You are on page 1of 136

Tech Trends 2016

Innovating in the digital era


Deloitte Consulting LLPs Technology Consulting practice is dedicated to helping
our clients build tomorrow by solving todays complex business problems involving
strategy, procurement, design, delivery, and assurance of technology solutions. Our
service areas include analytics and information management, delivery, cyber risk
services, and technical strategy and architecture, as well as the spectrum of digital
strategy, design, and development services offered by Deloitte Digital. Learn more
about our Technology Consulting practice on www.deloitte.com.
Contents

Introduction|2

Right-speed IT|4

Augmented and virtual reality go to work|20

Internet of Things: From sensing to doing|34

Reimagining core systems|48

Autonomic platforms|64

Blockchain: Democratized trust|80

Industrialized analytics|96

Social impact of exponential technologies|112

Authors, contributors, and special thanks|126


Tech Trends 2016: Innovating in the digital era

Introduction

In a business climate driven by powerful digital forces, disruption, and rapid-fire innovation,
every company is now a technology company. Whereas technology was traditionally confined
largely to operations and execution, its digital expression now informs all aspects of business, from
ideation to delivery. We witness daily how it drives product design, upends venerable business
models, and rewires competition.
The ascendance of exponential technologies to a place of strategic primacy has occurred within
a turbulent context. Globalization is driving borderless growth across established and emerging
markets. Barriers to entry are being lowered, if not demolished. In this climate, new entrants
focused on niches, specific functions, and overlooked domains can make meaningful impacts on a
global stage traditionally dominated by the worlds biggest players.
At the same time, customers are demanding evolved methods of engagement that are
personalized, contextual, and tailored for individual usability and utility. Likewise, the very nature
of employment is evolving as new skill sets become bargaining chips. Talent scarcity complicates
efforts to rethink operating and delivery models across functions and domains.
To help make sense of it all, we present Deloittes seventh Technology Trends report, our annual
in-depth examination of eight trends that are likely to disrupt businesses in the next 1824 months.
From blockchain and augmented reality to the Internet of Things and the socially responsible
applications of technology, these trends embody the macro forces fueling innovation: digital,
analytics, cloud, and the changing role of IT within the enterprise. We balance our coverage of each
trend by also considering the implications of cyber risk in the areas of security, privacy, regulatory
mandates, and compliance. We intentionally examine cyber risk not as a separate topic, but as an
enterprise discipline embedded in the planning, design, and realization of each individual trend.
The theme of this years report is innovating in the digital era, which is inspired by the
opportunities todays CIOsacross industries, geographies, and company sizeshave to shape
tomorrow for every corner of their organizations by transforming business as usual. These leaders
are in a rare position to imagine a future, and then harness innovation to build it responsibly from
the realities of today.

2
Introduction

Tech Trends features perspectives from client executives, industry and academic luminaries,
and our global network of Deloitte professionals, all exploring major trends that are helping
organizations innovate in the digital era. We also examine the roadmaps and investment priorities
of start-ups, venture capitalists, and leading technology vendors.
As you read the following chapters, we challenge you to think beyond the what of digital
innovationthe shiny objects, applications, and capabilitiesto the so whathow you will
harness emerging trends, innovation, and disruption to create real business value. Viewing the
horizon through this paradigm, recognize that the precision to which weve all become accustomed
may no longer be a given; in the age of digital innovation, we are exploring largely uncharted
territory. Moreover, any digital transformation journey should also address the more practical
realities of todayreimagining core systems, industrializing analytics capabilities, building
autonomic platformswhich are by no means trivial.
Over the next 1824 months, the only constant may be the specter of constant change. Amid this
turmoil, organizations that can confidently and purposefully harness technology trends will find
great opportunities to refocus, to revitalize, or even to inspire. Think beyond incremental adoption
patterns. Look not only for ways to do familiar things differently, but also to do fundamentally
different things. Launch new processes, products, and services, and seek out new ways to compete.
No matter what the scope, the time for you to act is now. Build tomorrow, starting today.

Bill Briggs Janet Foutty Craig Hodgetts


Chief technology officer Chief executive officer and US national managing
Deloitte Consulting LLP chairman directorTechnology
wbriggs@deloitte.com Deloitte Consulting LLP Deloitte Consulting LLP
Twitter: @wbdthree jfoutty@deloitte.com chodgetts@deloitte.com
Twitter: @janetfoutty Twitter: @craig_hodgetts

3
Right-speed IT

Right-speed IT
Living between black and white

Many IT organizations are progressing beyond the traditional single-speed


delivery models that work well for high-torque enterprise operations but
not for high-speed innovation. While some do have needs at both ends of
the speed spectrum, they often find that bridging the gap between the two
is difficult. A growing number of CIOs are building capabilities that link the
two edge points or operate along the continuum, with targeted investments
in process, technology, and talent to reengineer the business of IT, enabling
delivery at the right speed for the business.

A long-standing phenomenon has garnered is often framed between waterfall and agile
much mindshare in recent years: the essential delivery methods, as if agile techniques were
tension between stability and agility in IT. On the mythical savior of digital innovation and
one side are the predictability and controls growth, yet inappropriate for larger enterprise-
necessary to manage risk while delivering delivery models. For most organizations,
large-scale enterprise IT with reliability, speeding up the development process is only
scalability, security, and other ilities.1 On part of the equation to accelerate time to value.
the other is the push to drive discovery and Leading organizations are building on the
experimentation around new features, tools, simple two-speed IT mindset and recognizing
and technologies. Popular memes have they must be able to support a continuum of
oversimplified the conflict between these speeds in order to dial in the right approach
extremes, suggesting a bifurcated, either/or for a specific initiative, with the underlying
proposition, while offering little guidance on disciplines, capabilities, platforms, and talents
managing the unavoidable gap between the to appropriately support the actual breadth
two priorities. of business needs. The speed of IT should be
There are also several unfortunate as fast as possible, balancing business value,
misconceptions linked to the bimodal theory. risks, and technical feasibility. Critically, the
First, theres the fallacy that the pivot point is approach must handle the governance around
solely around speed, trading high torque for the appropriate speed as well as the inevitable
scale versus high speed for responsiveness. collision between teams and efforts running
This paints traditional enterprise delivery at different speeds. This transmission turns out
with the plodding caricature that plagues to be the essential ingredient missing in other
many IT departments. Second, the debate constructs. It helps identify the appropriate

5
Tech Trends 2016: Innovating in the digital era

treatment for a given initiative, assists in showdown. Delivery is an important


finding solutions, and navigates what controls ingredient, but upstream capabilities are
are required. actually just as important when codifying
Right-speed IT must address three broad right-speed IT.
categories: procedural, architectural, and Consider how building reach and rigor
organizational. Lets move beyond rhetoric and in the following IT capabilities may help
dig into each area. organizations reach the right speed for the job
at hand:
Procedure beyond process Finance management: Budgeting,
Many IT transformation prescriptions prioritization, allocations, and accounting
portray delivery methodology as the hero of treatments all need more flexibility than
the story. For this reason, bimodal is often annual appropriations, rigid planning
misinterpreted as a waterfall-versus-agile cycles, and depreciation schedules do.

Figure 1. Right-speed IT operating model dashboard


Finding a balance between high-torque enterprise IT and high-speed innovation IT can allow companies to optimize
technology operations. CIOs can calibrate the interrelated core capabilities below to find a point along the spectrum
between the two models that meets the needs of a given program, project, or product.

techn ology
disciplines
design
e int
t ur eg
ec ra
it
ch

ti
on
ar

program
buy bimodal

build use project portfolio single speed multimodal

investment strategy delivery management delivery model

strategist hybrid
ecosystem partnering
organization design

operator catalyst talent renewal waterfall agile

it priorities workforce management development methodology

strategy people process


Making decisions about technology Defining culture, responsibilities, Determining how software
investments and new sources of roles, and approval workflows, developers and IT operations
business based on the marketplace, coordinating management methods, teams integrate, collaborate,
internal development capacity, and optimizing employee skill base automate, and deliver solutions
and financial and human capital and productivity through training through standards, processes,
commitment levels and recruiting and methodologies

6
Right-speed IT

Failure to address the differences in given project or product. Offer the team
time-consuming finance management guardrails as they combine governance,
processes as part of an overall right- controls, delivery model, enabling
speeding initiative is a missed opportunity. processes, and stage gates to balance
Addressing these differences can increase business impact, technical vision, and risk.
efficiencies upstream in finance and
downstream in IT processes. Stakeholder communications and
expectation management: Dont hold
Procurement and sourcing: Similarly, back for a large periodic release. Instead,
multi-month RFP processes, drawn-out increase the number of releases or user
vendor assessments, and sourcing strategies previews to demonstrate progress. Gamify
focused on cost takeout are sometimes testing and reward members of the user
appropriate. But they also are not the community for providing feedback. Even
only game in town. Codify paths to adopt if these releases are not destined to be put
open-source solutions such as platforms, into production immediately, providing
libraries, and code-bases that could users and stakeholders with evidence of
jump-start efforts across the continuum. tangible progress can make the process
Consider alternative talent pools, from seem quicker.
crowdsourcing to code-a-thons to academia
to externships. The underlying building DevOps: Try to determine the granularity
blocks need to be available so you can of control points, formality of reviews, and
shift gears to accommodate the needs of the appropriate level of automation that
individual initiatives. will be needed for the effort. Right-speed
IT efforts often coincide with investments
Vendor and contract management: in autonomic platforms 2 that can help
Revisit nondisclosures, intellectual move more of ITs underlying workload
property protection clauses, and to labor-free, seamless tasks (or at least
traditional segmentation of provider introduce automation to eliminate waste
tiers. Consider creating new categories in the end-to-end lifecycle). The scope
of engagement that can be deployed could include environment management,
against efforts beyond simple fixed-scope requirements management, testing
and traditional service-level agreements. automation (regression and beyond),
Encourage value-based arrangements and configuration, build, and release
where vendors are compensated based management. Importantly, that also
on outcomes, potentially along with includes the ability to roll back deployed
co-investment scenarios involving solutions from production.
joint solution development and go-to-
market arrangements beyond traditional
supplier/vendor or contractor/consultant
Architecture is destiny
relationships. Revisit nondisclosures, Right-speed IT should also be informed
intellectual property protection clauses, and by overarching principles and programs that
traditional segmentation of provider tiers form the underpinnings of responsive, fungible
that may unnecessarily constrain potential IT capabilities. These are, after all, the same
partnering arrangements. principles and programs that will also inform
future architectures and applications. As such,
Solution shaping: Beyond determining it is important to create an engineering culture
the recommended end-to-end architecture, in IT and a product management mind-set:
ascertain the appropriate speed for a Both can help IT leaders balance tradeoffs

7
Tech Trends 2016: Innovating in the digital era

of opposing constraints and find the best Organizational realities


solutions for problems at hand.3 Specifically,
The third right-speed category involves
consider focusing on three main domains:
talent and organizational constructs. As
design, master data and integration, and
sometimes happens, getting the procedural and
building to run.
architectural aspects right might be the easy
Design as a discipline:4 Emphasize user part. Indeed, its often the people side that can
engagement and a persona-based approach be more unpredictable and harder to influence.
to project delivery. Regardless of speed or Changing ITs reputation as a static, sluggish
mode, solutions should approach problems organization to one that delivers solutions
from the user down, respecting but not dynamically and at the right speed requires a
being constrained by systems and data purposeful focus on four key areas:
implications. Detailed behavior studies,
Mind-set/culture: Author Nilofer Merchant
journey maps, user personas, storyboards,
wrote, Culture drives innovation and
wireframes, prototypes, and other
whatever else you are trying to accomplish
techniques for creating intuitive, simple
within a companyinnovation, execution,
designs may not be appropriate for every
whatever its going to be. And that then
initiative. But by placing some techniques
drives results . . . Its the people, the
and associated artifacts into your arsenal,
leadership, and the ideas that are ultimately
usability will be part of the DNA of
driving the numbers and the results.5 When
future projects.
it comes to successfully increasing the
speed of the processes your IT organization
Master data and integration: Individual
uses to deliver solutions, instilling an
projects should be expected to reuse
engineering culture that emphasizes both
underlying services and data. Likewise,
accountability and flexibility is critical. Your
designing new capabilities specifically
employees mind-sets will drive them to
for eventual reuse can help expand the
learn new ways of working and delivering
library of APIs and extend the reach of data
business value.
management efforts. Though expectations
will vary based on the size and mode of
Leadership: Culture starts with leaders,
the project, adherence to existing data
and it is shaped by your leaders actions and
and interface standards should be a
decisions. In right-speeding IT, the leaders
universal mandate.
will define and reinforce the mind-set
needed to make the right decisions about
Building to run: Embed tools geared
where on the right-speeding continuum
toward ongoing monitoring and
a specific initiative should fall. Leaders will
maintenance of solutions. Instrumentation,
mentor their people to work differently
management consoles and script, and
and more flexibly to both provide the
hooks for in-line monitoring of system and
right project controls and deliver faster.
higher-level business performance should
If you dont have leaders who understand
be considered. Coverage and granularity of
the right-speeding strategy and goals,
controls need to be able to scale up or down
and if your leaders are not driving and
depending on the mode of delivery. But a
supporting your people, it is unlikely you
playbook of potential options, supported by
will be successful in changing how IT
shared libraries and code snippets, will help
delivers solutions.
make adoption systematic.
Talent: Recognize that different
personalities and skill sets will be better

8
Right-speed IT

suited for different modes of right- workers are no strangers to highly matrixed
speed IT. Blanket assumptions around environments. Orienting evaluations
generational dispositions are not enough and formal feedback around project
here. Rather, this situation requires a objectives can help remove confusion
deeper understanding of your talent pool and align everyone working together
each individuals capabilities, passions, around common goals. Use departmental
aspirations, work styles, and attitudes. assignments to build scale and common
Rotational assignments that transition standards, methods, and tools. At the
workers through project and delivery types same time, eliminate barriers that could
can help broaden employee skill sets. But prevent individuals from making the best
recognize that some of your people will decisions, taking action immediately, and
be best served by being given relatively driving project goals. Another component
static assignments. Thats OK, assuming of right-speed IT involves holding daily
there is enough demand for those types stand-up or triage meetings in which
of assignments in your overall portfolio. department and domain leads converge not
Develop learning and development merely to hear pending design decisions
programs to help acclimate the workforce or project issues, but to take immediate
around right-speed IT nuances, as well action on them. This cadence alone can
as to nurture new capability building and help eliminate bottlenecks and alleviate
knowledge transfer across the organization. employee frustration.
Consider partnering with outside entities
that have experience and expertise in Incentives: What gets measured gets
aspirational delivery modes. For example, done. Rethink metrics and measurements
veteran Scrum masters or UX engineers are across the board, from project tracking
invaluable as you shift to agile development to individual performance management.
or user-centric design patterns. Create explicit goals that teams can
rally behind, ideally linked to product
Organizational structure: With their accomplishments or business outcomes
reporting models and career incentives versus tactical behaviors that address empty
split between the P&Ls and their jobs, IT organizational constructs.

9
Tech Trends 2016: Innovating in the digital era

Lessons from the front lines


Thinking is believing Working within the new model, teams
comprising existing and new talent along
During HPs historic 2015 split into two
with a functional experttypically a system
companies, Neeraj Tolmare led the end-to-
architect who knows a specific spaceare
end separation of more than 1,500 of the
assigned to work in pockets of fast-paced
companys global applications. To complete
development throughout the enterprise. In
this gargantuan task within an accelerated six-
an effort to find the right mix of skills and
month time frame, Tolmares teams worked at
abilities for each type of project and to expose
different speeds, following guidelines tailored
developers to different methods and tactics, the
to their individual tasks. In this model, some
company also regularly moves talent around,
teams completed tasks in a matter of hours,
assigning individuals to work on various
while others worked for days, using a variety
teams. Sometimes team members struggle
of techniques and approaches, to accomplish
with the idea that a project is no longer strictly
more complex goals. It took teams a couple
waterfall or agile, but a combination of the
of months to become comfortable working at
two, says Tolmare, but over time were seeing
varying speeds, but eventually most did, he
them adjust their thinking, and work very
says. They all understood there would be no
differently than they have in the past.6
Day 2 unless we all got to Day 1.
Tolmare is now driving efforts to transform
the digital imprint of HP Inc.the post- Collaborating at the right speed
division entity that sells PCs and printers. For integrated technology solutions
Part of this broad-ranging initiative involves provider CDW, finding the right speed for its
reinventing the way the company develops IT organization within a dynamic environment
technology products. Our existing model is more than a trendit is a tested strategy for
was too rigid; it could take us six months to success in a sector defined by near-constant
engineer and launch a solution, says Tolmare, disruption. CDW has deployed a model in
who serves as HP Inc.s vice president and head which IT collaborates with the business to
of Digital Transformation & IT Applications, develop solutions that meet its customers
Global eCommerce, P&L Management. We evolving needswith each team working at
realized that if technologists are going to a tempo that fits each projects specific goals
have a seat at the table and participate fully in and circumstances. Some teams sprint, others
strategic decision-making, we would need to walk at a measured pace, but each is guided by
create a flexible, fluid product development a solution framework defined not by the speed
model that would empower them to respond to of the delivery model, but by approaches to
the dynamic needs of the business. architecture, security, controls, deployment,
The development model Tolmare and his and associated metrics.
colleagues are creating is designed to infuse This collaborative development strategy
new thinking into development teams has not only helped CDW turn technology
accustomed to working primarily within into a competitive advantage; it has informed
standard systems development lifecycle ITs approach to meeting its mission, says
(SDLC) models. To support the model, the Jon Stevens, CDWs senior vice president
company is reskilling existing talent by helping of operations and chief information officer.
them to grow and diversify their individual For IT to be truly agile and responsive, our
skillsets, as well as to become familiar with development teams tailor their efforts to meet
agile techniques.

10
Right-speed IT

the distinctive needs of each business group. In always thinking about how technology can
this environment, one size does not fit all. drive innovation and competitive advantage.7
For example, CDWs e-commerce group
has organized its teams into product groups Super-regional transformation
that work in a way that reflects its approach to
Since its founding in 1921, State Auto
business: iterative, innovative, and fast-moving.
Insurance Companies has embraced the
Each team includes a business leader, product
independent agency system as the best way
managers, and a technology leader who,
to meet policyholder needs. To this day,
together, continually build upon successes or
independent agents within the regional
fail fast and move on to the next idea. Team
underwriters network strive to provide highly
members work closely with the DevOps
personalized service to customers who, in
team, which shepherds new products and
many instances, are friends and neighbors.8
enhancements through security and regression
That legacy is actively being transformed by
testing, and then onto a release platform.
technology. The company is building a more
Meanwhile, other parts of the CDW IT
competitive cost structure, launching analytics-
organization approach development differently.
informed products, shifting to digital customer
Teams supporting finance, for example, follow
engagement, and revamping the sales process.
a different methodology and governance
According to State Auto CIO Greg Tacchetti,
model that allow them to move at an
Theres not a single thing were not changing.
appropriate pace for maintaining compliance
Importantly, Tacchetti is charged not only
within systems that must meet specific
with transforming IT, but also with developing
regulatory requirements.
overall business strategy. To this end, he is
Regardless of approach, all IT efforts share
working with product teams to define the
core business value drivers: revenue, lower
product roadmap and make sure they have the
SG&A, higher gross profit, great customer
right architecture to support it.
experience, and co-worker engagement. And
IT is being transformed along several
regardless of the development methodology
dimensions. A modular architecture
or processes followed, IT engages with other
standardizes interfaces and data definitions.
groupsbusiness, audit, and security, for
Tacchetti is aligning programs to reduce
exampleso stakeholders are in lockstep
redundant effort and divergent investments
and there are no surprises. These groups are
across business lines. Hes also carving out
not looked at as separate departments with
sandboxes, tools, and platforms to allow the
process-laden boxes to check. Instead, they are
business to experiment and spin up new
embedded across the lifecyclefrom ideation
environments to vet ideasscaling those that
through ongoing operations.
show promise, and decommissioning those
The techniques CDWs IT organization
that do not.
deploys to help the company achieve results
Also, as part of the larger transformation
continually evolve as new technologies emerge
effort, Tacchetti is crafting a long-term plan
and market dynamics shift. Yet amid this
to build a multi-modal IT organization.
change, the philosophy underpinning CDWs
His vision is for an IT organization that
collaborative, flexible approach to IT remains
can work across the enterprise, not only as
constant. Its ultimately about the partnerships
technologists, but also as business strategists
you build with the business and with your
who can create the systems architecture
external partners, Stevens says. Not too long
and revamped business processes needed to
ago the question was, How do you get a seat at
increase efficiencies, lower costs of system
the table? Now, its about working as a team,
ownership, and make State Autos offerings

11
Tech Trends 2016: Innovating in the digital era

more profitable. A key part of that change is a fivefold increase in the number of release
a focus on design and usabilitycreating an opportunities year over yeara staggering
emphasis on end-user experience and journey achievement, albeit one Diaz and his team
maps. This focus extends throughout ITs value view as still not good enough.
chain: program design, product design, project As part of the continuous delivery program,
design, development, and post-go-live. Case in the company consolidated its fragmented
point: State Auto is in the midst of a platform approaches to agile development. Six quarters
transformation effort that is scheduled to go ago, 62 percent of projects were delivered using
live later this year. Its scope is much more than traditional waterfall methodologies. As of the
replacing the core policy engine; the platform last fiscal quarter, over 82 percent of projects
will serve as the backbone for new products were developed using agile; the remainder
and capabilities, including customer self- were developed using hybrid techniques
service and an overhauled CSR experience. that condense and accelerate the traditional
Tacchetti envisions the day when 12-month enterprise application development cycle.
projects are a thing of the past. A year Weve learned some great lessons, and we
from now, I want to be talking about rapid have made great strides shifting our culture
experimentation and agile techniques. Weve to a mindset of innovation, visualization, and
started conversations about weekly releases, he rapid feedback. Faster IT requires a culture
says. With its focus on speed and strategy, State of increased accountability to quality while
Autos IT organization is on a journey to help focusing on developer productivity with
drive and realize the business agendanot just technology and automation, says Diaz.
execute on defined requirements.9 Cisco continues to invest in architecture
and is working to extend its cloud footprint
Architecture-led, by digitizing its foundational platforms for
source control, build, review, and deployment.
services everything The company is also investing heavily to
Ciscos reputation for technology weave APIs into the network, and to deploy
innovation applies to its internal IT containers and middleware components
organization, which is on an ambitious to abstract, encapsulate, and execute on its
transformation journey to digitize IT and overall vision.
drive faster delivery of business outcomes. Importantly, Cisco has created a continuous
At the same time, Cisco IT must continue delivery model on this digital foundation.
to improve operational excellence, security, Right-speed IT is about applying the amount
compliance, resiliency, and quality. Clearly, of rigor and diligence that is appropriate for
this is an ambitious effort that defies simple each business application, says Diaz. For
transformation models. example, high levels of rigor are needed when
For Guillermo Diaz, Jr., senior vice working with ERP, whereas less complex
president and CIO of Cisco Systems, Theres applications may not require the same level
only one right speed for IT: faster and more of intensity. Weve implemented the digital
secure. To meet Diazs expectation on this architecture that makes it possible for us to
front, Cisco has transformed key capabilities, move at the speed of the business while also
beginning with release management. working appropriately with each business
Historically, system changes were limited to applications and ensuring security, says Diaz.
four major and twelve smaller releases per year. Diaz reports that since embarking on this
By creating a continuous delivery mind-set, transformation journey, Ciscos IT organization
adopting agile methodology, and automating has seen a 97 percent increase in project
the development process, Cisco has realized velocity, a 92 percent improvement in quality,

12
Right-speed IT

and, notably, a 79 percent increase in timely the cost of ensuring our business is secure, he
closure of security vulnerabilities. We wanted says. Our ultimate vision is to enable business
to drive agility, simplicity, and speed, but not at value faster.10

13
Tech Trends 2016: Innovating in the digital era

MY TAKE
MARCY KLEVORN
Vice president and CIO
Ford Motor Company

Ford Motor Company is building on its 112-year-old available for an hour every day for a triage meeting.
legacy, driving new offerings in connectivity, mobility, During this hour, project teams can raise problems
autonomous vehicles, and the customer experience, and work through them with the management team.
along with big data and analytics. With technology- Increasingly, senior business leaders take part in these
based innovation fueling investments in new products, proceedings as well. Whats more, team interaction
services, and customer engagement models, IT is and collaboration are replacing traditional siloed
evolving to embrace emerging technologies that could mind-sets and formal processes for issue tracking
potentially disrupt the way we design and manufacture and remediation.
products or understand and engage customers.

That means investing in our 11,000-person IT ...No one-size-fits-all; your


organization to better support the kind of nimble,
accelerated product exploration and development we companys culture influences the
need to lead in our current disruptive technological speed and reach of change.
climate. We recognized early on that a continuum of
delivery models was needed, so we simplified the story
to think about IT delivery in two modes. Enterprise It is important not to underestimate the impact all of
mode covers mature core businesses where risk needs this can have on traditional IT talent models. Will you
to be fiercely managedthe processes for how we risk losing long-time IT employees? Maybe. Will you
design, manufacture, and service our vehicles. The find it challenging to recruit individuals with needed
emerging mode (Mode 2) encompasses areas where development skills in a market where competition for
we are learning, experimenting, and iterating with talent is heating up? Probably. Given the scale and
new technologies. complexity of Fords IT ecosystem, these two prospects
occasionally keep me awake at night. But were making
We determine the right mode of delivery by risk, not progress. Weve made key external hires and entered
speed. We strive to deliver every project as quickly as is into new partnerships in order to acquire specific skills
appropriate, following the same overarching process. If and experiences. We have also made a commitment to
projects meet certain conditions, they can take happy reskill our employees, creating a program called Power
pathsan accelerated process that abbreviates certain Up that offers opportunities to learn new skills and
requirements and controls. Our modes dont translate recharge existing ones. We rotate our people between
into waterfall versus agile delineations. While Mode 2 emerging and enterprise projectswe cant have two
projects largely use agile, they often have interfaces different classes of citizens in IT, and we are very careful
into core systems, which requires taking a hybrid not to disenfranchise our base.
approach. And more than half of enterprise-mode
projects are now delivered with agile. Finally, I believe IT works best when driven by core
principles. At Ford, vertically focused development
Although our transformation journey is unfolding, we sometimes had the unintended effect of emphasizing
can share a few lessons weve learned so far. First, no corporate needswhich is inconsistent with our
one-size-fits-all; your companys culture influences companys guiding principle of placing customers
the speed and reach of change. Regardless of mode, at the center of everything we do. In our bimodal
we depend on team members to exercise their approach, development is horizontal, driven foremost
own judgment. We have a program affectionately by the impact any new product will have on the
called You Drive in which we empower team customer. It is an ambitious vision, but we are learning
members to speak out and share ideas for improving and making progress each day.
project outcomes.

We are also constantly looking for new ways of


working. For example, our senior IT managers are

14
Right-speed IT

CYBER IMPLICATIONS
A sophisticated understanding of risk can prove IT to establish operational baselines. Then, from
invaluable as CIOs build new IT delivery models and a cybersecurity standpoint, determine what
assign optimum development speeds for new initiatives. normal looks like for user behavior, server loads,
With detailed knowledge of security, privacy, risk, and data exchange, access, and external connectivity.
compliance, CIOs can weave these disciplines into Understanding what normal is can help IT identify
the fabric of all development and operations. This elevated risk situations when they occur and
is a lofty goal, even in the most cyber-focused of react accordingly.
IT organizations. But it can be achieved by making
secure by design a part of any broader right-speed Resilient: Is your environment safe enough to restore
IT transformation. normal operations following an attack? If the answer
is no, you have a problem. If the answer is I
Cybersecurity cant just be focused on compliance dont know, you have a bigger problem. Proactively
and executed using dated controls and one-size-fits- create plans for recovering from various attack
all stage gates. Right-speed IT requires scenarios, test them often, and be sure to
agility up, down, and across project incorporate lessons learned back into
lifecyclesfrom ideation to your operational plans to further
budgeting and from planning to accelerate detection and reduce
delivery. Security and privacy impact in the future.
concerns can undermine any
initiative, particularly those According to Deloittes 2015
focused on new business global CIO survey, only 18
opportunities or built on percent of CIOs surveyed
emerging technologies. see cybersecurity as a top
But cybersecurity does business priority. Yet, by
not have to impede the same token, 58 percent
innovation. Indeed, leading of respondents said the
organizations are involving investments they are making
progressive cyber professionals now in cybersecurity and data
throughout the development privacy will have a significant
process to evolve designs and impact on the business within
approaches in ways that help the next two years.11 The CIOs
balance functionality, time to value, and challenge is to convince the entire
underlying security, privacy, regulatory, and enterprisefrom IT, to the business, and then
compliance needs. At the same time, right-speed rippling out to the C-suitethat secure by design
concepts can be applied to cybersecurity efforts by should be treated by the business as a business priority.
introducing shared platforms or tools that make it
possible to leverage, self-assess, escalate, and certify This forward-looking approach to the cyber risk agenda
against protocols and control points. can be a fantastic component of the CIOs legacy. The
board and the C-suite have cyber implications on their
IT organizations can transition to a secure-by-design minds. Progressively building cybersecurity responses
mind-set in three stages: into reconstituted IT delivery and operating models
should be a part of how right-speed IT initiatives
Secure: Start with tactical steps to create highly are positioned.
virtualized, templated stacks. This establishes a sound,
When it comes to cybersecurity, there is no going back
standards-based way to build cybersecurity into the
to normal, no matter how much we wish we could.
fabric of the IT environment, with infrastructure
The question becomes how organizations can best
automatically inheriting patches, configurations, and
understand risk, control for it to the extent possible,
cyber-solution elements.
and then prepare for and respond to the inevitable.
Vigilant: Build a cohesive monitoring/threat
intelligence platform that makes it possible for

15
Tech Trends 2016: Innovating in the digital era

Where do you start?


Pieces of right-speed IT are likely already incremental enhancements to existing
in play in many organizations. Once there, the offerings. To foster a culture of innovation,
trick becomes bundling individual initiatives consider creating a cadence of product
into a more prescriptive whole, and evolving roadmap briefings with established vendor
in-flight bimodal programs to include nuanced partners, as well as discovery sessions with
capabilities across more than a dualistic venture capital firms, start-ups, incubators,
spectrum. Consider how the following lessons and local academic hubs. Incent teams
learned by early adopters might help you on to explore emerging technologies and
both fronts: file patents. All of these steps can make
Balance sheet of IT: Do you have visibility innovating a key requirement of each
into the various assets that make up persons job.
IT? What about programs and projects Marketing: IT is historically awful at
underway and the backlog of business self-promotion. Right-speed IT can help
needs? Beyond basic inventories, is there CIOs shift their organizations mind-set
strategic dispositioning of ITs balance sheet about IT and how it engages the other
according to value, committed resources, groups. To help stakeholders both inside
and risk? Do you have a service catalog that and outside of IT embrace this perspective,
delineates the capabilities being delivered consider launching a full-fledged marketing
throughout ITwhat they are, key campaign to bolster ITs reputation and
measurements, and how to engage? These drive awareness of the changes afoot.
and other foundational elements of any IT Implement dashboards and provide full
department are critical to the success of any transparency into not only the service
right-speed IT initiative. The balance sheet catalog, but also ITs progress addressing
and service-catalog constructs provide a the business goals. Use KPIs focused on
backdrop for allocating specific projects and business impact at the shareholder-value
programs to appropriate delivery models. level to effectively track project health and
Cool kids syndrome: Bimodal constructs expected return on spend.
often create a haves and have nots Informal collaboration: Unplanned and
caste system that divides IT workers by impromptu interactions between team
area of focus and work mode. Right-speed members can bring together different
IT sidesteps this outcome by creating perspectives and shine new light on
rotational constructs and offering a wide problems and possible solutions. Invest in
range of speed, platform, and delivery collaboration tools that make it possible for
methodology combinations. Even so, be project teams to share ideas, brainstorm
up front with your employees about the new ones, and tap into collective wisdom.12
skills that will be prized in the future. As Hold the line: Determine the appropriate
part of that same discussion, offer workers speed for any given project, and enforce
opportunities to learn new skills and strict compliance with your decision. In the
develop expertise. Also, accept that not early stages, it is easy to let project speeds
everyone can or will want to be a part of the fluctuate based on paths of least resistance
right-speed journey. or institutional inertia. Dont let teams
Distributed innovation: Everyone should follow their instincts. Hold employees
innovate, not simply to create breakthrough accountable for following the new IT
new products or services, but also to drive delivery model at all times.
continuous improvement of delivery or
16
Right-speed IT

Bottom line
Right-speed IT is an acknowledgement that IT departments need more ammunition to organize,
interact, and deliver value to the business. Bimodal constructs often strike a chord with their
simplistic framing.13 But projects often require additional gears that meet their specific needs
and cadences. With investments in foundational and flexible procedural, architectural, and
organizational domains, right-speed IT can help turn simplistic models and philosophical
discussions into concrete value.

17
Tech Trends 2016: Innovating in the digital era

Authors
Mark White, Products & Solutions Ideation and Strategy principal,
Deloitte Consulting LLP

Mark White has served as US, global, and federal Consulting chief
technology officer. His clients include organizations in federal, financial
services, high-tech, telecom, and other industries. He delivers critical
business solutions in areas including solutions architecture, data analytics,
IT operations, and infrastructure design. He is a frequent speaker at
global conferences and is regularly quoted in the media discussing the
impact of technology on business and government.

Judy Pennington, Organization Transformation & Talent director,


Deloitte Consulting LLP

Judy Pennington has more than 25 years of experience working at the


intersection of people and technology. Pennington helps IT clients assess
their operating model, organization structure, processes, and workforce,
assisting them in designing solutions to increase efficiencies and
employee engagement. She focuses on IT talent management strategy/
implementation, workforce planning, IT governance, organization
structure/strategy, learning strategy, and outsourcing.

Tom Galizia, US Technology Strategy & Architecture leader,


Deloitte Consulting LLP

Tom Galizia focuses on new, enabling information technology


capabilities that can help organizations effectively navigate changing
market dynamics, deliver business strategy and transformation, and drive
efficient IT operations. Galizia has 20 years of experience working across
many industries. He specializes in industry-specific solutions, emerging
market growth, M&A diligence and integration, service delivery, global
supply chain, and leasing.

Mike Habeck, US IT Business Management practice leader,


Deloitte Consulting LLP

Mike Habeck has over 20 years of experience, both as a consultant


and in executive roles, in delivering solutions intended to optimize
and transform IT technology and operations. His deep insights and
understanding of technology, operations, and strategy help clients
envision how technology strategy, infrastructure, and IT service delivery
models can help them achieve their business goals.

18
Right-speed IT

Endnotes
1. Predictability, maintainability, 8. State Auto Insurance Companies,
interoperability, capacity management https://www.stateauto.com/about/page.
(that is, high performance), resiliency, aspx?id=86, accessed January 21, 2016.
and flexibility, among others. 9. Greg Tacchetti (chief information officer,
2. Deloitte Consulting LLP, Tech Trends State Auto Insurance Companies), interview
2016: Autonomic platforms, 2016. with the authors, January 11, 2016.
3. Mark A. Campbell, Saying goodbye 10. Guillermo Diaz (CIO and senior vice
to bimodal IT, CIO Insight, January president, Cisco Systems), interview
13, 2016, http://www.cioinsight.com/ with the authors, January 13, 2016.
it-management/innovation/saying-goodbye- 11. Khalid Kark, Mark White, and Bill
to-bimodal-it.html#sthash.4pPTfXvH. Briggs, 2015 global CIO survey, Deloitte
dpuf, accessed January 26, 2016. University Press, November 3, 2015,
4. Deloitte Consulting LLP, Tech Trends http://dupress.com/articles/global-cio-
2013: Design as a discipline, 2013. survey/, accessed December 30, 2015.
5. Nilofer Merchant, Culture trumps 12. Rob Cross, Peter Gray, Shirley Cunningham,
strategy, every time, Harvard Business Mark Showers, and Robert J. Thomas,
Review, March 22, 2011, https://hbr. The collaborative organization: How to
org/2011/03/culture-trumps-strategy- make employee networks really work,
every, accessed January 26, 2016. MIT Sloan Management Review, October
6. Neeraj Tolmare (vice president and head of 1, 2010, http://sloanreview.mit.edu/
digital transformation & IT applications, global article/the-collaborative-organization-
eCommerce, P&L management, HP, Inc.), how-to-make-employee-networks-really-
interview with the authors, December 2015. work/, accessed January 26, 2016.

7. Jon Stevens (senior vice president of operations 13. Gartner Inc., Gartner says CIOs need
and chief information officer, CDW), bimodal IT to succeed in digital business,
interview with the authors, September 2015. press release, November 10, 2014,
http://www.gartner.com/newsroom/
id/2903717, accessed January 26, 2016.

19
Augmented and virtual reality go to work

Augmented and virtual


reality go to work
Seeing business through a different lens

The future of mobile is tilting increasingly toward wearables, especially as


augmented reality and virtual reality solutions hit the market. Long the
objects of sci-fi fascination, the looming potential of AR and VR technologies
lies in the enterprise with capabilities that could potentially reshape business
processes, or fundamentally recast customer experiences. While the
consumer world waits for the dominant AR and VR players to emerge, the
enterprise can fast-track adoptionand begin the process of fundamentally
reimagining how work gets done.

Until recently, augmented reality and technology in ways that would have been
virtual reality (AR and VR) technologies previously infeasible or even impossible.
have served primarily as inspiration for The transition from client-server and
fiction writers and Hollywood special-effects web-based technologies to mobile has been
teams. Yet increasingly, both are finding more transformative, partly because it has made it
practical application in the enterprise. And possible to deploy solutions at the actual point
while the hype surrounding eachparticularly where business takes place and decisions are
in the realms of entertainment and gaming made. It also represented a long-overdue move
makes for good headlines, the real story in toward more simple, intuitive interactions:
the coming months will likely be AR and VRs Point-click-tab-type gave way to touch-swipe-
disruptive potential to recast long-standing talk. AR and VR take this a step further by
business processes and tasks while opening a offering experiences built around natural
door to fundamentally new experiences. modes of interaction such as posture, gesture,
VR makes it possible for users to immerse and gaze, thus shifting attention from a glass
themselves in manufactured surroundings screen in our hands to the real or simulated
that depict actual places or imaginary world around us.
worlds. Meanwhile, AR overlays contextual Already, the disruptive impact of AR and
information on the immediate physical VR is being felt across consumer technologies
environments users see before their eyes, thus as dozens of new products enter the market.
blending digital components and experiences More broadly, AR and VR are introducing
with real life. Both allow us to deploy new opportunities to transform the enterprise,

21
Tech Trends 2016: Innovating in the digital era

particularly in the areas of communication Through this world view, the ways in which
and collaboration, training and simulation, companies exchange data, execute tasks, share
and field and customer service, as well as in culture, and build the core of the business
the reinvention of employee and customer change dramatically.
experiences. Device costs continue to
decline, standards are being defined, and A job with a view
app ecosystems are beginning to emerge.
Momentum around virtual and augmented
The combination of these influencesalong
reality grows with each new deployment. In
with a spate of high-profile acquisitions
particular, noncommercial prototypes are
that are shining klieg lights on AR and VR
sparking curiosity across a wide spectrum of
possibilitiesmay represent a tipping point
applications. For example, the Los Angeles
for AR and VRs business and technical
Philharmonic immerses audiences in the
implicationsand, more importantly, for
world of Beethoven.1 The British Museum
how we rethink the role of the individual in
invites visitors into a Bronze Age roundhouse
the workplace.
containing both real and virtual artifacts of
The process of rethinking begins by
the period.2 Psychologists at the University
understanding the affordance of new interfaces
of Louisville are creating exposure therapies
and interactions, and their impact on business
to help phobia patients confront and learn to
process and legacy enterprise technology.
contain their fears.3 Filmmakers are crafting

Figure 1. The evolution of interaction


shortened chains of command
Augmented and virtual reality help accelerate the
coalescence of users with their device-powered
experience of the world, improving the fidelity of
intention, increasing efficiency, and driving innovation.

hardware

interface interface

messengers smart screens intuitive interaction


Intermediate devices interact with Screens manipulated based on Devices respond to ambient cues
interfaces; virtually all input occurs environment facilitate direct physical and intentional movements to create
through a mouse or keyboard. or spoken interaction with displays. empathetic, personalized experiences.

point click type touch swipe talk gesture mood gaze

22
Augmented and virtual reality go to work

first-person POV documentaries that place developers can now walk through complete,
viewers in the middle of a Syrian refugee camp full-scale computer-rendered structures
or an African village beset by Ebola.4 getting a sense of the width of a hallway or
Meanwhile, businesses are taking the same the impact of detailed design decisions
technology and interaction paradigms to new before touching shovel to dirt.
heights across many industries, including
construction, health care, and manufacturing. Field and customer service: It is the IT
For example: departments responsibility to determine
how AR and VR will be used in tandem
Communication and collaboration: with existing and other emerging
Virtual reality and augmented reality technologies. Therefore, CIOs can lead
may soon accomplish what static and flat efforts to redefine how field and customer
mediums for knowledge exchange failed service workers approach their jobs. For
to do: Replace real, one-to-one human example, deploying augmented interfaces
interactions. AR and VR both offer IT that pair with connected devices, sensing
opportunities to change how the business objects, and relational data can deliver
and its employees report and share task-specific information to workers in the
information and take action. Marketing field in context and on demand. Augmented
managers are already using AR to view solutions can overlay a jet engines service
retail shelf inventory and sales data. hours, component temperature, and service
Engineering teams across the globe are panel details into an aircraft mechanics
deploying VR to collaborate in real time field of vision. Likewise, virtual solutions
to test and refine a single design. Whats can immerse customer service agents in
more, virtual reality is transforming simple collaborative scenarios featuring perceptive
productivity tools like videoconferencing conversations and problem-solving.
and live chats, enabling immersive face- Remote experts can see what field reps
to-face interactions that feature real facial see and provide guidance as they perform
expressions, physical gestures, and subtle maintenance or mechanical tasks. Think
nonverbal cues that are replicated in of a sportscaster explaining a replay with
real time. diagrams superimposed on the screen; the
same technique can be used as an overlay to
Training and simulation: AR and VR will the field reps view of the task at hand.
make it possible for IT to play an active
role in retooling high-cost training and Customer experience and interactive
simulation environments, many of which marketing: AR and VR offer potential
exist to rehearse critical scenarios without new ways to interact with products and
the risk of real-world consequences. For services. Moreover, they offer companies
example, manufacturers can replicate opportunities to raise awareness, promote
maintenance and repair scenarios in virtual features, and inspire desire for their suites
environments. In fact, by creating parallel of goods. Travel, hospitality, and leisure
processes that leverage remote controls firms are offering immersive, interactive
and robotics, they may be able to remove samplings of cruises or hotel stays that
employees from dangerous, real-world allow potential guests to explore properties
analogs altogether. Executive teams are and preview amenities virtually. Some of
using simulated high-resolution stages to these samplings go so far as to use wind
rehearse and refine their presentation skills. machines and olfactory stimulants to
In the construction industry, commercial replicate not just the sights, but also the

23
Tech Trends 2016: Innovating in the digital era

sounds and smells one might experience not previously visible. Likewise, a gesture
during a day at the beach. (for example, the snap of a finger or the
blink of an eye) could be used to change the
perception of both time and scale, pausing
Shifting focus or stopping time, accelerating outcomes, or
Designing user experiences for immersive even changing the position and relationship
environments is a fundamentally different of objects not bound by physical realities. This
process from creating experiences for flat creates an opportunity for the enterprise to
screens. Immersive environments leverage design environments that offer empathetic,
cues derived from ambient sounds or a simple personalized responses. For example, in a
glance to drive both intentional and reflexive virtual environment, an avatar could act as
movements. In both AR and VR, the clicks and a performance coach that analyzes the body
swipes that animate flat screen experiences are language and speech patterns of individual
replaced by spoken words, gestures, fidgeting, employees to help them enhance their
grabbing, pushing, a nod, or even a blink. presentation skills.
Consider the notion of focus. Naturally, Through AR and VR, organizations
people have notoriously short attention spans. can create environments that can react to
In the context of computing devices, we have changes in posture, mood, and attention. For
dealt with this by shrinking, reflecting, and example, dynamically reordering how tasks
curving the displays. But in the context of are presented to account for a user who is
behavioral interaction and productivity, focus sleepy or distressed can change the relationship
becomes a different obstacle altogether. In between technology, behaviors, and outcomes,
virtual or augmented environments, what and compensate for a higher cognitive load
happens to objects when a user looks at them in decision making. This, in effect, puts the
is as important as what the other objects are enterprise at the core of human-centered
doing even when the user is not looking at design: design emphasizing comfort, health,
them. A gaze becomes the new hover state, safety, happiness, productivity, and growth.
directing user intent and presenting options

24
Augmented and virtual reality go to work

Lessons from the front lines


The AR/VR consumer AR in construction: The next
market heats up best thing to building there
Over the next 18 to 22 months, we expect In a remote corner of west Texas, a field
to see augmented reality and virtual reality technician wearing a geotagged helmet
technologies transition from the science equipped with AR technology gazes up at
fiction ether to the more earthly, practical a 270-foot-tall telecom tower. Using hand
realms of business and government. However, gestures, he pulls a data overlay into his field of
enthusiasts will not have to wait for solid vision containing the technical and design data
use cases to emerge before they can begin to he will need to perform a thorough equipment
enjoy AR and VR at home. The consumer AR/ review on this tower.
VR market is heating up as offerings from Connecting field workers to data in this
Samsung, Microsoft, Facebook Google, HTC, way is one of many potential uses global
Motorola, Sony, and other leading technology engineering and construction company Black
brands near completion. Likewise, start-ups & Veatch envisions for AR technologies
such as MagicLeap, Lensar, and NantMobile, in the near future, says Dan Kieny, B&Vs
among others, plan to launch their own senior vice president and CIO. In our more
compelling offerings in the near future. than 100 years of building critical human
Early use cases are focusing on familiar infrastructure, we have seen a lot of technology
consumer scenarios: gaming, video advancements, and AR has a compelling
entertainment (Hollywood, adult, and value proposition in our industry right
other programming), and social media/ now. We are looking at AR applications that
collaboration. Meanwhile, new product provide individual operators with data they
categories are emerging that focus primarily need to perform specific construction and
on the technology footprint required to make maintenance tasks remotely.
the virtual or augmented realities tick. Some Wearables are nothing new in the
solutions require a high-end PC to function; construction industry. Workers in the field
some use a smartphone as the processing core. regularly don protective goggles, vests, and
Many are tethered to batteries, controls, or helmets, along with tool belts and other items
control units, while others are truly wireless. that help them perform specific tasks. Smart
Several benefit from baked-in or, in some wearables, such as augmented and virtual
cases, locked-in development partners to reality tools, therefore, represent a natural
help expand the breadth and utility of the progression. Black & Veatch is currently
platform. Others are either nascent plays or exploring applications of AR technologies such
have closed-garden content models. Regardless as helping to train unskilled labor remotely
of the approaches, expect to hear more about to perform highly technical tasks; providing
consumer augmented reality and virtual mobile monitoring capabilities that display
reality devices in the coming months. Existing system-status details in real time; and using
products will evolve. New product categories smart helmets that are geotagged to provide
will emerge. Welcome to the future. location-relevant information to field workers.
The company is also looking for ways
in which VR tools can be utilized to create
immersive environments, providing visibility

25
Tech Trends 2016: Innovating in the digital era

to large-scale designs. This capability could throughout the parcel delivery industry,
make it possible for owners and operators the process of sorting packages for delivery
to vet design decisions and consider the worldwide remains labor-intensive. At one
operational implications to layout, equipment global package-delivery company, training
placement, and other factors that impact workers to operate and maintain massive
maintenance. Longer term, artificial pieces of sorting equipment that can be half
intelligence and machine learning can help a football field long traditionally required
Black & Veatch refine the information that flying them to remote training centers where
field workers receive, and enhance the AR they would receive several weeks of intensive
interface between people and data. instruction. The problem with this approach
Behind the scenes, Black & Veatch is is that many workers dont retain learned
already laying the foundation for these and skills unless they use them regularly. In a
other scenarios. For example, it is deploying high-velocity performance environment
sensor and beacon technologies at construction in which equipment must run at top speed
sites to provide a backdrop of tool, supply, 24/7, the inability to address all mechanical
and personnel data. Efforts are under way problems quickly and efficiently can cost the
to capture and contextualize these new data company dearly.
sources for use in AR and VR experiences, as The organization is currently prototyping a
well as to enable exploration and analysis of 3D simulation solution that has been designed
hidden trends and business implications. Data to be leveraged via VR to provide virtualized
will never be fully structured, and thats OK, worker training on an ongoing basis, in any
says Kieny, emphasizing the shift in focus from location. In this solution, workers wearing
aggregation and stewardship to harnessing VR headsets would be immersed in a virtual
increasingly dynamic data to enhance human 3D production environment that features
interaction in a number of ways. These simulated versions of equipment in use. A
include creating more intuitive interfaces with training program, using both visuals and
systems and data, and enabling more engaging sound, would take users step by step through
dialogues with customers and partners. detailed maintenance and repair processes.
According to Black & Veatch CTO Brad The company envisions several ways in
Hardin, the company is initially focusing which the VR training solution could be
on AR opportunities. He also sees eventual deployed. In addition to providing just-in-
opportunities to use VR technology in areas time instruction on how to perform specific
like remote robotic welding and providing maintenance and repair tasks, it could
security training simulations for power also embed 3D simulations into mid-level
plants and other vulnerable infrastructure. e-learning programs for experienced workers.
In exploring opportunities to use smart So, for example, a user might click on a
wearables, we are ultimately trying to create prompt to bring up a new page that includes
more value for the company and our clients, a 3D simulation depicting how to complete a
says Hardin. But we are also trying to disrupt specific task. The company could also create
our business model before we get disrupted.5 VR training courses in which new hires could
learn five basic tasks in a virtual environment.
Can virtual reality help When they complete those five tasks, they can
advance to the next five, and so on, until they
deliver the goods? complete an entire entry-level course.
Even as automation increasingly disrupts
long-established operational models

26
Augmented and virtual reality go to work

MY TAKE
CHRIS MILK
Co-founder and director
Vrse and Vrse.works

At Vrse and its sister company, Vrse.works, we virtual reality, captured from various perspectives,
create fully immersive 360 video and VR cinematic painting the full portrait of the experience and not
experiences. But really, we tell stories. And every just tightly squeezed snippets.
story should (and does) dictate how its to be told.
Naturally, were staying up to date on all the new
advancements in technology and the great work ...We want to keep reevaluating
other people in the field are doing. But we cant wait
around until all the bumps are smoothed out, and how people experience familiar
neither should you. stories.
Virtual reality as an artistic mediumand, increasingly,
as a tool for innovation in business, health care, and Ive always been interested in the intersection
other areasis in its first growth spurt, and were between emotion and technology. Studying peoples
proud to be adding to the innovations. We create experiences while inside VR gave me the confidence
and pioneer a lot of the technology we use, and and curiosity to bring like minds to Vrse. Weve
every progressive iteration is inspired by a storytelling found that VR, when exercised with precision, can
choice. We like to take on challenges and find tap into a viewers sense of empathy. In short, VR is
creative solutions. Thats how cinema got from the a teleportation device. It can take you into a conflict,
proscenium wide shot to where the art form is today. instead of just showing you one. It can bring you
Mistakes tell us as much as successes about the future face to face with a child in a refugee camp or a band
of VR. on a stage, and the emotional response has been
measured to be similar to actually experiencing those
Our first foray into VR was the Sound and Vision interactions. For the UN experiences weve created,
experience I did with Beck a few years back. We UNICEF has taken to the streets with VR headsets in
wanted to reimagine the concert and create an effort to raise money for faraway causes. When
something organic and inclusive. Traditional concerts people on the street experienced VR, they were
are a battle: The audience faces one way, the twice as likely to donate. And were talking monthly
band another; sound clashes in the middle. Video donations, not just one-offs.
captured this brilliantly for years, but we wanted to
try a different shapethe circle. The concert-going Were continuing to create stories in VR that mean
experience is so round and immersive that we needed something to us. Weve had the great fortune of
to try our hands at a new technology if we were caring a whole lot about every experience weve
going to effectively capture Beck and the musicians put out, and we want to keep that going. We
magic. The event was being billed as an experiment want to keep reevaluating how people experience
in immersion, so my ultimate goal was to capture familiar stories.
and preserve the moment for a later broadcast in
VR. This was more than three years ago, though, And you? Now is the time for exploration. All previous
and VR mostly only existed in research labs. Luckily, art forms were built on mounds of trial and error, and
this was right around the time that Palmer Luckey VR is no different. Sometimes storytellers need to
and the guys at Oculus were making waves, so we travel down the long and winding road a hundred
started a conversation. The result is what the viewer times in order to find the highway.
experiences in Sound and Vision: fully immersive 360

27
Tech Trends 2016: Innovating in the digital era

CYBER IMPLICATIONS
Even with the virtual nature of augmented and virtual Yet beyond these considerations, each technology
reality, these two technologies introduce very real cyber presents its own unique cybersecurity and cyber
risk concerns. Though quite different, AR and VR share privacy challenges. For example, AR requires many
several common security and privacy considerations. more data points than VR to drive content for GPS
and positioning, tagging, shared metadata, and
The devices themselves need to be tracked, managed, facial recognition. Moreover, to enhance and tailor
and hardened to control access to underlying data and the augmented experience of an individual user, AR
applications and to entitlement rights to the gear. As systems may also integrate data from a host of sensors
they do with mobile devices and wearables, companies tracking that person and from other personal sources
should mitigate different risk scenarios involving data like health and fitness monitors. This raises a number of
and services at rest, in use, or in flight. They should security and privacy concerns about the data sources to
also consider adopting existing cyber protocols which individuals have access, and whether
from mobile-device, application, and combinations of data being aggregated
data management programs to by AR may compromise personally
create the necessary management identifiable information (PII) or
and controls around AR and payment card industry (PCI)
VR efforts. data.
Controlling the associated With VR, when you recreate
digital assets should be the physical world in a
a priority. Virtual reality VR environment, you also
and augmented reality recreate its problems and
introduce new and different vulnerabilities. Virtual
intellectual property that representations of your
may contain sensitive companys assets may
information requiring controls add another layer of risk by
for security and privacy, providing detailed blueprints to
regulatory and compliance potential weaknesses. How will
issues, and competitive advantage. you protect these soft spots? And
High-definition 3D renderings of what new governance approaches will
facilities, detailed tracking of property and be needed to protect user identities in the
equipment location and controls, and associated virtual world?
beacons, sensors, and connected footprints all need
appropriate protection, from encryption and access The flip side of the AR/VR cyber risk coin is that these
controls to rights and asset management. Likewise, two technologies show promise as tools that may help
protecting the information being presented in an organizations boost their overall security and privacy
AR/VR world and ensuring its integrity becomes strategies. VR, for example, can be used in disaster
critically important. What if data appearing in a recovery efforts and war room simulations. Scenario
cockpit AR display were to become compromised, planning around incident response can be taken to
and consequently, a jet veers off course? The possible another level with experiences closely resembling real-
implications could be tragic. life events. Likewise, AR may help companies better
visualize the cyber threats they face.

28
Augmented and virtual reality go to work

Where do you start?


The world of AR and VR should be an Behind the looking glass: Designing
extension of an organizations digital strategy, for AR and VR requires embracing new
applying new technologies to transform patterns and perspectives along with a
customer engagement and employee wholly different design vocabulary. It also
empowerment. While AR and VR may reek requires new enabling tools and services to
of shiny object syndrome, in both cases, bring the experiences to life and make them
the underlying promise is exceptionally work in the real world. High-definition 3D
grounded. AR can help to seamlessly integrate image capture and mapping equipment
technology with the real world; VR provides are emerging, accelerating developers
immersive simulated environments that help abilities to recreate real-world physical
model complex, unsafe environments that environments within new AR/VR tools.
are infeasible to explore in real life. Both Gaming engines are gaining a new purchase
can potentially create efficiencies and drive in the enterprise, with Unreal, Unity, and
innovation that impacts shareholder value. others being used to create simulations
As an added benefit, harnessing these tools at and virtual environments for AR and
the bleeding edge of consumer hype can also VR interaction.
help cement a CIOs reputation in the C-suite
and throughout the enterprise as a purveyor Side jobs: As companies deploy AR/VR
of futuristic solutions that are grounded in solutions, they may need to install beacons,
business realities. sensors, or even QR tags around facilities
Consider the following points as you begin and equipment to guide the context
your AR/VR journey: of augmented scenarios, especially for
equipment on the move. Likewise, they
The time is now: The consumer market might also need to construct wireless and
is becoming crowded in both categories. cellular infrastructure to support AR/
It will take time for dominant players to VR connectivity in remote areas. Finally,
emerge, but once they do, third-party emerging middleware platforms can help
developers will be able to focus their efforts abstract device-specific interaction from the
on building surrounding ecosystems. For underlying data and rules.
now, companies can begin to justify their
AR/VR use cases around single purposes New horizons: As many enterprises
with measurable impact and value. Expect learned during the first mobile technology
the market to evolve; as it does, companies wave, systems designed around previous-
can then move forward on point decisions generation technology cant simply be
that have self-contained positive ROI, ported to a new form factor. In fact, it took
design to allow portability, and reevaluate years for many organizations that were
the field with each new initiative to constrained by incrementalist thinking to
determine where to place the next bet. evolve from a mobile maybe to a mobile
Volatility will be the name of the game for first mind-set. The most compelling
some time. However, this volatility may also examples of this transition have been
drive rapid feature expansion, lower price mobile only, centered on experiences
points, and more creative arrangements that would not have been possible without
with vendors eager to partner with smartphones and tablets. Luckily, AR and
leading organizations.

29
Tech Trends 2016: Innovating in the digital era

VR lend themselves to more imaginative but essential to help everyoneIT, business


thinking. Begin with ambitious scenarios executives, and end users alikeunderstand
that look beyond yesterdays use cases. what they can do and how they should be
applied to drive value.
Given that these tools are brand new, accept
that experimentation is not only necessary,

30
Augmented and virtual reality go to work

Bottom line
Emerging technologies that invoke futuristic, seemingly fictional realities can spark a backlash
within the enterprise. Executives raised on Gene Roddenberry, George Lucas, and Michael Crichton
may be at once curious and dubious about what augmented reality and virtual reality are and, more
importantly, how they might impact business. But know that AR and VR are here; their benefits
to the enterprise will likely outpace consumer adoption cycles, which is notable given that the
market may swell to $150 billion annually by 2020.6 Its time to put AR and VR to workand bring
enterprise IT back to the future.

31
Tech Trends 2016: Innovating in the digital era

Authors
Nelson Kunkel, Deloitte Digital national creative director,
Deloitte Consulting LLP

Nelson Kunkel oversees the growth of Deloitte Digitals experience


design teams across a network of digital studios. His purpose is to
help peers and clients see the worldand their challengesfrom a
different perspective. Kunkel has spent his career building brands and
solving creative problems through empathy and understanding. More
importantly, he works daily to bring divergent perspectives together,
enabling designers and companies to do their best, most creative work.

Steve Soechtig, Deloitte Digital Experience practice leader,


Deloitte Consulting LLP

Steve Soechtig has spent his career helping enterprises solve complex
business challenges with emerging technologies. With the expansion
of wearable, virtual, and IoT technologies, Soechtig is currently
helping Deloitte Digitals clients identify opportunities to leverage
these emerging trends to further enhance their connections with their
employees and customers and improve the overall experience of their
business applications.

Jared Miniman, Deloitte Digital senior manager,


Deloitte Consulting LLP

As the user experience champion for Deloitte Digitals public sector


practice, Jared Miniman builds richly immersive mobile apps and app
ecosystems that connect to health care benefits systems and government
business rules engines. He incorporates advanced user research and
product visioning techniques into the planning and execution of major
technology projects spanning multiple agile teams and client stakeholder
groups. Minimans past work in the mobile space has resulted in a US
patent and over 2 million downloads.

Chris Stauch, Deloitte Digital director, Deloitte Consulting LLP

Chris Stauch is a designer, technologist, and brand strategist helping


clients solve their most visionary business challenges through design-
led thinking and implementation. As a leader in the west region design
practice, he leads cross-functional teams in user experience, visual design,
and front-end development at Deloitte Digital, Deloitte Consulting LLP.
He brings 19 years of experience in developing brands and businesses.

32
Augmented and virtual reality go to work

Endnotes
1. David Ng, L.A. Philharmonics Van Beethoven 4. Scott Hartley, The innovative technology
takes virtual reality for a classical spin, Los thats changing the way we watch movies,
Angeles Times, September 24, 2015, http:// Inc., September 1, 2015, http://www.
www.latimes.com/entertainment/arts/ inc.com/scott-hartley/how-the-united-
la-et-cm-los-angeles-phil-vr-20150924- nations-is-telling-stories-in-virtual-reality.
story.html, accessed January 16, 2016. html, accessed January 16, 2016.
2. Maev Kennedy, British Museum uses virtual 5. Dan Kieny (senior vice president and
reality to transport visitors to the bronze CIO, Black & Veatch) and Brad Hardin
age, Guardian, August 4, 2015, http://www. (CTO, Black & Veatch), interview
theguardian.com/culture/2015/aug/04/ with the authors, November 2015.
british-museum-virtual-reality-weekend- 6. Digi-Capital blog, Augmented/virtual reality
bronze-age, accessed January 16, 2016. to hit $150 billion disrupting mobile by 2020,
3. Erin Carson, 10 ways virtual reality is April 2015, http://www.digi-capital.com/
revolutionizing medicine and health care, news/2015/04/augmentedvirtual-reality-to-
TechRepublic, April 8, 2015, http://www. hit-150-billion-disrupting-mobile-by-2020/#.
techrepublic.com/article/10-ways-virtual- VinUMH6rSM9, accessed January 16, 2016.
reality-is-revolutionizing-medicine-and-
healthcare/, accessed January 16, 2016.

33
Internet of Things: From sensing to doing

Internet of Things:
From sensing to doing
Think big, start small, scale fast

Increasingly, forward-thinking organizations are focusing their Internet of


Things (IoT) initiatives less on underlying sensors, devices, and smart things
and more on developing bold approaches for managing data, leveraging
brownfield IoT infrastructure, and developing new business models.
Meanwhile, others are developing human-impact IoT use cases for boosting
food production, cutting carbon emissions, and transforming health services.
What impact will IoT have on your business and on the people around you?
Rapid prototyping can help you find out.

Like a wildfire racing across a dry prairie, end-user devices and 49 times higher than
the Internet of Things (IoT) is expanding total data center traffic.2
rapidly and relentlessly. Vehicles, machine Even as businesses, government agencies,
tools, street lights, wearables, wind turbines, and other pioneering organizations at the
and a seemingly infinite number of other vanguard of IoT take initial steps to implement
devices are being embedded with software, IoTs component partssensors, devices,
sensors, and connectivity at a breakneck software, connectivitythey run the risk of
pace. Gartner, Inc. forecasts that 6.4 billion being overwhelmed by the sheer magnitude
connected things will be in use worldwide in of the digital data generated by connected
2016, up 30 percent from 2015, and that the devices. Many will focus narrowly on passive
number will reach 20.8 billion by 2020. In monitoring of operational areas that have
2016, 5.5 million new things will get connected been historically off the grid or visible only
to network infrastructure each day.1 through aggregated, batch-driven glimpses. To
As IoT grows, so do the volumes of data fully explore IoTs potential, companies should
it generates. By some estimates, connected think big, start small, and then scale fast.
devices will generate 507.5 zettabytes (ZB) of Many enterprises already have unused IoT
data per year (42.3 ZB per month) by 2019, up infrastructure built into their manufacturing
from 134.5 ZB per year (11.2 ZB per month) machinery and IT software. We call these
in 2014. (A zettabyte is 1 trillion gigabytes). dormant components brownfields: Like
Globally, the data created by IoT devices roots, bulbs, and tubers in the soil, they
in 2019 will be 269 times greater than the need a good rain and a bit of tending to
data being transmitted to data centers from begin to thrive. Activating and connecting

35
Tech Trends 2016: Innovating in the digital era

these brownfield components may help bounded for deliberate intent and outcomes,
companies leapfrog some implementation and focused on specific, actionable business
steps and give their IoT initiatives a needed processes, functions, and domains.
boost. In contrast, greenfieldsenterprise The time has come for organizations to
environments with no preexisting IoT think more boldly about IoTs possibilities
infrastructurerequire basic seeding and a lot and about the strategies that can help them
of tending over time to yield a new crop. realize IoTs full disruptive potential. To date,
The value that IoT brings lies in the many IoT initiatives have focused primar-
information it creates. It has powerful potential ily on sensingdeploying and arranging the
for boosting analytics efforts. Strategically hardware, software, and devices to collect
deployed, analytics can help organizations and transmit data. These preliminary steps
translate IoTs digital data into meaningful taken to refine IoT approaches and tactics are
insights that can be used to develop new just the beginning. The focus must shift from
products, offerings, and business models. sensing to doing. How do inputs from sensors
IoT can provide a line of sight into the world drive closed-loop adjustments and innovation
outside company walls, and help strategists to back-, middle-, and front-office business
and decision makers understand their processes? Where can those processes become
customers, products, and markets more fully automated, and where can the core be
clearly. And IoT can drive so much more reconfigured using feedback from connected
including opportunities to integrate and devices and instrumented operations? What
automate business processes in ways never future IoT devices might open up new mar-
before possible. kets? To yield value, analytics-driven insights
Often overlooked is IoTs potential for must ultimately boost the bottom line.
impacting human lives on a grand scale. For One strategy involves harnessing the
example, in a world where hunger persists, information created by the IoT ecosystem to
smart farming techniques use sensor data augment worker capabilities, a process mod-
focused on weather, soil conditions, and pest eled in the Information Value Loop. When
control to help farmers boost crop yields. built to enhance an individuals knowledge
Meteorologists are leveraging hazard mapping and natural abilities and deployed seamlessly
and remote sensing to predict natural disasters at the point of business impact, IoT, in tandem
farther in advance and with greater accuracy. with advanced analytics, can help amplify
The health care sector is actively exploring human intelligence for more effective decision-
ways in which wearables might help improve making. For example, the ability to monitor
the lives of the elderly, the chronically ill, and the vital signs of elderly patients remotely and
others. The list goes on and will continue in real time will empower medical personnel
to grow. We are only beginning to glimpse to make more accurate care decisions more
the enormity of IoTs potential for making quickly. Even more profound, automated drug
lives better.3 delivery systems may be triggered to respond
to complicated signals culled from several
Sensing and sensibility parts of the care network.
Likewise, companies may harness
With so few detailed use cases, the sheer
data-driven insights to augment or
number of IoT possibilities makes it difficult
amplify operational activity in the form
to scope initiatives properly and achieve
of transforming business processes,
momentum. Many are finding that IoT
reimagining core systems and capabilities,
cannot be the Internet of everything. As such,
and automating controls. Eventually, robotic
organizations are increasingly approaching IoT
process automation and advanced robotics
as the Internet of some things, purposefully
will monitor events, aggregate sensor data

36
Internet of Things: From sensing to doing

Figure 1. The Information Value Loop


Information gathered by the Internet of Things enables businesses to create and capture new value by providing
insight to optimize actions. Modified actions in turn give rise to new information, starting the cycle anew. Value
drivers determine how much value is created; their relevance and importance depend on the specific use case.

stages act
technologies Initiating, changing,
value drivers or or maintaining an
h av i se event or state
be ns
d or
te t i o n va l u e d r
ma
en

iv

s
or er
gm

nf s
e

au
ly z

cre
ana

at e
Discernment of magnitude Use of sensors
patterns among to generate data
lligence

data that leads to about a physical


action, descriptions, risk event or state
or predictions

ork
inte

tw
time
ed

ne
nt e
gm

au
Gathering information Transmission of
ag

gr
te

created at different eg a information from


s ta n d a r d s
n ic
times or from different at generation to
e mu
sources com processing location

Source: Michael E. Raynor and Mark J. Cotteleer, The more things change: Value creation, value capture, and the Internet of Things, Deloitte
Review 17, July 27, 2015, http://dupress.com/articles/value-creation-value-capture-internet-of-things.

from numerous sources, and use artificial assets, handling any unexpected incidents that
intelligence capabilities to determine which may arise.5
course of action they can take to deliver the
most desirable outcome.4 Risks and rewards
Take manufacturing, for example. At
As organizations work to integrate vast,
a Siemens facility in Amberg, Germany,
disparate networks of connected devices into
machines and computers handle roughly 75
core systems and processes, there will likely be
percent of the value chain autonomously,
new security and privacy concerns to address.
with some 1,000 automation controllers in
These concerns could be particularly acute
operation throughout the production line.
in industries like health carewhich may be
Each part being manufactured has its own
aggregating, analyzing, and storing highly
product code, which lets machines know its
personal data gleaned from sensors worn by
production requirements and which steps
patientsor in manufacturingwhere risks
to take next. All processes are optimized
may increase as heavy industrial equipment or
for IT control, which keeps failure rates
infrastructure facilities become increasingly
to a minimum. In this facility, employees
connected. More data, and more sensitive data,
essentially oversee production and technology

37
Tech Trends 2016: Innovating in the digital era

available across a broad network means that network. Likewise, a decentralized approach
risks are higher and that data breaches could typically focuses on automation: Rules engines
pose significant dangers to individuals and would be embedded at end points, which
enterprises alike. would allow individual nodes to take action.
With IoT, data security risks will very likely In still other scenarios, IoT applications
go beyond embarrassing privacy leaks to, or visualizations could empower human
potentially, the hacking of important public counterparts to act differently.
systems. Organizations will have to determine Ultimately, the machine age may be
what information is appropriate for IoT upon usdecoupling our awareness of the
enablement, what potential risks the assets world from the need for a human being
and information may represent, and how they to consciously observe and record what is
can ensure that solutions are secure, vigilant, happening. But machine automation only sets
and resilient.6 the stage; real impact, business or civic, will
Similarly, as companies add additional come from bringing together the resulting data
inputs to their IT and IoT ecosystems, they and relevant sensors, things, and people to
will be challenged to create new rules that allow lives to be lived better, work to be done
govern how action proceeds and data is shared. differently, and the rules of competition to
Opening up IoT ecosystems to external parties be rewired.
via APIs will give rise to even more risk-related With this in mind, organizations across
considerations, particularly around security, sectors and geographies continue to pursue
privacy, and regulatory compliance. IoT strategies, driven by the potential for new
Acting on the information created by the insights and opportunities. By thinking more
IoTputting intelligent nodes and derived boldly about these opportunities and the
insights to workrepresents the final, and impact they could have on innovation agendas,
most important, part of the IoT puzzle. customer engagement, and competitiveness
Options for achieving this vary. Centralized (both short- and long-term), companies will
efforts involve creating orchestration or likely be able to elevate their IoT strategies
process management engines to automate beyond sensing to a more potentially beneficial
sensing, decisioning, and response across a stage of doing.

38
Internet of Things: From sensing to doing

Lessons from the front lines


Caterpillar embraces the To this end, Caterpillar recently announced it
had entered into a technology agreement with
Internet of Big Things analytics vendor Uptake to develop a predictive
At a remote mining region of western diagnostics platform to help customers
Australia, the IoTs lofty potential meets monitor and optimize the performance of their
the ground in a fleet of Caterpillar mining fleets.8 Looking forward, Caterpillar expects
truckseach boasting a 240-ton payload IoT to help redefine business processes, drive
that operate autonomously, 24 hours a day. better engagement with its customers, and
These giant, driverless machines are outfitted evolve its products, services, and offerings.
with a variety of sensors that transmit
information on oil pressure, filters, and other
truck components via wireless connections
Expanding the horizons
(such as satellite, cellular, and others) back to of connected care
Caterpillar headquarters in Peoria, IL, where Some companies in the health care
an advisor monitors the equipments vital signs industryincluding health plans, providers,
and can, when needed, make maintenance medical device manufacturers, and software
recommendations to the fleets owner.7 vendorsare testing the IoT waters with a
Though Caterpillar has been embedding number of sensor-driven big data initiatives
sensors in its products for decades, only in that could transform the way patients and their
the last few years has the global construction providers manage acute health conditions.
machinery and heavy equipment manufacturer One leading health care delivery system
begun exploring their potential application is currently developing a suite of mobile
within the context of IoT. Today, IoTor as applications to track, record, and analyze
they call it at Caterpillar, the Internet of Big biometric data generated by Bluetooth-
Thingsis a major strategic and technological enabled sensing devices worn by patients.
focus, with the company exploring ways to These apps, each configured to monitor
mine IoT data that can then be used to develop a specific medical condition, will share a
predictive diagnostics tools, design products, common digital platform and feature APIs
and improve product performance. to encourage external development. Once
For example, when compiled over time and deployed, they will be able to analyze sensor
analyzed, data generated by sensors embedded data and pair them with electronic medical
in construction-site machinery may be able records and other clinical information to help
to help engineers design heavy equipment caregivers make fasterand more informed
that can accomplish more work with fewer decisions for patients. For example, a diabetic
passes. Fewer passes translates to reduced patients glucose readings would be streamed
idle time, less operator fatigue, and lower fuel from a monitoring device to a mobile app
consumption. Ultimately, operating efficiently on his or her phone or tablet, and then on
can help owners of Caterpillar equipment to an integrated big data repository. Care
better serve their own customers. coordinators would be alerted to unusual
Importantly, this informationcombined changes in the patients glucose levels so
with Caterpillars domain knowledge about that they can take appropriate action, such
heavy equipment and analyticsmay help the as bringing the patient into the hospital
company more accurately predict how specific for closer examination or adjusting his or
pieces of equipment will perform in different her medications.
environments and on specific types of jobs.

39
Tech Trends 2016: Innovating in the digital era

The organization piloted its diabetes rooms or even entire floors being closed off to
monitoring application with almost 40,000 save energy.
diabetic patients, demonstrating the viability of IoTs reach within this building extends
the platform. Next on the agenda: Expanding far beyond lighting sensors. When employees
adoption of the diabetes pilot and extending approach The Edges high-tech garage, sensors
the platform to support other conditions such identify their vehicles and then point them to
as congestive heart failure, chronic obstructive available parking spots. Throughout the garage,
pulmonary disease (COPD), and high blood sensor-equipped LED lights brighten and dim
pressure, among others. as drivers arrive and leave.
And that miraculous coffee app? It doubles
Living on The Edge as a digital office administrator that can assign
daily workspaces that best fit users preferences
Its morning in Amsterdam. An employee
and allows them to control the brightness of
leaves her desk, walking casually toward a
the lighting above their work surfaces and
break room in the office building where she
adjust the climate of their particular areas. It
works. As she approaches, a custom app on
can direct people throughout the building
her smartphone engages sensors embedded in
reading a meeting location from ones online
a coffee machine, which immediately begins
calendar, for example, and suggesting a route
dispensing the employees preferred blend,
to get there. Employees can even use the app
complete with the add-ins she desires. When
to track their progress in the on-site gym,
the employee arrives at the break room, her
where some of the fitness equipment actually
custom brew is waiting.
feeds generated wattage into the buildings
Welcome to life in The Edge, a futuristic
power grid.
office structure widely known as the
Sluiter stresses that personal data generated
worlds smartest building.9 Completed in
by sensors and the app cannot be accessed by
2014, The Edgewhich is home to Deloitte
managers or anyone else. Privacy laws ensure
Netherlandsis a showplace for leading-
that nobody can track a persons whereabouts,
edge deployments of green architecture
monitor how many meetings he or she has
and advanced technology, including IoT
missed, or see what times he or she is using the
applications. The innovative, connected
garage. This building offers the technology
lighting panels do more than sip minute
to do certain things that would make tenants
amounts of voltagethey contain some 28,000
lives even easier, Sluiter says. But at the
sensors that detect motion, light, temperature,
same time, its extremely important to protect
humidity, and even carbon dioxide levels. Its
peoples privacy and conform to the law.
these sensors, providing real-time data, that
Those minimal barriers arent hindering
make The Edge occupant-friendly.
The Edges reputation. Our aim was to make
The sensors allow facility managers to assess
The Edge the best place to work, says Erik
how and when certain parts of the building are
Ubels, director of IT and Workplace Services,
being used. In our building, IT and facilities
Deloitte Netherlands. Our meeting areas are
management are a combined function,
filling up because every client and employee
explains Tim Sluiter, property manager, IT
wants to experience this building. Its not too
and Workplace Services, Deloitte Netherlands.
small yet, but the economy is growing and the
In the short term, collected information can
building is getting crowded. Its possible we
be used to determine where cleaning is and
made it too popular.10
is not necessary on a given evening. Long
term, emerging patterns showing light use
in certain locales on certain days can lead to

40
Internet of Things: From sensing to doing

MY TAKE

SANDY LOBENSTEIN
Vice president, connected vehicle technology and product planning
Toyota Motor Sales U.S.A., Inc.

At Toyota, we are all about mobility. Im not talking of data. For example, early on, everyone assumed
just about car ownership. Mobility also includes public consumers wanted apps in cars. Very quickly, the auto
transportation, ridesharing, hoverboards, walking industry realized that what customers actually wanted
anything that can get people from place A to place B was for the apps on their phones to work in their cars.
more efficiently and safely. Mobility is truly multi-modal. Across industries and sectors, strategists, designers,
and decision makers typically believe that current
Toyota sees the IoT as an enabler of mobility, and we approaches and systems are just fine. It takes vision
are moving very quickly to embrace its potential. Big and a considerable amount of courageto break with
data generated by sensors located throughout our cars the way things have been done for the last 100 years
will help engineers develop automobiles that think for and embrace some exotic technology that promises to
themselves. Likewise, Dr. Gill Pratt, the chief executive deliver new opportunities.
officer of the Toyota Research Institute (TRI), and other
researchers at TRI, will leverage IoT data to advance
the science of intelligent cars as we move into the ...In this era of historic
future mobility of autonomous vehicles. Progress in
these areas will likely deliver autonomous connected
technological innovation, all
cars that are reliable, safe, and fun to drive when you companies must work aggressively
want to. The benefits that these innovations may
eventually provide to everyday drivers, drivers with
to reinvent themselves by
special needs, and to seniors could be life-enabling. embracing new opportunities and
Toyota is no stranger to connected vehicle compelling visions of the future.
technologies; Lexus began offering connected vehicles
in 2001. Today, all Lexus vehicles are connected, which
But in this era of historic technological innovation,
enables services like Destination Assist, which links
all companies must work aggressively to reinvent
drivers to live agents who can provide directions for
themselves by embracing new opportunities and
getting from point A to point B. Lexus also offers
compelling visions of the future. This is exactly what
sensor-driven car health reports on current tire
Toyota is doing with IoT and mobility.
pressure, oil levels, and maintenance needs.
Im a car guy. In high school, I loved working under
These IoT applications are just the beginning. Cars
the hood of my car, which was the embodiment
are mechanical products built with mechanical
of leading-edge technology at that point in my life.
processes. Sensors are so small that we can place
For the last 15 years, we amateur mechanics have
them virtually everywhere on cars. And what if you
been distracted by other mechanical wondersthe
extend the same sensor technologies that monitor
kind everyone now spends their days staring at and
tires and brakes to the machines used to build vehicles
speaking into. Thats about to change. Connectivity
on the manufacturing floor? These sensors could
and cool new services are going to make cars come
alert production leaders that there is a problem at a
alive. All those people whove developed relationships
particular station, and that the parts manufactured at
with their smartphones are about to fall in love with
this station within a specific time frame will have to
cars all over again.
be rebuilt.

As for new offerings, its sometimes hard for


companies to wrap their heads around the value

41
Tech Trends 2016: Innovating in the digital era

CYBER IMPLICATIONS
The IoT connects critical infrastructure that has been Work to define standards for interoperability:
previously unconnected. As organizations begin Internally, define data and service standards to
harnessing these connections to create value, they guide consistent rollout within your organizations
may also add functionality to IoT networks that boundaries. Also consider getting involved with
will make it possible to take control of devices and consortia like the IIC12 to develop broader standards
infrastructure remotely, and to automate monitoring and ease connectivity and communication.
and decision-making within certain parameters based
on sensory data. Refactor with care: Retrofitting or extending
functionality of old systems may be exactly what your
Make no mistake: As companies put IoT to work, the IoT strategy needs. But when doing so, understand
smart, connected objects they deploy offer tremendous that there may be potential security, performance,
opportunities for value creation and capture. Those and reliability implications, especially when pushing
same objects, however, can also introduce risksmany legacy assets into scenarios for which they werent
of them entirely newthat demand new designed. Whenever possible, use purpose-
strategies for value protection. built components for the refactoring,
engineered specifically for the
For example, every new device
use case.
introduced in an IoT ecosystem
adds a new attack surface or Develop clear
opportunity for malicious responsibilities for the
attack, thus adding players in your ecosystem:
additional threat vectors to Rather than sharing
a list that already includes responsibility across a
protecting devices, data, diffuse ecosystem, players
and users. Likewise, identity should know where their
spoofingan unauthorized responsibilities begin and
source gaining access to end, and what they are
a device using the correct charged with protecting.
credentialsmay present Assessing potential risks
problems. And even if devices at each pointand making
arent directly compromised but sure stakeholders are aware of
experience a hardware failure or a bug those riskscan help make a solution
in the code, they should be able to fail in a more secure.
safe way that doesnt create vulnerabilities.
Get to know your data: The quantity and variety of
Moreover, the ecosystem structures that organizations
data collected via IoTand the fact that so much of
often rightfully deploy can give rise to vulnerabilities.
that data is now held by third partiescan make it
For example, IoT applications typically depend on the
difficult for companies to know if their data has been
closely coordinated actions of multiple players, from
breached. When dealing with tremendous volumes
vendors along the supply chain to clients, transport
of IoT data, small, virtually unnoticeable thefts can
agencies, the showroom, and end-use customers.
add up over time. Companies can address this threat
Vulnerabilities exist within each node and handoff
by developing a deep understanding of the data they
seam between sensors, devices, or players. It should
possess and combining this knowledge with analytics
not be assumed that partnersmuch less customers
to measure against a set normal. By establishing
have robust mechanisms in place to maintain data
a baseline of access and usage, IT leaders can more
confidentiality and guard against breaches.
readily and reliably identify possible abnormalities to
In the face of these and other challenges, companies investigate further.
can take several steps to safeguard their ecosystems:11

42
Internet of Things: From sensing to doing

Where do you start?

As IoT gains momentum, many Many aspects of IoT cannot be tested or


organizations find themselves paralyzed by the proven in laboratories but only with real
sheer volume of vendor promises, the number enterprise users and outside customers.
of novelty examples being imported from
the consumer realm, and by an overarching Get into the weeds: At some point, IoT
conviction that something real and initiatives require low-level expertise
importantyet frustratingly out of focusis around the underlying sensors,
waiting to be tapped into. connectivity, embedded components,
To maximize value, reduce risk, and learn and ambient services required to drive
fast, those just beginning their IoT journey orchestration, signal detection, and
should follow three innovation principles: distributed rules. The difference between a
Think big, start small, scale fast: provocative proof of concept and a fully
baked offering lies in a host of nuanced
Think big details: understanding the precision
and variability of underlying sensing
Ideate: Analyze the big ideas and use cases capabilities; MEMS sourcing, pricing,
in your industry. Move beyond sensing and installation; and wireless or cellular
to doing. Also, explore opportunities for characteristics, among others. To fill
achieving greater consumer and human knowledge gaps in the short term, some
impact with IoT. organizations leverage talent and skill sets
from other parts of the IT ecosystem.
Start small
Scale fast
Take stock: Before investing in new
equipment, conduct an inventory of all the Adopt an agile approach: Go to market
sensors and connected devices already on and iterate often. One benefit of all the
your balance sheet. Find your brownfields. investment being made in and around
How many sit dormanteither deactivated IoT is that the underlying technology is
or pumping out potentially valuable constantly improving as existing products
information into the existential equivalent evolve and new categories emerge. As you
of /dev/null? explore possible IoT strategies and use
cases, consider using lightweight prototypes
Get to know the data you already have: and rapid experimentation. This way, you
Many organizations have troves of raw data can factor in feasibility concerns, but you
theyve never leveraged. By working with wont be saddledat least for the time
data scientists to analyze these assets before beingwith the burden of enterprise
embarking on IoT initiatives, companies constraints. As compelling ideas gain
can better understand their datas current momentum, you can then shape your
value. Likewise, they may also be able to solution, refine the business case for it, and
enhance this value by selectively installing explore it at scale.
sensors to plug data gaps.
Enhance your talent model: Just as aircraft
Pilot your ecosystem: Pick proven IoT manufacturers hire aeronautical engineers
partners to quickly pilot ideas, try new to design products and software vendors
things, and learn quickly from failures.

43
Tech Trends 2016: Innovating in the digital era

employ legions of coders with specific Bring it home: Remotely deployed


skills, so too must companies pursuing assets and equipment often have starring
IoT strategies hire the right people for the roles in IoT use cases. But call centers,
job. Does your IT organization currently manufacturing floors, and corporate offices
include talent with the hardware expertise also offer considerable IoT potential.
needed to operate and maintain thousands Consider how creating an intranet of
of connected devices? Most dont. Before things might lead to improved workplace
pursuing an IoT strategy, consider conditions and enhanced comfort
enhancing your talent model not only to and safety at individual work stations.
bring in new skills from the outside, but Moreover, how might reimagining
also to reskill current employees. employee experiences in this way help your
company attract new employees and retain
existing ones?

44
Internet of Things: From sensing to doing

Bottom line
The Internet of Things holds profound potential. It is a futuristic fantasy made realthe connected
home, connected workplace, and connected government come to life. The sheer scope of IoT carries
countless implications for business, both finite and abstract. To sidestep such distractions, focus on
solving real business problems by creating bounded business scenarios with deliberate, measurable
value. For example, how can you use IoT to get closer to customers or increase efficiency in your
manufacturing operations or supply chain? Look for hidden value in your brownfields. Move from
strategy to prototyping as quickly as possible. Only real data, actual users, and sensors that respond
with actions can demonstrate the remarkable value proposition of IoT.

45
Tech Trends 2016: Innovating in the digital era

Authors
Andy Daecher, Technology Strategy & Architecture principal,
Deloitte Consulting LLP

Andy Daecher has worked in the high-tech industry for 25 years,


advising clients on the strategic use of technology to optimize their
businesses. He specializes in advising executives on the practical
applications of emerging technologies, the effective management of
IT organizations, and the execution of complex, transformational
technology-enabled projects.

Robert Schmid, Deloitte Digital director, Deloitte Consulting LLP

Robert has over 20 years of experience transforming global Fortune 100


and startup companies using new 21st-century technologies. He has
deep expertise delivering business value through innovative solutions
and effective partnerships in the areas of wearables, the Internet of
Things, social media, mobile workforce, cloud computing, merger
integration, complex integrations, ERP implementations, and offshoring
and outsourcing. He is a frequent author and public speaker.

46
Internet of Things: From sensing to doing

Endnotes
1. Gartner Inc., Gartner says 6.4 billion con- resilient in the connected age, Deloitte
nected things will be in use in 2016, up 30 Review 17, July 27, 2015, http://dupress.com/
percent from 2015, press release, November articles/internet-of-things-data-security-
10, 2015, http://www.gartner.com/newsroom/ and-privacy/, accessed December 22, 2015.
id/3165317, accessed December 9, 2015. 7. Micah Maidenberg, Why Caterpillar is letting
2. Cisco, Cisco Global Cloud Index: Forecast its geek flag fly, Crains Chicago Business,
and methodology, 20142019, October July 4, 2015, http://www.chicagobusiness.
28, 2015, http://www.cisco.com/c/en/us/ com/article/20150704/ISSUE01/307049995/
solutions/collateral/service-provider/global- why-caterpillar-is-letting-its-geek-
cloud-index-gci/Cloud_Index_White_Paper. flag-fly, accessed January 12, 2016.
html, accessed December 9, 2015. 8. Caterpillar, Caterpillar and Uptake to Create
3. Satish Tembad, How the Internet of Things Analytics Solutions, press release, March 5,
can change the India we live in on its head, 2015, http://www.caterpillar.com/en/news/
Business Insider India, September 8, 2015, corporate-press-releases/h/caterpillar-and-
http://www.businessinsider.in/How-the- uptake-to-create-analytics-solutions.html,
Internet-of-Things-can-change-the-India-we- accessed January 12, 2016; Craig Brabec
live-in-on-its-head/articleshow/48871985. (chief of analytics, Caterpillar Inc.) and Dan
cms, accessed February 12, 2016. Henderson (director of research and advanced
4. Jonathan Holdowsky, Monika Mahto, Michael engineering, Caterpillar Inc.), interview
E. Raynor, and Mark J. Cotteleer, Inside with the authors, December 18, 2015.
the Internet of Things, Deloitte University 9. Tom Randall, The smartest building in
Press, August 21, 2015, http://dupress.com/ the world, Bloomberg Business, September
articles/iot-primer-iot-technologies- 23, 2015, http://www.bloomberg.com/
applications/, accessed December 9, 2015. features/2015-the-edge-the-worlds-greenest-
5. Kevin OMarah, The Internet of Things building/, accessed February 8, 2016.
will make manufacturing smarter, 10. Deloitte, 2015 Global Report, 2016, http://
Industry Week, August 14, 2015, http:// www2.deloitte.com/global/en/pages/about-
www.industryweek.com/manufacturing- deloitte/articles/global-report-2015.html.
smarter, accessed December 21, 2015. 11. Saif, Peasley, and Perinkolam, Safe-
6. Irfan Saif, Sean Peasley, and Arun guarding the Internet of Things.
Perinkolam, Safeguarding the Internet 12. Industrial Internet Consortium, http://www.
of Things: Being secure, vigilant, and iiconsortium.org, accessed January 11, 2016.

47
Reimagining core systems

Reimagining core systems


Modernizing the heart of the business

Core systems that drive back, mid, and front offices are often decades old,
comprising everything from the custom systems built to run the financial
services industry in the 1970s to the ERP reengineering wave of the 1990s.
Today, many roads to digital innovation lead through these heart of the
business applications. For this reason, organizations are now developing
strategies for reimagining their core systems that involve re-platforming,
modernizing, and revitalizing them. Transforming the bedrock of the IT
footprint to be agile, intuitive, and responsive can help meet business needs
today, while laying the foundation for tomorrow.

ITs legacy is intertwined with the core value. When asked to rank the technology
systems that often bear the same name. In a investments they think will have significant
way, the modern IT departments raison dtre impacts on their business, survey respondents
can be traced to the origins of what is now cited analytics, digital, and cloud.
dubbed legacythose heart-of-the-business, Clearly, its easy to overlook the fact that
foundation-of-the-mission systems that these and other emerging technologies are
run back-, mid-, and front-office processes. highly dependent on the underlying data and
Some include large-scale custom solutions processes the core enables.
whose reach and complexity have sprawled Broad systems transformation involves
over the decades. Others have undergone bringing together sales, operations, supply
ERP transformation programs designed to chain, and service information to redefine
customize and extend their capabilities to meet underlying processes and inform new
specific business needs. Unfortunately, the products, services, and offerings. As such,
net result of such efforts is often a tangle of efforts to reimagine core systems can form
complexity and dependency that is daunting to the foundation upon which higher-order,
try to comprehend, much less unwind. shinier initiatives are built. Reimagining
Meanwhile, core upkeep and legacy the core can also help companies establish
modernization lay claim to inordinate amounts a modern baseline for improved efficiency,
of IT budget. Deloittes 2015 global CIO survey1 efficacy, and results. With this in mind,
found that core-related expenditures are leading organizations are evolving their
the single biggest line item in IT investment systems roadmaps to approach the core
dollars. This leads to an internal PR problem not as an anchor, but as a set of customer-
for the core: High cost is seen as low focused, outcome-driven building blocks that

49
Tech Trends 2016: Innovating in the digital era

can support the business in the digital age core strategy based on the needs and goals
and beyond. of the business. Start with existing business
processes. Does the core IT stack help or
The time is now hinder users with their daily tasks across
departments, processes, and workloads? How
The pace of change and innovation in
is the strategy of each function evolving,
technology is continuing to accelerate at an
and what impact will those strategies have
exponential pace, offering ripe opportunities
on the core? How is the broader business
to rewire the way we work and rewrite the
positioning itself for growth? What are the key
rules of engagement. The rate at which data
constraints and enablers for business growth
is produced by devices, sensors, and people
today? Implications for the core will no doubt
is acceleratingand that data is being
follow, but specific needs will differ depending
harnessed in real time by advanced predictive
on plans for organic growth in existing
and prescriptive analytics to expertly guide
markets, business model innovation, mergers,
business decisions once ruled by instinct and
acquisitions, and divestitures, among others.
intuition. Digital has unlocked new ways
Next, examine technology-driven factors
of engaging customers and empowering
by putting their potential impacts in a business
employeesnot just making it possible for old
context. For example, translate abstract
jobs to be done differently, but also creating
technical debt concerns into measurable
fundamentally new and different patterns of
business risks. Technical scalability can be
interaction. Mobile and tablet adoption served
represented by inhibitors to growth due to
as a clarion for wearables, the Internet of
limits on the number of customers, orders,
Things, and now augmented and virtual reality.
or payments that can be transacted. Translate
Competitive dynamics are also driving change.
reliability concerns into lost revenue or
Start-ups and companies without strong
penalties for missing SLAs due to outages or
ties to legacy systems will find themselves
service disruptions. Immature integration and
increasingly able to innovate in service
data disciplines can have concrete impacts
delivery, unhindered by decades of technical
in terms of project delaysand the extent to
debt and legacy decisions.
which they may hobble digital, analytics, and
At the same time, significant external forces
cloud efforts.
are redrawing core roadmaps. ERP vendors
have invested heavily in next-generation
offerings and are aggressively positioning Go big, go bold
their modernized platforms as the answer to Approach reimagining the core with
many enterprise system challenges. Cloud a transformational lensit is, after all, a
players are offering a rapidly growing catalog chance to modernize much more than
of back- and mid-office solutions. At the the underlying technology. Challenge the
same time, expertise in COBOL and other business to imagine how functions and
mainframe programming languages is growing processes should and could operate based on
scarce as aging programmers retirea todays realities, not yesterdays constraints.
situation that weighs heavily in more and How is digital eliminating physical location
more replatforming decisions.2 Against this constraints in your business? What if complex
backdrop, a steady drumbeat of hype touting analysis could be deployed across all of your
emerging technologies casts legacy as a four- organizations data in an instant? Where are
letter word in the minds of C-suite executives business ecosystems blurring or obliterating
and line-of-business leaders. lines between competitors, partners, and
All of these factors make it more important customers? How is cloud offering a different
than ever for CIOs to define a deliberate way of procuring, building, integrating,

50
Reimagining core systems

Figure 1. Impact, investment, and potential of core systems revitalization


In Deloittes 2015 global CIO survey of more than 1,200 technology leaders, respondents ranked core modernization
second to last as a technology area that will have a significant business impact in the next two years. However, in
CIOs investment breakdowns, core modernization has the highest percentage of high-level investment. Because other
technology efforts can depend on baked-in core modernization, it is often not perceived as strategic or impactful.

technology % of cios that anticipate % of cios with


areas significant business impact a high investment a medium low

analytics & 77% 17%


intelligence

digital ( web, 75% 19%


mobile, social )

cloud 64% 18%


computing

cybersecurity 58% 8%
& data privacy

legacy / core 47% 36%


modernization

emerging 28%
technologies

Based on two-year averages of Deloitte Dbriefs webcast polls in 2014 and 2015 of more than 2,000 and 1,000 participants
respectively, businesses largely see room for improvement in core systems. High-level investment in core modernization
can transform legacy solutions into agile, intuitive, and responsive systems and drive untapped business value.

core systems today b areas for improvement b

inflexible 23% flexibility 32%

just fine 15% functionality 16%

insufficient 13% performance 14%

unintuitive 13% usability 13%

strategic 9% none 2%

Sources: a Deloitte Development LLC, 2015 global CIO survey, 2015, http://dupress.com/articles/global-cio-survey, accessed November 25, 2015.
b
Deloitte Development LLC, Core renaissance: What is the new normal for legacy core systems?, Deloitte Dbriefs Technology Executives series,
October 1, 2015; Deloitte Development LLC, Core renaissance: The great systems revival, Deloitte Dbriefs Technology Executives series,
November 6, 2014.

and assembling services into systems? Core improving process scope or performance, may
modernization can provide a path toward be the appropriate response. Tactical execution
much more than reengineering; it may can be an option, but only after thoughtful
ultimately help the business reinvent itself. consideration; it should not be undertaken
Reimagining the core could also involve simply because it represents the path of least
more modest ambitions. For example, for resistance. Regardless of direction, define an
some core challenges, rote refactoring without explicit strategy, create a roadmap based on a
enhancing capabilities, or making technical series of manageable intermediate investments,
upgrades to underlying platforms without

51
Tech Trends 2016: Innovating in the digital era

and create a new IT legacy by reimagining master data reconciliation to simplify


core systems. business processes and introduce single
views of data on customers, products, the
The five Rs chart of accounts, or other critical domains.
Another likely candidate is integration,
Roadmaps for reimagining the core should
which aims to make transaction and other
reflect business imperatives and technical
business data available as APIs to systems
realities, balancing business priorities,
outside of the core and potentially to
opportunities, and implementation complexity.
partners, independent software vendors,
Approaches may range from wholesale
or customers for usage outside of the
transformational efforts to incremental
organization. These new interfaces can
improvements tacked on to traditional budgets
drive digital solutions, improve the reach
and projects. But they will likely involve one or
of cloud investments, and simplify the
more of the following categories of activities:
ongoing care and maintenance of core
Replatform: Upgrade platforms through systems. Finally, remediation may mean
technical upgrades, updates to latest rationalizing custom extensions to packages
software releases, migration to modern or simplifying the underlying code of
operating environments (virtualized bespoke solutions.
environments, cloud platforms, appliance/
engineered systems, in-memory databases, Replace: Introduce new solutions for parts
or others), or porting code bases. of the core. This may mean adopting new
Unfortunately, these efforts are rarely lift products from existing vendor partners. In
and shift and require analysis and tailored some industries, it may involve revisiting
handling of each specific workload. build versus buy decisions, as new
entrants may have introduced packages or
Revitalize: Layer on new capabilities to cloud services performing core processes
enhance stable underlying core processes that previously required large-scale custom-
and data. Efforts typically center around built solutions. Ideally, organizations will
usabilityeither new digital front-ends use these pivots to revisit the businesss
to improve customer and employee needs, building new capabilities that reflect
engagements, or visualization suites how work should get done, not simply
to fuel data discovery and analysis. replicating how work used to get done on
Analytics are another common area of the old systems.
focusintroducing data lakes or cognitive
techniques to better meet descriptive Retrench: Do nothingwhich can be
reporting needs and introduce predictive strategic as long as it is an intentional
and prescriptive capabilities. choice. Good enough may be more than
enough, especially for non-differentiated
Remediate: Address internal complexities parts of the business. Weigh the risks,
of existing core implementations. This understand the repercussions, inform
could involve instance consolidation and stakeholders, and focus on higher-impact
priorities.

52
Reimagining core systems

Lessons from the front lines


Driving core transformation Java-based platform that featured revamped
relational data models.
The Texas Department of Motor Vehicles
This approach offered a number of
(TxDMV) had a problem. The legacy
advantages. It allowed TxDMV to transition its
mainframe system it used to register almost
legacy ADABAS, Natural, COBOL, and VSAM
24 million vehicles annually3 was becoming,
applications to a more modern application
as they say in Texas, a bit long in the tooth.
platform more quickly, with higher quality,
The registration and title component, built
and at lower risk than it would have been
on ADABAS/Natural database, had been
able to do with traditional reengineering.
online since 1994. Its COBOL-based vehicle
End-user impacts were minimized because
identification system had been active for
the refactored system retained the functional
almost as long. Other components were, at
behavior of the legacy app while running
best, vintage.
on a stable, modern technology platform.
After years of heavy use, these systems
According to TxDMV CIO Eric Obermier,
were becoming costly and challenging to
relatively little code remediation was required.
maintain. Their lack of agility impeded
We had to rewrite a couple of particularly
significant business process improvements. On
complex modules so the refactoring engine
the data front, users struggled to generate ad
could handle them, but for the most part, our
hoc reports. The kind of advanced analytics
efforts were focused on creating test cases and
capabilities the agency needed to guide its
validating interfaces.
strategy and operations were nonexistent.
Thus far, TxDMVs efforts to reimagine its
Whats more, the entire TxDMV system had
core systems have borne welcome fruit. End
become vulnerable to maintenance disruption:
users can now develop and filter structured
If IT talent with the increasingly rare skills
reports in a modern format. Moreover, the
needed to maintain these legacy technologies
platform provides a stable base for adding
left the organization, it would be difficult to
more functionality in the future. Our next
replace them.
step is to modernize our business processes
It was as if our system was driving our
and increase end-user engagement to help
processes rather than the other way around,
drive the future of the registration and titling
says Whitney Brewster, TxDMVs executive
system. Given how much weve learned already,
director. We realized that, in order to make
those, along with future projects, will go much
the changes needed to serve our customers
more smoothly, says Brewster. This has been
better, we were going to need a more agile
a real confidence-builder for our entire team.4
system.
In 2014, TxDMV launched a core
modernization initiative designed to update The art of self-disruption
critical systems, address technical debt, and In the highly competitive digital payments
help extract more value from long-standing industry, warp-speed innovation and rapidly
IT investments by making them more agile. evolving customer expectations can quickly
Because they didnt have the budget to rip render leading-edge solutions and the core
and replace existing infrastructure, agency systems that support them obsolete.
IT leaders took a different approach. Using To maintain a competitive edge in this
a set of specialized tools, they were able to environment, PayPal, which in 2014 processed
automatically refactor the code base to a new 4 billion digital payments,5 has committed to
a strategy of continuous self-disruption. Over

53
Tech Trends 2016: Innovating in the digital era

the last few years, the company has undertaken technology sector, each aiming to disrupt even
several major initiatives in its development the most innovative incumbents.
processes, infrastructure, and core systems
and operations. All aboard! Amtrak reimagines
One of the companys more significant
undertakings involved transitioning from a
its core reservation system
waterfall to an agile delivery methodology, an What began in 2011 as a channel-by-
effort that required retraining 510 development channel effort to modernize Amtraks
teams spread across multiple locations in a legacy reservation system has evolved into
matter of months.6 The revamped approach what is now a major customer experience
applied to both new digital platforms and transformation initiative grounded in
to legacy system enhancements. Though core revitalization.
embracing agile was a needed change, PayPal Dubbed EPIC, this initiative is creating
knew the impact might be diminished if an enterprise platform for new capabilities
existing infrastructure could not become that can deliver a seamless and personalized
more nimble as well. So the company customer experience across Amtrak.com,
decided to re-architect its back-end systems, mobile, call centers, in-station kiosks, and
including transitioning its existing data center third-party touchpoints. From a business
infrastructure into a private cloud using perspective, the EPIC platform will enable
OpenStack cloud management software. The Amtrak to respond to changing market
net result of deploying agile delivery and conditions and customer needs more quickly,
operating with a revitalized infrastructure was offer customers a fully integrated travel service
accelerated product cycles that provide scalable rather than just a train ticket, and support
applications featuring up 40 percent fewer lines distribution partners in ways that currently
of code.7 overload its systems.
Additionally, over the last few years, The EPIC transformation is built on top of
PayPal has acquired several mobile payment ARROW, the system at the heart of Amtraks
technology vendors whose innovations not pricing, scheduling, and ticketing. Built 40
only fill gaps in PayPals portfolio of services, years ago, ARROW provides the foundation
but also drive beneficial disruption within for processing transactions according to
its core systems and operations. In 2013, Amtraks complex business rules. Instead
PayPal acquired Chicago-based Braintree, of ripping out legacy core systems, Amtrak
whose Venmo shared payments products is modernizing them to enable new digital
could potentially boost PayPals presence capabilities, which makes it possible for
in the mushrooming peer-to-peer (P2P) Amtrak to maintain operational stability
transaction space.8 In July 2015, the company throughout the transformation effort.
announced the acquisition of Xoom, a digital To achieve EPICs full potential, Amtrak
money transfer provider, in order to grow its must first address a host of system challenges
presence in the international transfers and within ARROW. The ARROW system
remittances market.9 maintains reservation inventory and provides
With a multifaceted approach to data to other Amtrak systems for accounting,
modernizing its systems and processes, PayPal billing, and analysis. Over the years, Amtrak IT
has revitalized its existing platform, added has added useful custom capabilities, including
new service capabilities, and transformed itself automatic pricing, low-fare finders, and real-
into a broad-reaching payment OS for all time verification of credit and debit cards.11
transactions.10 This approach will certainly be But the customization didnt stop there, says
tested as new firms enter the financial services Debbi Stone-Wulf, Amtraks vice president
of sales, distribution, and customer service.

54
Reimagining core systems

There are a lot of good things about ARROW, cloud platforms. Amtrak is also looking for
but there are items we need to address. opportunities to leverage the EPIC platform
Weve hard-coded business rules that dont in other parts of the organization, including,
belong there and added many point-to-point for example, bag tracking, which is currently a
interfaces over the years as well. Changes take largely manual process.
time. Our plan is to keep the good and get rid This project has helped us look at modern
of the bad. technology for our enterprise platform and
In anticipation of a 2017 rollout, IT and implement it more seamlessly across legacy
development staff are working to design and new systems, says Stone-Wulf. It has also
EPICs architecture and interfaces, and map helped us renew our focus on customers and
out a training plan for business and front-end on what Amtrak is delivering. In the past we
users. The solution includes a new services would ask, How does it help Amtrak? Now we
layer that exposes ARROWs core capabilities ask, How does it help our customers?12
and integrations to both local systems and

55
Tech Trends 2016: Innovating in the digital era

MY TAKE

KARENANN TERRELL
Executive vice president, CIO
Wal-Mart Stores Inc.

As CIO of Wal-Mart Stores Inc., my top priority is into the roadmaps of each of our domain areas as
building and maintaining the technology backbone quickly as possible to accommodate immediate and
required to meet Wal-Marts commitment to its future needs. If were successful, we will never have
customers, both today and in the future. Given our to take on another focused modernization program in
companys sheer sizewe operate 11,500 stores my lifetime.
in 28 countriesscale is a critical use case for every
technology decision we make. And this burgeoning Second, in building our case for taking on such a
need for scale shows no sign of abating: In 2015, our far-reaching project now, we knew our ideas would
net sales topped $482 billion; walmart.com receives gain traction more quickly if we grounded them
upward of 45 million visits monthly. As for our systems, in the businesss own culture of prioritization. By
there are probably more MIPS (million instructions focusing on enhanced functional capabilities, our
per second) on our floor than any place on Earth. efforts to reimagine the underlying technology
Weve built a core landscape that combines custom- became naturally aligned with the needs of the
built solutions, packaged solutions weve bought and business. Within the larger conversation about meeting
adapted, and services we subscribe to and use. growing needs in our function areas, we deliberately
avoided distinguishing or calling out the scope of
All of this makes the IT transformation effort we have modernization efforts. This approach has helped us
undertaken truly historic in both complexity and reach. build support across the enterprise and make sure
Over the last few years, technological innovation modernization isnt viewed as something easily or
has disrupted both our customers expectations and quickly achieved.
those of our partners and employees. We determined
that to meet this challenge, we would modernize Finally, we created strong architectural guidelines
our systems to better serve Wal-Marts core business for our modernization journey, informed by the
capabilities: supply chain, merchandizing, store following tenets:
systems, point-of-sale, e-commerce, finance, and HR.
As such, in all of these areas, we are working to create Get started on no-brainer improvementsareas in
greater efficiencies and achieve higher levels of speed which we have no regrets, with immediate mandate
and adaptability. to take action and do it! For example, we had
applications with kernels built around unsupported
operating systems. We just had to get rid of them.
...Our IT strategy is not (and will Build out services-based platforms, aligned around
never be) about reacting to the customer, supply chain, and our other functional
domains. Our classic footprint (a term I prefer to
technology trend of the moment... legacy, which seems to put a negative emphasis
on most strategic systems) required decisions
From the beginning, three foundational principles around modernization versus transition. We ended
have guided our efforts. First, we have grounded this up with several platforms because of our scale and
project in the basic assumption that every capability complexityunfortunately, one single platform just
we develop should drive an evergreen process. As isnt technologically possible. But we are building
technological innovation disrupts business models and micro-services, then macro services, and, eventually,
drives customer expectations, modernization should be entire service catalogs.
a new way of working, not an all-consuming, point-
in-time event. Our goal has been to embed scope

56
Reimagining core systems

Create a single data fabric to connect the discrete cloud? My answer is because theres nothing wrong
platforms. The information generated across with mainframes; they will likely always play a part in
all touchpoints is Wal-Marts oilit provides a our solution stack. Moreover, theres not enough dark
single, powerful view of customers, products, fiber in the world to meet our transaction volumes
suppliers, and other operations, informing decision- and performance needs.
making and operational efficiency while serving
as the building block for new analytics products Business needs drive our embrace of big data,
and offerings. advanced analytics, mobile, and other emerging
domains; we never put technology first in this
Is there a hard-and-fast calculus for determining equation. With that in mind, were positioning our
which approach to take for reimagining core systems? technology assets to be the foundation for innovation
Only to fiercely keep an eye on value. Our IT strategy and growth, without compromising our existing core
is not (and will never be) about reacting to the business, and without sacrificing our core assets. Im
technology trend of the moment. Im sometimes confident were on the right path.
asked, Why dont you move everything to the

57
Tech Trends 2016: Innovating in the digital era

CYBER IMPLICATIONS
Revitalizing core IT assets can introduce new cyber risks Moreover, deploying network, data, and app
by potentially exposing vulnerabilities or adding new configuration analysis tools during core renaissance
weaknesses that could be exploited. Technical debt discovery, analysis, and migration may also provide
in nonstandard or aging assets that have not been CIOs with greater insight into the architectural and
properly maintained, or legacy platforms that are given systemic sprawl of legacy stacks. This, in turn, can help
exceptions or allowed to persist without appropriate them fine-tune their core renaissance initiatives and
protections, allow threats that could otherwise be their cyber risk management strategies.
reasonably mitigated to persist, and expand risk.
Revitalizing core systems; deploying new analytics
Accordingly, efforts to reimagine the core can tools; performing open heart surgerywhere will
introduce both risk and opportunity. On the risk front, CIOs find the budget for efforts that many agree are
remediation efforts may add new points of attack now critical? Core renaissance can help on this front as
with interfaces that inadvertently introduce issues well. Revitalizing and streamlining the top and bottom
or raise the exposure of long-standing weaknesses. layers of legacy stacks may provide cost savings as
Similarly, repurposing existing services can also create efficiencies increase and care and feeding costs are
vulnerabilities when new usage scenarios extend reduced. Budget and talent resources can then be
beyond historical trust zones. directed toward transforming security systems and
processes. IT solutions increasingly focus either on built-
Yet, reimagining the core also presents opportunities in security and privacy features or on providing easy
to take stock of existing vulnerabilities integration with third-party services that can
and craft new cyber strategies that address security and privacy needs. It is
address the security, control, and imperative that risk is integrated by
privacy challenges in revitalized design as opposed to bolted-on
hybridor even cloud-only as an afterthought.
environments. Companies can
use core-focused initiatives Approaches for addressing
as opportunities to shore vulnerabilities will vary by
up cyber vulnerabilities; company and industry, but
insert forward-looking many are crafted around
hooks around identity, the fundamental strategy of
access, asset, and identifying cyber beacons
entitlement management; that are likely to attract
and create reusable threats, and then applying
solutions for regulatory and the resources needed to
compliance reporting. protect those assets that are
more valuable or that could cause
Were moving beyond significant damage if compromised.
misperceptions about cloud As last years cyber-attacks have shown,
vulnerabilities and the supposedly universal customer, financial, and employee data fit
advantages of direct ownership in managing risk. these risk categories.13 In addition to securing data and
Some companies operating legacy IT environments other assets, companies should also implement the
have mistakenly assumed that on-premises systems tools and systems needed to monitor emerging threats
are inherently more secure than cloud-based or hybrid associated with cyber beacons and move promptly to
systems. Others have, in effect, decoupled security make necessary changes.
from major core systems or relied upon basic defensive
capabilities that come with software packages. Core In the world of security and privacy there are no
revitalization initiatives offer companies an opportunity impregnable defenses. There are, however, strategies,
to design security as a fundamental part of their new tactics, and supporting tools that companies can
technology environments. This can mean major surgery, utilize to become more secure, vigilant, and resilient
but in the current risk and regulatory environments, in managing cyber risk. Efforts to reimagine the core
many organizations may have no choice but to proceed. are an opportunity to begin putting those ramparts
Doing so as part of a larger core renaissance initiative in place.
can help make the surgery less painful.

58
Reimagining core systems

Where do you start?


Core modernization is already on many logic has been resource-intensive and
IT leaders radar. In a recent Forrester survey issue-prone to the point of being cost-
of software decision makers, 74 percent listed prohibitive. Why migrate that old COBOL
updating/modernizing key legacy applications application when its cheaper to train a
as critical or high priority.14 The challenge few folks to maintain it? Increasingly,
many of these leaders face will be to move however, new technologies are making
from an acknowledged need to an actionable core modernization much more affordable.
plan with a supporting business case and For example, conversion technologies can
roadmap. Reimagining the core could involve achieve close to 100 percent automated
gearing up for a sustained campaign of conversion of old mainframe programs
massive scope and possible risk, potentially to Java and modern scripting languages.
one that business leaders might not be able to New tools are being developed to
understand or willing to fully support. automate the scanning and analysis of ERP
Yet, the fact is that CIOs no longer have a customizations, which allows engineers and
choice. In the same way that the core drives others to focus their efforts on value-added
the business, it also drives the IT agenda. tasks such as reinventing business processes
Consider this: What if that same legacy and user interactions.
footprint could become the foundation for
innovation and growth and help fuel broader Shoes for the cobblers children: Leading
transformation efforts? CIOs caution against approaching core
The following considerations may help modernization as a project with a beginning
bring this vision more clearly into focus: and an end. Instead, consider anchoring
efforts in a broader programmatic agenda.15
Its a business decision: There should be Keep in mind that core modernization
a clear business case for modernizing core efforts shouldnt be limited to data and
systems. Historically, business case analysis applicationsthey should also revisit
has tended to focus primarily on cost underlying infrastructure. As IT workloads
avoidance, thus rendering many proposed migrate to higher levels of abstraction, the
initiatives uneconomical. Its hard to justify infrastructure will require deep analysis.
rewriting a poorly understood, complex Shifting simultaneously to software-defined
core legacy application based only on environments and autonomic platforms16
the prospect of avoiding costs. However, can amplify application and data efforts.
when companies frame the business case Similarly, higher-level IT organization,
in terms of lost business opportunities and delivery, and interaction models will need
lack of agility, the real costs of technical to evolve along with the refreshed core.
debt become more apparent. Even then, Consider undertaking parts of the right-
however, it is important to be realistic when speed IT model17 in conjunction with core
projecting the extent of hidden complexity, modernization efforts.
and how much work and budget will
be required to meet the challenges that Honor thy legacy: Reimagining the
surround this complexity. core has everything to do with legacy.
That legacy is entangled in a history of
Tools for the trade: Until recently, the investment decisions, long hours, and
process of moving off ERP customizations careers across the organization. A portion
and rewriting millions of lines of custom of your workforces job history (not to

59
Tech Trends 2016: Innovating in the digital era

mention job security) is embedded in companys technology heritage without


the existing footprint. As such, decisions becoming beholden to it. Sidestep
concerning the core can be fraught with subjective debates by focusing on fact-
emotional and political baggage. As you based, data-driven discussions about
reimagine core systems, respect your pressing business needs.

60
Reimagining core systems

Bottom line
Legacy core systems lie at the heart of the business. In an age when every company is a technology
company, these venerable assets can continue to provide a strong foundation for the critical systems
and processes upon which growth agendas are increasingly built. But to help core systems fulfill
this latest mission, organizations should take steps to modernize the underlying technology stack,
making needed investments grounded in outcomes and business strategy. By reimagining the core
in this way, companies can extract more value from long-term assets while reinventing the business
for the digital age.

61
Tech Trends 2016: Innovating in the digital era

Authors
Scott Buchholz, Systems Integration director,
Deloitte Consulting LLP

Scott Buchholz is a technology leader with 20 years of experience


in the areas of solution, enterprise, and data architecture;
program management; and IT service management. He leads
technology-enabled business transformations that range from
optimization efforts to full-lifecycle implementations.

Ben Jones, Technology principal, Deloitte Consulting LLP

With more than 20 years of process and technology consulting


experience, Ben Jones has led large, complex process and technology
projects in multiple industries, including utilities, consumer and
industrial products, and media. Jones is an experienced program
manager with demonstrated success leading all facets of business
transformation projects. He is highly regarded for his extensive
knowledge of technology strategy, project management, risk
management, and implementation methodology.

Pavel Krumkachev, Technology principal,


Deloitte Consulting LLP

Pavel Krumkachev helps clients with strategic transformations that


leverage Oracle applications and technology. He is a trusted advisor
to Fortune 500 companies in large-scale ERP implementations, post-
merger integration initiatives, and enterprise architecture projects.
Krumkachev is a knowledge leader and published author on a variety
of topics, including mergers and acquisitions, IT strategy, cloud, digital
enterprise, and XaaS.

62
Reimagining core systems

Endnotes
1. Deloitte, 2015 global CIO survey, http://www2. 9. PayPal to acquire Xoom, BusinessWire,
deloitte.com/uk/en/pages/technology/articles/ July 1, 2015, http://www.businesswire.com/
cio-survey.html, accessed January 19, 2016. news/home/20150701006690/en/PayPal-
2. Sharon Florentine, Four ways businesses Acquire-Xoom, accessed October 26, 2015.
can close the legacy tech skills gap, CIO, 10. Ingrid Luden, PayPals David Marcus:
October 15, 2015, http://www.cio.com/ Braintree keeps its brand and ops intact;
article/2993834/staff-management/4-ways- Venmo will be used for big P2P push,
businesses-can-close-the-legacy-tech-skills- TechCrunch, September 26, 2013, http://
gap.html, accessed January 19, 2016. techcrunch.com/2013/09/26/paypals-david-
3. Texas Department of Motor Vehicles, marcus-braintree-keeps-its-brand-and-
http://www.txdmv.gov/about-us, ac- ops-intact-venmo-will-be-used-for-big-
cessed October 7, 2015. p2p-push/, accessed October 26, 2015.

4. Whitney Brewster (executive director, Tx- 11. National Railroad Passenger Corporation
DMV) and Eric Obermier (CIO, TxDMV), Major Information Systems, https://www.
interview with the authors, December 14, 2015. amtrak.com/ccurl/244/705/Amtrak-
Major_Information_Systems-Oct2008-2.
5. PayPal corporate fact sheet, https:// pdf, accessed January 12, 2016.
www.paypal.com/us/webapps/mpp/
about/, accessed October 26, 2015. 12. Debbi Stone-Wulf (vice president, sales,
distribution and customer service, Amtrak),
6. Linda Tucci, Four pillars of PayPals big interview with the authors, December 15, 2015.
bang agile transformation, Search CIO, 2014,
http://searchcio.techtarget.com/feature/ 13. Paul Szoldra, The 9 worst cyber attacks
Four-pillars-of-PayPals-big-bang-Agile- of 2015, Tech Insider, December 29,
transformation, accessed November 17, 2015. 2015, http://www.techinsider.io/cyberat-
tacks-2015-12, accessed February 8, 2016.
7. Charles Babcock, PayPal revamps data center
for agility, Information Week, April 28, 2015, 14. Paul D. Hamerman and Randy Heffner,
http://www.informationweek.com/strategic- Dont just maintain business applications,
cio/executive-insights-and-innovation/ raise business responsiveness, Forrester
paypal-revamps-data-center-for-agility/d/d- Research, Inc., October 23, 2015.
id/1319855, accessed November 17, 2015. 15. Chris Murphy, Why Wal-Marts CIO
8. Jenna Wortham, Braintree, a payments calls legacy IT systems classic, Informa-
company, buys Venmo for $26.2 million, tion Week, May 6, 2015, http://www.
Bits Blogs, NYTimes.com, August 16, 2012, informationweek.com/why-wal-marts-
http://bits.blogs.nytimes.com/2012/08/16/ cio-calls-legacy-it-systems-classic/a/d-
payments-start-up-braintree-buys-venmo-for- id/1320286, accessed January 19, 2016.
26-2-million/?_r=0, accessed October 26, 2015. 16. Deloitte Consulting LLP, Tech Trends
2016: Autonomic platforms, 2016.
17. Deloitte Consulting LLP, Tech Trends
2016: Right-speed IT, 2016.

63
Autonomic platforms

Autonomic platforms
Building blocks for labor-less IT

IT may soon become a self-managing service provider without technical


limitations of capacity, performance, and scale. By adopting a build
once, deploy anywhere approach, retooled IT workforcesworking with
new architectures built upon virtualized assets, containers, and advanced
management and monitoring toolscould seamlessly move workloads
among traditional on-premises stacks, private cloud platforms, and public
cloud services.

Autonomic platforms build upon and bring and desktop facilities are expensive, difficult
together two important trends in IT: software- to manage, and often woefully suboptimized.
defined everythings1 climb up the tech stack, Often procured and configured for single-
and the overhaul of IT operating and delivery purpose usages, they are sized to withstand
models under the DevOps2 movement. With the most extreme estimates of potential load.
more and more of IT becoming expressible as Moreover, they are typically surrounded by
codefrom underlying infrastructure to IT duplicate environments (most of them idle)
department tasksorganizations now have that were created to support new development
a chance to apply new architecture patterns and ongoing change. In the mainframe days,
and disciplines. In doing so, they can remove such inefficiencies were mitigated somewhat by
dependencies between business outcomes and logical partitionsa segment of a computers
underlying solutions, while also redeploying hardware resources that can be virtualized and
IT talent from rote low-value work to the managed independently as a separate machine.
higher-order capabilities needed to deliver Over the years, this led to virtualization, or the
right-speed IT.3 creation of software-based, logical abstractions
To truly harness autonomic platforms of underlying physical environments in which
potential, one must first explore its IT assets can be shared.
foundational elements. Notably, virtualization shortened the time
required to provision environments; rather
Virtualization up than waiting months while new servers were
ordered, racked, and configured, organizations
The kernel of software-defined everything
could set up a virtual environment in a matter
(SDE) has been a rallying cry in IT for decades.
of hours. Though virtualization started at the
The idea is straightforward: Hardware assets
server level, it has since expanded up, down,
like servers, network switches, storage arrays,

65
Tech Trends 2016: Innovating in the digital era

Figure 1. Autonomic architecture and across the technology stack. It is now also
widely adopted for network, storage, and even
Autonomic platforms combine two important IT movements:
software-defined everything across the technology stack and data center facilities. Virtualization alone now
DevOps operating and delivery models. Both movements are accounts for more than 50 percent of all server
further accelerated by robotics, process automation, and workloads, and is projected to account for 86
cognitive technologies.
percent of workloads by the end of 2016.4

DevOps down
autonomic platforms
As virtualization was working its way
up the stack, the methods and tools for
automatic dynamic managing IT assets and the broader business
provisioning resourcing
of IT were undergoing a renaissance. Over
time, IT departments became saddled with
continuous availability
monitoring management manual processes, cumbersome one-size-fits-
all software development lifecycle (SDLC)
methodologies. Or they developed over-
the-wall engineering mind-sets in which
containers individuals fulfill their own obligations with
little understanding or concern about the
needs of downstream teams. This operational
software-defined enhanced devops baggage has fueled tension between ITs
everything capabilities
development group, which pushes for speed
and experimentation with new features
servers sensing and tools, and its operations organization,
which prizes stability, performance, and
fault
detection predictable maintenance.
networks
To combat organizational inefficiency as
workforce

responding well as any discord that has arisen among


storage various parts of the IT value chain, many
reporting organizations are implementing DevOps,5 a
data new way of organizing and focusing various
centers traditional teams. DevOps utilizes tools and processes
environment to eliminate some of the waste embedded in
workplace management legacy modes for operating IT. In a way, it
technology
requirements also extends the software-defined-everything
management mission into the workforce by instilling
continuous
abstractions and controls across the tasks
integration required to manage the end-to-end life cycle of
IT. Scope varies by organization, but DevOps
release
management often concentrates on a combination of
the following:
incident
management
Environment management: Configuration,
system provisioning, and deployment of
maintenance
(increasingly virtualized) environments

Requirements management: Disciplines


for tracking details and priorities of features

66
Autonomic platforms

and specificationsboth functional automation + robotics, or taking automation to


and nonfunctional the next level by basing it in machine learning.
Almost all traditional IT operations are
Continuous integration: Providing the candidates for autonomics, including anything
means to manage code updates across thats workflow-driven, repetitive, or policy-
multiple developers and to validate and based and requires reconciliation between
merge edits to resolve any conflicts, issues, systems. Approaches have different names:
or redundant efforts robotic process automation (RPA), cognitive
automation, intelligent automation, and even
Release management: Bundling and cognitive agents. However, their underlying
deploying new solutions or editing existing stories are similarapplying new technologies
solutions through staging environments to automate tasks and help virtual workers
into production handle increasingly complex workloads.
Virtualized assets are an essential part
Event/incident management: Tracking, of the autonomics picture, as are the core
triage, and resolution of system bugs or DevOps capabilities listed above. Investments
capability gaps in these assets can be guided by a handful of
potential scenarios:
System maintenance/monitoring:
Ongoing tracking of overall solution Self-configuration: Automatic provisioning
performance across business and technical and deployment of solution stacks include
attributes, including network, servers, and not only the underlying data center
storage components resources and requisite server, network,
and storage requirements, but also the
Production support: Managing and automated configuration of application,
monitoring application performance data, platform, user profile, security, and
in real time, including monitoring privacy controls, and associated supporting
run-time activities, batch jobs, and tools, interfaces, and connections for
application performance immediate productivity. Importantly, efforts
should also be made to build services to
Business command center: Real- automatically decommission environments
time management/monitoring of and instances when they are longer
business transactions such as payment neededor, perhaps more interestingly,
flows, inventory bottlenecks, and when they are no longer being used.
existential threats
Self-optimizing: Self-optimizing refers
to dynamic reallocation of resources in
Enter autonomic platforms which solutions move between internal
With the building blocks in place, the real environments and workloads are shifted
fun can begin: automating and coordinating to and between cloud services. The rise of
the interaction of these software-defined containers has been essential here, creating
capabilities. Thats where autonomic platforms an architecture that abstracts the underlying
come in, layering in the ability to dynamically physical and logical infrastructure, enabling
manage resources while integrating and portability across environments. Note
orchestrating more of the end-to-end activities that this build once, deploy anywhere
required to build and run IT solutions. architecture also requires services to
When discussing the concept of manage containers, cloud services, and the
autonomics, we are really talking about migration of build- and run-time assets.

67
Tech Trends 2016: Innovating in the digital era

Self-healing: DevOps asked designers to target parts of emerging platforms and help
embed instrumentation and controls for retrofit legacy platforms to participate in
ongoing management into their solutions, autonomic platforms. Start-ups are aggressively
while also investing in tools to better attacking this space, bolstered by their
monitor system performance. Autonomic ability to capture value through software
platforms take this a step further by adding enablers in segments historically protected
detailed availability and service-level by huge manufacturing and R&D overheads.
availability management capabilities, as Multivendor landscapes are the new reality
well as application, database, and network the arrival of an ERP for IT solution by a
performance management tools. These single vendor remains years away. Yet even
can be used to continuously monitor without a single end-to-end solution, leading
the outcome-based health of an end-to- organizations are taking holistic, programmatic
end solution, anticipate problems, and approaches to deploy and manage autonomic
proactively take steps to prevent an error, platforms. These often include taking tactical
incident, or outage. first steps to consolidate environments and
solutions and to modernize platformssteps
that can help fund more ambitious enablement
The journey ahead and automation efforts.
The promise of autonomic platforms (like Furthermore, autonomic platforms can act
those of its predecessors, SDE and DevOps) as a Trojan horse that elevates ITs standing
can wither in the face of circumscribed throughout the enterprise. How? By boosting
initiatives and siloed efforts. Heavy IT responsiveness and agility today and by
segmentation among infrastructure and providing the architectural underpinnings
delivery management tool vendors does not needed to support the next-generation
help either. The good news is that established solutions and operating environments
players are now introducing products that of tomorrow.

68
Autonomic platforms

Lessons from the front lines


Automating one step at a time duties. Metrics emphasized process compliance
rather than what the process was trying
In support of the companys ongoing digital
to control or its impact to the business. To
transformation, American Express continually
change the mind-set, infrastructure specialists
strives to enhance the way it does business to
were given training to help them hone
meet changing customer needs. The financial
their development skills and gain expertise
services companys goal is engage new
in autonomic platforms and tools. These
customer groups wherever they are, whenever
specialists were also charged with creating
they choose, using whatever device they prefer.
lower-level function automation and putting
To this end, tech and business leaders
in place monitoring, maintenance, and self-
have challenged themselves to accelerate
healing capabilities functions focused on
their existing product development cycle.
business process and activity monitoring,
The technology organization took up the
not on the performance of the underlying
challenge by looking for a way to scale its
technology components.
infrastructure and operations to deliver across
Additionally, other product teams
a large and often siloed ecosystem in new and
have begun transforming the systems that
innovative ways. Cost and speed complaints
support other American Express products
surfaced, with incremental plans for modest
and platforms. In this environment, product
improvements leading to one executive
development still relies upon more traditional
observing, We dont need a faster horse; what
software engineering methods, such as
we really need is an automobile. In response,
waterfall methodologies and manual testing
the group supporting the prepaid/mobile
and deployment. Developers have begun to
payments platformwhich serves as the
tackle transformation in stagesintroducing
backbone for the companys digital products
concepts from agile development such as
rallied behind a software-defined everything
regression testing, measuring legacy code
strategyfrom environments and platforms to
quality, and establishing foundational hooks
operating and delivery models.
and automated routines for instrumentation
They first began working on reducing
and maintenance. In addition, they are
cost, improving time to market, and
working to help all team members become
automating much of the prepaid/mobile
more versed in agile and DevOps processes
payments platform. Then, they put tools
and techniques.
in place that allowed developers to deploy
Given the complexity of the existing
their solutions, from development through
multivendor, multiplatform IT ecosystem
production, without friction. Development
and the overarching financial regulatory
teams are now incented differentlyfocused
requirements, American Express is taking
not only on speed to value, but also on
a variety of approaches to automating and
building operationally manageable code.
integrating its IT ecosystemrolled out in
Such enhancements typically manifest in
phases over time. And while the existing team
important ways, from the percentage of
has taken impressive leaps, the company has
SCRUM scope reserved to pay down technical
also strategically inserted talent who have
debt6 to creating expectations for embedded
seen this movie before. At the end of the day,
instrumentation for ongoing ops.
the challenge is about fostering a culture and
On the operations side, Amexs technology
mind-set changepushing a new vision for IT
team adopted ITIL processes built around
and revitalizing existing technical and talent
controls, checkpoints, and segregation of
assets to drive improved value for customers

69
Tech Trends 2016: Innovating in the digital era

and to differentiate American Express from aligned to support both traditional and nimble
the competition.7 IT teams. On the process front, key initiatives
included creating a continuous delivery
Boosting productivity framework and implementing a new approach
to QA that focused more on business assurance
with DevOps than quality assurance, and emphasized
To keep up with exploding demand for automation throughout product testing.
cloud services in a marketplace defined by Finally, the pilots technology
rapid-fire innovation, VMwares development transformation effort involved automating
operations team had become a beehive of the deployment process using VMwares own
activity. In 2014 alone, the company ran five vRealize suite, which helped address last-
release trains in parallel and brought 150 mile integration challenges. Pilot leaders
projects to completion. deployed containers and created a software-
Yet, the pace of development was becoming defined stack across servers, storage, and the
unsustainable. The process was beset by too network to help reduce deployment complexity
many handoffs and downtimes for code and guarantee portability.
deployments. Quality assurance (QA) was Pilot results have been impressive; Resource
slowing release momentum. According to efficiency improved by 30 percent, and app
Avon Puri, VMwares vice president of IT, quality and time to market each improved by
enterprise applications, and platforms, the 25 percent. Puri says that results like these
companys approach to developmentfrom were made possible by aligning everyone
requirements to releaseneeded an overhaul. developers, admins, and otherson one team,
It was taking us 22 days to get a new operating and focusing them on a single system. This
environment up and running, he says. Also, is where we get the biggest bang for the buck:
because of our overhead, our projects were We say, Heres a feature we want, this is what it
becoming increasingly expensive. means, someone writes the code, and after QA,
So the company launched a nine-project we put it into production.8
pilot to explore the possibility of transitioning
from traditional development to a DevOps
model with a 70-member DevOps team, with
Innovation foundry
the aim of bringing down costs, completing In downtown Atlanta, a software engineer
projects more quickly, and streamlining the shares an idea with his fellow team members
QA process. The pilot took a three-pronged for improving a product under development.
people-process-technology approach, and Over the course of the morning, Scrum team
focused on the following parameters: resource members quickly and nimbly work to include
efficiency, application quality, time to market, the idea in their current sprint to refine and
deployment frequency, and cost savings. test the viability of the idea, generate code,
The people transformation component and publish it to the code branch. Within
involved organizing key talent into a self- hours, the enhancement is committed into the
contained DevOps team that would own build, validated, regression-tested against a
projects end-to-end, from design to release. full suite of test scenarios, dynamically merged
To support this team, pilot leaders took steps with updates from the rest of the team, and
to break down barriers between departments, packaged for deploymentall automatically.
processes, and technologies, and to help This is just another day in the life of iLab,
developers work more effectively with business Deloitte Consulting Innovations software
units in early planning. Notably, they also product development center, which builds
deployed a multimodal IT working model in commercial-grade, cloud-based, analytics-
which process models and phase gates were driven, software products designed to be

70
Autonomic platforms

launched as stand-alone offerings. iLab integration with our products, Graves says.
was born out of a need to industrialize the Today we still deploy manually, but it is by
intellectual property of the core consulting choice and we see that changing in the near
practice through software creation by future.
dedicated product development teams, says iLabs commitment to autonomic platforms
Casey Graves, a Deloitte Consulting LLP has upstream impacts, shaping the design
principal responsible for iLabs creative, and development of solutions to include
architecture, infrastructure, engineering, and hooks and patterns that facilitate automated
support areas. Today, our goal is to develop DevOps. Downstream, it guides the build-
impactful products, based upon our consulting out of underlying software-defined networks
intellectual property, quickly and efficiently. designed to optimally support product and
That means putting the talent, tools, and agile platform ambitions. Moreover, supporting a
processes in place to realize automations full truly nimble, agile process requires ensuring
potential. that product teams are disciplined to following
To support the pace of daily builds and the processes and have the tools, technologies,
biweekly sprints, iLab has automated process skills they need to achieve project goals, and to
tasks wherever possible to create a nearly work effectively on an increasingly automated
seamless process flow. Because we use agile development platform.9
techniques, we are able to use continuous

71
Tech Trends 2016: Innovating in the digital era

MY TAKE
JAMES GOUIN
CTO and transformation executive
AIG

AIGs motto, Bring on tomorrow, speaks to our Adapting a large organization with legacy assets and
companys bedrock belief that by delivering more multiple mainframes in various locations around the
value to our 90 million insurance customers around globe to this new model is not easy, but it is a must
the world today, we can help them meet the do for us. Our goal is to be a mobile-first, cloud-first
challenges of the future. organization at AIG. To do that, our infrastructure
must be rock solid, which is why strengthening
the network was so important. Were investing
This is not just any IT in a software-defined network to give us flexible
modernization initiative; the infrastructure to deploy anytime and anywhere
region to region, country to country. These
disruptive forces bearing down investments also introduce delivery capabilities in the
on the financial services sector are cloud, which can help us enter new relationships and
confidently define a roadmap for sourcing critical
too fundamental to address with capabilities that are outside of AIGs direct control.
a version upgrade or grab bag of Everything were doing is important for todays
shiny object add-ons. business. But it is also essential in a world where the
sensors and connected devices behind the Internet
of Things have already begun changing our industry.
It also means reinventing ourselves in a market being Telematics is only the beginning. Data from sensors,
disrupted by new players, new business models, and people, and things (smart or otherwise) will give
changing customer expectations. Enablement of us unprecedented visibility into customer behavior,
end-to-end digital services is everything today. Our product performance, and risk. This information
customers want products and services fast, simple, can be built into product and pricing models, and
and agnostic of device or channel. To deliver that used to fuel new offerings. The steps we are taking
value consistently, were working to transform our to automate IT and create a flexible, modern
IT systems and processes. Our goal: to build the infrastructure will become the building blocks of this
flexible infrastructure and platforms needed to deliver new reality.
anytime, anywhere, on any device, around the
globeand do it quickly. AIGs transformation journey is happening against
a backdrop of historic change throughout the
This is not just any IT modernization initiative; the insurance industry and in insurance IT. Not too long
disruptive forces bearing down on the financial ago, underwriters, actuaries, and IT were part of the
services sector are too fundamental to address with back office. Now, IT also operates in the middle and
a version upgrade or grab bag of shiny object front offices, and has taken a seat in the boardroom.
add-ons. Insurance providers, banks, and investment Likewise, the consumerization of technology has
firms currently face growing pressure to transform made everyone an IT expert; executives, customers,
their business models and offerings, and to engage and everyone in between now have extremely high
customers in new ways. This pressure is not coming expectations of technologyand of those who
from within our own industry. Rather, it emanates manage it within organizations like ours. The bar
from digital start-ups innovating relentlessly and, in is high, but at the end of the day everyone is just
doing so, creating an entirely new operating model reinforcing why were here: to deliver great products
for IT organizations. I think of this as a west coast and services for our customers.
style of IT: building minimally viable products and
attacking market niches at speeds that companies
with traditional east coast IT models dream of.

72
Autonomic platforms

CYBER IMPLICATIONS
Risk should be a foundational consideration as flip side, incorporating cyber into orchestration can give
organizations create the infrastructure required to rise to several challenges around cyber governance:
move workloads seamlessly among traditional on-
premises stacks, private cloud platforms, and public Determining what needs to stay on-premises and
cloud services. Much of this infrastructure will likely be what doesnt: Every organization will have unique
software-defined, deeply integrated across components, considerations as it identifies the infrastructure
and potentially provisioned through the cloud. As such, components that can be provisioned from external
traditional security controls, preventive measures, and sources, but for many the best option will likely
compliance initiatives will likely be outmoded because be a mix based on existing investments, corporate
the technology stack they sit on top of was designed as policies, and regulatory compliance. In any scenario,
an open, insecure platform. the security solutions should be seamless across on-
premises and off-premises solutions to prevent gaps
To create effective autonomic platforms within a in coverage.
software-defined technology stack, key concepts
around things like access, logging and monitoring, Addressing localization and
encryption, and asset management should be data management policies: As
reassessed, and, if necessary, enhanced. systems spread inside and
There are new layers of complexity, new outside corporate walls, IT
degrees of volatility, and a growing organizations may need
dependence on assets that may not to create a map that
be fully within your control. The illustrates the full data
risk profile expands as critical supply chain and
infrastructure and sensitive potential vulnerabilities.
information is distributed to new This can help guide the
and different players. development of policies
that determine how
Containers make it possible
all parties in the data
to apply standards at the
supply chain approach
logical abstraction layer that
data management
can be inherited by downstream
and security.
solutions. Likewise, incorporating
autonomic capabilities within cyber- Growing numbers of
aware stacks can help organizations companies are exploring
respond to threats in real time. For example, avenues for using virtualization to
the ability to automatically detect malware on your address these and other challenges while
network, dynamically ring-fence it, and then detonate improving security control. At VMware, one approach
the malware safely (and alert firewalls and monitoring leverages the emerging microsegmentation trend.
tools to identify and block this malware in the future) Microsegmentation is about using virtualization as a
could potentially make your organization more secure, means to create a virtual data center where all the
vigilant, and resilient. machines that enable a multi-tiered service can be
connected together within a virtual network, says Tom
Revamped cybersecurity components should be Corn, senior vice president of security products. Now
designed to be consistent with the broader adoption of you have a construct that allows you to align your
real-time DevOps. Autonomic platforms and software- controls with what you want to protect.
defined infrastructure are often not just about cost
reduction and efficiency gains; they can set the stage Corn adds that with microsegmentation, it is very
for more streamlined, responsive IT capabilities, and difficult for an attacker to get from the initial point of
help address some of todays more mundane but entry to high-value assets. If someone breaks in and
persistent challenges in security operations. has one key, that one key should not be the key to the
kingdom; we need to compartmentalize the network
Incorporating automated cyber services in the such that a breach of one system is not a breach of
orchestration model can free security administrators to everything you have.10
focus on more value-added and proactive tasks. On the

73
Tech Trends 2016: Innovating in the digital era

Where do you start?


Autonomic platforms typically have too good to be truea self-funding vehicle
humble beginnings, often emerging from to build concrete capabilities for the IT
efforts to modernize pieces of the operating organization of the future.
environment or the SDLC. Replacing siloed, The following can serve as starting points in
inefficient components with siloed, optimized the journey to autonomic platforms:
components no doubt has an upside. However,
companies may achieve more compelling Containers: Though the hype around the
results by shifting from one-offs to any of the container movement is largely justified,
following integrated, orchestrated approaches: we remain in the early days of adoption.
IDC analyst Al Gillen estimates that fewer
Option 1: A greenfield build-out of an than one-tenth of 1 percent of enterprise
autonomic ecosystem featuring cloud, applications are currently running in
software-defined everything, and agile containers. Whats more, it could be
techniques. Existing workloads can be 10 years before the technology reaches
moved to the greenfield over time, while mainstream adoption and captures more
new workloads can start there. than 40 percent of the market.12 Consider
adopting a twofold strategy for exploration.
Option 2: Move to the new autonomic First, look at open-source and start-up
platform world using containers. Simplify options to push emerging features and
the environment and sunset redundant or standards. Then, tap established vendors as
useless components over time. they evolve their platforms and offerings
to seamlessly operate in the coming
Option 3: Move to the new world container-driven reality.
application by application, realizing that
some applications will never make the API economy:13 In some modern IT
journey and will have to die on the vine. architectures, large systems are being
broken down into more manageable pieces
Before we drill deeper into these and known as microservices. These sub-
other strategies, it is important to note that components exist to be reused in new and
ongoing budget pressures and rising business interesting ways over time.15 For example,
expectations dont lend themselves to far- organizations may be able to realize
reaching transformation agendasespecially autonomic platforms full potential more
those targeting ITs behind-the-scenes quickly by deconstructing applications
trappings. That said, operations continue to into application programming interfaces
dominate global IT budgets, accounting for (APIs)services that can be invoked by
57 percent of overall spending, according other internal or external systems. These
to findings from Deloittes 2015 global CIO modular, loosely coupled services, which
survey.11 (Interestingly, only 16 percent take advantage of self-configuration, self-
of spending targets business innovation.) deployment, and self-healing capabilities
Addressing inefficiencies inherent to legacy much more easily than do behemoth
infrastructure and IT delivery models can systems with hard-wired dependencies,
likely improve operations and reduce costs. help reduce complex remediation and
That those same investments can also increase the amount of replatforming required
agility and business responsiveness may seem

74
Autonomic platforms

for legacy systems to participate in Robotics: While much of the broader


autonomic platforms. robotics dialogue focuses on advanced
robotics drones, autonomous
Cloudy perspective: Cloud solutions will transportation, and exoskeletons
likely play a part in any organizations progress is also being made in the realm
autonomic platform initiatives. Increasingly, of virtualized workforces. RPA, cognitive
virtualized environments are being agents, and other autonomic solutions
deployed in the cloud: In 2014, 20 percent are advancing in both IT operations
of virtual machines were delivered through and business process outsourcing.
public infrastructure-as-a-service (IaaS) Their promise encompasses more than
providers.16 However, dont confuse the efficiency gains in mundane tasks such as
means with the end. Ultimately, cloud entering data. Indeed, the most exciting
offerings represent a deployment option, opportunities can be found in higher-
which may or may not be appropriate order, higher-value applications, such as
based on the workload in question. Price virtual infrastructure engineers that can
per requisite performance (factoring in proactively monitor, triage, and heal the
long-term implications for ongoing growth, stack, or virtual loan specialists that help
maintenance, and dependencies) should customers fill out mortgage applications.
drive your decision of whether to deploy a
public, private, or hybrid cloud option or
embrace an on-premises option based on
more traditional technologies.

75
Tech Trends 2016: Innovating in the digital era

Bottom line
IT has historically underinvested in the tools and processes it needs to practice its craft. Technology
advances in underlying infrastructure now offer IT an opportunity to reinvent itself with revamped
tools and approaches for managing the life cycle of IT department capabilities. By deploying
autonomic platforms, IT can eliminate waste from its balance sheet while shifting its focus from
low-level tasks to the strategic pillars of business performance.

76
Autonomic platforms

Authors
Ranjit Bawa, US Cloud and Infrastructure leader,
Deloitte Consulting LLP

Ranjit Bawa has over 15 years of experience in large-scale


end-to-end infrastructure transformations at leading global
multinationals. He assists clients with issues around growth and
agility, technology innovation, new business models, service
quality, operational efficiency, and risk management.

Jacques de Villiers, Cloud Services director,


Deloitte Consulting LLP

Jacques de Villiers is a technologist with deep domain and cloud


experience, helping clients transition applications and infrastructure
from legacy and on-premise environments to private and public clouds.
He is also responsible for helping Deloitte Consulting LLP to define
and execute against its cloud vision and strategy, identifying partners,
technology, and trends that are affecting Deloittes clients.

George Collins, Deloitte Digital chief technology officer,


Deloitte Consulting LLP

George Collins has over 15 years of experience helping executives shape


technology-centric strategies, optimize business processes, and define
product and platform architectures. Collins has delivered a variety of
technology implementations, from e-commerce, CRM, and ERP to
content management and custom development projects. With global
experience, he has a broad outlook on the evolving needs of a variety of
markets.

77
Tech Trends 2016: Innovating in the digital era

Endnotes
1. Deloitte Consulting LLP, Tech Trends 7. Rhushabh Mehta (vice president and software
2015: Software-defined everything, 2015. development leader, American Express)
2. Deloitte Consulting LLP, Tech Trends and Bo Gorham (vice president of global
2014: Real-time DevOps, 2014 infrastructure, American Express Technology),
interview with the authors, November 2015.
3. Deloitte Consulting LLP, Tech Trends
2016: Right-speed IT, 2016. 8. Avon Puri (vice president of enterprise
applications and platforms, VMware),
4. Kent Weaver and Jim Gallagher, The interview with the authors, November 2015.
2015 rules of data center migration,
Baseline, January 30, 2015, http://www. 9. Casey Graves (principal, Deloitte
baselinemag.com/infrastructure/the- Consulting LLP), interview with
2015-rules-of-data-center-migration. the authors, January 7, 2016.
html, accessed January 20, 2016. 10. Sean Michael Kerner, VMware plots a
5. Amy DeMartine, Eveline Oehrlich and course for the future of security, eWeek, April
Megan Doerr, Brief: Join the DevOps 20, 2015, http://www.eweek.com/security/
craze, but start with the right business case, vmware-plots-a-course-for-the-future-of-
Forrester Research Inc., September 24, 2015. security.html, accessed December 29, 2015.

6. Deloitte Consulting LLP, Tech Trends 11. Deloitte, 2015 global CIO survey, http://www2.
2014: Inspiring disruption, 2014. deloitte.com/uk/en/pages/technology/articles/
cio-survey.html, accessed January 20, 2016.

78
Autonomic platforms

12. Brandon Butler, Why (and how) VMware 14. Matt Miller, Innovate or die: The rise of
created a new type of virtualization just for microservices, Wall Street Journal (CIO
containers, CIO, September 5, 2015, http:// Journal), October 5, 2015, http://blogs.wsj.
www.cio.com/article/2983377/data-center/ com/cio/2015/10/05/innovate-or-die-the-rise-
why-and-how-vmware-created-a-new- of-microservices/, accessed January 20, 2016.
type-of-virtualization-just-for-containers. 15. Thomas J. Bittman, Four trends
html, accessed January 20, 2016. changing server virtualization decisions,
13. Deloitte Consulting LLP, Tech Trends Gartner Inc., March 5, 2015.
2015: API economy, 2015.

79
Blockchain: Democratized trust

Blockchain: Democratized trust


Distributed ledgers and the future of value

Trust is a foundational element of business. Yet maintaining itparticularly


throughout a global economy that is becoming increasingly digital
is expensive, time-consuming, and, in many cases, inefficient. Some
organizations are exploring how blockchain, the backbone behind bitcoin,
might provide a viable alternative to the current procedural, organizational,
and technological infrastructure required to create institutionalized trust.
Though these exploratory efforts are still nascent, the payoff could be
profound. Like the Internet reinvented communication, blockchain may
similarly disrupt transactions, contracts, and trustthe underpinnings of
business, government, and society.

Discussions of blockchain often begin could represent transactions, contracts, assets,


with bitcoin, the cryptocurrency that gained identities, or practically anything else that
notoriety as much for its novelty as for the can be described in digital form. Entries are
volatility of its valuation. In a fog of media permanent, transparent, and searchable, which
reports driven by bitcoins associations with makes it possible for community members
dubious use cases,1 the far-reaching potential to view transaction histories in their entirety.
of blockchainthe technology underpinning Each update is a new block added to the
bitcoinremained largely obscured. Yet, that is end of the chain. A protocol manages how
changing. Organizations throughout the public new edits or entries are initiated, validated,
and private sectors have begun exploring ways recorded, and distributed. With blockchain,
that blockchain might profoundly transform cryptology replaces third-party intermediaries
some of their most basic operations, from as the keeper of trust, with all blockchain
the way they execute contracts and carry out participants running complex algorithms to
transactions to the ways they engage customers certify the integrity of the whole.
and more. It seems ironic that as digital transforms
What is blockchain? Simply put, it is a the world, one of its more promising building
distributed ledger that provides a way for blocks is a throwback to our decidedly analog
information to be recorded and shared past. Blockchain is the tech-charged equivalent
by a community. In this community, each of the public ledgers that were once used in
member maintains his or her own copy of the towns to record everything of importance:
information and all members must validate the buying and selling of goods; the transfer
any updates collectively. The information of property deeds; births, marriages, and
81
Tech Trends 2016: Innovating in the digital era

Figure 1. Blockchain: How it works deaths; loans; election results; legal rulings;
and anything else of note. Instead of a
Blockchain allows for the secure management of a shared
bearded master wielding a long-stemmed
ledger, where transactions are verified and stored on a network
without a governing central authority. Blockchains can come stylus to record minuscule entries into
in different configurations, ranging from public, open-source an oversized book, blockchain uses
networks to private blockchains that require explicit permission advanced cryptography and distributed
to read or write. Computer science and advanced mathematics
(in the form of cryptographic hash functions) are what make programming to achieve similar results: a
blockchains tick, not just enabling transactions but also secure, transparent, immutable repository
protecting a blockchain's integrity and anonymity. of truth, one designed to be highly
resistant to outages, manipulation, and
unnecessary complexity.

Rewiring markets
Blockchains ability to replace
middlemen with mathematics is precisely
why this technology matters. It can reduce
overhead costs when parties trade assets

1
transaction Two parties exchange data;
this could represent money, contracts, deeds, directly with each other, or quickly prove
medical records, customer details, or any ownership or authorship of informationa
other asset that can be described in digital form. task that is currently next to impossible
without either a central authority or
impartial mediator. Moreover, blockchains
PENDING ability to guarantee authenticity across
institutional boundaries will likely help
parties think about the authenticity of
records, content, and transactions in new
ways. Consider, for example, the efficiencies

2 that shared ledger technology might bring


verification Depending on the networks
parameters, the transaction is either verified
to the labyrinthine global payments market.
instantly or transcribed into a secured record
and placed in a queue of pending transactions. In Or how a secure, transparent, transactional
this case, nodesthe computers or servers in the environment might help developing
networkdetermine if the transactions are valid countries reduce the estimated $1.26 trillion
based on a set of rules the network has agreed to.
they lose each year to corruption, bribery,
theft, and tax evasion.2
The financial services industry
BLOCK N BLOCK N+1 BLOCK N+2 (FSI) plays an important role as todays
institutional authority of record for
payments and remittances, the issuing
and trading of securities and trading,
and ownership of financial instruments.
It comes as no surprise, then, that
FSI organizations are aggressively

3
structure Each block is identified by a hash,
a 256-bit number, created using an algorithm pursuing blockchain investment and
agreed upon by the network. A block contains experimentation. Outside of the financial
a header, a reference to the previous blocks hash, sector, organizations across industries are
and a group of transactions. The sequence of linked
hashes creates a secure, interdependent chain. also ramping up their own blockchain
programs and exploring opportunities,

82
Blockchain: Democratized trust

with next-generation payments, loyalty


and rewards platforms, smart contracts,
BLOCK N
asset management, and exchange scenarios
leading the charge.

4
Meanwhile, venture capitalists have validation Blocks must first be validated to
invested roughly $1 billion in 120 be added to the blockchain. The most accepted
form of validation for open-source blockchains
blockchain-related start-upshalf of that is proof of workthe solution to a mathematical
investment taking place within the last puzzle derived from the blocks header.
calendar year.3 Investors recognize that
the blockchain ecosystem lends itself to
different use cases and technology enablers, BLOCK N
from payment processors and digital
wallets to cryptocurrency exchanges and
blockchain-based platforms. Analysts at
one investment bank commented on this
trend recently, saying, We expect venture
capital flows to accelerate in 2016 and lead

5
blockchain mining Miners try to solve
to further development of the foundational the block by making incremental changes
and infrastructure services necessary to to one variable until the solution satisfies a
create a fertile plug and play ecosystem network-wide target. This is called proof of work
because correct answers cannot be falsified;
for entrepreneurs and innovation that may
potential solutions must prove the appropriate
ultimately escalate enterprise adoption level of computing power was drained in solving.
from a trickle in 2016 to a multi-year boom
starting in 2017.4
Blockchain consortiums are forming as
well. For example, R3 CEV, representing
more than 42 of the worlds largest banks,
is creating a distributed ledger platform
to power FSIs foray into blockchain.5
The Digital Currency Group, sponsored
by MasterCard, New York Life, and

6
the chain When a block is validated, the
others, manages and operates a portfolio miners that solved the puzzle are rewarded and
of blockchain and cryptocurrency the block is distributed through the network.
investments.6 Enabling technology players Each node adds the block to the majority chain,
the networks immutable and auditable blockchain.
are also getting involved. The Open Ledger
Project, backed by IBM, Cisco, Intel, the
Linux Foundation, and others, has created a
standards-based, open-sourced blockchain
platform to accelerate adoption and the
development of surrounding services.7

Patterns of value
7
built-in defense If a malicious miner tries
And were only getting started. With to submit an altered block to the chain, the
new use cases emerging weekly, its worth hash function of that block, and all following
examining both the underlying benefits blocks, would change. The other nodes would
detect these changes and reject the block from
of blockchain8 as well as the operational the majority chain, preventing corruption.
areas in which blockchain may add little

83
Tech Trends 2016: Innovating in the digital era

value. Blockchain often works best when the third partypotentially eliminating cost,
following conditions are met: delays, and general complexity.

Transparency: Ease of sharing and visibility Collaboration: Blockchain can be


are essential features of a blockchain; programmed to instigate specific
lack of one or the other of these is often a transactions when other transactions
central driver of blockchain adoption. They are completed. This could help parties
become particularly critical in transactions collaborate without increasing risk on
in which more than one organization is transactions with multiple dependences, or
making blockchain entries. those authored by different parties.

Trust: The immutability of blockchain Security: With private and public


makes it nearly impossible for changes to key cryptography part of blockchains
be made once established, which increases underlying protocol, transactional security
confidence in data integrity and reduces and confidentiality become virtually
opportunities for fraud. unassailable. Trust zones can also be
established, including open public ledgers
Disintermediation: With blockchain, peer- and permission-based shared or private
to-peer consensus algorithms transparently blockchains in which participation is
record and verify transactions without a limited to select entities.

84
Blockchain: Democratized trust

Lessons from the front lines


Establishing trust in real time immutable and carried out in real time (five
seconds), Ripple can also help mitigate fraud,
With 16 million clients worldwide and
credit, FX, and counterparty risks.
operations in 40 countries, Royal Bank of
Ripple and RBC are working on a limited-
Canada (RBC) executes large numbers of
production proof of concept now. As much
cross-border payment transactions each day,
promise as blockchain represents, it is crucial
including bank-to-bank, business-to-business,
to validate its scalability, reliability, security,
and peer-to-peer remittances.9
and performance for a large-scale deployment.
The traditional process used throughout
RBC looks to do just that before expanding
the banking industry to execute such
into other areas.
transactions can be cumbersome, often
Meanwhile, RBC is currently exploring
involving multiple intermediaries, customer
other distributed ledger use cases as well. One
fees, and lengthy reconciliation tasks.10
option involves creating a loyalty platform11
Recognizing an opportunity to increase
in which the bank engages customers in
efficiency and lower operational costs, two
real time through a blockchain to help them
years ago RBC began looking for technologies
better understand the points and rewards
that could help it develop a new approach to
they are accruing as they use RBC products
cross-border transactions.
and services. Likewise, customers will also
At that time, many people in our industry
be able to engage directly with a variety of
were exploring possible uses for bitcoin, says
RBC partners via the blockchain for real-time
Eddy Ortiz, RBCs vice president, solution
redemption of reward points. Our customers
acceleration and innovation. As we came to
will be able to see their points accrue each time
understand more about the challenges we
they use their RBC credit card, says Ortiz.
faced, we realized the underlying technology
And the reward points become like liquid
powering it was what was particularly
cash, enabled by blockchain.
exciting.
Selling the idea within RBC of changing
RBCs first step was understanding what
long-established cross-border payment
blockchain was and, importantly, was not.
processes with blockchain became its own
Beyond technical and functional aspects,
challenge. We either oversimplified our plan
the RBC team needed to understand the
and senior leadership didnt see the value,
business problems blockchain might help their
or we went too technical and lost them,
organization solve. Cross-border payments
recalls Ortiz. By working with several RBC
emerged as a prime opportunity: Clearly, there
stakeholders to refine their pitch and focus
was value in the ability to settle transactions in
more on the specific business problems to be
near-real time.
solved, Ortiz and his team got the green light
After researching numerous shared-ledger
to proceed in exploring these opportunities
technology options, RBC settled on Ripple,
with Ripple and other partners.
a provider of global financial settlement
Whether cross-border payments, rewards
and FX market-making software solutions.
programs, or more ambitious forays around
Ripple makes it possible for financial
smart contracts, RBCs exploration of
institutions to send and receive cross-currency
blockchain technology comes down to use
payments more efficiently by connecting
casesthe business problems that technology
banks directly to each other via distributed
can help alleviate.12
financial technology. Because transactions are

85
Tech Trends 2016: Innovating in the digital era

No good deed goes unrecorded bitcoin. In 2015, its making waves again, this
time in the financial services market.
To help stem long-standing corruption
Currently, managing the issuance and
in Honduras land title registry system, in
exchange of shares in private companies is
2011 the World Bank announced it would
a paper-based, manual process. This can
loan the Honduran government $328 million
be cumbersome, time-consuming, and
to digitize title files and upgrade tools and
error-prone. Private companies typically
processes.13 While subsequent efforts did help
handle sales and transfers of shares with
modernize and standardize the governments
informal mechanisms such as manually
administrative capabilities, they also made
maintained spreadsheets. NASDAQ wants to
it easier for corrupt players to hack into
replace that process with a system built on
central databases and illegally alter digital
blockchain technology.
land records.14
Earlier in October 2015, NASDAQ (MX
In May 2015, Factom, the organization that
Group Inc.) rolled out Linq, a blockchain-
manages open source software for securely
based platform and ledger system that manages
recording transactions through a distributed,
the buying and selling of shares of private
decentralized protocol, announced that it
companies. Linq provides clients with a digital
would be working with Epigraph, a land title
ledger that creates a record in the blockchain of
software vendor, to help the government of
every transfer of security among private users,
Honduras recreate its digital land title registry
providing improved auditing and increased
system in a blockchain. The goal of this effort is
transparency of ownership. Some of the first
simple: Use blockchain technology to create a
companies on the platform include Synack,
transparent land title registry system in which
Tango, and Vera.17
digitized records are tamper-proof.15
The experiment joins a slew of financial
The system being developed addresses
industry forays into bitcoin-related technology.
existing security vulnerabilities in several ways.
While the innovation is an achievement in
First, individual land records are digitized
and of itself, it also represents the potential
hashed or encoded with an immutable
for future transformational change in the
fingerprintand stored permanently on
infrastructure of financial services. If the effort
the blockchain. The system then tracks and
is deemed successful, NASDAQ, one of the
documents every change of ownership, every
worlds largest stock markets, wants to adopt
loan made against a single piece of land, and
blockchain technology, which could shake
every contract made against mineral rights.
up systems that have facilitated the trading of
Users can track the entire history of a land title
financial assets for decades.
instantly. They cannot, however, alter anything
While a completely revamped digital
currently in the system. They can use a stored
infrastructure for financial services
version to create a new document, but they will
markets will take some time, there are
not be able to recreate or replace a hash once it
promising initiatives underway across the
is filed.
world. NASDAQ is preparing to roll out
The Honduran blockchain initiative is in a
blockchain applications in Estonia, where
pilot program for a single city, with a system
it owns the Tallinn Stock Exchange and the
built and capable of accepting entries. In the
Estonia Central Securities Depository.18 The
coming year, project leaders plan to roll out the
applications will focus on improving the
pilot to additional municipalities.16
proxy voting process for companies as well
as company registration and public pension
A Linq to the future registration, programs that NASDAQ manages
In 2014, blockchain technology made waves for the government of Estonia.
as the underpinning for the cryptocurrency

86
Blockchain: Democratized trust

Some things should wallet. Then, via email, the doctor alerts both
the patient and the relevant practitioner or
remain private specialist who will schedule and perform the
An individuals digital medical records are required procedure. Upon completing the task,
often distributed across systems in physicians the relevant practitioner will assign a proof
offices, hospitals, insurance companies, or that the procedure has been administered to
other organizations. As such, any one doctor the patients blockchain wallet. At the same
or service provider may not have access to time, smart contract logic built into the
all of the information necessary to meet a blockchain sends this proof to relevant third
persons health needs. Moreover, though these parties. These could include organizations like
records contain highly personal, confidential the Centers for Disease Control, which tracks
information that should never be made vaccination rates (among other statistics),
public, no single authority controls them, thus or the patients insurance carrier, which will
making them vulnerable to cyber threats and process payment or reimbursement. As the
unintentional leaks. holder of the blockchain key, the patientand
One global manufacturer of medical only the patientdetermines who else should
technologies is exploring how individuals receive this information.
might use blockchain technology to take Though this limited use case focuses
control of their own medical records in a exclusively on medical records, the ability
secure distributed medical records system for individuals to create digital identities and
similar to a bitcoin wallet. Though the model use them within distributed ledger systems
under development is still a prototype, its to secure and manage personal information
basic design spotlights the potential value will likely underpin similar use cases going
blockchain may soon add in the arena of forward. The ultimate benefit? In the near
security and privacy. future, individuals may be able to aggregate all
Heres how it works: A doctor notices that a of their personal informationsuch as their
patient is due for a certain medical procedure financial, medical, and purchase histories
or test. The doctor initiates a transaction into one secure ledger with a single digital
marked with the patients unique digital identity, with full control over how and with
identity within the individuals blockchain whom credentials will be shared.

87
Tech Trends 2016: Innovating in the digital era

MY TAKE
BRIAN FORDE
Director of digital currency
MIT Media Lab

From the cover of the Economist to an eye-popping Consider other potential opportunities that are specific
billion dollars invested in bitcoin-related start-ups, we to your industry. The entertainment industry might
are increasingly seeing companies explore business leverage cryptocurrencies to manage event ticketing.
opportunities using bitcoin and other cryptocurrencies. By issuing concert tickets on the blockchain, fans
The reason: This emerging technology could potentially can verify transfer of ownership from one digital
disrupt the way people and organizations carry out wallet to another, rather than worrying whether
a wide variety of transactions. For example, using the PDF of the ticket they received was sold to 10
cryptocurrencies, such as bitcoin, people can transfer other people. Financial services firms may be able
money without a bank or write enforceable contracts to streamline legal and contractual interactions with
without a lawyer or notary. Companies could make customers. Media companies could transform their
online payments more secure and inexpensive. In approaches to managing digital rights as well. In 2015,
fact, similar to the Internet, which exponentially British musician Imogen Heap made headlines by
increased communication by reducing cost and friction demonstrating how a song could be released on the
to near zero, cryptocurrencies have the potential blockchain to manage who has the rights to listen to
to exponentially increase transactions for the same the song.19 Previously, artists have been forced to use
reasons. Ultimately, new entrants will adopt this more common proprietary digital rights management
emerging technology and disrupt existing industries. platforms. With the blockchain, the artist will receive
his or her royalty payments sooner and you, as a
So what does this mean to your company right now? customer, actually own the song and can resell it to
To understand the potential of cryptocurrencies, others. With digital rights platforms, thats illegal.20
you should review how your company completes
transactions with customers. Money transfer is one of The argument for embracing blockchain becomes
the first types of transactions to think about. Identify more urgent given the risks associated with storing
the brokers and middlemen who are extracting fees customers personal information. For example, to
from your transactions. Maybe its a credit card prevent fraud, many online retailers require customers
processor or an intermediary involved in a wire to provide their name, home address, and other
transfer. These partiesand the transaction fees they personal information associated with their credit
chargemay no longer be needed when you carry cardjust to make a purchase. However, these data
out transactions with cryptocurrencies. At its core, this repositories become honeypots that, in todays world,
technology enables transactions between two parties increase the likelihood of a cybersecurity attack on
without requiring a costly middleman. your company. With bitcoin, you wouldnt need to ask
for, or worse yet, store any personal information to
complete a purchase. Whats more, developers are now
...We are seeing how the ability looking into using the blockchain for electronic medical
records, educational transcripts, or other personal
to transfer the ownership of information stores that would benefit from better
assets directly from one party to privacy and interoperability.
anothersafely, efficiently, and Today, we are seeing how the ability to transfer
without an intermediarycan the ownership of assets directly from one party
to anothersafely, efficiently, and without an
increase efficiency and reduce intermediarycan increase efficiency and reduce
transaction costs for pioneering transaction costs for pioneering companies willing to
experiment with this emerging technology. But before
companies willing to experiment you embark on this journey, download a bitcoin wallet
with this emerging technology. and try it for yourself. It might just spark a new idea for
this nascent technology.

88
Blockchain: Democratized trust

CYBER IMPLICATIONS
To a large degree, current interest in blockchain is it was discovered that, in several instances, a single
fueled by the security benefits this emerging technology mining pool had contributed more than 50 percent of
offers users. These benefits include, among others: bitcoins mining. During these relatively brief periods,
the pool had unprecedented power to circumvent
The immutable, distributed ledger creates trust in the decentralization that differentiates bitcoin from
bookkeeping maintained by computers. There is no traditional currencies. For example, the group had
need for intermediaries to verify transactions. the ability to spend the same coins twice, reject
competing miners transactions, or extort higher
All transactions are recorded with the fees from people with large holdings.21 In a
time, date, participant names, and separate 2015 incident, Interpol cyber
other information. Each node in researchers issued an alert that it
the network owns the same had discovered a weakness in
full copy of the blockchain, a digital currency blockchain
thus enhancing security. that would allow hackers
to stuff the blockhain
Transactions are with malware.22
authenticated by a
network of computer Given that there is no
miners who complete standard in place for
complex mathematical blockchain security, other
problems. When all miners potential cyber issues could
arrive at the same unique emerge. For this reason, there
solution, the transaction is currently exists an overreliance
verified and recorded on the on crowdsourced policing.
block.
Blockchain is a new technology, and
The distribution of miners means that therefore discussion of its potential
the system cannot be hacked by a single weaknesses is somewhat academic. But what
source. If anyone tries to tamper with one ledger, all of if your whole financial system fell apart because of
the nodes will disagree on the integrity of that ledger some underlying vulnerability in blockchain that was
and will refuse to incorporate the transaction into discovered down the road or because computing
the blockchain. power caught up, allowing someone to break the
system? Though you should not let fear of such
Though blockchain may provide certain security scenarios prevent your company from exploring
advantages over more traditional transactional systems blockchain opportunities, as with all leading-edge
that require intermediaries, potential risks and protocol technologies, it pays to educate yourself, work with
weaknesses that could undermine the integrity of partners on cyber issues, and remain secure, vigilant,
blockchain transactions do exist. In 2014, for example, and resilient.

89
Tech Trends 2016: Innovating in the digital era

Where do you start?


Early adopterslargely within FSI protocols and platform features to allow
are piloting blockchain in innovation labs portability should it eventually become
and by investing in technology start-ups. necessary to switch to a different standard.
Organizations across industries should
aggressively explore scenarios in which Partner? Perhaps: With the blockchain
blockchain could reinvent parts of their ecosystem growing, to accelerate ramp-up
operations, value chains, or business models. and adoption efforts, it may make sense
They should look for ways blockchain could to partner with one or more vendors. But
help bring new efficiencies to costly, slow, or before signing on the dotted line, try to
unreliable transactions and introduce new understand what makes a prospective
models for partnership and collaboration. partners offering unique. Is the partner
Are there new products and offerings that willing to co-invest in solutions (or even
can extend the blockchain platform? What in proofs of concept) that will meet your
about designing products that leverage shared- specific needs? Typical caveats apply for
ledger technology? Whatever the specific tapping start-ups: understanding the
play, it is time to dig in, gain understanding leadership team, board, VCs, funding level,
and experience, and determine ifor, and financial viability. Whether the partner
more likely, whereblockchain can help in is big or small, define the exit strategy up
your organization. front to remove hard dependencies and
imbalances in future negotiations. Given
Specific areas of focus may include:
the nature of the blockchain, partnerships
Education: Unlike other emerging with peers and competitors might be
technologies such as mobile, analytics, options as well.
or even the cloud, blockchain can be
confusingwhat it is, how it works and, Know your trust zones: Public, private
most importantly, why it matters. Moreover, (permission-based), or hybrid? The
some of the earliest and most public use implications are more pronounced than
cases involving bitcoin may be deemed they may immediately appear. Established
irrelevant or underwhelming. Concerted players often create permission-based,
education efforts are required, ideally tightly managed trust zones that basically
coupled with a disciplined approach to impose legacy thinking about what
innovation and a prototype demonstrating constitutes trust on a new architecture.
potential use cases specific to a given Remember, each case will likely be
organization and industry. unique and thus require its own trust-
zone variation. With blockchain, the
Embrace the ecosystem: The blockchain most effective option may not always be
community is seeing considerable permission-based.
investment from established industry
institutions, technology vendors, academia, Understand blockchains limitations:
venture capital firms, and start-ups, among Blockchain is not a cure-all, just as it is
others. Now is not the time to worry about not simply a glorified shared database.
which blockchain technologies or standards The computational requirements to run
will dominate. That said, any solutions the blockchains consensus algorithms23
should include abstractions around consume time and resources. The very

90
Blockchain: Democratized trust

features that protect blockchain against subject to oversight by governing bodies


theft and fraud could also drive overhead if similar to those overseeing various aspects
not correctly implemented. As such, high- of the Internet. Private blockchains will be
volume transactions with latency sensitivity managed under private agreements.
may not be ideal candidates for blockchain.
The second regulatory consideration
is more interesting. Though costly and, in
Remember the miners: With bitcoin,
some places, inefficient, third-party clearing
miners earn bitcoins for carrying out
houses, exchanges, government agencies, and
mining tasks. In your use cases, what
other central bodies play an important role
economic incentives will you put in place
in arbitration and conflict resolution. Each
to entice miners to perform the mining and
typically has authority to reverse transactions.
recording tasks?
Existing financial industry systems had very
similar goals when they were introduced in
Regulation and compliance: Here, there
the 1970s24improve efficiency and instill
are two points to consider. With blockchain
trust by overhauling outdated legacy systems
technology, progress is outpacing
and processes. Though the technological
regulation, which may help users gain
differences between those systems and
momentum with their blockchain initiatives
blockchain are enormous, regulation designed
in the short term. Eventually, regulation
to standardize open-ledger transactions could
and legal precedents that recognize
prove beneficial for the financial and legal
blockchain transactionswill almost
systems as a whole, and for early adopters who
certainly catch up with this technology.
have already embraced blockchain.
Public blockchains will most likely be

91
Tech Trends 2016: Innovating in the digital era

Bottom line
Business, government, and society are built on trust. Even cynics who argue for more fiscally driven
motivations only reinforce this basic point. After all, money is only a concept whose value is linked
solely to collective faith in its value as tender for debts, private or public. As such, any promise to
use modern computing principles to transform how we achieve and apply trust is disruptive
perhaps on an historic scale. Will the eventual embrace of blockchain mean that venerable
institutions of trust disappear? That seems unlikely. It does mean, however, that very soon they may
have to transform themselves if they hope to continue participating, substantively and efficiently, in
blockchains brave new world.

92
Blockchain: Democratized trust

Authors
Eric Piscini, Banking and Technology principal,
Deloitte Consulting LLP

Eric Piscini serves Deloittes technology and banking clients, bringing


them 20 years of experience in defining IT strategies in areas including
M&A, technology infrastructure, IT operations, e-channel strategies,
payments, and digital transformations. In addition to serving financial
institutions and banking regulators in core aspects of their technology
environment, Piscini leads the global Deloitte Cryptocurrency Center,
dc3.

Joe Guastella, US Financial Services Consulting practice leader,


Deloitte Consulting LLP

Joe Guastella leads Deloittes US Financial Services consulting practice


and is a member of the global Financial Services executive team. He
is responsible for service delivery in the areas of strategy, operations,
human capital, technology, and risk. Guastella has more than 25 years
of experience guiding financial services executives in the design of
strategic change management and large-scale transformations. Prior to
his global and US leadership roles, he led Deloittes Asia Pacific Insurance
consulting practice.

Alex Rozman, senior manager, Deloitte Financial Advisory


Services LLP

Alex Rozman is a regulatory and compliance professional who advises


clients on BSA/AML/OFAC and other regulations relating to financial
institutions, money service businesses, and emerging payments firms.
Rozman is a recognized and frequent speaker at blockchain industry
conferences and has participated in training conferences for regulators.
He has over 16 years of experience in the legal, compliance, and
regulatory aspects of the financial services industry.

Tom Nassim, Ecosystems and Exponentials leader, Deloitte


Consulting LLP

Tom Nassim has more than 15 years of consulting experience working


across the domains of strategy and innovation, with a focus on building
innovation capabilities in large, complex organizations. He works with
Deloitte Consulting LLPs clients to help them harness the disruptive
threats and opportunities associated with exponential technological
change in the fields of digital currencies, artificial intelligence, robotics,
crowdsourcing, digital biology, and more.

93
Tech Trends 2016: Innovating in the digital era

Endnotes

1. Bitcoin as a vehicle for funding terrorism: Stan 10. Nasreen Quibria, Blockchain holds promise
Higgins, ISIS-linked blog: Bitcoin can fund for cross-border payments, American Banker,
terrorist movement worldwide, CoinDesk, July August 7, 2015, http://www.americanbanker.
7, 2014, http://www.coindesk.com/isis-bitcoin- com/bankthink/blockchain-holds-promise-
donations-fund-jihadist-movements, accessed for-cross-border-payments-1075902-1.
January 4, 2016; Bitcoin as the currency fueling html, accessed December 15, 2015.
criminal black markets: Joshua Bearman, 11. Robert Barba, Legacy systems threaten
The rise and fall of the silk road, Wired, banks more than startups: RBC head
May, 2015, http://www.wired.com/2015/04/ McKay, American Banker, November 11,
silk-road-1/, accessed January 4, 2016. 2015, http://www.americanbanker.com/
2. Mark Prosser, Today corrupt officials spend news/bank-technology/legacy-systems-
your moneytomorrow blockchain will threaten-banks-more-than-startups-rbc-
stop them, SingularityHUB, October 20, head-mckay-1077775-1.html?utm_mediu
2015, http://singularityhub.com/2015/10/20/ m=email&ET=americanbanker:e5519242:
today-corrupt-officials-spend-your- 3878862a:&utm_source=newsletter&utm_
money-tomorrow-blockchain-will-stop- campaign=daily%20pdf-nov%2012%20
them/, accessed January 4, 2016. 2015&st=email&eid=39d31f630245c3221274
3. Deloitte analysis and CoinDesk, d20da0d72df7, accessed December 15, 2015.
Bitcoin venture capital, http:// 12. Edison (Eddy) Ortiz (vice president,
www.coindesk.com/bitcoin-venture- solution acceleration and innovation,
capital/, accessed January 4, 2016. Royal Bank of Canada), interview
4. Spencer Bogart and Kerry Rice, The with the authors, December 2015.
blockchain report: Welcome to the Internet of 13. World Bank loans US$32.8 million for
value, Needham and Company LLC, October land titles, Honduras Weekly, July 1, 2011,
21, 2015, http://storj.io/TheBlockchainReport. http://www.hondurasweekly.com/money/
pdf, accessed January 4, 2016. item/11518-world-bank-loans-us$328-million-
5. R3 CEV, http://r3cev.com, for-land-titles, accessed December 19, 2015.
accessed January 4, 2016. 14. Gertrude Chavez-Dreyfuss, Honduras
6. Fitz Tepper, Barry Silbert launches to build land title registry using bitcoin
digital currency group with funding from technology, Reuters, May 15, 2015, https://
MasterCard, others, TechCrunch, October uk.news.yahoo.com/honduras-build-land-title-
27, 2015, http://techcrunch.com/2015/10/27/ registry-using-bitcoin-technology-162701917.
barry-silbert-launches-digital-currency- html#ca9hqrJ, accessed December 19, 2015.
group-with-funding-from-mastercard- 15. Ibid.
others/, accessed January 4, 2016. 16. David Johnston (chairman of the board,
7. Prableen Pajbai, IBM spearheads open Factom) and Peter Kirby (CEO, Factom),
ledger project, which uses blockchain interview with the authors, November 2015.
technology, NASDAQ, December 17, 17. Samburaj Das, NASDAQ launches Linq, a
2015, http://www.nasdaq.com/article/ private blockchain-powered trading platform,
ibm-spearheads-open-ledger-project- Cryptocoin News, October 28, 2015, https://
which-uses-blockchain-technology- www.cryptocoinsnews.com/nasdaq-launches-
cm555865, accessed January 4, 2016. linq-a-private-blockchain-powered-trading-
8. David Schatsky and Craig Muraskin, platform/, accessed January 4, 2016.
Beyond bitcoin, Deloitte University Press, 18. John McCrank, Nasdaq says to develop
December 7, 2015, http://dupress.com/ blockchain services in Estonia, Reuters,
articles/trends-blockchain-bitcoin-security- November 13, 2015, http://www.reuters.com/
transparency/, accessed January 4, 2016. article/us-nasdaq-blockchain-estonia-id
9. Royal Bank of Canada, RBC at a USKCN0T301H20151114#sbRj4SRy3O
glanceQ3/2015, http://www.rbc.com/ F9yl3I.97, accessed January 4, 2016.
investorrelations/pdf/rbcglance2015q3.
pdf, accessed December 15, 2015.

94
Blockchain: Democratized trust

19. Ian Alison, Imogen Heap shows how smart 22. INTERPOL, INTERPOL cyber research
music contracts work using Ethereum, identifies malware threat to virtual currencies,
International Business Times, October press release, March 26, 2015, http://www.
4, 2015, http://www.ibtimes.co.uk/ interpol.int/News-and-media/News/2015/
imogen-heap-shows-how-music-smart- N2015-033, accessed December 28, 2015.
contracts-work-using-ethereum-1522331, 23. Technically, pending updates are queued and
accessed November 19, 2015. processed by distributed nodes called miners,
20. Mike Masnick, ReDigi loses: You cant who are running algorithms performing
resell your MP3s (unless you sell your puzzle-like hash routines that require brute-
whole hard drive), Techdirt (podcast), force effort to fulfill the conditions of the
April 1, 2013, https://www.techdirt.com/ underlying rule set. Miners who successfully
articles/20130401/11341622538/redigi- announce solving the puzzle provide a
loses-selling-used-mp3s-online-infringes- record of programmatic effort to validate
first-sale-doesnt-apply-to-digital-transfers. that they genuinely completed the task.
shtml, accessed January 26, 2016. This explains why blockchain is sometimes
21. Cyrus Farivar, Bitcoin pool GHash.io commits referred to as a proof of work protocol.
to 40% hashrate limit after its 51% breach, Ars 24. Steven Melendez, The future of bitcoin
Technica, July 16, 2014, http://arstechnica.com/ isnt bitcoinits bigger than that, Fast
security/2014/06/bitcoin-security-guarantee- Company, October 13, 2015, http://www.
shattered-by-anonymous-miner-with-51- fastcompany.com/3051679/innovation-agents/
network-power/, accessed December 28, 2015. the-future-of-bitcoin-isnt-bitcoin-its-bigger-
than-that, accessed January 4, 2016.

95
Industrialized analytics

Industrialized analytics
Data is the new oil. Where are the refineries?

Data is a foundational component of digital transformation. Yet, few


organizations have invested in the dedicated talent, platforms, and processes
needed to turn information into insights. To realize datas full potential,
some businesses are adopting new governance approaches, multitiered data
usage and management models, and innovative delivery methods to enable
repeatable results and scale. Indeed, they are treating data analysis as a
strategic discipline and investing in industrial-grade analytics.

Over the past 10 years, data has risen in distributed data architecture, in-memory
from an operational byproduct to a strategic processing, machine learning, visualization,
boardroom concern. Harnessing analytics natural language processing, and cognitive
has led to new approaches to customer analytics have unleashed powerful tools that
engagement;1 the ability to amplify employee can answer questions and identify valuable
skills and intelligence;2 new products, services, patterns and insights that would have seemed
and offerings; and even opportunities to unimaginable only a few years ago. Perhaps
explore new business models. In these times Ann Winblad, senior partner at technology
of talent scarcity, data scientists continue to be venture capital firm Hummer-Winblad, said it
particularly prizedeven more today than in best: Data is the new oil.5
2012, when Harvard Business Review declared Against this backdrop, it seems almost
the data scientist role the sexiest of the 21st illogical that few companies are currently
century.3 making the investments needed to harness
Analytics now dominates IT agendas and data and analytics at scale. Where we should
spend. In Deloittes 2015 global CIO survey, be seeing systemic capabilities, sustained
which polled 1,200 IT executives, respondents programs, and focused innovation efforts,
identified analytics as both a top investment we see instead one-off studies, toe-in-the-
priority and the IT investment that would water projects, and exploratory investments.
deliver the greatest business impact. In a While they may serve as starting points,
similar survey of a broader executive audience, such circumscribed efforts will likely not
59 percent of participants either included data help companies effectively confront daunting
and analytics among the top five issues or challenges around master data, stewardship,
considered it the single most important way and governance.
to achieve a competitive advantage.4 Advances

97
Tech Trends 2016: Innovating in the digital era

Its time to take a new approach to Thinking boldly


data, one in which CIOs and business
Beyond enabling scale and predictability of
leaders deploy the talent, data usage and
outcome, industrializing analytics can also help
management models, and infrastructure
companies develop a greater understanding
required to enable repeatable results and scale.
of datas possibilities and how to achieve
By industrializing analytics in this way,
them. Many data efforts are descriptive and
companies can finally lay the foundation for
diagnostic in nature, focusing primarily on
an insight-driven organization6 that has the
what happened and why things happened
vision, underlying technology capabilities, and
the way they did. These are important points,
operating scale necessary to take advantage of
but they only tell part of the story. Predictive
datas full potential.
analytics broadens the approach by answering

Figure 1. The analytics journey


While the concept of analytics has been around for a long
time, advances in data capture have made it a strategic focus.

insight
economy
analytics as 2020+
a disruptor
analytics 20142018+
applied
analytics 20132016
aware internet
20092013 of things
analytics
as r&d silo big crowd- digital
data sourcing enterprise
19952009 data
scientists

smart- machine
phones learning
cloud
social computing cognitive
actuarial media analytics
models

The taxonomy of a strong data analytics program


information acquisition & curation
Data stores support downstream processes by
providing cleansed data for value-added apps.

information delivery
The provisioning of data to end users supports
business analysis and decision making.

information to insights
Tagged logical or physical representations of
data simplify access for business users.

insights to actions
A set of tools improves control over data
accessed by the enterprise for business needs.

98
Industrialized analytics

the next obvious questionwhat is going chain requires a different approachand a


to happen? Likewise, prescriptive analytics different architecture. The way businesses
takes it one step further by helping decision should operate in todays data-rich world is to
makers answer the ultimate strategic question: acquire the data first, and then figure out what
What should I do? Business executives have they may be able to do with it. Reordering the
been trained to limit their expectations to the process in this way can lead to new approaches
descriptive analytics realm. Education and to data storage and acquisition, including
engagement may help inspire these leaders distributed data solutions, unstructured data
to think more boldly about data and their repositories, and data lakes. It also lends
potential. It could lead them to embrace the itself to applying advanced visualization,
advanced visualization tools and cognitive machine learning, and cognitive techniques
techniques theyll need to identify useful to unearth hidden patterns and relationships.
patterns, relationships, and insights within Or, in extreme cases, it makes it possible
data. Most importantly, it could help them for decisions to be made and actions taken
identify how those insights can be used to without human interventionor even without
drive impact and real business outcomes. human comprehension.7
Any effort to industrialize analytics should This doesnt mean that traditional extract,
set forth the data agenda and delineate its transform, load techniques are no longer
strategic aspirations. This agenda can help valid. Data warehouses, business intelligence,
define a companys vision for data usage and performance management tools still
and governance and anchor efforts around have a role to play. Only now, they can be
key performance indicators that matter to more effective when complemented with new
the business. Moreover, it can help line up capabilities and managed with an eye toward
stakeholder support by clearly describing creating repeatable enterprise platforms with
how an overarching analytics strategy might high potential reuse.
benefit individual groups within the enterprise. Especially important are several long-
Demos and proofs of concepts that illuminate standing best practice concepts that have
how analytics, dashboards, and advanced data become mandates. Master data management
analysis techniques can help drive strategy establishing a common language for
and communicate intent can be especially customers, products, and other essential
powerful here. domains as the foundation for analytics
effortsis more critical than ever. Likewise,
The times they are a-changin because anarchy doesnt scale,8 data
governance controls that guide consistency
In addition to thinking more boldly about
and adoption of evolved platforms, operating
analytics and datas potential, companies
models, and visions remain essential. Finally,
should rethink their current approaches for
data security and privacy considerations
deploying and managing analytics. Many
are becoming more important than ever as
data efforts follow a well-worn path: Identify
companies share and expose information, not
what you want to know. Build a data model.
just across organizational boundaries, but with
Put the data into a data warehouse. Cleanse,
customers and business partners as well.
normalize, and then, finally, analyze the data.
This approach has long been sufficient to
generate passive historical reports from batch- Who, where, and how
driven feeds of company-owned, structured, The way a company organizes and
transactional data. executes around analytics is a big part of the
Today, analyzing exploding volumes of industrialized analytics journey. The analytics
unstructured data from across the value functions size, scale, and influence will evolve

99
Tech Trends 2016: Innovating in the digital era

over time as the business view of analytics Challenge consultant and contractor
matures and the thirst for insight grows. relationships to redirect tactical spend into
Consider how the following operating models, building a foundation for institutional,
tailored to accommodate industry, company, industrialized analytics capabilities. Likewise,
and individual executive dynamics could partner with local universities to help shape
support your analytics initiatives: their curricula, seeding long-term workforce
development channels while potentially also
Centralized: Analysts reside in one immediately tapping into eager would-be
central group where they serve a variety of experts through externships or one-off data
functions and business units and work on hackathons.
diverse projects. Developing creative approaches to sourcing
can help with short-term skill shortages.
Consulting: Analysts work together in a For example, both established and start-up
central group, but are deployed against vendors may be willing to provide talent as
projects and initiatives that are funded and part of a partnership arrangement. This may
owned by business units. include sharing proofs of concept, supporting
business case and planning initiatives, or
Center of excellence: A central entity even dedicating talent to help jump-start
coordinates the activities of analysts across an initiative. Also, look at crowdsourcing
units throughout the organization and platforms to tap into experts or budding
builds a community to share knowledge apprentices willing to dig into real problems
and best practices. on your roadmap. This approach can not
only yield fresh perspectives and, potentially,
Functional: Analysts are located in breakthrough thinking, but can also help
functions like marketing and supply chain establish a reliable talent pipeline. Data science
where most analytical activity occurs. platform Kaggle alone has more than 400,000
data scientists in its network.9
Dispersed: Analysts are scattered across The final piece of the puzzle involves
the organization in different functions and deploying talent and new organizational
business units with little coordination. models. Leading companies are adopting
Regardless of organizational structure, Six Sigma and agile principles to guide their
an explicit talent and development model analytics ambitions. Their goal is to identify,
is essential. Look to retool your existing vet, and experiment rapidly with opportunities
workforce. Modern skill sets around R in a repeatable but nimble process designed
programming and machine learning routines to minimize work in progress and foster
require scripting and Java development continuous improvement. This tactic helps
expertise. Recruit advocates from the line of create the organizational memory muscle
business to provide much-needed operational needed to sustain industrialized analytics that
and macro insights, and train them to use tools can scale and evolve while driving predictable,
for aggregating, exploring, and analyzing. repeatable results.

100
Industrialized analytics

Lessons from the front lines

Anthems Rx for the To this end, the company has built a number
of insight markers to bring together claim and
customer experience
case-related information with other descriptors
With an enrollment of 38.6 million of behavior and attitudes, including signals
members and growing, Anthem Inc. is one from social and quantified self personal
of the United States leading health insurers care management sources. This information
and the largest for-profit managed health helps Anthem support individualized wellness
care company in the Blue Cross and Blue programs and develop more meaningful
Shield association.10 relationships with health care providers.
The company is currently exploring new Meanwhile, Anthem is piloting a
ways of using analytics to transform how it bidirectional exchange to guide consumers
interacts with these members and with health through the companys call centers to the
care providers across the country. We want appropriate level of service. Data from the
to leverage new sources of data to improve exchange and other call center functions have
the customer experience and create better been used to build out predictive models
relationships with providers than we have in around member dissatisfaction. Running
the past, says Patrick McIntyre, Anthems in near-real time, these models, working in
senior vice president of health care analytics. tandem with text mining and natural language
Our goal is to drive to a new business model processing applications, will make it possible
that produces meaningful results. for the company to identify members with
From the projects earliest planning stages, high levels of dissatisfaction, and proactively
Anthem understood that it must approach big reach out to those members to resolve
data in the right way if it hoped to generate their issues.
useful insightsafter all, incomplete analysis Another pilot project uses analytics to
adds no value. Therefore, beginning in 2013, identify members with multiple health care
the company worked methodically to cleanse providers who have contacted Anthems call
its data, a task that continued for 18 months. center several times. These calls trigger an
During this time, project leaders also worked automated process in which medical data
to develop an in-depth understanding of from providers is aggregated and made
the business needs that would drive the available to call center reps, who can use this
transformation initiative, and to identify the comprehensive information to answer these
technologies that could deliver the kind of members questions.
insights the company needed and wanted. To maximize its analytics investments and
Those 18 months were time well-spent. to leverage big data more effectively, Anthem
In 2015, Anthem began piloting several recently recruited talent from outside the
differentiating analytics capabilities. Applied health care industry, including data scientists
to medical, claim, customer service, and other with a background in retail. These analysts are
master data, these tools are already delivering helping the company think about consumers
insights into members behaviors and attitudes. in different ways. Having them ask the right
For example, predictive analytics capabilities questions about how consumers make health
drive consumer-focused analytics. Anthem care choiceschoices made traditionally by
is working to understand its members not employershas helped tremendously, says
as renewals and claims, but as individuals McIntyre. We are now creating a pattern-
seeking personalized health care experiences. recognition and micro-segmentation model for

101
Tech Trends 2016: Innovating in the digital era

use on our website that will help us understand initiatives while at the same time powering
the decision-making process that like-minded smaller, more innovative efforts. For example,
consumers use to make choices and decisions. a major industrial organization could be an
McIntyre says Anthems analytics initiatives original equipment manufacturer providing
will continue to gain momentum in the parts to Eatons product development group
coming months, and will likely hit full stride while at the same time purchasing Eaton
some time in 2017.11 products for use in its own operations.
Advanced analysis of master data can reconcile
Singing off the same these views, which might help sales reps
identify unexplored opportunities.
sheet of data To maintain its mission-critical master
In 2014, Eaton Corp., a global provider of data set and to improve data quality, Eaton
power management solutions, began laying the has established a top-down data governance
groundwork for an industrial-scale initiative function in which business line owners, data
to extend analytics capabilities across the leads, and data stewards oversee the vetting
enterprise and reimagine the way the company and validation of data. They also collaborate to
utilizes transaction, sales, and customer data. facilitate data security and to provide needed
As Tom Black, Eatons vice president of tool sets (for example, visualization and click
enterprise information management and view). At the user level, technology solution
business intelligence, surveyed the potential engagement managers help individuals
risks and rewards of this undertaking, he and teams get more out of Eatons analytics
realized the key to success lay in building capabilities and coordinate their analytics
and maintaining a master data set that could initiatives with others across the company.
serve as a single source of truth for analytics Eaton recognizes the need to balance
tools enterprise-wide. Without a solid master centralized analytics efforts with empowering
data plan, we would have ended up with lot the organization. In this way, the company
of disjointed hypotheses and conjectures, he harnesses industrialized analytics not only
says. In order to make analytics really sing, we for efficiencies and new ways of working,
needed an enterprise view of master data. but to also help fuel new products, services,
Yet creating a master data set in a company and offerings.13
this sizeEaton employs 97,000 workers and
sells its products in 175 countries12would Pumping analytics iron
likely be no small task. Trying to aggregate 20
years of transaction data across hundreds of Describing the variation in analytics
ERP systems is not easy, Black says. But once capabilities across the industries in which he
we got our hands around it, we realized we had has worked, Adam Braff, Zurich Insurance
something powerful. Groups global head of enterprise data,
Powerful indeed. Eatons IT team has analytics, and architecture, invokes the image
consolidated many data silos and access portals of the humble fiddler crab, a semi-terrestrial
into centralized data hubs that provide access marine creature whose male version has
to current and historic customer and product one outsized claw. Every industry has one
data, forecasting, and deep-dive reporting mature, heavily muscled limb that informs the
and analysis. The hubs also maintain links dominant way the organization uses analytics.
to information that may be useful, but is not In insurance, analytics has traditionally
feasible or necessary to centrally aggregate, been about pricing, underwriting, and their
store, and maintain. This framework supports underlying actuarial models, he says.
large strategic and operational analytics

102
Industrialized analytics

Because his industry has this mature company is developing a better understanding
analytics arm, Braff sees opportunities to of the quality and potential usefulness of its
look to underdeveloped analytics spaces that data assets. Meanwhile, Zurich is assessing
include indirect channels, customer life-cycle how effectively different groups use data to
valuation, and operations excellence, among generate value. It will also increase data quality
other areas. In the latter, The challenge measurement and accountability across all
is identifying outliers and taking action, data-intake channels so data used downstream
says Braff. Once you put data together and is of consistently high quality.
prioritize use cases, thats where you can find A third major step involves developing the
success. organization and talent needed to industrialize
Zurich is on a journey to identify analytics analytics. In this environment, IT workers will
opportunities and then put the data resources, need three things: sufficient business sense
systems, and skill sets in place to pursue them. to ask the right questions; a background in
The first step is a listening tourengaging analytical techniques and statistical modeling
leaders from the business side to understand to guide approaches and vet the validity of
the challenges they face and to explore ways conclusions; and the technical knowledge to
that analytics might remedy those challenges. build solutions themselves, not simply dictate
A dedicated offense team will then translate requirements for others to build. Working
those needs into rapid data and analytics with the business side to develop these
sprints, starting small, proving the solutions solutions and taking their feedback is a great
value, and scaling soon after. way to learn how to apply analytics to business
The defense side, meanwhile, focuses on problems, says Braff. That iterative process
foundational elements such as data quality. can really help people build their skillsand
Today, Zurich has decentralized analytics the companys analytics muscles.14
organizations and data stores. By performing a
comprehensive data maturity assessment, the

103
Tech Trends 2016: Innovating in the digital era

MY TAKE
JUSTIN KERSHAW
Corporate vice president and CIO
Cargill, Inc.

For Cargill Inc., a leading global food processing and Cargills IT operation can be described as a billion-dollar
agricultural commodity vendor and the largest privately business within a $135 billion operation. We run IT
held company in the United States, industrializing like a business, tracking income, expenses, and return
analytics is not an exploratory project in big data usage. on assets. We strive to set an example for the entire
Rather, it is a broadly scoped, strategically grounded organization of how this business group uses analytics
effort to continue transforming the way we collect, to generate critical insights and improve performance.
manage, and analyze dataand to use the insights To this end, we boosted our analytics capabilities,
we glean from this analysis to improve our business created scorecards and key performance indicators,
outcomes. At Cargill, we are striving to have a more and deployed dashboards to put numbers to how we
numerically curious culture, to utilize analytics in more are delivering.
and more of our decisions, and to create different and
better outcomes for customers. In using analytics to build a more numerically driven
culture, it is important to remember that bad data
yields bad insights. Improving data quality where
It is important to remember that the work actually happens requires that leaders
drive a comprehensive cultural shift in the way
bad data yields bad insights. employees think about and use data and how they
take responsibility for data. Companies often address
the challenge of data quality from the other end by
Cargills commodity trading and risk management
spending tons of money to clean messy data after it
analytics capabilities have always been strong, but
gets in their systems. What if you didnt have to do
that strength had not spread throughout all company
that? What if you could transform your own data
operations. As we continue to digitize more of our
culture into one that rewards quality, tidiness, and
operations, the opportunity to achieve a higher level
disciplined data management approaches? Thats
of analytical capability operationally is front and
where rules help; they can support an outcome that
center. This is not only in our production but also in
gets rewarded. You can hire data scientists to help
all our supporting functions. The IT team has been
you better understand your data, but lightening their
transformed over the last two years, and much of
load by cleaning the data before they begin working
this change was made possible by outcomes and
with it can make a big difference. Then you can
targets derived from analytics. Our performance is
double down on your efforts to create a culture that
now driven more numerically. Cargill is creating a more
prizes individuals who are mathematically curious and
fully integrated way of operating by transitioning from
more numerically driven, who frame and satisfy their
a holding entity structurecomprising 68 business
questions with data rather than anecdotes, and who
units operating on individual platformsto a new
care about accuracy at the root, making sure they
organizational structure (and mind-set) in which five
know where the data enters the systems and where
business divisions operate in integrated groups. This
the work is done.
is giving rise to different ways of operating and new
strategies for driving productivity and performance When I talk to business executives about the
more numerically, and with more capability acquisitions or investments they are considering, I
from analytics. often share this advice: Before moving forward, spend
a little money to train the individuals operating your
As CIO, one of my jobs is to put the tools and
systems and share steps they can take to improve
processes in place to help both the company and IT
data quality. Reward data excellence at the root. In
better understand how they perform, or in some cases
the end, the investment pays off: Better data quality
could perform, with integrated systems. To generate
leads to better planning, which, in turn, leads to
the performance insights and outcomes we want,
better execution.
we took a fresh approach to data management and
analysis, starting with IT.

104
Industrialized analytics

CYBER IMPLICATIONS
As companies create the governance, data usage, and In a virtual environment, not all sources are
management models needed to industrialize their created equal. Companies transitioning to a data
analytics capabilities, they should factor cyber security lake model should determine how best to stratify
and data privacy considerations into every aspect of trust, given that some sources live within the
planning and execution. Keeping these issues top companys firewall and can be considered safe,
of mind every step of the way can help heighten a while external sources may not be. As part of this
companys awareness of potential risks to the business, process, companies should also develop different
technology infrastructure, and customers. approaches for handling data that have been
willfully manipulated versus those which may just be
It may also help an organization remain focused on generally unclean.
the entire threat picture, which includes both external
and internal threats. Effective cyber vigilance is not just Derived data come with unique risk, security, and
about building a moat to keep out the bad guys; in privacy issues. By mining customer transaction data
some cases there are bad guys already inside generated over the prior three months, an
the moat who are acting deliberately online retailer determines that one
to compromise security and avoid of its customers has a medical
detection. Then there are legions condition often treated with an
of otherwise innocent players array of products it sells. The
who carelessly click on an company then sends this
unidentified link and end up customer coupons for the
infecting their computers products it believes she
and your companys entire might need. In the best-
system. Cyber analytics case scenario, the customer
plays an important role uses the coupons and
on these and other appreciates the companys
fronts. Analytics can help targeted offerings. In the
organizations establish worst case, the company may
baselines within networks for have violated federal privacy
normal, which then makes it regulations for medical data.
possible to identify behavior that
is anomalous. It is impossible to know what
information analytics programs will
Until recently, companies conducted analysis ultimately infer. As such, companies need
on harmonized platforms of data. These existed in strong data governance policies to help manage
physical data repositories that would be built and negative risk to their brand and to their customers.
maintained over time. In the new model, data no These policies could set strict limits on the life cycle
longer exists in these repositories, but in massive data of data to help prevent inaccuracies in inferences
lakes that offer virtualized views of both internal and gleaned from out-of-date information. They might
external information. also mandate analyzing derived data for potential risks
and flagging any suspicious data to be reviewed. Just
The data lake model empowers organizations and their as organizations may need an industrialized analytics
data scientists to conduct more in-depth analysis using solution that is scalable and repeatable, they may also
considerably larger data sets. However, it may also give need an analytics program operating on an enterprise
rise to several new cyber and privacy considerations: level that takes into account new approaches to
governance, multitiered data usage and management
models, and innovative delivery methods.

105
Tech Trends 2016: Innovating in the digital era

Where do you start?


The expansive reach of data and analytics in a swamp of jargon, complicated tables,
potential makes them a challenging domain. and overly indexed statistics. More often
Ghosts abound in the machinein legacy data than not, the results with the greatest
and ops, as well as in some stakeholders dearly impact are those that are communicated
held convictions about the relative importance clearly and concisely.
of data across the business. Perhaps even more
challenging, the C-suite and other decision Revitalize the data core: Many
makers may lack confidence in ITs ability to organizations have made long-standing
deliver crunchy, actionable business insights. investments in multiple areas across the
But although the deck may seem stacked industrialized analytics charter. Using
against success, the very act of attempting to those areas to industrialize analytics
industrialize analytics can help frame these can accelerate the journey, but such
issues, building support for streamlining an approach can also be risky. Legacy
delivery and tapping analytics full potential. design choices can color your vision of
To get the ball rolling, consider taking the the road ahead. Likewise, the technical
following steps: debt and poor organizational constructs
that accompany legacy systems can stifle
Air grievances: Though it may be progress and undermine project value.
uncomfortable, it is important to get the
state of the state out in the open before Educate and lead: The bigger and older
launching any transformation effort. Solicit the organization, the more difficult it is
constructive feedback from all quarters to drive a cultural change for analytic
on how well existing analytics and data transformation. Dont underestimate
needs are being met and how these needs the need for education, communication,
may change as business evolves. Address learning, and reinforcement, both within
issues and perceptions, including those and beyond the direct analytics team.
that are fact-based and those driven by Moreover, becoming an insights-driven
misunderstandings and bias. Learn where organization requires some level of buy-in
inaccurate metrics or expectations are across departments and hierarchies. To this
creating challenges and where redundant end, senior leadership support is crucial,
or outdated activities no longer add value. but no more so than clearly articulating the
Likewise, examine instances in which overly journey. Providing concrete details of what
simplistic models, overconfident analysts, the transformation means at an individual
lack of clarity on outcomes, or inaccurate level, along with examples of how early
assumptions have led to incorrect results. adoption can drive tangible results, can
The emphasis should be on lighting candles also help overcome wariness among staff.
versus cursing the darkness. Work to Finally, though it may not be necessary
build the analytics agenda while setting a to have one executive explicitly own the
vivid baseline against which progress can initiative, some organizations have created
be measured. chief data officer and chief analytics
officer positions as a means to galvanize
Communicate clearly and purposefully: and hold themselves accountable fortheir
Dont let analytics efforts get bogged down analytics ambitions.

106
Industrialized analytics

Tailor your efforts: The results of crowd to bolster a nontraditional sourcing


industrialized analytics initiatives will vary strategyespecially as you formalize your
by organization. With this in mind, project analytics vision and overarching strategies.
leaders should tailor their aspirations
and roadmaps to reflect the specific Blaze new trails: Optimizing current
DNA of their own organizationtaking spend levels around the data and
into account executive personalities and information space should definitely be
passions as much as operational and a part of planning. But industrialized
organizational dynamics. analytics should be about more than
just cost containment and efficiency
Rethink your talent strategies: Respect gains. Discovering new ways to harness
the scarcity of talent in the data science and data and activate insights could lead
analytics fields, but dont let it be an excuse to breakthroughs across domains and
for lack of progress. Explore vendors, start- functions.
ups, service providers, academia, and the

107
Tech Trends 2016: Innovating in the digital era

Bottom line
Data is the only resource were getting more of every day, said Christina Ho, deputy assistant
secretary at the US Department of the Treasury recently.15 Indeed, this resource is growing in both
volume and value. Properly managed, it can drive competitive advantage, separating organizations
that treat analytics as a collection of good intentions from those that industrialize it by committing
to disciplined, deliberate platforms, governance, and delivery models.

108
Industrialized analytics

Authors
Rajeev Ronanki, Cognitive Computing and Health Care Innovation
practice leader, Deloitte Consulting LLP

Rajeev Ronanki has over 20 years of health care and information


technology experience. He leads Deloitte Consulting LLPs cognitive
computing and health care innovation practice, focused on implementing
cognitive solutions for personalized consumer engagement, intelligent
automation, and predictive analytics. Ronanki is at the forefront of
some of the health care industrys most strategic initiatives on cognitive
computing, analytics, and big data, and he is the author of several key
publications on these topics.

Ashish Verma, Information Management director,


Deloitte Consulting LLP

Ashish Verma has over 17 years of management consulting experience


helping Fortune 100 companies build solutions that focus on solving
complex business problems related to realizing the value of information
assets within an enterprise. He leads the Big Data Analytics and
Innovation and Architecture initiatives for Deloitte Consulting LLP,
building offerings and accelerators to improve business processes
and effectiveness.

David Pierce, Information Management director,


Deloitte Consulting LLP

David Pierce has almost 20 years of experience implementing solutions


to improve marketing and finance performance through better access
to information. He advises clients on ways to realize value from
information management by utilizing new technologies and more
effectively coordinating enterprise activity. Pierce has worked on all
elements of analytic programs, from strategy to design, implementation,
and sustainment.

Mark Shilling, Analytics & Information Management practice


leader, Deloitte Consulting LLP

Mark Shilling leverages foundational and disruptive technologies and


techniques to help clients become insight-driven organizations. Working
across all industries, he has 20 years of experience advising clients on
large-scale, global data and analytics programs, helping them drive
efficiency and effectiveness in core areas of cost reduction, operational
risk, performance management, asset efficiency, and regulatory reporting.
His technical focus spans data management, information delivery,
performance management, and advanced analytics.

109
Tech Trends 2016: Innovating in the digital era

Endnotes

1. Deloitte Consulting LLP, Tech Trends 5. Perry Rotella, Is data the new oil?, Forbes,
2015: Dimensional marketing, 2015. April 2, 2012, http://www.forbes.com/
2. Deloitte Consulting LLP, Tech Trends sites/perryrotella/2012/04/02/is-data-the-
2015: Amplified intelligence, 2015. new-oil/, accessed January 18, 2016.

3. Thomas H. Davenport and D.J. Patil, 6. Tom Davenport, The insights-driven


Data scientist: The sexiest job of the organization: Management of insights is
21st century, Harvard Business Review, the key, Deloitte University Press, August
October 2012, https://hbr.org/2012/10/ 26, 2015, http://dupress.com/articles/
data-scientist-the-sexiest-job-of-the-21st- insight-driven-organization-insight-
century/, accessed January 18, 2016. management/, accessed January 18, 2016.

4. Gil Press, 6 observations for a new survey 7. See examples in Tech Trends 2016:
on the state of big data analytics, Forbes, IoT: From sensing to doing, 2016.
September 4, 2015, http://www.forbes.com/ 8. Terradata, Anarchy doesnt scale: Why
sites/gilpress/2015/09/04/6-observations- your data lake needs a government,
from-a-new-survey-on-the-state-of-big- Forbes, June 4, 2015, http://www.forbes.
data-analytics/, accessed January 18, 2016. com/sites/teradata/2015/06/04/anarchy-
doesnt-scale-why-your-data-lake-needs-a-
government/, accessed January 18, 2016.

110
Industrialized analytics

9. Kaggle Inc., The home of data science, https:// 13. Tom Black (vice president, enterprise
www.kaggle.com/, accessed January 18, 2016. information management and business
10. Anthem, Anthem reports fourth quarter intelligence, Eaton), interview with
and full year 2015 results, press release, the author, November 2015.
January 27, 2016, http://ir.antheminc. 14. Adam Braff, (executive vice president and
com/phoenix.zhtml?c=130104&p=irol- global head, enterprise data, analytics, and
newsArticle&ID=2132574, architecture, Zurich Insurance Group),
accessed February 1, 2016. interview with the author, January 20, 2016.
11. Patrick McIntyre (senior vice president, 15. Kenneth Corbin, Feds advance open
health care analytics, Anthem, Inc.), interview data roadmap despite challenges, CIO,
with the author, December 11, 2015. September 3, 2015, http://www.cio.com/
12. Eaton Corp., Company facts, http://www. article/2980133/government/feds-advance-
eaton.com/Eaton/OurCompany/AboutUs/ open-data-roadmap-despite-challenges.
index.htm, accessed November 23, 2015. html, accessed January 18, 2016.

111
Social impact of exponential technologies

Social impact of
exponential technologies
Corporate social responsibility 2.0

As strategic discussions increasingly focus on how business can evolve


and capitalize on new innovation, it is important to recognize the
enhanced role companies should play in the responsible use of disruptive
technologies. Their challenge will be finding ways to design and architect
models for driving transformative change and positive social impactboth
for philanthropic good and for more commercial purposes. Harnessing
exponentials for social impact can help build markets, drive adoption, and
light a powerful beacon for attracting and retaining top talent. Beyond
that, organizations should consider the ethics and morality of applying
exponential technologiesbeyond traditional risk concerns of security,
privacy, regulatory, compliance, safety, and quality.

In the last several editions of Tech biotechnology, and digital medicine evidence
Trends, weve included a special feature on a renaissance of innovation, invention,
exponentials, exploring ways that the ever- and discovery.
increasing pace of technological innovation This year, weve given several of these
is driving an impending transformative exponentials their own Tech Trends chapters as
and potentially disruptiveshift in the their mass adoption window has moved into
existing business landscape. Weve framed the next 18 to 24 months. At the same time,
exponentials in two ways. First, weve were seeing leading organizations harness
documented the unprecedented speed and emerging technologies for social good, while
magnitude of advancement in fields blending others have begun examining the potential
science and technologybreakthroughs impact exponentials may have on society,
progressing at a pace with or exceeding education, health care, and the environment.
Moores Law. Second, weve examined their
potential impact, featuring topics with the Pandoras box
potential to positively affect billions of lives.
Around the globe, an emerging
Technologies such as 3D printing, artificial
entrepreneur class is accessing, adopting, and
intelligence, advanced robotics, virtual and
experimenting with exponential technologies.
augmented reality, alternative energy systems,

113
Tech Trends 2016: Innovating in the digital era

This phenomenon is presenting a wide array commercial implications of exponentials.


of opportunities and risks for market leaders, The same forces driving innovation and
emerging players, and everyone in between. growth in the commercial sector can also
Organizations across sectors and geographies drive transformational change on a social
are now focusing on the potentially disruptive level. Humanitys grandest challenges in
opportunities looming on the horizon. Clearly, education, health care, climate change, and
The times they are a-changing. even civil rights can all be viewed through
Yet at the same time, these forward- a different lens as disruptive technologies
thinking organizations are also encountering energize creative problem-solving. What
opportunities to look beyond the purely responsibility do companies have to expand

Figure 1. Corporate archetypes around social impact


Exponential technologies have the potential to create large-scale business model and social disruption. In order for
companies to manage externalities and create value from this disruption, they should examine how they can best
proceed with research and development not only responsibly, but as a catalyst for social change.

A Deloitte study examining the social impact practices of the 2014 Fortune 500 global public companies revealed four
business archetypes. These archetypes help companies better understand where their social impact strategies stand and
how they compare to their peers, so they can be intentional about maximizing value for their business and society at large.

50%

40%

30%

20%

10%

profit first social first

11% 53% 33% 3%


shareholder corporate impact social
maximizer contributor integrator innovator

Social impact Social impact Social impact Social impact


emphasizes risk is siloed within is part of firm is embedded in
mitigation and firm and driven strategy and processes and
short-term by external used to explore business
value. factors. markets. offerings.

Source: Deloitte Development LLC, Driving corporate growth through social impact: Four corporate archetypes to maximize your social impact,
2015, http://www2.deloitte.com/content/dam/Deloitte/us/Documents/strategy/us-strategy-operations-social-impact-corporate-archetypes.pdf,
accessed December 17, 2015.

114
Social impact of exponential technologies

their reach beyond their own walls, and to help Over the last 10 years, there has been a
leverage exponentials to drive greater good noticeable shift in the way public companies
in society? Moreover, how will business and think about social impact as a strategic driver
society address the ethical and moral questions of value. Today, some companies are beginning
around unequal access to new innovations and, to adopt a social impact mind-set to build
more broadly, how these new innovations will differentiated products, explore new markets,
be used? secure a sustainable supply chain, attract
and retain Millennial talent, and transform
With great power comes contentious regulatory relationships, among
other tasks. In short, social impact is slowly
great responsibility evolving from a pure public relations play to an
This famous quote has been credited to an important part of corporate strategy to protect
array of luminaries, from Stan Lee, the writer and create value.
of Spider-Man, to Franklin D. Roosevelt, and A recent Deloitte study of the social impact
even Winston Churchill; the first literary practices of the Fortune 5003 found that 11
record of this phrase appears to be attributed percent of organizations had made minimal
to Francois-Marie Arouet, also known as investment in social impact programs; another
Voltaire.1 Regardless of its original source, in 53 percent had invested modestly in programs
the context of exponentials, this phrase takes focused on charitable donations and volunteer
on an entirely new meaning. work. The study found that only 33 percent
Technology is a universal ingredient across of companies could be considered impact
exponentials. This puts the CIO and IT in a integrators: organizations that have made
unique position to help build awareness of the driving the types of change were describing
potential social impacts and opportunities of here central to their business strategies
exponential technology initiatives. This can and goals.
be a natural extension of the CIOs broader This suggests there is considerable white
agenda around innovation and risk. But it may space for companies to target with programs.
also help CIOs define their legacies, promote The financial services industry, for example,
their personal brands to the CEO and the might explore new ways for blockchain
board, and instill a new sense of purpose in the to democratize banking, enable micro-
IT organization. transactions, and simplify philanthropic
Dr. Peter Diamandis has said, The donations. The consumer food industry could
worlds biggest problems are the worlds potentially leverage biotechnology to change
biggest business opportunities. Want to be a the health benefits profile and affordability of
billionaire? Impact a billion people!2 He is their products. The entertainment industry
right. The technology needed for organizations might partner with educational leaders to
to catalyze significant positive social leverage advances in augmented and virtual
changewhile at the same time pursuing reality to revolutionize learning and education.
commercial ambitionshas never been By supporting the maker movement and
more accessible. The world needs problem- exploring new ways to leverage 3D printing,
solvers, and customers and employees are manufacturers could help provide affordable
becoming increasingly aware of this fact each housing and basic necessities to the worlds
day. Organizations that identify innovative underserved populations. Hospitals and the
and creative methods to incorporate a social health care industry have opportunities to use
impact mission into their business strategies digital medicine to reinvent and democratize
will likely be recognized and acknowledged, prevention, diagnosis, and treatment.
which could also translate into real growth
and longevity.

115
Tech Trends 2016: Innovating in the digital era

Social good is good business Purpose, mission, and talent


Globalization is raising the stakes around Social impact initiatives are also helping
social impact. Even companies with a strong create talent beacons in the market as
market presence are working to expand employees become more socially conscious.
their reach into additional segments and Sound HR and business strategies should
countries, including second-tier markets consider the expectations of talent and
and rural areas. Here, grand challenges exist: consumer pools as a whole, and with a
poverty, inadequate sanitation, water quality, particular focus on Millennials.
and failures in the social infrastructure of There has been a convergence between
housing, education, and health care. Resource social impact and innovation, largely
constraints and environmental challenges driven by Millennials, who account for $1
loom, including energy costs, water quality, trillion of current US consumer spending.7
and pollution. As widely reported, Millennials decision-
In these markets, solving fundamental making processes are often influenced by a
social needs can lead to commercial desire to have a larger purpose in life. This has
opportunities, but it can also challenge made corporate social responsibility (CSR) an
business operations. Growing businesses imperative and not an option.
need capable employees, reliable suppliers, CSR increasingly plays a huge role in
a well-governed economy, and consumers shaping brand perception. According to
with the means and confidence to buy. Dr. one study of corporate social impact, when
Judith Rodin, president of the Rockefeller companies support social and environmental
Foundation, has said, In much of the world, issues, Millennials respond with increased
markets must be built before they can be trust and loyalty, and are more likely to buy
served. Forward-looking business leaders those companies products.8 Even more
who embrace this reality make explicit pointedly, in a recent survey of Millennials,
commitments to enter new global markets more than 50 percent of 13- to 25-year-old
both as economic opportunity zones as well respondents said they would refuse to work for
as community spaces requiring nurturing and an irresponsible corporation.9
support.4 Applying advanced technology can But its not just about Millennials. A
expedite the journey and amplify the effect. study by the Society for Human Resource
From using artificial intelligence and cloud Management found that 55 percent of
computing to run advanced analytics studies companies with strong sustainability programs
of clean water5 to deploying drones to deliver had better morale, 43 percent had more
food and medicine to villages isolated after efficient business processes and a stronger
natural disasters,6 real progress is being made, public image, and 38 percent experienced
to exponential effect. higher employee loyalty.10 Social impact
crosses generational bounds, and it can be
a differentiating play in the war on talent
especially in the hyper-competitive battle for
the IT worker of the future.11

116
Social impact of exponential technologies

Lessons from the front lines


A virtual field trip of dreams for the first time, we realized we were onto
something unique: a virtual reality solution
At Google, innovation follows a natural
that delivers freedom for students and some
order in which leading-edge engineering is
basic level of control for teachers, says
applied in pursuit of a technologys potential,
Rochelle. Ive never seen such immediate
not its near-term commercial viability, says
buy-in and agreement on the potential for a
Jonathan Rochelle, product manager for
product. Everyone who tries it immediately
Google Education.
gets excited.
This approach is providing Rochelle with
Expedition is still in early days as a pioneer
the resources and creative leeway he needs to
program. Engineers are working to streamline
pursue his latest social impact project: Google
the process for creating immersive panoramas,
Expeditions, a virtual reality platform built for
which currently requires syncing an array
the classroom. While its long-term ambitions
of 16 GoPro cameras. Likewise, Rochelle
are far-reaching, the first iteration takes aim at
and his team are testing the beta product
improving an educational mainstay: the field
in classrooms where teachers and students
trip. Rochelle and his team are working with
take it for a trial run and provide feedback.
teachers and content partners from around
We are not educators, but we want to be
the world to create more than 150 tours that
sure that educators guide the development of
will immerse students in new experiences and
this product, says Rochelle, who adds that
learning environments. Students are free to
before Expeditions is available more broadly,
explore distant locales without ever leaving
hundreds of thousands of teachers and
their desks. They can easily follow their
students from 10 countries will have tested it.
teachers leadat least as long as the guided
Expeditions is a feather in the Google VR
tour holds their interest. Factoids, notes,
development teams cap. But, says Rochelle,
educational videos, and anything else that
it is also proof that VR innovations can
will help knowledge stick are also available to
move forward without an immediately viable
help kids dig deeper and learn more. And field
business model. My goal is to take incredible
trips are only the first frontier. Care to study
technologies and make them useful for
shark anatomy? Immerse yourself in a virtual
educators. If they work in that capacity, they
viewing tank for five minutes to study one up
will likely eventually work in other capacities,
close. Organic chemistry? Become an explorer
too.12
of the molecular machinations that make us
who we are. Potential lies across the entire
academic curriculum. Set phasers to wellness
Expeditions was born during a hackathon As a general rule, unmet consumer
in which two engineers blended VR concepts need drives innovation. Unfortunately, this
from the Google Cardboard viewer with rule doesnt always apply to the health care
document-sharing capabilities from the industry. In an age of tech-enabled individual
companys classroom application. The result empowerment, patients often have few
was an app that made it possible for one leader opportunities to receive medical care without
to guide multiple people on a virtual journey. going to a clinic or hospitala limitation that
Their first iteration featured two panoramas: can create inefficiencies and drive up prices.
one a tour of the Taj Mahal, and the other To help address this challenge, in
a view from space. When we tried this out 2012 Qualcomm Life, Inc., a subsidiary

117
Tech Trends 2016: Innovating in the digital era

of Qualcomm Incorporated, focused on use. The winning design will be announced in


wireless health solutions. Working through early 2017.14
its philanthropic arm, the Qualcomm
Foundation, and in collaboration with Best foot forward
the XPRIZE Foundation, Qualcomm Life
Since 2006, shoe seller TOMS has
launched the Qualcomm Tricorder XPRIZE,
pioneered new approaches for harnessing the
a global competition in which teams compete
power of business and digital technologies to
to develop a portable, wireless device that
help others. Through its One for One program,
accurately diagnoses a set of diseases,
every customer purchase made on TOMS.
independent of a health care professional
com helps provide shoes, eye care, water, safe
or facility, and provides a positive user
birth, and bullying prevention services to
experience. At the end of the five-year
people in need around the world. The company
competition, the team with the best design
also collaborates with a network of giving
and diagnostic performance will pocket a cool
partnerslocally staffed and led social and
$10 million.13
charitable organizations with a long-term
According to Rick Valencia, senior vice
commitment to the regions in which they
president and general manager at Qualcomm
operate. Through these and other efforts,
Life, the decision to support this competition
TOMS has, to date, given away roughly 10
was driven by Qualcomms commitment
million pairs of shoes and helped restore sight
to promoting innovation in health care.
to more than 200,000 people.15
Trying to address challenges in an area like
To grow its global network of giving
diagnostics is not easy. But we strongly believe
partners and to enhance the online customer
that mobile technology has a role to play in
experience, TOMS built an e-commerce
that effort, he says.
platform that supports additional TOMS sites
Inspired by a prop and concept from
in almost a dozen countries. The platform was
the Star Trek series, devices are expected to
designed with a scalable architecture to launch
accurately diagnose 13 health conditions (12
new sites rapidly, allowing TOMS to build
diseases as well as the absence of conditions).
online marketplaces that reflect the culture and
They should also continuously monitor vital
shopping preferences of local constituencies.
signs in real time, independent of a health care
It also incorporates, among other features,
worker or facility, and in a way that provides
responsive design capabilities, which enable
a compelling consumer experience. The only
the site to immediately recognize the type of
design limitation is that the device must weigh
device a customer is using and automatically
under five pounds.
adjust format, content, and performance
The Qualcomm Tricorder XPRIZE
accordingly. This is particularly useful in
competition is currently underway. An
regions where feature phones dominate.
initial field of roughly 300 entrants has been
TOMS sites around the world now deliver
narrowed to seven finalists hailing from North
a highly visual, personalized customer
America, Europe, and Asia. The finalists
experience built on relevant content,
represent a wide array of backgrounds: a
helpful recommendations, and a faster,
medical doctor with a PhD in engineering;
easier check-out process. Additionally, the
two brothers who run their own medical
companys business users now have better
device company; and a group of students
control over the customer experience, since
from Johns Hopkins University. In the coming
they have the ability to target promotions,
months, finalists will deliver at least 30 new
personalize content, customize search results
prototypes that will be tested for consumer

118
Social impact of exponential technologies

and recommendations, and update product 3D printing software, robotic sensors, and
information across multiple sites on the fly. financial capital from crowdfunding efforts
Notably, this solution provides a separate to create a bionic hand that is less costly to
platform that small, local merchants who produce than some others on the market.
share TOMS philanthropic visionand who Instead of months and hundreds of thousands
might not have an e-commerce platform of dollars, it takes Open Bionics days and
of their owncan use to market products thousands of dollars to build a robotic
designed and manufactured in their own prosthetic, which means that its prosthetics
regions. The Marketplace platform, which is are more accessible to amputees across the
fully integrated into the TOMS e-commerce developing world. Whats more, Open Bionics
site, today features a wide variety of textiles, prosthetic hands match more expensive
jewelry, houseware, and other items produced prosthetics in terms of functionality, but are
locallyand now, thanks to TOMS, marketed lighter and custom-made, and thus often more
and sold worldwide. comfortable for the wearer.
Open Bionics efforts are attracting
Open Bionics offers attention worldwidenotoriety that has
brought in additional funding and sparked
a helping hand potentially beneficial partnerships. Recently,
Aware that staggering development costs the company took home a $200,000 prize for a
had put prosthetics beyond the reach of many second-place win in Intels Make it Wearable
hand amputees, Joel Gibbard, an engineering challenge.17 Likewise, in 2015, Open Bionics
major studying robotics, launched a project was accepted into Disney Accelerator powered
at his university to develop a low-cost robotic by Techstars, a program designed to accelerate
prosthetic. Within a year, he had built a the growth of start-up companies from around
working robotic prosthetic using a 3D printer. the world. As part of this program, Gibbard
Following graduation, Gibbard accepted a and his team will create prosthetic hands and
job with a global engineering and technology arms for kidspatterned after designs inspired
firm. Yet despite the opportunities this by their favorite Disney characters.18
position presented, he couldnt stop thinking To date, Open Bionics engineers have
about his university project and the amputees worked on 10 prototypes, and they are
everywhere who desperately needed currently developing an eleventh. Though
prosthetics. Gibbard soon quit his new job, the companys productsall of which are
moved back in with his parents, and used all of open sourceare not currently available
his savings to buy a 3D printer.16 for sale, Gibbard estimates they should be
Today, Gibbard is CEO of Open Bionics, commercially available within a year.19
a UK startup that is using open-source

119
Tech Trends 2016: Innovating in the digital era

OUR TAKE
MARCUS SHINGLES DR. PETER DIAMANDIS
CEO Founder and executive chairman, XPRIZE Foundation
XPRIZE Foundation Co-founder and executive chairman, Singularity University

In the book Abundance: The Future is Better Than there will be a window of time in which the economics
You Think,20 there is a picture drawn of a future in of a breakthrough for some innovations can only be
which all 9 billion people on planet Earth have access afforded by either those who have the knowledge,
to clean water, food, energy, health care, education, or those who can afford to purchase what that
and everything else necessary to achieve a first-world knowledge produces. Such powerful capabilities may
standard of living. This feat is achieved thanks to leave some segments of the population behind as
exponential technologies and innovation. Yet questions other super-haves accelerate rapidly.
remain: Will abundance be equally distributed?
When will it be achieved? Will all nations and their At what point do these scenarios create animosity,
populations, and all segments of society have equal anxiety, envy, and jealousy between those with
access to this abundance at once? Its worth pausing the knowledge and the means versus those
for a moment to contemplate these questions and the who do not? What roles and responsibilities do
related social impacts. governments, business leaders, and society at
large have in this precarious pre-abundance period
to facilitate the democratized access to these
We are arguably heading toward transformative technologies?

a future in which we will have As exponentially accelerating technologies transition


us toward an era of abundance, we need a new breed
the knowledge and capabilities to of leadership that can monitor and help minimize the
make the impossible possible. potential for this growing divide. This new breed of
technologically literate leaders will be needed in order
to provide the education and knowledge to reassure
The pace of invention and innovation is accelerating and guide societies during a potentially very unstable
rapidly. The dematerialization, demonetization, and period of disruptive change.
democratization of technology could potentially
lead to a new definition of haves and have-nots. Our traditional linear institutions and leaders,
During the next couple of decades, there may well religious and governmental, tend not to support rapid
be turbulence during a period of pre-abundance in change and often seem wired to preserve the status
which the impact of exponential technologies will be quo, sometimes even at the expense of the trust of
unevenly distributed, thus resulting in a new paradigm the people they serve. Tomorrows leaders will need
shift as to the notion of human inequality and to navigate these difficult transitions to help build a
class division. bridge to abundance. From luminary entrepreneurs
to global CEOs to outspoken social visionaries, these
Exponential technologies such as artificial intelligence, leaders will individually and collectively need to rethink
robotics, and 3D printing will lead to massive and reinvent todays social contracts and social norms.
transformation in the workforce and job displacement.
Add the impact of other exponential technologies, Where will these forward-thinking leaders come from?
such as infinite computing power, the Internet of Our history teaches us that these types of leaders are
Things, and synthetic biology, and we are arguably rare, and often underappreciated at first glance. In this
heading toward a future in which we will have the coming era of disruption, one thing is for certain: A
knowledge and capabilities to make the impossible new generation of exponential leadership is needed,
possible. In the early stages of the exponential curve, and all parts of society will be required to participate.

120
Social impact of exponential technologies

CYBER IMPLICATIONS
In the current political climate, Oscar Wildes adage over a politically driven reaction by hackers to an
No good deed goes unpunished still resonates. As we official social policy, how might having numerous
see frequently in both the domestic and international employees use company systems to engage with
arenas, one groups pursuit of the social good can social or philanthropic organizations on, for instance,
offend the sensibilities of others, leading to social a crowdsourcing platform outside your firewall alter
media outrage, protests, and threatened boycotts. your companys risk profile? While social engagement
likely presents no more risk than any other
Unfortunately, the consequences of social, political, engagement with external entities, companies should
or philanthropic activities can extend beyond boycott take steps to include these and other scenarios in
threats: Organizations identifying themselves with their existing cybersecurity, cyber privacy, and cyber
a particular social or political cause may also make risk policies.
themselves beacons for hackers bent on punishing
them for their activism. For example, in 2011, French How might sharing technology assets with others
nuclear power generator EDF was fined 1.5 million impact cyber risk? By encapsulating assets and
by a Paris court for hacking into the computers of services as APIs, a global technology vendor
environmental group Greenpeace. Greenpeace shares the code for a potentially
had opposed EDFs plan to construct a transformational product with
new generation of nuclear reactors the world. Through this act
in France.21 of generosity, the company
may change the lives of
As companies examine
millions. But it may also
opportunities for using
offer bad actors a new
technology to promote the
point of entry into its
common good, they should
systems. As the open
factor in potential impacts
sourcing of assets
both positive and negativeof
for social and other
pursuing a particular course of
reasons becomes more
action. They should also consider
common, organizations
the full range of cyber threats
considering this option
they face, including bad actor
should thoroughly examine
events, as well as those involving
how making previously
well-intentioned employees who are
confidential information widely
oblivious to cybersecurity considerations.
available could potentially open
Finally, companies can explore opportunities
up new risk avenues. They should then
for making their technologies and cyber expertise
weigh the potential positives against cyber-
available to like-minded groups who share their social
related negatives to determine if this is the best
or philanthropic goals.
strategy for achieving its social goals.
To understand more clearly how cybersecurity could
impact your companys social agenda, consider the Cyber expertise as a gift? Think about it. As
following questions: discussed in the last two editions of Tech Trends,
cybersecurity is itself an exponential. As your
organization establishes its cybersecurity and
How could getting involved affect your
cyber risk programs, how could you work with
companys cyber beacon? While organizations
organizations that lack the resources in these areas to
may have a good handle on the cyber threats
develop their own programs? Using your experience
their core business faces, they may not have as
and tools to help a nonprofit tackle some of the same
detailed an understanding of the cyber threats they
cyber risk challenges your own company faces could
could face as they expand into the arena of social
be one of the most beneficial contributions your
responsibility. How might a companys involvement
company can make.
with certain causes or organizations potentially
attract the attention of hackers? Beyond concerns

121
Tech Trends 2016: Innovating in the digital era

Where do you start?


Social impact is a big topic, extending far Mind-set change: Making the business
beyond the realm of IT. However, defining case for solving social needs requires a
the role that exponential technologies play change in mind-set and new ways of doing
in corporate social impact programs is the business. Addressing the specific needs
responsibility of IT executives, particularly the of underserved consumers, the social
CIO. Why? Because the convergence of R&D challenges facing local suppliers, and the
and social investments can lead to adoption limits of infrastructure and education
of new products and offerings. It can also requires a sustained commitment to serve a
serve as a backdrop for experimenting with particular market. This might also require
technologies before applying them to core longer-term planning horizons, changes
business concerns. Given the sheer number of in the product development process, new
considerations and opportunities, formulating forms of collaboration, and innovative
an actionable social impact plan that lays business models.
out a clear vision for the use of exponential Power to the people: Challenge your
technologies can be challenging. stakeholders to help inform your social
Here are some potential places to start: impact agenda. Hold company-wide
Frugal innovation: Business strategies may contests to surface ideas from around
call for achieving growth by addressing the globe. Crowdsource concepts from
the needs of poor and aspirational market customers, partners, and other interested
segments, which often requires offering third parties. Organize hackathons to
more sustainable, affordable products. quickly form teams and refine raw thinking
Rather than stripping existing products into high-level designs, business cases,
of features, shift your focus to leveraging and roadmaps. The more people engage
exponential forces to invent something in social impact programs, the more
that is affordable and fills a basic need. beneficial the programs will likely become
For example, GE developed a portable to everyone involved.
ultrasound machine for China that not Ethics architecture: Make it the
only decreased infant mortality rates, but responsibility of teams working with
created a new product category that led to artificial intelligence, robotics, 3D printing,
widespread adoption.22 and other exponentials to consider both
Ecosystems: In their social impact efforts, the ethics and unintended consequences
organizations will likely be partnering not of these technologies. Building risk
just with competitors, but with NGOs and intelligence across IT is a leading practice,
the public sector. Whereas once businesses but it needs to evolve beyond security,
and nonprofits viewed each other largely as privacy, safety, quality, and regulatory
antagonists, they are increasingly finding concerns. It should also include thoughtful
opportunities to bring complementary exploration of potential social and ethical
knowledge, experience, and skills to bear on impacts and, as needed, mitigations for
social problems. Meanwhile, government those impacts.
can also play an important role as an anchor
buyer, coordinator, and implementation
partner for market-based solutions.

122
Social impact of exponential technologies

Bottom line
By exploring how disruptive and relatively cheap emerging technologies can be optimized for both
social and business gains, business and technology leaders may be able to help solve the worlds
grandest challengesand build new markets along the way. Beyond helping to attract dedicated
customers, suppliers, and employees, social impact programs also present a unique opportunity for
leaders to build a legacy of lasting value for their companies, and potentially for the world.

123
Tech Trends 2016: Innovating in the digital era

Authors
Marcus Shingles, Deloitte Consulting LLP
CEO, XPRIZE Foundation
Former Deloitte Consulting Innovation leader

Marcus Shingles is a former principal with Deloitte Consulting


LLP and leader of DC Innovation, in which role he worked with
corporate executive teams to better understand and plan for the
opportunities and threats of disruptive innovation driven by exponential
technologies. Shingles is now the CEO of The XPRIZE Foundation, a
nonprofit leader in designing and implementing models that utilize
gamification, crowd-sourcing, incentive competitions, and exponential
technologies to solve the worlds greatest social challenges.

Bill Briggs, US chief technology officer, Deloitte Consulting LLP

Bill Briggs is a strategist with deep implementation experience, helping


clients anticipate the impact of new and emerging technologies on
their business in the future and get there from the realities of today. As
Deloitte Consulting LLPs chief technology officer, Briggs is responsible
for helping to define the vision for Deloitte Consulting LLPs technology
services, identifying and communicating technology trends affecting
clients businesses, and shaping the strategy for Deloitte Consulting LLPs
emerging services and offerings.

Jerry ODwyer, US Social Impact practice leader,


Deloitte Consulting LLP

Jerry ODwyer helps clients across the public, private, and social sectors
become a catalytic force to meet urgent societal challenges. He has
significant experience advising Fortune 500 clients on procurement
transformation and sustainable supply chain and operations practices,
including efforts to reduce material, energy, water, and waste to improve
resilience and mitigate risks.

124
Social impact of exponential technologies

Endnotes
1. Wiki Answers, Who said that with great 11. Deloitte Consulting LLP, Tech Trends
power comes great responsibility?, http:// 2015: IT worker of the future, 2015.
wiki.answers.com/Q/Who_said_that_with_ 12. Jonathan Rochelle (product manager,
great_power_comes_great_responsibility, Google Education), interview with
accessed January 14, 2016. the authors, January 15, 2016.
2. Peter Diamandis, Think big (video, 13. Qualcomm, Qualcomm Tricorder
0:58), Singularity University, https:// XPRIZE, http://tricorder.xprize.
exponential.singularityu.org/finance/ org/, accessed December 18, 2015.
want-to-be-a-billionaire-impact-a-billion-
people, accessed January 19, 2016. 14. Rick Valencia (senior vice-president and
general manager, Qualcomm Life), interview
3. Deloitte Consulting LLP, Driving corporate with the authors, December 2015.
growth through social impact, 2015, http://
www2.deloitte.com/content/dam/Deloitte/us/ 15. TOMS, About TOMS, http://www.
Documents/strategy/us-strategy-operations- toms.com/about-toms#companyInfo,
social-impact-corporate-archetypes.pdf. accessed January 13, 2016.
4. Deloitte Consulting LLP, Business Trends 2014: 16. James Dyson Foundation, Open Bionics,
Business and social impact, Deloitte University http://www.jamesdysonaward.org/projects/
Press, March 31, 2014, http://dupress.com/ open-bionics/, accessed January 13, 2016.
articles/bus-trends-2014-business-social- 17. Open Bionics, Open Bionics big win from
impact/, accessed January 14, 2016. Intel, press release, November 4, 2015, http://
5. Samantha Klein, The POWER of www.openbionics.com/blog/open-bionics-big-
crowdsourcing, IBM, July 16, 2015, win-from-intel, accessed January 13, 2016.
https://www.ibm.com/blogs/social- 18. Sarah Buhr, Open Bionics creates Disney-
business/2015/07/16/the-power-of- inspired bionic hands for amputee kids,
crowdsourcing/, accessed January 14, 2016. TechCrunch, October 9, 2015, http://
6. Tim Smedley, Drones new mission: Saving techcrunch.com/2015/10/09/open-bionics-
lives in developing countries, Guardian, creates-disney-inspired-bionic-hands-for-
January 9, 2015, http://www.theguardian.com/ amputee-kids/, accessed January 13, 2016.
sustainable-business/2015/jan/09/drones- 19. Michelle Star, 3D-printed robotic
tech-natural-disasters-medical-developing- prosthetic wins 2015 UK James Dyson
countries, accessed January 14, 2016. Award, CNET, August 25, 2015, http://
7. Sarah Cahan, Perceptions, Millennials www.cnet.com/news/3d-printed-robotic-
and CSR: How to engage the new leaders prosthetic-wins-uk-james-dyson-
of tomorrow, Cone Communications, award/, accessed January 13, 2016.
http://www.conecomm.com/csr-and- 20. Peter Diamandis and Steven Kotler,
millennials, accessed January 14, 2016. Abundance: The Future is Better Than You
8. Ibid. Think (New York; Free Press, 2012).
9. Jeanne Meister, Corporate social 21. Thierry Leveque, EDF fined for hacking into
responsibility: A lever for employee Greenpeace computers, Reuters, November
attraction and engagement, Forbes, June 11, 2011, http://www.reuters.com/article/
7, 2012, http://www.forbes.com/sites/ us-edf-spying-f-idUSTRE7AA34920111111,
jeannemeister/2012/06/07/corporate-social- accessed January 3, 2016.
responsibility-a-lever-for-employee-attraction- 22. Jeffrey Immelt et al., How GE is
engagement/, accessed January 14, 2016. disrupting itself, Harvard Business Review,
10. Susanne Gargiulo, Why everyone October 2009, http://www.fast-bridge.
wants to work for the good guys, CNN, net/wp-content/uploads/resources/
November 7, 2012, http://www.cnn. How%20GE%20Is%20Disrupting%20
com/2012/11/07/business/global-office-csr- Itself.pdf, accessed January 14, 2016.
volunteer/, accessed January 14, 2016.

125
Tech Trends 2016: Innovating in the digital era

Authors
Executive editor
Bill Briggs, US chief technology officer
Deloitte Consulting LLP
wbriggs@deloitte.com | Twitter: @wbdthree

Bill Briggs is chief technology officer of Deloitte Consulting LLP. In his


18-plus years at Deloitte, he has delivered many complex transformation
programs for clients in a variety of industries, including financial services,
health care, consumer products, telecommunications, energy, and
public sector. Briggs is a strategist with deep implementation experience,
helping clients anticipate the impact that new and emerging technologies
may have on their business in the future and get there from the realities
of today.

In his role as Deloitte Consulting LLPs CTO, Briggs is responsible for


research, eminence, and innovation. He plays a key role in defining
and executing the vision for Deloitte Consulting LLPs technology
practice, identifying and communicating technology trends that affect
clients businesses, and driving the strategy for Deloitte Consulting LLPs
evolving technology services and offerings.

Briggs is also the founding global leader of Deloitte Digital, which offers
a mix of creative, strategy, user experience, engineering, and technology
services to help clients harness disruptive digital technologies to imagine,
deliver, and run the future. In establishing Deloitte Digital, Bill was
responsible for the launch and growth of a new global practice that
redefined the vision of a digital consulting agencyone that engages
differently with customers, reshapes how work gets done, and rethinks
the very core of its clients markets.
Briggs earned his undergraduate degree in computer engineering from
the University of Notre Dame and his MBA from the Kellogg School of
Management at Northwestern University.

126
Authors, contributors, and special thanks

Cyber implications authors

Adnan Amjad, Cyber threat management leader


Deloitte & Touche LLP
aamjad@deloitte.com

Adnan Amjad is the cyber threat management leader for Deloitte & Touche
LLP. His role includes responsibility for cyber security strategy development,
vulnerability management, security operations, and critical infrastructure
protection. He interacts and liaises with academia, industry trade associations,
media outlets, and global law enforcement agencies on issues related to cyber
security. Amjads client base includes some of Deloittes largest clients in the
energy, financial services, and telecom sectors. He earned his undergraduate
degree from Indiana University at Bloomington.

Ed Powers, US national managing principal, Cyber Risk


Deloitte & Touche LLP
epowers@deloitte.com

Ed Powers helps complex organizations establish Secure.Vigilant.


Resilient. programs to achieve strategic growth objectives in the face
of increasingly sophisticated cyber threats. He has worked with many
of the worlds largest companies to help them transform their legacy IT
security programs into business-led programs that integrate strategic risk,
regulatory, and technology components.

Irfan Saif, US Advisory leader, Technology


Deloitte & Touche LLP
isaif@deloitte.com

Irfan Saif s experience has been shaped by the opportunity to work with
some of the worlds most innovative technology and media companies.
Saif leads the technology sector for Deloittes Advisory practice and is
also a leader of Deloittes CIO program. He is interested in emerging
technologies and their application in tackling key domains such as cyber
analytics, advanced threat detection, and the Internet of Things.

127
Tech Trends 2016: Innovating in the digital era

Chapter authors and contact information


Right-speed IT Internet of Things: From sensing
to doing
Mark White
Deloitte Consulting LLP Andy Daecher
Products & Solutions Ideation and Deloitte Consulting LLP
Strategy principal Technology Strategy & Architecture principal
mawhite@deloitte.com adaecher@deloitte.com

Judy Pennington Robert Schmid


Deloitte Consulting LLP Deloitte Consulting LLP
Organization Transformation & Deloitte Digital director
Talent director roschmid@deloitte.com
jupennington@deloitte.com
Reimagining core systems
Tom Galizia
Deloitte Consulting LLP Scott Buchholz
US Technology Strategy & Architecture leader Deloitte Consulting LLP
tgalizia@deloitte.com Systems Integration director
sbuchholz@deloitte.com
Mike Habeck
Deloitte Consulting LLP Ben Jones
US IT Business Management practice leader Deloitte Consulting LLP
mhabeck@deloitte.com Technology principal
bejones@deloitte.com
Augmented and virtual reality
go to work Pavel Krumkachev
Deloitte Consulting LLP
Nelson Kunkel Technology principal
Deloitte Consulting LLP pkrumkachev@deloitte.com
Deloitte Digital national creative director
nkunkel@deloitte.com Autonomic platforms

Steve Soechtig Ranjit Bawa


Deloitte Consulting LLP Deloitte Consulting LLP
Deloitte Digital Experience practice leader US Cloud and Infrastructure leader
ssoechtig@deloitte.com rbawa@deloitte.com
Jacques de Villiers
Jared Miniman Deloitte Consulting LLP
Deloitte Consulting LLP Cloud Services director
Deloitte Digital senior manager jadevilliers@deloitte.com
jminiman@deloitte.com
George Collins
Chris Stauch Deloitte Consulting LLP
Deloitte Consulting LLP Deloitte Digital chief technology officer
Deloitte Digital director georgecollins@deloitte.com
cstauch@deloitte.com

128
Authors, contributors, and special thanks

Blockchain: Democratized trust David Pierce


Deloitte Consulting LLP
Eric Piscini Information Management director
Deloitte Consulting LLP dapierce@deloitte.com
Banking and Technology principal
episcini@deloitte.com Mark Shilling
Deloitte Consulting LLP
Joe Guastella Analytics & Information Management
Deloitte Consulting LLP practice leader
US Financial Services Consulting mshilling@deloitte.com
practice leader
jguastella@deloitte.com Social impact of exponential
technologies
Alex Rozman
Deloitte Financial Advisory Services LLP Marcus Shingles
Senior manager Deloitte Consulting LLP
arozman@deloitte.com CEO, XPRIZE Foundation
Former Deloitte Consulting Innovation leader
Tom Nassim mshingles@deloitte.com
Deloitte Consulting LLP
Ecosystems and Exponentials leader Bill Briggs
tnassim@deloitte.com Deloitte Consulting LLP
US chief technology officer
Industrialized analytics wbriggs@deloitte.com

Rajeev Ronanki Jerry ODwyer


Deloitte Consulting LLP Deloitte Consulting LLP
Cognitive Computing and Health Care US Social Impact practice leader
Innovation practice leader jodwyer@deloitte.com
rronanki@deloitte.com

Ashish Verma
Deloitte Consulting LLP
Information Management director
asverma@deloitte.com

129
Tech Trends 2016: Innovating in the digital era

Contributors
Karen Ambari, Zachary Aron, Doug Bade, Elizabeth Baggett, Andre Barneveld Binkhuysen, Alan
Brady, Matthew Budman, Amy Bergstrom, Lynne Calligaro, Ram Chandel, Ami Chitwood, Joseph
Cody, Larry Danielson, Alejandro Danylyszyn, Alex Dea, Tony Demarinis, Tim Dickey, Karen
Edelman, Scott Fasnacht, Mark Frank, Tom Friedman, Kathy Goria, Trevor Gee, Doug Gish,
Jeff Glueck, Casey Graves, Cary Harr, Masa Hasegawa, Erica Holley, Alexis Hui, Lisa Iliff, Ryan
Jones, Alexandra Kawecki, Carolyn Kenny, Shehryar Khan, Bruce Laco, Simon Lapscher, Daniel
Ledger, Steven Lemelin, Andrew Luedke, Lisa Maine, Karen Mazer, Belinda McConnell, John
Mennel, Marlin Metzger, Dottie Morris, Shelly Mortimer, Ashwin Patil, Alison Paul, Ann Perrin,
Jay Petersen, Arun Prasad, Turner Roach, Jim Rose, Bill Schick, Omer Sohail, Quinn Solomon,
Matthew Spoke, Mark Stern, Terry Stuart, Rupinder Sura-Collins, John Tweardy, Vishveshwara
Vasa, Joe Vitale, Jon Warshawsky, Nate Wong, Rajender Y

Research team
Leads: Thomas Carroll, Brian Cusick, Alex Dea, Ashish Kumar, Karthik Kumar, Paridhi Nadarajan,
Jaclyn Saito, Jenny Zheng

Team members: Nidhi Arora, Daniel Austria, Jasjit Bal, Jackie Barr, Daniel Beckerman, Christine
Bennett, Gokul Bhaghavantha Rao, Annas Bin Adil, Arushi Bisen, Rachel Bruns, Eric Chau, Maya
Chehab, Alice Chien, Kate Christian, Aaron Chu, Adam Corn, Sean Cremins, Jiten Dajee, Michael
Davis, Kevin Denny, Meghan Elliott, Aminah Fawad, Alex Feiszli, Inez Foong, Omar Garada,
Prakhar Goel, Tracy Harden, Lilian Hoang, Jaimie Hsu, Seimi Huang, Yili Jiang, Meredith Johnson,
Jay Joshi, Jasneet Kanwar, Solomon Kassa, Brooke Kennedy, Mohsin Khan, Siqi Kong, Varun
Kumar, Sagar Lathia, Teddy Lefkof, Connie Li, Luke Liu, Alyssa Long, Rachel Malkin, Ryan Malone,
J.R. Mauricio, Lea Ann Mawler, Justin McAuliff, David Melnick, Joshua Monks, John Mueller,
Manish Narula, Talia OBrien, Ankit Patel, Ellie Peck, Akshai Prakash, Lee Reed, Andrea Reiner,
Tammara Ross, Joey Scammerhorn, Shaleen Shankar, Hugh Shepherd, William Shepherdson,
Brittney Shkil, Andrea Shome, Kyriakos Sotos, Kit Swain, Ryan Sword, Jake Therianos, Maria
Thomas, Michael Thomas, Varun Tilva, Mike Turco, Meera Valliath, Cody Westphal, Jessica Wiley,
Jaclyn Williams, Christopher Yun

130
Authors, contributors, and special thanks

Special thanks
Mariahna Moore for leading us through the first salvos of Tech Trending with your amazing poise,
passion, and drive; for doing such a phenomenal job making sure the team was able to do the
unthinkable (get to the finish line without you); and most importantly, for giving the OCTO the
cutest and most important deliverable of the year. This ones for Cameron.

Cyndi Switzer for somehow continuing to raise your game, bringing your inimitable energy,
expertise, and follow-through to make the impossible seem effortless, and for being the yin to
the OCTOs yang from the very beginning. Congratulations on the new frontier, but youll be
sorely missed.

Dana Kublin for not just your amazing creativity and design wizardry, but for stepping up your
game on every front this yearserving as creative lead, project manager, and product owner for so
many moving parts.

Maria Gutierrez for impossibly exceeding ridiculously high expectations, leading us into new,
exciting, and precedent-setting directions. You have become a truly indispensable part of the team,
and a huge part of the new heights were aspiring to.

Doug McWhirter for working miracles time and again, delivering on our promises to turn brief
conversations into blindingly insightful and witty prose. Beyond your skills with pen/keyboard,
your editorial judgment is so appreciatedserving as our bellwether to tell not just a complete
story, but an interesting one.

Jenni Marple for not just jumping into the storm in its craziest hour, but grabbing the helm and
masterfully leading us to go live. Your grace, humor, and fierce leadership are a huge addition to
the teamwhich quite simply would not have gotten to the finish line without your tireless efforts.
Expect continued great things as the OCTO charter is expanded.

Shelby Baker, Leslie Barron, Lauren Eisdorfer, Torchy Franklin, Ellen Kauffman, and Owais
Khan for the fantastic impact made in your first year of Tech Trendingfrom the phenomenal
effort leading our unbelievable volunteer army to your vast contributions researching, shaping,
writing, marketing, and refining the content. What an honor to work with such a fabulous team.

Matt Lennert, Junko Kaji, Troy Bishop, Emily Koteff Moreano, and the tremendous DU Press
team. Your professionalism, collaborative spirit, and vision continue to help us take the report to
new heights.

Finally, thanks to Stuart Fano for your triumphant return to the fray, delivering another brilliant
app. Were so glad to have you back in action. And bonus points for bringing Dominic Conde into
the action, who helped so much with our interactive experience.

131
Learn more
Follow @DeloitteOnTech
www.deloitte.com/us/techtrends2016

Follow @DU_Press
Sign up for Deloitte University Press updates at www.dupress.com.

About Deloitte University Press


Deloitte University Press publishes original articles, reports and periodicals that provide insights for businesses, the public sector and
NGOs. Our goal is to draw upon research and experience from throughout our professional services organization, and that of coauthors in
academia and business, to advance the conversation on a broad spectrum of topics of interest to executives and government leaders.
Deloitte University Press is an imprint of Deloitte Development LLC.

This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or its and their
affiliates are, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice
or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or
action that may affect your finances or your business. Before making any decision or taking any action that may affect your finances or
your business, you should consult a qualified professional adviser.
None of Deloitte Touche Tohmatsu Limited, its member firms, or its and their respective affiliates shall be responsible for any loss
whatsoever sustained by any person who relies on this publication.

About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of
member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description
of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed
description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules
and regulations of public accounting.
Copyright 2016 Deloitte Development LLC. All rights reserved.
Member of Deloitte Touche Tohmatsu Limited