The oil price crashed. All of a sudden the industry needs to dramatically reduce costs if it wants to stay profitable. The oil and gas industry is one of the few industries that has created bespoke solutions for every well. Part of the explanation for this is that each oil and gas platform behaves differently. Drilling and pumping oil is not a predictable business. There can be bubbles, obstructions, lots of oil, variable pressure, etc.
However the bigger explanation is that in a highly profitable business, IT costs were just a drop in the ocean and it was a lot more profitable to focus on maximizing output then optimizing costs. This reality has changed with the oil prices falling extremely low and shale gas creating oversupply for the first time in history.
How can open source help the energy industry?
At this moment each IT solution in oil and gas is bespoke. By open sourcing a next-generation oil and gas management platform, adoption will be a lot higher than any proprietary solution. If the solution focuses on the communalities more than the differences and abstracts complexities then 80% of the average use cases can easily be covered. The remaining 20% will still be bespoke but if an automated change management solution is put in place then automatic upgrades and rollbacks will reduce costs of the bespoke parts substantially as well.
Looking for a name for this new platform? Let’s call it EnergyStack for the moment. Openstack is the open source private cloud technology that is currently revolutionizing the IT landscape. Although EnergyStack is probably going to get born and managed in a different way, Openstack is a good example of how an industry has been revolutionized and solutions of equal quality have been brought to market at a factor of a tenth of the price of the incumbent solution.
How to kickoff EnergyStack?
Incumbent IT players will be the once that get commoditized by an open source energy management platform, for which they are not the right players to push the idea. The ideal players are challengers that join a couple of early adopters. The main problem is finding financing because in an economically challenging moment investing to save costs is not the strength of a chief financial officer that manages capex on a quarterly basis. So anybody that has a good idea, don’t hesitate to share it.
Mobile operators are at the top of the list of companies customers complain about. Their prices are abusive. Their services usable at best, but often horrible. Have you seen T-Shirts saying “I love my voicemail!”? When you call them for support, you end up adding inadequate support to the list of complaints. So writing a blog post about how unhappy people are with their mobile operator is not valuable. What if the crowd could fix all these problems?
How to build a dream mobile operator?
From a technology perspective we have come a far way in recent years. Lime Micro, Yate, Nuand, Fairwaves, Telestax, Metaswitch, etc. have all been working on little puzzle pieces. There are relatively cheap micro base stations and very likely we end up below $100, and even $50, in the next two years. Shortly there will be open source LTE. There are open source value added services app stores. Open source and scale out communication management solutions. Open source software defined networking. It is time to start putting the pieces of the puzzle together.
Don’t you need an LTE license? In countries like the Netherlands and Sweden it is legal to put a mobile base station as long as you stick to some limitations around height, strength of signal, etc. In Mexico you can put up a base station in areas that are not covered by the traditional mobile operators. You have LTE-U, an unlicensed part of the spectrum that new mobile phones support. White spaces database can technically allow LTE spectrum that is not being used in a geographical area to be repurposed while the main license holder does not use it. So if you use the unlicensed spectrum and white spaces in most countries and start with normal spectrum in a handful of other countries and focus on making customers happy, then governments will get persuaded by happy crowds to change laws on spectrum licenses and make voters happy. What is needed is a better model that can be copied by many countries.
What does a dream mobile operator look like?
Should a mobile operator allow communities to build out their own networks and have federated models in which communities can interconnect? You can use my network, if I can use yours. Or alternatively is there only one network? Perhaps a peer to peer model?
If you don’t host an antenna, would you pay for data and if so how much? What if somebody does not pay? Prepay vs postpaid? Should bitcoin be the preferred form of payment? Should data caps exist to avoid abusive behaviour? Can certain traffic be given less priority if it improves overall experience for everybody at the cost of some? What services would be needed? How is support provided? What about governments and operators trying to use laws to go against what the crowd wants?
There are still a lot of questions to be answered. And with enough people trying to find solutions, they are all solvable. However there is one fundamental question:
Would you use a crowd funded mobile operator?
If there is no demand for a crowdfunded mobile operator then this is just another blog post. But the first step in a crowd funded mobile operator is to validate that the crowd wants it. How do you do this? Simple! Tweet, retweet, favour any tweet with #dreamcoms. Vote up on Hacker News any articles about Dreamcoms. Tell your Facebook, Google+, etc. friends about Dreamcoms. Blog about how Dreamcoms could solve certain problems. Make viral Youtube videos about Dreamcoms. Make T-Shirts. Campaigns. Anything that brings Dreamcoms into the spotlight.
If you are unhappy with your current mobile phone operator and you want to dream about a communication provider that is awesome, you tell the world about Dreamcoms. Enough social media traffic will enable to form a community that can work on Kickstarter and Crowd funding initiatives that solve every aspect that needs to be put in place. At the moment it is a dream but wouldn’t it be awesome to make it real. It is in your hands now to tell the world that you want Dreamcoms to happen…
Hacker news had the following article at the top of their list: the wolf of wall tweet. It talks about algorihms that used a rumor and the options market to make millions in seconds. This article refers to Flash Boys as well, a famous book about high frequency trading. However the big news is that whatever the article talks about as being magical is not magical at all, you can do a lot more and you will read about examples later on.
How does tweet option buying work?
Advances in neural networking have led to Deep Belief Networks (DBN). DBN in some cases are able to do natural language recognition and other types of recognition better than human beings, or at least a lot faster. So a DBN that is trained to read from the Twitter firehose and scan lots of news articles will beat humans in speed. Add an interface to options trading and you have what the article describes.
Taking it to the next level – knowing the future of the economy
What if you would know economical facts with a high degree of certainty before anybody else, and not sub seconds but hours, days, weeks, even months before anybody else. This is what Internet of Things combined with DBNs and automated trading can give you. How? Imagine you are into trading car stocks. Via computer vision you are able to count events. There are lots of public street cameras that stream in real-time data about what is happening on the roads. Humans look at them to see if there is a lot of traffic. Computers can use them to recognize and count events. So what would happen if strategically picked street cameras get hooked up to DBNs, you would be able to count how many trucks leave a factory with cars. You would be able to correlate these events month after month with the revenue figures of car manufacturers and then correlate with their stock value. The car manufacturers will at the end of a quarter announce their profits and a key aspect of their success depends on how many cars where sold. If you would know weeks or a month in advance that the volumes of cars coming out of a factory have picked up dramatically then you know the stock value will go up. If you would buy minutes before the figures come out a large quantity of car stocks then trading algorithms will pick up on this and will make you loose lots of the potential profit. However if you can spread purchase orders over weeks in small quantities then HFT can not detect your strategy.
Street cams is only the beginning
Using street cams would only be the beginning. Add weather sensors and lots of other sensors and you can do magic at large scale and would have a magical dashboard of the real economy before anybody else. If you are interested in this subject be sure to reach out on LinkedIn…
The “Ectors Principle” says that it is impossible to be excellent at hardware, software and services. You have to pick one and at most two but you can’t have all three.
Why can’t you be excellent at all?
Hardware is a discipline that requires you to define everything upfront and then to produce in as large volumes as possible to get to the lowest price per unit. It is a volume business with low margins.
Services requires people that understand customers ‘ problems and try to find solutions for them. It focuses on integration, customization, support, etc. To double revenue, you need to double the workforce.
Software is the art of combining easy to use solutions, with extensible and customizable features at an optimized and acceptable level of performance and availability. Smarter programmers can win from armies of dumb programmers.
So how can you combine a hardware platform that needs to have all features prebaked, with a people business that focuses on adding new features for each customer, with a software in which the art is to offer more with less features because feature overload kills ease of use, performance and availability? The simple answer is you can’t do them all well. You have to pick.
Who is trying to prove the “Ectors Principle” wrong?
IBM, HP, etc. come to mind when the words hardware, software and services are mentioned. How are they doing? BAD!!! Please name 5 HP software products that you find inspiring! IBM at least realized that being excellent at all three is hard and sold its PC and server business to focus on services and software. A word of advise: spin-off Power processors as an independent company!
Apple? Apple is not in the services business because you can’t have a closed software and hardware ecosystem and try to customize it to everybody’s needs.
Google? Google tried hardware with Motorola (failure!) and Nest but is not focusing on services because they don’t want to have to hire double the amount of people to double revenue.
Amazon? Hardware is proving difficult. Enterprises cloud services was a stretch.
General Motors? Do you like the software that comes with cars. Would you call it excellent?
Cisco, Ericsson, Huawei, Nokia, etc.? Software defined networks will kill their hardware margins in the next months/years. Alacatel Lucent just threw in the towel. More consolidation to follow.
General Electric? Wait until everything becomes “smart”. If GE is smart then their smart fridges have app stores with apps and peripherals from others. If not it will not be pretty.
Focus on one
Ideally you focus on one discipline and have another one as a hobby at most. Trying to do all will result in a weak link in the chain. The exact link that competitive startups will focus on to bring the imperium on its knees…
Every industry will be affected by IoT. Homes, businesses, cities, farm land, seas, space, etc. will get sensors. However the first IoT devices that will be massively adopted will not be a new breed of devices. They will more likely be devices we already know but will come with extra connectivity options and other IoT features.
Why not new devices?
For any new device that customers don’t know, you will have to educate the users, setup a new distribution channel as well as aftersales services offerings. This takes time and is risky and as such device manufacturers will not massively produce them from day one. The result is that new types of devices will cost more than the magical $100 for which they auto limit their market success.
What will be the first IoT devices?
You can already say that Bluetooth scales, Nest thermostats & firedectors, Phillips Hue, etc. are the first IoT devices alongside Fitbits and other wearables. However these devices are single purpose devices that often don’t do more than their non-connected counterparts. Let’s call them the Internet of Isolated Things because out of the box, most of them work only with their app or their cloud and none has any meaningful peer to peer relationships. They only allow other devices to be a remote control.
The real revolution in IoT will start when devices will not come with everything prebaked by the manufacturer. As soon as for instance a storage NAS is able to run multiple IoT apps to connect to your Bluetooth scale, your Nest firedectors, your Hue lights and your Fitbit will we see the real power of IoT in the home. From that moment onwards you will see something amazing happening, devices together will have synergies that weren’t there before. You will have the lights in the living room go red, Fitbits receiving messages and your Nest firedectors downstairs launching a “mom will be upset alert!”, just because Mom stood on the scale and the results wasn’t pretty. You will have 30 seconds to hide the scrambled eggs and butter croissants and substitute them by fresh fruits and Special K
Without a joke, the devices that you will buy regularly, but whose next-generation can hold many IoT apps will become the key IoT success enablers. Think WiFi routers, NAS, unified conference systems, set top boxes, etc. They might not be the sexiest devices in the world but people buy them in large quantities so IoT app enabling them will assure the IoT revolution to be accelerated…
GSMA, ETSI, etc. have been defining standards for the telecom world for years. However outside of the telecom industry these standards have found little or no adoption. In a world where telecom operators are fast becoming bit pipes, do we really need telecom standards? Why can’t the telecom industry just use SIP, WebRTC, REST, etc. just like everybody else?
The current systems in telecom are assuming calls and SMS need to be billed for. What would happen if the starting point is: data insights, network apps and connectivity are the only things that are billed? Connectivity is likely going to be unlimited or with very high limits over time. New revenue would have to come from selling data insights, either individually with consent, or aggregated and anonymised. As well as from apps that run inside the network: on CPEs, DSLAMs, mobile base stations, etc. So for the purpose of this blog let’s focus on a world where calls and SMS can no longer be charged for and connectivity is close to unlimited for most normal use cases. To move bits fast through a network, you want the least number of protocol converters. So using many different standards would make things slow and expensive. Additionally telecom operators have overpaid for lots of standards and their software support during years without ever using them. Finally implementing a standard is very costly because often only 20% of the functionality is really used, but the other 80% needs to be there to pass compliance tests.
The nonstandard or empty networking appliance
In a world where software can define networks and any missing functionality is just a networking app away, it would be a lot better to start from an empty networking appliance, i.e. networking hardware without software, and then to buy everything you need. If you need a standard then you might want to buy the minimal/light, equals 20%, implementation and see if you can live with it. Chances are you still have too many functions that are not used. Facebook open sourced its top of the rack networking solution and surprise, surprise, the interface is Thrift based. Thrift is used in all the other Facebook services to have a standard high throughput interface for all its software services. Google probably uses protocol buffers. Apache Avro would be another alternative and the most openly licensed of them all. So instead of focusing on a standard, it would be better to standardise on a highly throughput optimised interface technology instead of public slow standards. Inside a telecom operator this would work very efficient and for those systems that talk to legacy or outside world systems, adding a standard is just a networking app away. This would simplify a telecom network substantially, saving enormous costs and accelerating speed of change because less code needs to be written and maintained making integrations easier. These are all ideas that assume there are actual appliances that are software defined. As soon as general purpose compute becomes fast enough for heavy data plane traffic then the reality will be software defined networking in a virtualized way with autoscaling and all the other cloud goodies. However this reality is still some years off, unfortunately. In the short run virtualization of the control plane and software defined networking appliances [SDNA] for the data plane, is the most realistic option…
IT departments are a strange beast. Several years ago they were the most innovative department in most companies. They offered software solutions the business was not prepared for. However cloud, big data, IoT, etc. have accelerated in the last years faster than most in-house IT departments could handle. Some IT departments have more focused on putting processes in place to avoid talking to end-users than to actually helping the business compete faster and better. So how do you know if you are dealing with an IT dinosaur department or not?
1) speed of simple routine tasks
How fast can an IT department do simple tasks, e.g. open a firewall port, correct a misspelling on a website, add a user, add a subdomain, etc. If yours can turn around these tasks via automated solutions in minutes, you are top class. In hours, you are fine. However when we start talking about weeks or months then you definitely have an IT dinosaur department.
2) willingness to help the business
If your business has a problem, do you go to your IT department to ask for help on how IT might solve the problem and give the company a strategic advantage? Or on the contrary, the business has no other choice then to bring their own devices, use corporate credit cards to buy cloud resources, use external consultants, etc. because the last department that will listen to them is the IT department? Years of IT cost optimisations have pushed innovation out of some IT departments. If this sounds like yours: “IT dinosaur department”.
3) attitute towards change
The world is innovating so fast that any business that wants to be competitive needs to embrace change. This means that waterfall methodologies no longer work. Lean, scrum, minimum valuable product, continuous deployment, etc., call it whatever you like. The reality is that if your attitude is that whatever you decide today will need to be changed tomorrow, you are doing the right thing. Few businesses can afford to make a five year IT plan any more. When the ink dries, it will be outdated. In a world were HP, Dell, IBM, Accenture, etc. need to reinvent themselves continuously or risk dying, what do you think will happen to other sectors? One mobile app like Uber, can create global chaos in an over-regulated sector like the taxi sector. There are too many sectors that have not been innovating and risk being disrupted, e.g. telecom, energy, logistics, financial services, retail, etc. If there is no attitude to embrace change, then you are at risk of becoming or already have become an IT dinosaur.
What is a dinovator?
A dinovator is a person that accepts that they work for or are at risk of becoming an IT dinosaur but don’t accept this reality. A dinovator will look for unproven, non-standard, and often risky technology solutions to apply to the current business challenges and will via prototypes demonstrate to others that there is a better future. A dinovator will not try to make slides and convince others. They know that some people still don’t have a smart phone and will probably never change their mind. A dinovator makes sure that others understand how cutting-edge technologies can give a company a unique advantage. Seeing is believing. If you would live in 1802, would you belief that one day the world would be jammed with cars, planes and smart phones? You would not. You would call a fool to anybody trying to convince you otherwise. However if somebody would show a prototype of a car to you, then you would have to belief that horses are not the only means of transportation. Only over time will you realise that traffic jams and F1 will be possible. But at least you stopped believing that horses will continue to have a monopoly. The world needs dinovators to show this message to telecoms, energy companies, transport companies, banks and insurers, super market chains, etc.
Everybody can be a dinovator
You don’t need to be technical to be a dinovator. If you are in a business position, just asking smaller or alternative suppliers to show different more innovative approaches will also work. Telecom operators have during years asked their suppliers to give them faster and cheaper networks. They did not ask with the same intensity for new revenue generating solutions. The end result is that their regular suppliers have been focusing all their energy on what the customer asked. If a customer does not ask for it, then a “well managed company” will not dedicate resources to it. It is the typical innovator’s dilemma. The end result is that the industry is shrinking and once super companies have no other choice then to consolidate and fire employees, e.g. Nokia just bought Alcatel Lucent. You have a choice. Either you wait for others to make your job irrelevant or you become a dinovator. If you are good at being a dinovator then pretty soon you will be able to call yourself and your company an innovator. Being an innovator is an attitude. So join the dinovator movement, tweet your dinovations to the world and include #dinovator @telruptive.