CRISIL YOUNG THOUGHT LEADER 2012
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1 CRISIL YOUNG THOUGHT LEADER 2012 Virtualization, Cloud, Social Networking, Big Data, etc. - Are these just buzz words? What are the technologies that will change business in the near future? Abhinav Asati First Year, IIM Kozhikode
2 Table of Contents Executive Summary... 2 Introduction... 3 Past digital era and Future digital economy... 3 Technologies... 3 Cloud Computing... 3 Mobile Technology... 4 Big Data: Tapping Value in Information... 5 Social Media... 7 Intelligent & Collaborative Technologies... 7 Conclusion... 8 References P a g e
3 Executive Summary As the businesses are increasingly becoming digital, the reach of business technologies would not remain confined to IT functions alone but it would penetrate in the fabric of businesses in the years to follow. The real power lies in the convergence of the technologies and in their application in organization to redefine the working. Miniaturization should be the trend in the changing technologies era striving for better output in both traditional industry sectors and new sectors such as clean energy and biotech. The technologies like cloud computing, mobility, social media and business intelligence have potential to innovate the business processes and operations, if applied effectively. Every technology in itself is the game changing one. Mobile technology is increasing becoming easy to use; redefining the way an organization works, making it mobile and efficient. Advanced analytics would help in gaining an edge through business intelligence on big data. Social media can increase business reach through social computing results. Technologies such as Cloud computing are already scaling up the businesses in terms of capabilities, investing in new sector etc. Moreover, the emergence of intelligent technologies like augmented reality - can potentially complement the existing technologies. This report would give the insights about how the technologies would help in reshaping the business operations. It has tried to capture the future using some existing and trending keywords to give the picture of the technologies that would radically change the modus operandi of the businesses in the near future. 2 P a g e
4 Introduction Technology and economy are linked together inextricably. The changing technologies are providing cheap and fast access to the interconnected world and thus transforming markets. Technological innovations are making the resource acquisition easier, thereby helping the economies to grow and develop. With higher-than-ever bandwidth and storage capacity, newer notions have emerged in IT industry which possesses the potential to make a change not only in IT sector but across the business verticals of many other industries. Cloud computing, big data, virtualization etc. are the new buzz words, but these are not just buzzwords. In next sections of the dissertation, these technologies are discussed in-depth as to how they are going to bring revolution in industry and how companies should align their strategies keeping them in mind to ensure business growth under changing market dynamics. Past digital era and Future digital economy The invention of Internet has revolutionized the world by transforming and affecting many aspects of global marketplace. At present, Internet contributes a significant fraction which is growing - in the global GDP. According to a McKinsey report in 2011, the Internet contributes 3.4 percent to GDP in the G-8 countries, China, India, Brazil, South Korea, and Sweden equal to the GDP of Spain and Canada [1]. The mode of communication has also changed from telegraph to telephone to mobiles thus enabling mobility with increased growth rate of developing economies. In developing countries like India, telecom user density has increased tremendously from 25% to 90% in last 5 years. Similarly, Internet user density would reach to 150 million by the end of So, it will not take longer that older paradigms of products and services will go obsolete. The economy in the future would be governed by the pace of adaptation of emerging digital technologies by companies to deal with greater volatility and uncertainty in the market place. A judicious deployment of the future technologies for developing products and services would change the market dynamics through a disruptive innovation. The equations would change in the near future if internet of things would take a leap in the forecasted direction. Technologies Cloud Computing The cloud is the subset of the internet which itself can be classified into three conceptual clouds viz. connectivity cloud for transfer of information, resource cloud for storage of information and social cloud for networking and collaboration. This technology has changed the environment in terms of reshaping business practices, the companies are now more concerned towards strategic implementation in order to make the most of it through better, faster and cheaper IT. Recently, there has been an increased focus of IT companies to provide low-cost cloud solutions to startups who prefer not to spend into tangible resources such as servers, hubs etc. and save funds for 3 P a g e
5 investment elsewhere. Out of different service models for cloud computing viz. SaaS 1, PaaS 1 and IaaS 1, software as a service is dominating the market and the businesses would gear to adopt Business process as a service (BPaaS) [2] which provides complete access to the business processes in which both the infrastructure and the people governing the business are shared. Figure 1 shows the market potential for cloud models. Figure 1: Market Potential for cloud models Source: Sizing the Cloud. Ried, Stefan and Kisker, Holger. Forrester Research, April 21, 2011 The future trends would likely to be seen as Anything as a Service (XaaS) which refers to the collection of services delivered through cloud. It can be Communication as a Service where in consumers can use the services without investing in infrastructure using VoIP or PBX as a cloud. Education as a Service is the other frontier in the current burgeoning education sector where a company can provide unified and collated educational content as per the needs of people and helping to improve their learning curve. Knewton 2 is a company headquartered in US providing adaptive learning platform powered by the third party learning solutions. Therefore, anything as a service can also include Monitoring as a Service helping businesses to monitor their processes remotely or Cloud migration as a Service which gives the company flexibility to migrate their physical servers to a cloud. Mobile Technology The increasing use of smartphones and other smart handhelds in the work place is enabling organizations to offer flexibility and develop resources to implement mobility in their workforce. These handhelds of the current generation can harness the same power as that of existing systems by tapping into the cloud to realize the cybernetic vision in which human and devices are P a g e
6 integrated as a whole. The Knowledge Economy [4] would expand in order to include other industries with the help of mobility resulting into apt knowledge management. Figure 2 gives an overview of the potential of managing full fledges smart handheld devices. The mobile strategy can be implemented with the availability of tools to manage devices operating on a range of operating systems. The application development and its integration with a set of devices would decide the extent of mobility in the coming years. The three primary approaches identified to attain this goal are Virtualization; Web based Approach and Native Applications [3]. Therefore in the coming years The Everywhere Employee would be the keyword via mobility in the enterprise by connecting the business devices motivating the employees to be in sync with the BYOD 3 (bring your own device) concept. The mobility would take the Internet to the next level by altering its architectural model which is quite fixed to more mobile with the extensive use of wireless technologies. Figure 2: Smart Handhelds Management Capabilities Source: Gartner (April 2012) Big Data: Tapping Value in Information Lately, there has been a lot of talking about the potential of big data analytics available out there for exploitation by business verticals across the industry. Though it is not necessary to define big data in terms of memory; any data set with respect to the advancing technology or data with respect to industry or sector can be classified as big data. Data generated on social networking and micro-blogging websites, data from web search patterns, live video feeds from thousands of surveillance cameras, data from GPS and sensors for weather forecasting, data from large-scale online shopping patterns, and each dataset which is too complex and big to be handled by conventional database management tools constitute as big data. Global storage demand for the 3 BYOD refers to use your own devices to access privileged company resources such as , file servers and databases as well as their personal applications and data. 5 P a g e
7 big data is likely to result in new storage technologies or optimization of existing technologies like cloud computing. The BFSI (Banking, Financial Services and Insurance), media & advertising and entertainment industry are in the league for the adoption of big data tools to smoothen their digital operations. Big data is a dynamic area with huge potential in almost all businesses; however, core opportunities in some sectors are predicted in figure 3. Sector BFSI Healthcare Telecom Law and Order Energy Marketing Figure 3: Forecasted Applications driving the Future Potentials Risk analysis, customer behavior prediction, Fraud management, Market sentiment analysis Medical record analysis for geographical localization, Disease outbreak prediction Customer usage profile analysis, Profit maximization by service personalization Real-time crime surveillance, Public sentiment monitoring and prediction, cyber security Customer usage profile analysis, Resource monitoring, Pilferage prevention and energy conservation Customer usage profile analysis, Customer feedback analysis, Spatiotemporal purchasing patterns, Real-time advertisement targeting The emerging technologies for big data can be into information management- consolidation of data, interactive visualization of data and real time business intelligence. The internet companies being the early adopters of analysis of data using the analytics tools build on top of the software would be joined by other big companies in various sectors. The core capabilities and services that are expected to drive forward the big data analytics for enhancing business opportunities and opening newer domains, in future are: 1. Stream computing: real-time data processing rather than batch processing. 2. Hadoop 4 based analytics to process big data by clusters of commodity servers. 3. Large-scale data visualization and integrated massive processing of data from sources of varies modalities (man as well as machines) for exploring massive datasets seamlessly and application development. According to a report by Gartner [7] the growing big data would attract investments in big data infrastructure and management which is projected to drive $28 billion of worldwide IT spending in The spending would rise to $34 billion in 2013 with 10% of the spending in the new data coming through. Hence, big data can create significant value for the economy thereby helping companies to become more efficient and effective resulting into value creation for consumers. 4 Hadoop is an open-source software framework that supports data-intensive distributed applications. 6 P a g e
8 Social Media The emergence of this new versatile tool would have a larger pie in impacting the business environment if used effectively. The essence of social media should be capturing real value by linking it to the business objectives. Crowd-sourcing 5 helps businesses to improve their processes with the help of systems that can sense and process the emerging information [4]. In the coming years there is still a blur picture of the enduring social media platforms and the mantra for winning through social media but a systematic approach can be the key to make the best out of investing in this technology. The research conducted by Bain & Company [5] talks about the five key principles from social media out of which social media analytics is the key to link data for the long term value proposition to the consumers. Social Computing would be the trend in the future coming out of the extensive use of social media. It is the analytics and computing of the social media data making it more structured and meaningful. The computational knowledge platform like wolfram-alpha 6 - which computes the answer by analyzing through the structured data formed out of the big data around it - would be the key to enhance business capabilities of an organization. The emergence of technologies like dog programming language 7 makes easy to develop intuitive social applications consisting of complex social processes requiring social computing thereafter. Micro blogging sites offering social computing would increase in the future since the CRM and advertisement service providers are making their way to it due to their increasing popularity and ease of using them. Computational Advertising 8 would be the key to optimize the advertising costs in the future; where advertisement can be customized depending on the user base over internet television. A project like OpenSocial 9 by Google has the potential to exemplify the world of social media with more clarity thereby adding value to the organizations. Intelligent & Collaborative Technologies The Internet of Things would take a plunge in the near future deviating to the world of wirelessly connected devices. The ubiquitous network would help in connecting millions of devices through the same IP network. Adding embedded intelligence to the objects after mobility would result into the creation of smart objects which are self-interacting; thereby personalizing the life of each and every person. The augmented reality technologies like Project Glass 10 and Project Chauffeur 11 by Google has the potential of making objects intelligent enabling interaction of physical and virtual worlds. Augmented reality would help restructuring the industries with the help of architect, designers and IT services. 5 Crowd-sourcing is a process that involves outsourcing tasks to a distributed group of people. 6 Wolfram-alpha is an online service that answers factual queries directly by computing the answer from structured data, unlike search engine results Computational advertising is a new scientific sub-discipline, at the intersection of information retrieval, machine learning, optimization, and microeconomics. 9 OpenSocial helps websites to share their social data with the web. 10 A R&D project by Google to develop an augmented-reality head-mounted display. 11 A self-driving car project by Google. 7 P a g e
9 Conclusion The conflux of the four technologies viz. mobility, cloud computing, business intelligence and social media have the potential to disrupt the business environment in a more impactful manner as compared to the early days of internet. In the coming years, these technologies will collectively assume the center stage in strategic planning and decision making in businesses by progressive IT firms, whether big or small. In case of India, gradually as the problem of lower average bandwidth will alleviate and penetration will populate, a whole new market will be there to tap not only for existing giants but also for entrepreneurial ventures. So, in these changing times, it is in best interest of the companies to take cloud computing, big data, virtualization etc. as advantageous prospect and exploit the emerging opportunities. References 1. Internet matters: The Net's sweeping impact on growth, jobs, and prosperity, McKinsey Global Institute, May Winning in the Digital Economy, BCG Perspectives, September Business Redefined, Ernst & Young 5. Putting media to work, Bain & Company Insights, September gartner.html 8. Cloud hits the enterprise, Deloitte Review, Issue 11, Technology forecast, PWC, Issue 1, P a g e
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