Training developers in person, then going back home

From an interview with Jeffrey Hammond and Marc Cecere on developer skills gaps. Here, the trend to training with people in person and then (slowly) going back “home”:

[Hammond:] One of the things I think you see is it– so many companies have used the words, partnering model, for years, and it’s been more or less lip service. But you do see a little bit more of a partnering and more highly tailored model. As an example, if you look at some of the projects that we see companies like a Pivotal or an IBM running these days, they may actually start in a garage that is near the organization so in San Francisco, or in London, or in New York City, but they start off-site. And the client’s developers, the client’s business personnel, go to those rooms, those war rooms if you will, and start work. Now, over time, some of that work may migrate offshore, or migrate back to the client. In the case of Pivotal, they’ll run multiple teams through their centers. Allstate is a really good example where they have I think over 100 developers and have kind of been through that process now, and they’ve drained their local talent pool. But it’s much less a, “This is the work we need to do and here’s the requirements and here’s the scope and let’s put this out to bid.” It’s much more a business transformation or a re-engineering type of project that is very high-touch. And I don’t see companies being able to do that if they’re not at least down the street from their clients and from their development shops. So I think it changes the nature of the types of engagement. I think it’s one of the reasons that you’ve seen so many of the large systems integrators buying agency talent as quickly as they can, because when you look at the sort of design experience techniques that are used, journey mapping, ethnography, those sorts of things, at least right now they still tend to be very custom – almost a manual process. You see sticky notes up on walls. You see war rooms. You see an environment that is kind of hard to capture from a remote, tool-based sort of delivery model.

Source: The Battle For Talent, Forrester

American Airlines is a good profile of enterprise cloud buyer’s needs, hopes & dreams – Notebook

While this is sort of a bummer story for Pivotal (we’d like to have this account), it has a good profile of American and their needs in it. All of which are representative of other large organizations, e.g.:

  • Application types: “The first result is that the airline will migrate to the IBM Cloud some of its critical applications, including the main website, its customer-facing mobile app and its global network of check-in kiosks. Other workloads and tools, such as the company’s Cargo customer website, also will be moved to the IBM Cloud.”
  • Managed data-centers/cloud: “The airline will be able to utilize the global footprint of IBM Cloud, which consists of more than 50 data centers in 17 countries, in addition to a wide range of application development capabilities.”
  • Long-term planning: “We wanted to make sure that the cloud provider would be using Cloud Foundry and open-source technologies so we don’t get locked in by proprietary solutions,” Grubbs said. “We also wanted a partner that would offer us the agility to innovate at the organizational and process levels and have deep industry expertise with security at the core.”
  • We want to do all the new meat-ware: “As part of this process, American will work with IBM Global Services to use IBM’s Garage Methodology of creating applications through a micro-services architecture, design thinking, agile methodology, DevOps and lean development, the company said.”
  • Legacy, it’s how you got here: “IBM Cloud will help enable developers to build and change application functionalities for the airline’s customers. These customer-facing systems will be on the IBM Public Cloud, while American will maintain backend connectivity to other on-premise legacy and third-party systems, for true Hybrid Cloud functionality.”
  • There’s a lot going on: “American Airlines and its subsidiary, American Eagle, offer an average of 6,700 flights per day to about 350 destinations in more than 50 countries. American has hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C.”

Source: American Airlines Heads for a New Cloud with IBM

DevOps at Disney, management lessons learned – Notebook

New types of software and delivery mechanisms (SaaS, mobile) mean new problems and scale:

“We were so used to dealing with tens of servers and suddenly it was hundreds and thousands of servers,” which in turn created more work for the development teams.

More:

“The digital expansion of business equals more work and firefighting,” Cox said.

Less time spent doing dumb-shit:

employees used to spend the eight hours of the park closed every night, manually updating each server. Now only one person can update the whole fleet in 30 minutes.

Some guiding principals and management challenges:

Cox said that leading a change of this order of magnitude involved three crucial ingredients:
1. Collaboration: break down silos, mutual objectives.
2. Curiosity: keep experimenting.
3. Courage: candor, challenge, no blaming or witch-hunting.
But  these can come with its own leadership challenges, including:
• The politics of command and control.
• How new leadership can take a company in a new direction.
• The blame bias of who versus what.

And, some good motivation:

We keep moving forward, opening up new doors, doing more things because we’re curious.

All from Jennifer Riggins’s write-up at TheNewStack

Big pay-offs in innovation take time and have confounding finances

A nice way of explaining Amazon’s success in charts, e.g., as compare to Wal-Mart:


Just thinking aloud without any analysis, it seems liken Amazon is an example of how difficult, long, and confounding  doing continual innovation as your business is. Many companies claim to be innovation-driven, but most can just eek out those “incremental innovations” and basic Porterian strategy: they improve costs, enter adjacent marketers, and grow their share of existing TAMs, all the while fending off competitors.

Amazon, on the other hand, has had decades of trying new business models mostly in existing businesses (retail), but also plenty of new business models (most notably public cloud, smart phones and tablets, streaming video and music, and whatever voice + machine learning is).

All that said, to avoid the Halo Effect, it’s important to admit that many companies tried and died here…not to mention many of the retailers who Amazon is troubcibg – Wal-Mart has had several goes at “digital” and is in the midst of another transformation-by-acquisitions. Amazon, no doubt, has had many lucky-breaks.

This isn’t to dismisss any lessons learned from Amazon. There’s one main conclusion, thought: any large organization that hopes to live a long time needs to first continually figure out if they’re in a innovation/disrupting market and, if they are, buckle up and get ready for a few decades of running in an innovation mode instead of a steady-state/profit reaping mode. 

Another lesson is that the finances of innovation make little sense and will always be weird: you have to just hustle away those nattering whatnots who want to apply steady-state financial analysis to your efforts. 

You can throw out the cashflow-model chaff, but really, you just have to get the financial analysis to put down their pivot tables and have faith that you’ll figure it out. You’re going to be loosing lots of money and likely fail. You’ll be doing those anti-Buffet moves that confound normals.
In this second mode you’re guided by an innovation mindset: you have to be parnoid, you have to learn everyday what your customers and competitors are doing, and do new things that bring in new cash. You have to try.

Banks are handling disruption well – Highlights

Thus far, it seems like the large banks are fending off digital disruption, perhaps embracing some of it on their own. The Economist takes a look:

  • “Peer-to-peer lending, for instance, has grown rapidly, but still amounted to just $19bn on America’s biggest platforms and £3.8bn in Britain last year”
  • “last year JPMorgan Chase spent over $9.5bn on technology, including $3bn on new initiatives”
  • From a similar piece in the NY Times: “The consulting firm McKinsey estimated in a report last month that digital disruption could put $90 billion, or 25 percent of bank profits, at risk over the next three years as services become more automated and more tellers are replaced by chatbots.”
  • But: “Much of this change, however, is now expected to come from the banks themselves as they absorb new ideas from the technology world and shrink their own operations, without necessarily losing significant numbers of customers to start-ups.”
  • Back to The Economist piece: “As well as economies of scale, they enjoy the advantage of incumbency in a heavily regulated industry. Entrants have to apply for banking licences, hire compliance staff and so forth, the costs of which weigh more heavily on smaller firms.”
  • Regulations and customer loyalty are less in China, resulting in more investment in new financial tech in Asia: 
  • As another article puts it: “China has four of the five most valuable financial technology start-ups in the world, according to CB Insights, with Ant Financial leading the way at $60 billion. And investments in financial technology rose 64 percent in China last year, while they were falling 29 percent in the United States, according to CB Insights.”
  • Why? “The obvious reason that financial start-ups have not achieved the same level of growth in the United States is that most Americans already have access to a relatively functional set of financial products, unlike in Africa and China.”
  • There’s some commentary on the speed of sharing blockchain updates can reduce multi-day bank transfers (and payments) to, I assume, minutes. Thus: ‘“Blockchain reduces the cost of trust,” says Mr Lubin of ConsenSys.’

Fixing legacy problems with new platforms, not easy

  • The idea of building banking platforms to clean up the decades of legacy integration problems.
  • Mainframes are a problem, as a Gartner report from last year puts it: “The challenge for many of today’s modernization projects is not simply a change in technology, but often a fundamental restructuring of application architectures and deployment models. Mainframe hardware and software architectures have defined the structure of applications built on this platform for the last 50 years. Tending toward large-scale, monolithic systems that are predominantly customized, they represent the ultimate in size, complexity, reliability and availability.”
  • But, unless/until there’s a crisis, changes won’t be funded: “Banks need to be able to justify the cost and risk of any modernization project. This can be difficult in the face of a well-proven, time-tested portfolio that has represented the needs of the banking system for decades.”
  • Sort of in the “but wasn’t that always the goal, but from that same article, Gartner suggests the vision for new fintech: ‘Gartner, Hype Cycle for Digital Banking Transformation, 2015, says, “To be truly digital, banks must pair an emphasis on customer-facing capabilities with investment in the technical, architectural, analytic and organizational foundations that enable participation in the financial services ecosystem.”’
  • BCG has a prescriptive piece for setting the strategy for all this, from Nov. 2015.

Case studies

  • A bit correlation-y, but still useful, from that BCG piece: “While past performance is no guarantee of future results, and even though all the company’s results cannot be entirely attributed to BBVA’s digital transformation plan, so far many signs are encouraging. The number of BBVA’s digital customers increased by 68% from 2011 to 2014, reaching 8.4 million in mid-2014, of which 3.6 million were active mobile users. Because of the increasing use of digital channels and efforts to reconfigure the bank’s branch network—creating smaller branches that emphasize customer self-service and larger branches that provide higher levels of personalized advice through a remote cross-selling support system—BBVA achieved a reduction in costs of 8% in 2014, or €340 million, in the core business in Spain. Meanwhile, the bank’s net profits increased by 26% in 2014, reaching €2.6 billion.”
  • And a more recent write-up of JPMC’s cloud-native programs, e.g.: ‘“We aren’t looking to decrease the amount of money the firm is spending on technology. We’re looking to change the mix between run-the-bank costs versus innovation investment,” he said. “We’ve got to continue to be really aggressive in reducing the run-the bank costs and do it in a very thoughtful way to maintain the existing technology base in the most efficient way possible.” …Dollars saved by using lower-cost cloud infrastructure and platforms will be reinvested in technology, he said.’ JPMC, of course, is a member of the Cloud Foundry Foundation which means, you know, they’re into that kind of thing.

Saving $20m and going agile in the process

From an interesting sounding panel on government IT:

“We do discovery on a small chunk and then development, and then while that’s going on, we’re starting discovery on the next small chunk, and so on and so forth,” Smith said. “And then when the development is done, we loop back and we do user testing on that piece that’s done. But we don’t release it. That’s … one of the differences between agile and the way we did it. At the end of the phase we release everything.”

Also, some fun notes on consolidating legacy systems and resistance to going agile.

Don’t worry, computers are just causing a class war

On the contrary, as this book will argue, the digital revolution is very much like the industrial revolution. And the experience of the industrial revolution tells us that society must go through a period of wrenching political change before it can agree on a broadly acceptable social system for sharing the fruits of this new technological world. It is unfortunate, but those groups that benefit most from the changing economy tend not to willingly share their riches; social change occurs when losing groups find ways to wield social and political power, to demand a better share. The question we ought to be worried about now is not simply what policies need to be adopted to make life better in this technological future, but how to manage the fierce social battle, only just beginning, that will determine who gets what and by what mechanism.

Underlying the problem is rich people putting all their money under the mattress. Their wealth isn’t flowing down to the rest of the people. These wealthy folks have worked hard, and feel like they’re owed all that money (rather than having taken away by high taxes and redistributed); or, at least, they feel others are not deserving.

However, as the book goes into say, this mind-set ignores how a functioning society enables that success in the first place, and now sustains it:

A makers-and-takers conception of the world is one that neglects the social foundation on which wealth is built. We aren’t merely divided into makers and takers. We are participants in societies, operating according to a broad social consensus. When that consensus breaks down, the wealth goes away. Society either agrees a way to share its riches that most members find acceptable, or the system fractures and the social wealth available to everyone shrinks.

Source: The Wealth of Humans: Work, Power, and Status in the Twenty-first Century by Ryan Avent.

Go to where the customers are. True story.

By making it easy for people to buy movie tickets online or through a smartphone app, Fandango has experienced breakneck growth over the last two years. A couple of taps and presto! The seats are yours.

And on the “omni-channel,” even cyberspace has lots of omni:

“Consumers, particularly young ones, find it inconvenient to hop into different silos to get something done,” she said. “They want it all in one place. That sounds obnoxious, I know — the definition of a ‘first-world problem’ — but it’s true, and Fandango is solving it for them.”

Source:
Buy Movie Tickets on Facebook? Fandango Makes It Possible

Why do you have to burn $4bn to add mobile apps to taxis?

In the first quarter of this year, Uber lost about $520 million before interest, taxes, depreciation and amortization, according to people familiar with the matter. In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the U.S., those people said. That means Uber’s losses in the first half of 2016 totaled at least $1.27 billion.

Meanwhile, revenue:

Bookings grew tremendously from the first quarter of this year to the second, from above $3.8 billion to more than $5 billion. Net revenue, under generally accepted accounting principles, grew about 18 percent, from about $960 million in the first quarter to about $1.1 billion in the second.

It’s expensive to start a global, meat-space business, even if you’re “assetless”:

Uber, which is seven years old, has lost at least $4 billion in the history of the company.

I find the continuous usage of Uber as an example of “the way forward” in business unhelpful. Not because it’s not an interesting business, but because without these kinds of numbers in context, you think it’s easy. If you’re prepared to burn through $4bn before profit, sure thing!

The advantage established businesses should have is less spending to build a market: they just need to do better serving their existing customer base at first, not spend all that money to start from zero. What I find devilishly fascinating is why it’s so hard for those large organizations to take advantage of the assets they already have and why, possibly, it’s easier just to start from scratch, as Uber has been doing with that $4bn.

Source: Uber Loses at Least $1.2 Billion in First Half of 2016