Part three of a continuing series on the changing analytical ecosystems
By Mark P. Dangelo
www.Innovative-Relevance.com
With any new “miracle” idea or innovation, history and experience has taught us to approach it with a fair amount of skepticism. Foundationally, we often retort, “So what and who cares?” However, when highly respected media icons such as the Financial Times, start to consistently publish objective articles on a topic, skepticism for many turns into potentially creating competitive differentiation (see Cloud Computing Sidebar).
Our Heads are Firmly in “The Clouds”
The terminology and capabilities of cloud computing or “The Cloud,” has exploded in the last three years. For some, the expectations will far exceed reality. However, driven by continual technical advances innovatively supported by people and processes, “The Cloud” approaches have found harmonization with profit starved investors and forward thinking strategists.
Equally, the widespread euphoria has morphed into fragmented realities for corporate decision makers seeking robust operating functionality supported by rapid implementation cycles. That is, they have found quick successes, but their larger future is still unclear. In general, the principles of cloud computing are no longer buried in trade journals, presented in an obscure standards brief, or merely debated by technologists over beers.
As a matter of fact, cloud computing, underpinned by new measurements and data integration demands, is increasingly appearing in corporate agendas with an estimated annual spend in the billions and growing at an annual compounded rate of 25% and 40%.
At a time when organizations are questioning everything and dealing with iterative cost cutting programs, these articles and growing implementation successes are beginning to establish a foundation for lasting action.
Yet, we need to ask some very fundamental questions before we redefine the 2010 budgets and open the checkbook. For example, what is the roadmap, and more importantly what does “The Cloud” pragmatically offer? How can quality, “decision intelligence” be developed? What analytical measurements, driven by cloud technology, are now important?
You see, “The Cloud” is as important operationally as it is strategically if we adopt more than a “one-off” line of attack.
A Changing Reality for Decision Making
Analogous to the aftermath of the Great San Francisco Earthquake of 1906, we can foresee lasting corporate and social strife as a result of the prior supply chain practices and decisions encompassing origination, servicing, and securitization processes.
The permanent solutions and regulatory changes will be years in the making. Nonetheless, what is becoming apparent is the fundamental root causes. Our current public flaws architecturally resided with the flawed reasoning models used to confirm co-dependent mortgage decisions.
Yet, with finance and mortgage groups (FMG’s) spending over $14 billion (out of $80 billion globally) on decision driven business intelligence, dashboards, scorecards, planning, infrastructure, and applications, what will the new costs and benefits be when using cloud computing solutions? Sometimes, when dealing with highly complex challenges, historical references can teach us how to avoid a reoccurring fate of excessive spending.
In reviewing a 2007 report by the Economist Intelligence Unit (EIU, “In Search of Clarity, Unraveling the Complexities of Executive Decision Making”), we are able to witness a time capsule of priorities, methods, and challenges internalized prior to the most severe recession in nearly 80 years.
In hindsight, there are several understated findings, within the EIU assessment, which stand out:
1) “Poor data leads to poor decisions,”
2) “Challenges only increase as companies grow,”
3) “Too much art, not enough science?,” and
4) “Decision support tools need to be easier to use.”
Fast-forward two plus years, and we now see how the lack of relevant quantitative criteria fostered one of the greatest wealth destabilizations in three generations. The indicators were all “green,” but the decisioning results wound up to be very, very ”red.”
Layering and Leveraging KPI’s
It was a myopic focus on granular key performance indicators (KPI’s,) without a holistic examination of interrelationships and efficacy, which produced “false positives.” Or stated differently, the use of inelastic, static measurements and monitoring methods to predict future performance was just a disaster waiting to happen. Future decisioning cannot be defined merely by projecting forward historical indicators (i.e., backward focused gauges as a measure of future performance and consumer behaviors). It is akin to driving 65 mph while constantly being focused on the actions in the rearview mirror.
As we know, this was the preferred BAU for analytical predictions before the escalation of cloud computing, and the multi-faceted integration demands implied with the deployment of these new, virtual data sources. Moreover, we now are confronted with challenges of cascading economics and public policies that result in the demand for a series of risk adjusted analytics needed for decision making, compliance, and operational performance. So, what now?
“The Cloud” adoption, coupled with the crystal clear failures of the past, represents a waterfall opportunity to redefine and rebuild how decision making for the next decade should be done. The opportunity is with not just technology, but the integration and compartmentalization of multi-polar sources into intelligent and self correcting decision approaches.
The future of analytics begins to mirror a federated model of interconnected KPI’s that not only assesses past performance, but provides adaptability of forward-looking indicators that are properly vetted and cross-matched against multi-polar requirements. After all, analytics is more than data – it must deliver intelligence.
Sound impossible? Too Complex? Too futuristic? Think again. What I’m representing in this thumbnail began in earnest back in 2007-2008 with their seeds planted nearly a decade prior.
Analyzing and Anticipating Tomorrow
As the siloed technology discussions of SaaS, SOA, virtualization, and web services converge and confront fluid business pressures, standard operating processes and decision making breaks down and becomes dysfunctional. Business leaders struggle with innovation and consumer behaviors without sufficient analytics, intelligence, and predictability on “what’s next?”
Moreover, changing market conditions have created voids in reporting and compliance systems, internal skill sets needed for adaptation and the budgets needed to implement change. There is a need for clarity to avoid layers of cascading hazards, but uncertainty and risks have created institutionalized frustrations. In essence, we need to unwind the legacy, but be mindful of the disruptions and chaos that can be introduced.
In several of my prior 2009 articles, we examined the foundational strategies of analytics. In this article, we introduced the new variable of cloud computing and touched on the benefits and challenges it creates for severely strained IT departments and business personnel. However, what is the answer? What are others doing? What are the implications of adoption or redefinition?
To assess and begin anticipating viable solutions for the use of analytics, we invite you to participate in a brief survey. The survey can be found at www.Innovative-Relevance.com/analyticsurvey/. We anticipate releasing select findings of “Using Analytics and Creating Intelligence in ‘The Cloud’” industry report, starting in October 2009 in subsequent MBA articles.
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In closing, there is a strange reader reaction that happens when a writer looks into the future and attempts to ascertain strategy – go figure, not everyone agrees on how to read the aggregated indictors for positive and profitable results. Earlier in 2009, when I holistically examined analytics and the likely impacts on operations and markets, there were many doubters. Now after another $5 plus billion in new M&A actions, perhaps those ideas don’t look so crazy after all?
But, whether you agree or disagree, we cannot deny our predicaments both domestically and globally. As printed in the Financial Times on August 13, 2009, “Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, hit 360,149, an increase of 7 per cent from June and 32 per cent on the year. One in every 355 US homes received a foreclosure notice in July, according to the online marketplace for foreclosure properties.”
There is a need for change and how we responsibly and ethically define “success.” New and relevant analytics will help us determine our performance and models of operations – before others make those decisions for us.