informatics driven business - cbi 2014, geneva,...

Informatics Driven Business: Exploring New Frontiers Created by

Information Technology

IEEE CBI 2014 Keynote

Kwei-Jay Lin University of California, Irvine

July 2014

© 2014 Kwei-Jay Lin

Outline

w  Business Informatics (BI): Broadly defined/redefined w  BI as a disruptive innovation for business w  BI research on IT-enabled business trend w  WuKong as an example frontier BI project w  BI technology structure and components

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A Brief History on IEEE CBI

w  We have come a long way: –  1st WECWIS (1999) è 5th CEC (2003) è 15th CBI (2013), 16th CBI (2014)

–  USA è China è Europe –  Web-based Information Systems è E-Commerce

è Business Informatics

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What is Business Informatics? (Christian Huemer, Keynote @CEC 2012)

w  “Business informatics is a scientific discipline targeting information processes and related phenomena in a socio-economical context.

w  “BI seeks for methodological approaches to describe, explain, predict, and design information and communication models, architectures, and systems for the business environment.

w  “… BI research … considers a real-world business context in developing new theories and concepts that enable new practical applications.”

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Business Driven Informatics vs. Informatics Driven Business

“… enable new practical applications?” 1.  Using informatics to improve old business

–  Data collection, analytics, decision –  Business process design and management

2.  Using informatics to build new business –  Informatics provides new market and opportunities –  Business is re-engineered to capture the opportunities

created by informatics

Who’s driving whom? B

I

© 2014 Kwei-Jay Lin 6

Innovation

w  In business world, in order to build a new business, we look for “innovation”.

w  Innovation is the number one buzzword that every business and government leader likes to talk about.

“Innovation occurs at the intersection of invention and insight. It's about the application of invention - the fusion of new developments and new approaches to solve problems.”

– Sam Palmisano, IBM CEO (2002-2011)


Types of Innovation

The research on Innovation by Prof. Clayton Christensen has defined (Harvard Business Review, Jan. 1995) two types of innovations:

w  Sustaining Innovations –  New and better technology to help leading firms consolidate their

hold on a market –  E.g. new car models, annual Victoria’s Secret shows

w  Disruptive Innovations –  They typically offer lower functionality in terms of customer's

requirements and are of little use or interest to current customers –  E.g. electric motorcycles, K-mart fashions

Bower, J. L., and C. M. Christensen. "Disruptive Technologies: Catching the Wave." Harvard Business Review 73, no. 1 (January–February 1995): 43–53.


Original vs. Disruptive Technology


Types of Disruptive Innovations

Clayton Christensen has also defined two types of disruptive innovation: w  Low-End Disruptive Innovation (LE)

–  Providing a low cost alternative –  Low-end disruptive innovation disrupts pricing. –  E.g. products from street vendors

w  New-Market Disruptive Innovation (NM) –  Creating a new group of users –  New-market disruptive innovation disrupts markets segmentation. –  E.g. cellular phones


Driving Forces Behind DT

For a disruptive technology to win, it needs 3C’s: –  Cost (must be significantly cheaper) –  Convenience (have vs. have-not, i.e. alternative) –  Compatibility (with higher end technology)

Cost

Compatibility

Convenience


Sustaining Factors Behind DT

For a disruptive technology to be a lasting business, it needs 3P’s: –  Profitable (must make enough money) –  Productive (must be truly useful to users) –  Preemptive (incompatible with incumbent business goals)

Profitable

Productive

Preemptive


Examples of LE Disruptive Technology

1.  PC (vs. mainframes and workstations) w  Originally a toy device, not a qualified computing device w  With enough volume to sustain growth and improvement w  Eventually replaces the incumbent technologies

2.  Shuttle Airlines (vs. full-service airlines) w  Originally a small market, with a low profit margin w  With enough volume to slowly expand city coverage w  Now all major airlines have shuttle operations

3.  Discount Brokers (vs. full-service brokers) 4.  Discount Department Stores (vs. big stores)


Is Internet LE or NM Disruptive?

w  LE: –  Companies can adopt Internet in the new infrastructure

using ERP, BPM, Cloud –  Companies have used it for CRM, e-Commerce

w  NM: –  Many Internet-based companies (Amazon, Expedia,

Airbnb) are thriving –  Google has soared from $26 billion @IPO to now more

than $394 billion –  Facebook has a market cap more than $175 billion –  Alibaba is going for one of the largest IPO ($200 billion). –  It’s not a bubble!


How about Business Informatics?

w  Is BI disruptive?

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Benefit of Business Informatics

w  Using BI, business will be more agile, better managed, more informed, better connected, lower cost, more profitable, …

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Question about Business Informatics

w  Is BI Disruptive? w  If BI is disruptive, is it Low-End or New-Market

disruptive?

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BI: Low End and New Market

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Business Needs to Change! - McKinsey Report on IT-enabled Business Trends

w  “Progress in information technology is transformative.

w  “Understanding how these capabilities are evolving is critically important for companies.

w  “The IT-enabled business trends provide fresh opportunities for companies to create new sources of value — new products, new ways of touching customers, and new tools for improving operating efficiency.

w  “They also have the potential to shift profit pools, disrupt markets and commercial relationships, undermine existing market leaders, and shift value to consumers or among producers.”

McKinsey Report: http://www.mckinsey.com/insights/high_tech_telecoms_internet/ten_it-enabled_business_trends_for_the_decade_ahead

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McKinsey’s 2013 List of 10 IT-Enabled Business Trends

1.  The social matrix 2.  The Internet of All Things 3.  Big data, advanced analytics 4.  Realizing anything as a service 5.  Automation of knowledge work 6.  Integrated digital/physical experiences 7.  Me+free+ease 8.  The e-volution of commerce 9.  The next three billion digital citizens 10.  Transformation of government, health care, and education

http://www.mckinsey.com/insights/high_tech_telecoms_internet/ten_it-enabled_business_trends_for_the_decade_ahead

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Social Matrix

w  “Leaders should use social tools to improve internal collaboration, an area of immense opportunity. Organization structures can be completely reimagined due to the ease of collaborating across geographic or organizational boundaries.

w  “They can reimagine the process of solving difficult problems and to collaborate with the brightest minds outside their organizations.

w  “In the information age, leaders of consumer-facing companies in particular should use co-creation both to solve problems and engage their customers.”

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Social Matrix w  “The ability to add social capabilities to any digitally enabled

communication or transaction can make social technology pervasive. “Social” is a feature that can be embedded in products, markets, business systems, entertainment programming, and public institutions.

w  Social networks allow us to “like” things and could soon evolve to mark the things we “want,” potentially signaling greater commercial intent.

w  Virtually any economic activity that is carried out electronically can now be social.

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Big Data

European Data Forum (EDF) 2013, 2014 w  Siemens: Big data in industrial applications w  SAP: In-Memory Computing - The need for speed on big data w  Statoil - We need to understand our data w  Telefonica: Big Data - Big Opportunities - Big Risks? And what

about Europe? w  The Value of Big Data: From Data-Driven Enterprises to a

Data-driven Economy w  The Data Economy: an opportunity for Greece

w  http://2013.data-forum.eu/program/keynotes w  http://2014.data-forum.eu/program/keynotes

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Big Data and AI

w  Big data can enable augmentation and automation of some knowledge work, especially the type that requires applying patterns from a large amount of data.

w  Artificial intelligence (AI) research includes the development of software that can reason, gather knowledge, plan intelligently, learn, communicate, perceive and manipulate objects.

w  AI allows users of big data to automate and enhance complex descriptive and predictive analytical tasks that, when performed by humans, would be extremely labor intensive and time consuming.

w  Thus, unleashing AI on big data can have a significant impact on the role data plays in deciding how we work, how we travel and how we conduct business.

Source: Big Data: Artificial Intelligence, European Union, September 2013.

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Google and AI

w  There is increased emphasis on machine learning and robotics from companies like Google, which has been acquiring organizations in this space.

–  End of of 2013, DNNresearch and seven robotics companies. –  December 2013, Boston Dynamics –  January 2014, UK startup DeepMind ($400 million).

w  Estimations value the AI market in 2013 at €700 million, and expect it to grow over the coming years to more than€27 billion by 2015.

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Internet of All Things (IoT)

w  “More than 12 billion devices, including computers and smartphones, are connected to the Internet, expected to increase in the next decade, from 50 billion to 1 trillion devices.”

w  The sensors and actuators fitted to “things” to connect to the Internet such as RFID and MEMS has seen the cost falling. –  The cost of a RFID tag fell by 40% in the 18 months to April 2013.

One tag now costs about 10 US cents. –  The price of MEMS, e.g. accelerometers, gyroscopes and

pressure sensors, has fallen by 80-90% in the past 5 years. –  WiFi routers used to cost around US$200, now US$10. –  Another push for IoT is the mobile Internet, epitomized by

smartphones and tablet devices everywhere.

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http://www.wired.com/2013/05/spime-watch-internet-of-things-landscape-from-techcrunch/


http://blog.appinions.com/2014/07/08/internet-of-things-influence-study/


Using IoT for BI

w  Businesses with the biggest impact from IoT are related to manufacturing, building infrastructure, health care, and supply chains by monitoring and optimizing activities and assets at a very granular level.

w  However, any activity that “touches” multiple things or people across the value chain is a candidate for re-engineering with the help of networked sensors and actuators.

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IoT is About Services

w  The explosion of IoT applications provides many opportunities for businesses to improve performance and create new service offerings.

w  IoT creates new ways of managing people and assets, collecting data, and optimizing systems.

w  Companies can combine IoT capabilities with advanced analytics to create innovative new products and services.

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Service Vision: Big Brother Business

With innovation in informatics, businesses can serve their customers in the following ways: w  Passive: users using social networks can decide to

participate or not

w  Proactive: users using IoT are always monitored and constantly participating

w  Persuasive: users using IoT are “urged” consciously or unconsciously to engage in activities –  Exercise, health products, shopping

w  Preventive: users are not “allowed” to do undesirable things –  Driver-less car, security, parental discretion

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WuKong Self-configurable

IoT Platform

Context Data

Context Engine

Prediction Engine

Data Streams

Anticipatory Reasoning

Control/Action

The WuKong Project: Configurable and Proactive IoT


“Context” Can Be Defined By:

w  Where am I? What’s around me? –  Location: mapping and descriptions

w  When is it happening? –  Time: calendar and commitments

w  Who am I with? –  Participants: identity and relationship

w  What are we doing? –  Activity: process and current stage

w  Why are we doing this? –  Goals: intention and interest

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Service Definition, Design and Delivery Context

Personal Needs and Business Model

Technology

WuKong: Intelligent Care Services

Proactive Computing

Configurable, Robust, Secure & Private IoT

Context

Needs

Data

Energy HarvestingCloud Servers

Aggregator

Intelligent Wireless Video Sensor Nodes

Aggregator

Sensor

Coding

Analysis

Data Transceiver

Business Model

Services Composition


Business Informatics Technology

Storefront

Supply Chain

IT

Value Models

Customer Care

Platform Technology

System Technology

Management Technology

BZ Informatics Technology Components

Cloud, IoT, Social Network, e-Commerce

BP, EA, EE, Data Analytics, Security

Optimization, Transformation, Prediction, Delivery

Profit, Market, Growth, Innovation, Service, Needs

Infrastructure

Business

Automation

Enabler


Conclusion

w  Innovation has become the driving force of economy. –  Just look at the market caps of Google, Apple, Facebook, etc.

w  BI can be used as both low-end and new-market disruptive innovation.

w  BI research should cover the push and pull models between business and informatics.

w  There are many new, potentially hugely profitable, frontiers for the application of new BI technologies.


McKinsey’s List of Disruptive Technologies by 2025

1.  Mobile Internet 2.  Automation of knowledge work 3.  The Internet of Things 4.  Cloud technology 5.  Advanced robotics 6.  Autonomous and near-autonomous vehicles 7.  Next-generation genomics 8.  Energy storage 9.  3D printing 10.  Advanced materials 11.  Advanced oil and gas exploration and recovery 12.  Renewable energy http://www.mckinsey.com/insights/business_technology/disruptive_technologies

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