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2010 what do we do ?
2010 what do we do ?
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2010 what do we do ?

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This presentation covers the economic downturn, the it industry in Israel, IT industry in iots new form

This presentation covers the economic downturn, the it industry in Israel, IT industry in iots new form

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  1. Dr. Jimmy Schwarzkopf Research Fellow STKI jimmy@stki.info http://drjimmystki.blogspot.com/ 1 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 1 Do not remove source or attibution from any graphic or portion of graphic
  2. 2 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  3. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 3 Do not remove source or attibution from any graphic or portion of graphic
  4. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 4 Do not remove source or attibution from any graphic or portion of graphic
  5. YOU will get an email that allows you to login www.docsntalks.com Separate group per roundtable topic STKI Summit 2009 All “downloadable” Presentations will be www.docsntalks.com 5 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 5 Do not remove source or attibution from any graphic or portion of graphic
  6. Presentation Agenda 1 The past year an “educated guess” 2 How does it matter in IT 3 Major changes in IT technologies 6 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  7. Presentation Agenda 1 The past year an “educated guess” 2 How does it matter in IT 3 Major changes in IT technologies 7 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  8. • Evariste Galois (1811-1832) – accepted a duel with pistols (lack of wisdom) – spent the night before the duel in Three Kinds of Learning: writing down his mathematical testament: theory ofthat (academic) 1. Knowing transformation of roots in 2. Knowing how (applied) algebraic equations (creating science) 3. Knowing why (analytical) Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 8 Do not remove source or attibution from any graphic or portion of graphic
  9. • Evariste Galois (1811-1832) – accepted a duel with pistols (lack of wisdom) – spent the night before the duel in writing down his mathematical testament: theory of transformation of roots in algebraic equations (creating science) Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 9 Do not remove source or attibution from any graphic or portion of graphic
  10. Facts: financial meltdown in 5 steps Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 10 Do not remove source or attibution from any graphic or portion of graphic
  11. REAL ESTATE BUBBLES • Real estate “Bubble” all over the world – The belief that everybody should own a home – The belief that “real estate” value increases more than inflation. • SEPARATION of “loan agent” from “mortgage holder” • SUBPRIME MORTGAGES • SECURITIZATION OF MORTGAGES • as long as real estate prices kept rising and interest rates remained low. • Wall Street bundled mortgages into securities, bundled riskier loans (subprime mortgages) with better risk loans, decreasing risk, hard to assess the value of the loans. 11 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  12. China Inc: USA T-bills Republic • Trade with China turned out to be fair and balanced : ”They sold the USA poison toys and tainted food; the USA sold them fraudulent securities “ • FLOATING EXCHANGE RATE ?. rise in the value of YUAN, would slow the growth of exports; in terms of the dollar it had to be fixed, the government had to buy all dollars and give Yuans to the exporters. • Trade surpluses kept growing —acquired $2 trillion in Tbills • DEEP STRATEGY behind accumulation of low-yielding Tbill assets? • NO … • today they plea that someone will rescue them from the consequences of their own investment mistakes 12 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  13. Crime Inc. • UN estimates organized crime’s annual revenues are 3% of the world’s GDP, over $1 trillion – half in drug sales – the rest in multi-service activities : control of legal and illicit gambling establishments, arms trade, human smuggling, traffic in body organs, car theft, prostitution and racketeering • International Monetary Fund estimates that ILLICIT FUNDS worldwide amount to: – about $2 trillion – These funds usually move into unregulated institutions Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  14. Credit Default Swaps CREDIT DEFAULT SWAP (CDS or CDO) • like insurance, buyer pays a premium and, in return, receives a sum of money if events occur….. but : • the seller need not be a regulated entity; • the seller is not required to maintain any reserves to pay off buyers Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 14 Do not remove source or attibution from any graphic or portion of graphic
  15. The shadow banking system crashed taking the whole world economy down. Asset comparison: • Assets of regulated banking system – $10 trillion • Assets of shadow banking system: – Hedge funds ………….$ 2.5 trillion – Investment Firms ….$ 6.0 trillion – Other ……………..……..$ 4.0 trillion Anything that does something like a “bank”; Anything that has to be rescued in crises the way banks are; Should be regulated as a bank Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 15 Do not remove source or attibution from any graphic or portion of graphic
  16. Does somebody know what is going on?? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 16 Do not remove source or attibution from any graphic or portion of graphic
  17. Does somebody know what is going on?? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 17 Do not remove source or attibution from any graphic or portion of graphic
  18. Does somebody know what is going on?? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 18 Do not remove source or attibution from any graphic or portion of graphic
  19. ECONOPHYSICS • Rejects the traditional view of the economy as a fully transparent, rational system striving toward equilibrium. • Uses concepts and mathematical models that draw on complexity theory and statistical physics to understand economic, business and IT cycles . Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 19 Do not remove source or attibution from any graphic or portion of graphic
  20. EFBP or El Farol Bar Problem • people considering going to the bar were wondering whether or not it would be overcrowded that night………… • If everyone uses the same strategy for deciding whether or not to go to the bar the bar will be either full or empty each night. • EFBP cannot have a standard, generally agreed, “rational” solution because: – If everyone acts rationally. Then everyone will lose. And the pub will go out of business. • What society needs. …is for everyone to act irrationally, in accordance with whatever personal hunch they have at that time Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 20 Do not remove source or attibution from any graphic or portion of graphic
  21. QUANTS MATHEMATICAL MODELING OF HUMANITY • great undertaking of the 21st century • turned the world of content into math, and turned investment decisions into math Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 21 Do not remove source or attibution from any graphic or portion of graphic
  22. Prediction using mathematics The POWER and the S LAW phenomenon, seems to be applicable to a wide range of currently relevant economic and technological outcomes, including financial crises, industrial production, corporate bankruptcies it can even describe how industry structures evolve. 22 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 22 Do not remove source or attibution from any graphic or portion of graphic
  23. 23 23 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI www.KurzweilAI.net Do not remove source or attibution from any graphic or portion of graphic
  24. ‘Power curves’ • The power law phenomenon seems to be applicable to : – financial crises, – industrial production, – corporate bankruptcies – IT spending Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 24 Do not remove source or attibution from any graphic or portion of graphic
  25. “The only function of economic forecasting (STKI-IT forecasting included)* is to make astrology look respectable” John Kenneth Galbraith * my additions 25 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  26. The S-curve Flow of Economics The Real Financial Economy Economy (produces (moves value) capital) VALUE: production of goods Money/capital and services 26 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  27. Technologies that changed the way we do things Productivity changes per hour worked Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 27 Do not remove source or attibution from any graphic or portion of graphic
  28. 4 Professors and 1 School 1. Profs. Prescott & Kydland – REAL ECONOMY CYCLES influenced by the technology that converts inputs of capital and labor into output of goods. Technology creates value, changes productivity and produces cycles 2. Prof. Carlota Peres – Technological Cycles change “best business practices” – These cycles create explosive growth and change – Everything changes: the way we work, live, play – Technology influences financial markets 28 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 28 Do not remove source or attibution from any graphic or portion of graphic
  29. 3. Prof. THOMAS KUHN : • Real economy and technology advance in a peaceful way interrupted by violent change revolutions • PARADIGM SHIFT: A change in world view that calls everything you know into question and each world view is replaced by another 4. Prof. Joseph Shumpeter : • Innovation is the basis of technological change through “Creative Destruction” • Markets do not know how to do Price Adjustments for Technological Innovation • Produces also Financial Innovation (usually unregulated) that tend to eventually burst 29 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  30. Austrian-School of Economics government interventions: credit cycle theory • Governments (central banks) tend to "artificially" set interest rates too low for too long with wrong regulations – Low interest rates tend to stimulate borrowing – Leading to an unsustainable "monetary boom“ (FRENZY) – Financial institutions get caught in the frenzy – Shadow banking system starts to “ease” movement of money – "credit crunch" "recession" or "bust" – occurs when this frenzy cannot be sustained. 30 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  31. FRENZY: success, excess demand and GREED SUCCESSES ATTRACT of the new all available money towards entrepreneurs… the technological revolution …attracting even more Spectacular profits funds and preparing and growing capital gains the inevitable collapse!!! GREED: makes many unprofitable Excess demand projects appear viable… in the stock market ASSET INFLATION Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 31 Do not remove source or attibution from any graphic or portion of graphic
  32. FIVE TECHNOLOGICAL REVOLUTIONS IN 230 YEARS 32 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  33. S curves for Economic progress DRIVEN BY SUCCESSIVE TECHNOLOGICAL REVOLUTIONS Technological progress Time 40-60 years 33 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  34. SOCIAL REVOLT technology/economic cycles Austrian Degree Perez new INSTALLATION PERIOD Turning Point DEPLOYMENT PERIOD School of diffusion of the PARADIGM forecast Institutional recomposition and role shift technological revolution MATURITY “Creative destruction” SYNERGY Kuhn’s Defeat of the old “boom” financial capital “golden age” to maturity FRENZY growth and social benefits production capital ERUPTION Schumpeter’s ? Creative big-bang Next destruction big-bang Time 2O - 30 years ??? 2O - 30 years Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 34 Do not remove source or attibution from any graphic or portion of graphic
  35. The Age of Steel and Heavy The Age of Information Technology Engineering and Global Telecommunications The Age of Oil, Automobiles Bubble, Corporate scandals & 2008 Recession… and Mass Production 1894-1920 MATURITY 1960-74 SOCIAL UNREST MATURITY Depression 1930’s and WWII Social unrest mature industries CHINA Inc. 1943-59 1968-70 to Third World SYNERGY Financial Capital Financial Capital Post war Regulations Golden Age Regulations Break down Break down 1920-29 Production Capital 1987-2008 FRENZY FRENZY New 1971-87 regulations ERUPTION Internet 1908-1920 Roaring Transistors; computers; & Telecoms ERUPTION Twenties analog instruments; mania Oil and automobiles (USA) numerical control Mass production ICT Revolution Crash Bretton Woods 1971 and stagflation Starts with the 1929 Welfare State Intel Internet bubble 1908 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Marshall Plan Micro-processor 2008 Global meltdown Ford Model-T Do not remove source or attibution from any graphic or portion of graphic
  36. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 36 Do not remove source or attibution from any graphic or portion of graphic
  37. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  38. Israel in the Rankings Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 38 Do not remove source or attibution from any graphic or portion of graphic
  39. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 39 Do not remove source or attibution from any graphic or portion of graphic
  40. Amount of ‘big” IT (in Israel) instalations has decreased in the last 3 years 40 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 40 Do not remove source or attibution from any graphic or portion of graphic
  41. But…. How bad is it? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 41 Do not remove source or attibution from any graphic or portion of graphic
  42. How bad is this “recession” ? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 42 Do not remove source or attibution from any graphic or portion of graphic
  43. Job Losses in USA http://flowingdata.com/about-nathan/ Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 43 Do not remove source or attibution from any graphic or portion of graphic
  44. Business survey: Total business sector Data source: Bank of Israel Research Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 44 Do not remove source or attibution from any graphic or portion of graphic
  45. One of the lowest employment rates in OECD Israel 2006 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 45 Do not remove source or attibution from any graphic or portion of graphic
  46. But using another stat: percent fully employed adults --4% Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 46 Do not remove source or attibution from any graphic or portion of graphic
  47. low per capita ($ USD) IT expenditure IT spending in Israel is 2.71% of GDP European Union IT spending is 3.3% of GDP $ 600 USD < European Union per capita spending on IT amounts to 1100 € Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 47 * IT spending data by STKI Do not remove source or attibution from any graphic or portion of graphic
  48. GDP per hour worked (*5)… excellent indicator but data is usually 3 years behind IT Market change Change in GDP per hour worked (*5) 48 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 48 * IT spending data by STKI 48 Do not remove source or attibution from any graphic or portion of graphic
  49. But in real time: State of the Economy Index as an “indicator “ of IT investment State-of-the- IT market growth rate economy index is an indicator for examining the direction in which real economic activity is moving, in real time. (Bank of Israel) 1 2 Deviation from the trend is calculated via the Markov-switching model and enables the turning points in the business cycle to be identified at an early Deviation from the trend (*10) 1 2 stage. (Bank of Israel) All IT spending data by STKI 49 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 49 Do not remove source or attibution from any graphic or portion of graphic
  50. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 50 Do not remove source or attibution from any graphic or portion of graphic
  51. Glint of Hope for IT Spending in Second Half of 2009 The ChangeWave survey was conducted May 11-12 1,939 respondents involved with IT spending in their organization participated Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 51 Do not remove source or attibution from any graphic or portion of graphic
  52. Forecast: Goldman Sachs IT spending Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 52 Do not remove source or attibution from any graphic or portion of graphic
  53. Sales forecasts in USA Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 53 Do not remove source or attibution from any graphic or portion of graphic
  54. -”The world economy has avoided "utter catastrophe“ and industrialized countries could register growth this year”- May 25, 2009 (Reuters) Nobel Prize-economist Paul Krugman -”The global economy had come out of "free fall,“ offering hope of incipient recovery late this year”- May 22, 2009 (Reuters) — OECD -”The U.S. economy is stabilizing, but has a long way to go to recover from its current recession “- May 27, 2009 (Reuters) — Treasury Secretary Timothy Geithner -”The pace of contraction in world economic output appears to be easing and recovery could begin at the end of this year”- May 22, 2009 (Reuters) — OECD chief Angel Gurria -”China's economy has already bottomed out from the economic slowdown and entered a recovery phase ahead of other countries”- May 22, 2009 (Yomiuri Shimbun) Kwan Chi Hung, Senior Fellow of the Nomura Institute of Capital Markets Research Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 54 Do not remove source or attibution from any graphic or portion of graphic
  55. Don't get too excited about some recent brighter economic news It has been a cheerful couple of days for those starved of bright economic news. Hopeful statistics have been trickling in from many parts of the world. 1.-signs that might point towards the beginning of the end of the “Great Recession”. 2.-more sober analysis would suggest there is a long way to go before recovery sets in. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 55 Do not remove source or attibution from any graphic or portion of graphic
  56. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  57. IT market share (%) by INDUSTRY Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 57 Do not remove source or attibution from any graphic or portion of graphic
  58. Industries 2003-2009 All amounts in M$$USD K USD Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 58 Do not remove source or attibution from any graphic or portion of graphic
  59. How recessions affected IT vendors 59 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 59 Do not remove source or attibution from any graphic or portion of graphic
  60. Recession cost reductions Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 60 Do not remove source or attibution from any graphic or portion of graphic
  61. ‫מאז אוקטובר 8002 ועד מרץ 9002, הביקוש לעובדי הייטק ירד‬ ‫בכ-%43. בהשוואה למרץ 8002, הביקוש לעובדי הייטק במרץ‬ 36%-‫9002 היה נמוך בכ‬ Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 61 Do not remove source or attibution from any graphic or portion of graphic
  62. A little history………. 62 62 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 62 Do not remove source or attibution from any graphic or portion of graphic
  63. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  64. When is the right time to change?? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  65. Frogs forecast “earthquakes” Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  66. Post-recession: Create New Value Proposition ? 66 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  67. So what do we do in the “New Era” ? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 67 Do not remove source or attibution from any graphic or portion of graphic
  68. Business Process Innovation High Improve: SURVIVE Innovate : GROW Invent: CHANGE Business Performance Contribution to 2012 4Q 2009 2011 2010 2010 2009 Low Redo Existing Rethink Redefine Processes Business Business 68 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  69. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  70. 70 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  71. “Wealth in the new economy flows directly from innovation, not optimization” Kevin Kelly Wired Magazine 71 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  72. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  73. Inclusive Knowledge Society with Multiple Compensatory Safety Mechanisms 20th century: 21st century: Mass Production Economy Information & Service Economy DIVERSITY HOMOGENEITY HYPER SEGMENTED MARKETS: SEPARATION OF INTEGRATION OF MIND /HAND MIND AND HAND Knowledge Worker Blue collar White collar T education Work TIME and PLACE of WORK Revenue, profit Revenue, profit, ROY and ROI and RISK UNAVOIDABLE CAPACITY FOR ENVIRONMENTAL ENVIRONMENTAL DESTRUCTION PROTECTION Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 73 Do not remove source or attibution from any graphic or portion of graphic
  74. Can you see the difference?? • BEFORE – We sold “products” – We “productized” services • NOW – We will sell “services” – We will “servicerize” products Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  75. What will happen here? • pay for service and get free phone? • pay for phone and get free service? • pay for use of application and content and get free phone and service? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  76. Hyper Segmented Markets Long Tail Vs. Pareto Law 95.5% 76 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  77. Hyper Segmented Markets Long Tail Vs. Pareto Law 77 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  78. No balance between work and leisure (home) • Prof. Ragnar Frisch – time the most precious resource an individual has – very difficult to find balance (impossible) • Prof. Israel Kizner – A market with men unable to learn: in other words COMMODITY PEOPLE… needs a group of outsiders T PEOPLE who are able to perceive opportunities – This group of entrepreneurs…notice profit opportunities that exist because of the initial ignorance of the original market participants and that have persisted because of their inability to learn. 78 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 78 Do not remove source or attibution from any graphic or portion of graphic
  79. People as “commodities” Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  80. People as “commodities” Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  81. BLACK SWAN So the black swan doesn’t have feathers. The black swan is an event with three properties: 1. its probability is low, based on past knowledge. 2. although its probability is low, when it happens it has a massive impact. 3. people don’t see it coming before the fact, but after the fact, everybody saw it coming. So it’s prospectively unpredictable but retrospectively predictable. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  82. BLACK SWAN So the black swan doesn’t have feathers. The black swan is an event with three properties: 1. its probability is low, based on past knowledge. 2. although its probability is low, when it happens it has a massive impact. 3. people don’t see it coming before the fact, but after the fact, everybody saw it coming. So it’s prospectively unpredictable but retrospectively predictable. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  83. 21st century: affects firm performance: RISK and UNCERTAINTY Humans cannot understand uncertainty/risk Figure out how to measure RISK, manage it and hold managers accountable for it. Just as revenue growth, productivity and profit . 83 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  84. Enterprise Risk Management • According to any “new age” theory: – Management proposes OPTIONS to the CEO/Board and also shows the RISKS each of them carries. – Risk also changes with TIME – This process is called: “ENTERPRISE RISK MANAGEMENT” Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 84 Do not remove source or attibution from any graphic or portion of graphic
  85. Development of the risk management function 1990s 2000s 2010+ Focus on loss Focus on Focus on link to Focus on stakeholder performance & Aligned to business drivers prevention governance & profitability capital efficiency reporting Focus on Integrated alignment to Risk & Value Focus on risk objectives Management quantification Integrated Performance Management Institution-Wide Objectives-oriented Risk Management Risk Management Value-at-Risk Risk Monitoring & Reporting Risk Control Frameworks Integrated across risks / businesses Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  86. Enterprise Risk Management Customer Demand Shortfall Cost Overruns 24 Accounting Irregularities Competitive Pressure Management Issues M&A Integration Problems Supply Chain Issues 11 Product Issues 12 Foreign Macro-Economic Customer Pricing 7 7 7 6 Commodity Prices 6 Loss of Key Customer 4 3 Interest Rates 2 2 1 1 1 1 0 0 Strategic Operational Financial Hazard 58% 31% 6% 0% Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 86 Do not remove source or attibution from any graphic or portion of graphic
  87. Competition in services? Business Process Improvement New Business Model 87 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  88. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 88 Do not remove source or attibution from any graphic or portion of graphic
  89. CIOs will do BPI in 2009 IT of Competitor Value Business 1 ERP captured Process 1 Market by verticals No Real Competitive Sales difference in value Differentiation Prospect IT of Competitor Value Business ERP captured Process 2 2 by verticals Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 89 Do not remove source or attibution from any graphic or portion of graphic
  90. CIOs will do BPI in 2009 IT of Competitor Value Business 1 ERP captured Process 1 Market by Best verticals Projects Business No Real Competitive Sales difference in value Differentiation For Prospect IT of Practices Competitor 2 ERP Value captured by 2009/10 Business Process 2 verticals Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 90 Do not remove source or attibution from any graphic or portion of graphic
  91. Key challenge for new IT: Information moves where needed and not everywhere it can Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  92. 2009-11: BI and DATA MINING Data Warehouse MDM Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  93. Post-recession IT Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 93 Do not remove source or attibution from any graphic or portion of graphic
  94. The IT ecosystem: COST OF DELIVERING versus COST OF BUYING Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 94 * From SYMANTEC Do not remove source or attibution from any graphic or portion of graphic
  95. The IT ecosystem: COST OF DELIVERING versus COST OF BUYING Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 95 * From SYMANTEC Do not remove source or attibution from any graphic or portion of graphic
  96. The IT ecosystem: COST OF DELIVERING versus COST OF BUYING Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 96 * From SYMANTEC Do not remove source or attibution from any graphic or portion of graphic
  97. Factories get to nearly full utilization…. IT should also….. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 97 Do not remove source or attibution from any graphic or portion of graphic
  98. Datacenters today have 30% utilization 100s different Energy waste Software products 30% max in 25% Storage utilization Utilization x86 servers Ala-carte telecomm Hundreds of services Enterprise Processes 98 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 98 Do not remove source or attibution from any graphic or portion of graphic
  99. Managing the IT capability • Utilization is all about: – Virtualization – Automation – Standardization – Provisioning • Things to do : – ITIL, CoBIT, ISO 17799 (discipline & efficiency) – IT system performance management – Application Rationalization – AGILE project development Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 99 Do not remove source or attibution from any graphic or portion of graphic
  100. Standardized Equipment Economies Of Scale 100 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 100 Do not remove source or attibution from any graphic or portion of graphic
  101. Application Rationalization • An assessment of applications will show what applications have to canceled and which should remain. • If usage continues, then which have high HATMAA and which do not: – LOW HATMAA need special tools and re-training – HIGH HATMAA need tool for constant reinforcement Which applications are over supported and which under supported. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 101 Do not remove source or attibution from any graphic or portion of graphic
  102. Standardized Services Economies Of Scale “Application Image” is a sum of infrastructure services and software services needed to deliver an IT product Two types of IT services: 1. Infrastructure Services or Ensembles 2. Software Services or Mashups 102 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 102 Do not remove source or attibution from any graphic or portion of graphic
  103. Service-Oriented Infrastructures Infrastructure Services Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 103 Do not remove source or attibution from any graphic or portion of graphic
  104. Service-Oriented Architecture Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 104 Do not remove source or attibution from any graphic or portion of graphic
  105. WOA (mashups) vs SOA: evolution Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 105 Do not remove source or attibution from any graphic or portion of graphic
  106. The MASHUP “dream” MASHUPS (BPM) Process Manager MDM assembly engine Master data manager Enterprise Integration Bus Front- & Workflow eBusiness Financial Backoffice Management System System System System Legacy CRM SCM System System System Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 106 Do not remove source or attibution from any graphic or portion of graphic
  107. The new Service-Based IT 107 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  108. Traditional versus Cloud Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 108 Do not remove source or attibution from any graphic or portion of graphic
  109. Delegating the Power to the Cloud Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 109 Do not remove source or attibution from any graphic or portion of graphic
  110. A huge paradigm shift is underway Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 110 Do not remove source or attibution from any graphic or portion of graphic
  111. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  112. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 112 Do not remove source or attibution from any graphic or portion of graphic
  113. Cloud example CLOUD Services SQL MAIL Workflow Access Data Security Portal Control SaaS ERP CRM STKI drjimmys@gmail.com Raanana Yoni Mail CUTTER EDM jimmy@stki.com DRP* Hosted at XXX New York Karen Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  114. Post-recession: Create New Value Proposition ? 114 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  115. It’s Time for Every Organization to Ask: “Which Path Will We Choose?” Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  116. Computing Platform Lifecycle Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 116 Do not remove source or attibution from any graphic or portion of graphic
  117. Platform vs. Open vs. Reliable • Obama staffers could not work: a "generation" gap in technology • Looks like the Bush administration, like many organizations worldwide, used old reliable Microsoft Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  118. end of commodity hardware • HP/Dell typically pay $60 to $150 for Vista • Can use the older Windows XP for roughly $15 for netbooks (until 10/2009) • HP/Dell make only about $20 in profits on a $400 netbook • Windows 7 : pricing from $50 to $350 (Windows 7 Home Premium $200 ) Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 118 Do not remove source or attibution from any graphic or portion of graphic
  119. end of commodity hardware • HP/Dell typically pay $60 to $150 for Vista • Can use the older Windows XP for roughly $15 for netbooks (until 10/2009) • HP/Dell make only about $20 in profits on a $400 netbook • Windows 7 : pricing from $50 to $350 (Windows 7 Home Premium $200 ) Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 119 Do not remove source or attibution from any graphic or portion of graphic
  120. 1980 -2010 Platform Lifecycle Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 120 Do not remove source or attibution from any graphic or portion of graphic
  121. Innovation will come from? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 121 Do not remove source or attibution from any graphic or portion of graphic
  122. Industry in a Box Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 122 Do not remove source or attibution from any graphic or portion of graphic
  123. Other ecosystems: blackberry Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 123 Do not remove source or attibution from any graphic or portion of graphic
  124. iPhone Ecosystem: 40 million devices and 50,000 applications Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 124 Do not remove source or attibution from any graphic or portion of graphic
  125. Ecosystem: Information access & analysis Exploding volumes of 1. Tools for finding and digital information (video, audio, images, text, making sense of the transactional data, etc) information. 2. Tools for data cleansing. 3. Tools for minimizing duplication. 4. Tools for storage management. 5. Tools for backup management. 125 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  126. Industry in a Box Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 126 Do not remove source or attibution from any graphic or portion of graphic
  127. Industry in a Box Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 127 Do not remove source or attibution from any graphic or portion of graphic
  128. Industry in a Box Companies Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 128 Do not remove source or attibution from any graphic or portion of graphic
  129. What will they do ????? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 129 Do not remove source or attibution from any graphic or portion of graphic
  130. Software: M&As expected Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 130 Do not remove source or attibution from any graphic or portion of graphic
  131. 66% of HP is hardware (most commodity) 80% of IBM is focused on software and services Which is the right “NEW” IT vendor business model ??????? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 131 Do not remove source or attibution from any graphic or portion of graphic
  132. When is the right time to change?? Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  133. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  134. Transformation of IT: CIO priorities for 2009 1. Cost reduction 9. Storage virtualization 2. DRP/BCP 10. Desktop virtualization 3. Server virtualization 11. Data De-duplication 4. Server consolidation 12. Governance, risk 5. BI/DW management and 6. Security compliance 7. CRM 13. Self-service 8. WAN Optimization/ 14. Mainframe application optimization acceleration 15. Open Source 134 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  135. The new Economy Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  136. METAweb: web 3.0 Connecting “INTELLIGENCE” 136 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  137. New “search engines” Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 137 Do not remove source or attibution from any graphic or portion of graphic
  138. Post-recession: Create New Value Proposition ? 138 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  139. In a battered economy, free goods and services online are more attractive than ever. METAweb New So how can the suppliers make Business Model a business model out of nothing? 139 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  140. WEB 1.0: Media companies put content in the web and push it to users . Low content variety Content production is slow and expensive Professional authors Managers Create content based on what they Hand-manage publishing think people want businesses Push! Push! Users = consumers Users consume professionally produced content 140 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  141. WEB 2.0: New platforms allow users to generate content themselves User generated content High content variety Blogs, videos, photos, music etc. dramatically increases, while technical quality goes down. Authoring platforms enable everyone to publish! Web2.0 managers are hand-managing the platforms Professional authors can still publish, but are competing with – everyone! Users = authors users generate content 141 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  142. WEB 2.0 in business Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 142 Do not remove source or attibution from any graphic or portion of graphic
  143. Croudsourcing: Markets 2.0 • Traditional market 1.0 model: Traditional Market 1.0 Model central organization serving many individuals – Large-scale impersonal markets – Low preference expression • Market 2.0 model: flexible dynamic Market 2.0 Models capital allocation systems that provide democratic, more immediate, low-cost, affinity-directed capital Many: One Peer finance – Benefits to individuals: freedom, One: Many Affinity purchasing convenience, preferences articulation – Benefits to groups: virtual aggregation of group power to conduct transactions Many: Many Prediction markets Peer philanthropy Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 143 Do not remove source or attibution from any graphic or portion of graphic
  144. Books you should read: crowdsourcing 144 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 144 Do not remove source or attibution from any graphic or portion of graphic
  145. METAweb = web3.0 user generated (mind) business A simple idea: a technology so effective that every mind can make a living of its creativity, instantly. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  146. METAweb: Business platforms empower everyone to become a (media) entrepreneur Business tools Full scale media management tools for everyone User generated content Blogs, videos, photos, music etc. User generated business Premium content, advertising, e-commerce Authoring platforms Business platforms enable everyone to publish! Everyone can manage Publish Build business Users = entrepreneurs users generate business! 146 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  147. So what are the differences ? web1.0 web2.0 METAweb Creation Delivery Management 147 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  148. When will be stop “imitating paper”? The Austin 7 was produced from 1922 through to 1939 by the Austin Motor Company. The Karl Benz Patent Motorwagen (or motorcar), built in 1885, is widely regarded as the first automobile, that is, a vehicle designed to be propelled by a motor. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  149. What do I use ???? • No longer need a • Blogs: memory • IT related – Google • Economics – Yahoo • Musical taste: – Wikipedia – ITunes – Twitter • Books and others: – Amazon • Personal Information • Social Capital – Smartphone tells me – LinkedIn about birthdays, phones, – groups addresses – Xing – Facebook 149 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 149 Do not remove source or attibution from any graphic or portion of graphic
  150. Study by Prof. Granovetter shows that weak links are better than strong • Strong Links: More motivation to help you, since they know you better •Weak Links : Likely less overlap with leads you can easily get elsewhere Most job referrals come through those who we see rarely: old school friends, former co- workers, etc. Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 150 Do not remove source or attibution from any graphic or portion of graphic
  151. Lifecycle of a “social network” Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 151 Do not remove source or attibution from any graphic or portion of graphic
  152. All Rights Reserved 2008@STKI Moshav Bnei 152 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 152 Do not remove source or attibution from any graphic or portion of graphic
  153. What do you use ? Social Technographics™ Josh Bernoff, co- author of Groundswell 153 Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI Do not remove source or attibution from any graphic or portion of graphic
  154. Post-meltdown REVOLUTION 4The real, long-term change is just beginning The revolution may have to be felt, and anyone thinking about our started in a garage in California economic future should consider this: • access to information is a democratizing but it has already crossed forceText here Your Your Text here every border • makes it inexpensive and easy to collaborate and share information. moving as freely • even the smallest companies can now have around the globe as a cloud as big a presence online as a multinational corporation Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 154 Do not remove source or attibution from any graphic or portion of graphic
  155. Thank you Dr. Jimmy Schwarzkopf http://drjimmystki.blogspot.com/ jimmy@stki.info Dr. Jimmy Schwarzkopf’s work Copyright 2009©STKI 155 Do not remove source or attibution from any graphic or portion of graphic

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