What every executive needs to know about IT

WHAT EVERY EXECUTIVE NEEDS TO KNOW ABOUT IT Executive MBA Class May 20, 2009

WHAT EVERY EXECUTIVE NEEDS TO KNOW ABOUT IT  IT is a commodity  IT should be customer driven  Consolidate IT organizations  Plan to spend 4-8% of gross revenues on IT  Design a “to-be” set of technical standards  Business units should own the business process  IT should have technical standards.  See past IT staff pushing “technical religion”

WHAT EVERY EXECUTIVE NEEDS TO KNOW ABOUT IT  Digital natives offensively share information  We are living in exponential times  Product development is becoming simulation based  Computers are starting to perform “knowledge discovery”  Your corporate and your competitor’s data is online.  Information security must be rethought Good IT is about maintaining the fundamentals while “living in the exponent”. If you do, IT does matter!

(source: CNET News)

If Facebook were a country, It would be the 5th-largest in the world More than 100 million users log on to Facebook at least once each day More than two-thirds of Facebook users are outside of college The fastest growing demographic is those 35 years old and older Average user has 120 friends on the site More than 3.5 billion minutes are spent on Facebook each day Facebook is 5 years old

of time online spent on social networks (source: The Guardian)

NOT JUST GEEKS!

The revolution has gone global.

Culture Youth are growing up

1946-1960 1961-1975 Analog Technology Boomers Generation X Analog Technologies Telephone & TV 1976-1990 1991-2005 Generation Y Generation E Digital Technologies New Technologies

“This generation thinks differently, behaves differently and is already starting to demand, aggressively, big changes in the way society, business and individuals interact. Is your workplace prepared for the changes?” – CIO Insight Magazine Gen Y - Social Model Boomers - Industrial Model Offensive Defensive Information Information Sharing Sharing

Social Networking Sites Got fired. “Facebook Fired” became a meme Intern posted this to facebook … Is this what you imagine?

60% of people use social software today for business purposes.

Social networks today are explicit – and a pain

In the future, networks will be automatically discovered. Photo from Facebook Phone numbers discovered in email signatures Current status from Facebook / Twitter Network of people we both know (derived by email) Network of people she knows that I don’t know

THE INTERSECTION OF CLEAN ENERGY AND ECONOMIC GROWTH IS THE DEFINING CHALLENGE OF OUR GENERATION

MEANWHILE OUR NEED FOR ENERGY IS AFFECTING GLOBAL CLIMATE 30 Actual emissions: CDIAC CO2 emissions (GtC y-1) 450ppm stabilisation 25 Climate forcing 650ppm stabilisation is both stronger A1FI 20 A1B and sooner A1T A2 15 B1 than expected 10 B2 5 1850 1900 1950 2000 2050 2100

WE NEED FASTER COMPUTERS TO ACCELERATE OUR UNDERSTANDING OF GLOBAL CLIMATE CHANGE…

Cray 1 (1976) 136,000,000 Floating Point Operations Per Second

University of Tennessee’s “Kracken” supercomputer. World’s fastest academic computer. Cray XT5 (2009) 1,000,000,000,000,000 Floating Point Operations Per Second

Cray XT5 (2009) 1,600,000,000,000,000 FLOPS Cray 1 (1976) 136,000,000 FLOPS

We are just at the beginning of the computing revolution…

WHAT IS THE UT SUPERCOMPUTER USED FOR? The Stuff of Dreams  Limitless clean energy  Quantified impacts of atmospheric CO2 New insights into Climate code for global,  U.S. cellulose based fuel cellulose-to-ethanol dynamic CO2 exploration conversion rather than oil  Drug delivery systems that release medicine precisely where needed Simulations of fusion First 3-D simulation of reactor flame including chemistry, temperature, and flow

SIMULATION DRIVES BUSINESS COMPETITIVENESS Image courtesy of Pratt & Whitney  Reducing design costs  Breakthrough insights for through virtual prototyping manufacturers  Procter & Gamble uses HPC to  Reducing physical tests for model production of Pringles® and faster time to market Pampers®

We were taught to share these discoveries by publishing a paper or filing a patent after all the work was done. Paper (n): The full record that supports that claim should be available for detailed examination and critique

Meanwhile we communicate electronically ... Corporate email communications Green = Internal Yellow = External

to networks of people...

What if we, curate the conversation... … not the objects

Is the openness of the next generation going to change the scientific process by allowing computers to mine the “human conversation”?

Scientific Method Knowledge Discovery Proving a hypothesis. Finding the unknown correlations.

The usual response to these ideas?

Scientists like…

…control “To be termed scientific, a method of inquiry must be based on gathering observable, empirical and measurable evidence subject to specific principles of reasoning.” - Wikipedia

They don’t like…

Windows Live

Mega Vendors are providing “free” services so they can jointly see your data.

MATH IS GETTING BETTER AT MACHINE LEARNING (EXTRACT KNOWLEDGE FROM DATA) 1980s: Pair wise document similarity (document clustering) D1 w11 , w12 , ..., w1 t sim ( Doc a , Doc b ) (( Count ( word 1 _ inDoc a )) * ( Count ( word 1 _ inDoc b )) D2 w 21 , w 22 , ..., w 2 t (( Count ( word 2 _ inDoc a )) _* ( Count (Word 2 _ inDoc b )) t (( Count ( word _ inDoc a )) _* ( Count (Word _ inDoc b )) n n sim ( D 1 , D 2 ) w1 i w2i i 1 1990s: Latent Semantic Analysis (what does the word mean?) terms 1 2 3 4 5 6 7 8 9 really just matrix multiplication: term vector (query) x strength matrix = doc vector 1 2 3 4 5 6 7 documents

WE ARE MAKING IT EASIER FOR THE MACHINE TO LEARN 1980s: HTML • Uses tags for formatting (e.g., “italic”). • Describes the layout. 1990s: XML • Uses tags for structure and semantics (e.g., “this is the address and contains the house number, street, and postcode”)

GOOGLE FLU • Web search terms can be indicators of flu activity • Google can estimate flu activity per state two weeks faster than traditional systems (US Center for Disease Control)

DISCOVER YOUR COMPETITORS SUPPLY CHAIN. By analyzing Custom And Border Protection public Bill of Lading, analysts were able to determine Apple’s supply chain and release date for iPhone3G

SENTIMENT ANALYSIS FOR STOCK MARKET PREDICTION  Brokerage houses are using computers to “micro- trade” stocks based on sentiment analysis of blog sphere. Figure from Glance, Hurst, Nigam, Siegler, Stockton, & Tomokiyo, KDD’05

MY CURRENT MARKET STRATEGY (YTD I AM UP 15%)  I use zillow.com analysis of MLS to assess US housing trends. Wash DC National Avg  S&P housing index does the same thing, but releases the news ~6 weeks after Zillow does.  If there is a difference in the sentiment on the street (on the day before the housing index is released) and what I see on Zillow I will log/short NYSE:URE  Correlation index between S&P and Zillow is 95%

THE MORE WE SHARE THE SMARTER IT GETS. GoogleDocs searched the web. Googledocs determined the commonality of what I was entering and automatically Next generation versions will be completed the rest of the list. able to tell you what correlations exist between two seemingly unrelated attributes

WHAT IS NEXT…  Every photo is moving to the cloud  Facial recognition is emerging as a mainstream capability  Within the next ten years you will be able to search for a face in a context like:  “Show me a picture of bob in a car”  Prepare for the skeleton in your closet to return.  We are going to need to redefine what we expect to be private.

Current approach to securing enterprise information in the cloud

NEVER UNDERESTIMATE THE MOTIVATION, PATIENCE, AND CREATIVITY OF AN ADVERSARY!  They play strength to weakness  They develop surprising partners  They have no rules  They see offense as a systems challenge  They attack against a defense that is naïve, arrogant, unbalanced and fragmented We can work a lot harder at what we are doing and not make much of a difference!

WHAT MOTIVATES A HACKER? Spy Thief Trespasser Vandal Author

The line between personal and business is increasingly blurred. “You want to contact me in the evening, that is fine. We are going to use my home computer, IP phone, gmail, not yours” Business needs greater agility to Technology innovation is driven survive. by consumer products “I can’t wait for IT to deliver that” “I can do this at home, why not in the office?” “The seed of revolution is repression” Woodrow T. Wilson Digital Natives (younger workers) Consumer products cost have new expectations less. “You want me to do what? You must be joking, I’ll “How much? I could have 50 skype ust use my Groove / Flikr / MySpace / del.icio.us for accounts for the cost of one of those old collaboration. Next time IM me.” ISDN phones” Human nature is to either avoid online services or impose more security controls

Time to rethink history information security policies

IN ORDER TO LEAD THE REVOLUTION INSTEAD OF REPRESSING IT WE MUST…. FOCUS ON SECURING THE DATA, NOT THE DEVICE

TYPICAL POLICY EXPRESSION… …LACKS ENFORCEMENT TOOLS

ENTERPRISE DIGITAL RIGHTS MANAGEMENT (EDRM) AKA: DOCUMENT LEVEL SECURITY 1. Author receives a client licensor certificate the first time they rights- protect information. 2. Author defines a set of usage rights and rules for their file; Application creates a “publishing EDRM Server license” and encrypts the file. 3. Author distributes file. 1 4 4. Recipient clicks file to open, the application calls to the EDRM server which validates the user and issues a “use license.” 2 3 5 5. Application renders file and Information Author The Recipient enforces rights. EDRM: This is not the same as DRM (iTunes / RIAA)

WHAT EDRM DOES NOT PROTECT FROM:

WHAT EVERY EXECUTIVE NEEDS TO KNOW ABOUT IT  Digital natives offensively share information  We are living in exponential times  Product development is becoming simulation based  Computers are starting to perform “knowledge discovery”  Your corporate and competitors data is online.  Information security must be rethought You can’t teach “good IT”, it is about “living in the exponent”. IT does matter!

SUMMARY  IT does matter, but you need to change your expectations.  IT can be THE strategic differentiator for a modern business.  The problem is IT is changing so quickly you can’t “teach it” you have to jump in and “live it”.  The only thing you can “teach” is to be offensive with your information, think way outside the box and be ready for a major cultural change to show “raw humanity” and what people are really thinking. Yes, this is uncomfortable. But if you are scared I did my job. Don’t think it is something you can slow down. Get on board and make some money by embracing the change.

“It is not the strongest of the species that survive, nor the most intelligent, but the one most adaptable to change.” - Charles Darwin

Time for a change.

What every executive needs to know about IT

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