fix it and fast. This is the story of Betterment and the topic of my new case study report, Toss the Deskphone: Betterment Uses Dialpad to Modernize Communications.
 
Betterment is a company at the forefront of the FinTech disruption as an early pioneer of Robo-advisory investing. The company grew rapidly from an eight-employee startup to currently a mid-sized company with over 200 employees and managing over $8 billion in Assets Under Management (AUM). The problem was their communications system was a PBX-based solution that was expensive and a mismatch for a highly mobile workforce not always stationed at their desks. Betterment’s Technology Operations Manager, Mike Bongardino, went through an extensive evaluation process and decided that moving to a native cloud communications solution could support their mobile workforce, scale alongside the company as they continued their meteoric growth, and require minimal administration support. Betterment chose Dialpad, a cloud-based unified communications provider that offered a flexible, scalable, and multi-device friendly solution to free their team from complicated desk phones and saw savings of over 60 percent.
 
Image source: Dialpad on multiple devices
 
Native cloud communications provide mobility, scalability, and cost effectiveness for companies and we at Constellation see more companies making the switch over the next several years. The ability to integrate call activity with CRM solutions for improved customer tracking is another key benefit. For CIOs and IT professionals considering moving their traditional phone systems to cloud-based solutions, the case study report contains five key factors to consider, lessons learned from Bongardino, pitfalls to avoid, and overall recommendations on how to plan for the move.
 
Constellation clients can download the full report or an excerpt can be accessed here. Drop a comment below and let me know if you’re planning to move your organization’s communications platform to the cloud.
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'Vigilante' Malware Brickerbot: Not the Answer for IoT Security

'Vigilante' Malware Brickerbot: Not the Answer for IoT Security

Constellation Insights

Last year, the IoT botnet Mirai was used in a number of high-profile DDoS (distributed denial of service) attacks, taking advantage of hundreds of thousands of insecure Linux-based IoT devices. In recent weeks, a new strain of IoT malware has emerged, with a different and potentially dangerous new purpose. 

Dubbed Brickerbot, the malware seeks out vulnerable Linux devices, accesses them and then executes a series of instructions that corrupts storage, disrupts Internet connectivity and inihibits kernel operations, rendering the device useless, or "bricked." Brickerbot works much like Mirai, scanning for devices that still have their default user names and passwords.

As Mirai's effectiveness underscores, far too many end users simply forget, don't know how, or don't care to take the simple security step of changing their devices' defaults. 

Security firm Radware discovered Brickerbot in March, when the malware targeted devices in a honeypot Radware maintains for security research purposes.

Since then, speculation has centered on the motivations of Brickerbot's author or authors. One popular hypothesis finds Brickerbot to be a form of vigilantism. In other words, by proactively destroying unsafe devices, the likes of Mirai will be inhibited. 

Brickerbot's creator(s) haven't publicly stated their motivations, and it's possible their intents are solely malicious. But if vigilantism is the goal, that's inexcusable, says Constellation Research VP and principal analyst Steve Wilson

"Some hackers have god complexes," he says. "The very words 'white hat' and 'black hat hackings betray a blurred morality where one way or another people take the law into their own hands."

"Who makes the judgement that a device is insecure? It's not black and white," Wilson adds. "Where is the risk assessment that a vulnerable device that might malfunction is worse that a bricked device that will actually malfunction?"

Indeed, as a post on Network World notes, applied unchecked malware like Brickerbot could have fatal consquences:

Imagine driving down the road and having your car’s computer bricked. ... At some point, lives will be lost and people maimed. An uncontrolled botnet seeking to protect us all from badly designed devices will brick the wrong one—or dozens of them.

IoT device manufacturers, eager to get their products to market as quickly and cheaply as possible, bear much of the responsibility for the current threat landscape.

"I am outraged by the parlous state of IoT security," Wilson says. "It is appalling that devices which never were computers are foisted on consumers with unapprehended complexities and inadequate computer security. We need to see action on the part of consumers, to demand proper security.  Consumer affairs regulators need to act to ensure device quality is fit for purpose. Manufacturers need to be held accountable for damages caused by faulty products."

"The last thing we need is vigilantism," Wilson says. "By all means expose, names and shame culpable product companies but don't take the law into your own hands."

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Tech Optimization Digital Safety, Privacy & Cybersecurity Chief Information Officer