2008 service based economy???? the future

Innovation Economy: Resist the hype but don’t ignore the realities Dr. Jimmy Schwarzkopf Research Fellow S T K I [email_address]

WIKIPEDIA STKI מתוך ויקיפדיה , האנציקלופדיה החופשית חברת STKI - Schwarzkopf The Knowledge Integrators היא חברת ייעוץ בתחום מערכות מידע בישראל , המפעילה צוות של אנליסטים . לקוחות החברה כוללים בנקים , חברות ביטוח , משרדי ממשלה , חברות היי - טק ותעשייה , חברות טלקום ועוד . באמצע שנות ה -80, ד " ר ג ' ימי ( חיים ) שוורצקוף ביצע את המחקר הראשון מסוגו אודות שוק טכנולוגיית המידע בישראל , עבור חברת DEC . המחקר הכה גלים בשוק הישראלי , ונתן תמונת מצב קונקרטית בשוק שהיה עד אותה עת בלתי ממופה . ד " ר שוורצקוף המשיך בחקר השוק ובשנת 1992 הקים את חברת Meta Group Israel , ששימשה כנציגות בישראל של חברת Meta Group העולמית . במסגרת החברה , המשיך ד " ר שוורצקוף לפרסם מחקרי שוק בתחום באופן קבוע , וכן לספק ייעוץ לחברות והארגונים המובילים בשוק . בשנת 2004 נרכשה Meta Group העולמית על ידי חברת גרטנר , וד " ר שוורצקוף והאנליסטים המשיכו בפעילותם בישראל תחת השם STKI .

This presentation is dangerous: will make people think about intelligence and wisdom (two very different things) ,[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

If I could have predicted this ?? All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info “ When the network becomes as fast as the processor, the computer hollows out and spreads across the network.” – Eric Schmidt, did in 1993

So: I cannot “predict” any one in particular but…..

What has happened in 2008 and what can I do? … will this change INSTITUTIONS organization, production and consumption habits and norms ? ,[object Object],[object Object],[object Object]

Prof. Prescott and Prof. Kydland ,[object Object],[object Object],[object Object],[object Object],Sveriges Riksbank Prize Economic Sciences Alfred Nobel 2004 All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

Economic progress takes place by overlapping surges DRIVEN BY SUCCESSIVE TECHNOLOGICAL REVOLUTIONS Technological progress Time 40-60 years

FIVE TECHNOLOGICAL REVOLUTIONS IN 230 YEARS

TWO DIFFERENT PERIODS IN EACH GREAT SURGE big-bang Next big-bang Degree of diffusion of the technological revolution Time Kuhn’s “ boom” Schumpeter’s Creative destruction Turning Point Institutional recomposition and role shift INSTALLATION PERIOD ‘ Creative destruction’ Paradigm shift DEPLOYMENT PERIOD Reaping of growth and social benefits from the prevailing paradigm 2O - 30 years 2O - 30 years ???

Recurring phases of each great surge

The changing face of the last 100 years

During the deployment phase: unprecedented opportunities and new business models

Prof. Carlota Perez : TECHNO-ECONOMIC PARADIGM SHIFTS

Which road should we take ? All Rights Reserved @STKI Moshav Bnei Zion, Israel +972 9 74 444 74 www.stki.info Alice came to a fork in the road . “ Which road do I take ?” she asked. “ Where do you want to go ?” responded the Cheshire cat. “ I don’t know ” Alice answered. “ Then ” said the cat, “ it doesn’t matter ”. Lewis Carroll, Alice in Wonderland

directions of the current paradigm shift

FEATURES OF THE CURRENT PARADIGM SHIFT “ SERVICES”

Assumption : Generation C is here The birth of Generation C (T people) Control Content Communicate Creativity Channel Creative Class Community Connected Co-Creators Cash Consumer 2.0 Conversation All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

from BUILD product to CREATE service The New Economic Age All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info Red Ocean Strategy Blue Ocean Strategy Compete in existing market space. Create uncontested market space. Beat the competition. Make the competition irrelevant . Exploit existing demand. Create and capture new demand. Make the value-cost trade-off. Break the value-cost trade-off. Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost. Align the whole system of a firm’s activities in pursuit of differentiation and low cost .

So what do we do in the “New Era” ?

Shift to a solutions economy From product to service What are customers trying to solve? “ Less stuff… more service”

Example: Suppliers of components with added-value ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

Cloud Computing Modularity Desktop as a service Software as a service (standard applications ) Platform as a service (custom applications) Infrastructure as a service (compute, storage, network)

Wisdom of Clouds : "cloud computing" ,[object Object],[object Object],[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

What is Cloud Computing? 4+ billion phones by 2010 Web 2.0-enabled PCs, TVs, etc. Businesses, from startups to enterprises 1. data and services reside in massively scalable data centers 2. accessed from any connected devices over the internet . All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

Cloud Computing Architecture Monitoring DBMS Management Stack Provisioning Manager Application Server Monitoring Provisioning Baremetal & Xen VM Virtualized Infrastructure based on Open Source Linux & Xen Data Center – 64 bit X86 All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info Open Source Linux with Xen Monitoring Agent Virtual Machine Virtual Machine Virtual Machine Virtual Machine Apache

Computing and Communication Technologies Evolution: 1960-2010! Control Centralised Decentralised Cloud Computing

BOOK OF THE 1990’s ,[object Object],[object Object],[object Object],Business Process enabled IT All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info Plus 10,000 rebuttals And 20+ books

BOOK OF 2003 copied: “The Myth of Real Time Information”, HBR 1966 Tactical and Strategic IT management Plus 2000+ rebuttals And 5 books

Book of 2005 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

Access Proliferation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: Darwin Day Conference, Google

The Peopleware Ecosystem Peopleware WCM Security Application Servers EAI Web Services E-Forms/Workflow Search Development Tools E-Learning Directory Collaboration Expertise Location & Mgmt. SSO Wireless Business Intelligence Knowledge Mgmt. DM BPM Identity Management Composite App. Framework BAM

Infrastructures influence the new T person ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

OLDENBURG: how infrastructure… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

Defining the new world T PERSON = Neo-nomad

Prof. Ragnar Frisch ,[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info Sveriges Riksbank Prize Economic Sciences Alfred Nobel 1969

Neo-nomads : new Bedouins flourishing in the coffeehouses of central Israel All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info ,[object Object],[object Object],[object Object]

Nomad Worker (2008) vs. Paris Existentialist (1950s) ,[object Object],[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

2007: the year of my discovery ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

I have outsourced part of my life to external cognitive servants : ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

Jimmy’s Touch Points Buys tickets online Checks scores Looks for information about Nascar games Reads up on new cd releases Reads his friend’s postings Gets the latest updates on favorite teams Downloads Songs Music Sites Sports Sites Blog Sites Movie Sites Gaming Sites Google.com Searches for “what’s cool”

Transaction Sites Multimedia Sites Game Sites Social Sites Average person: 10-15 intimate 150 social 500-1500 weak links All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info Banks Insurance Travel “ Amazon” “ e-bay” YOUtube Slideshare Blogs Newspapers WIKIPEDIA Business Simulations Training Second Life Sales

Is it a coincidence or someone is playing with us 1) Google's dissemination of old United Airlines news resulting in a precipitous UAL stock slide 2) Google stocks appeared to fall off a cliff during the final few minutes of trading last week(Silicon Alley Insider has a minute-by-minute breakdown ), plummeting from more than $400 per share to around $200. Luckily, it turns out Nasdaq is declaring a “do-over,” canceling all trades above $425.28 or below $400.53. Nasdaq blamed the drop on “erroneous orders” that were “triggered by orders routed from another exchange.” So it has reset Google’s closing price at $400.52, up more than 5 percent from the day’s open. 3) Other news follows Google-related stock gaffe, during which Google Finance’s data was incorrect for more than 12 hours . 4) Apple stock briefly took a dive Friday after a CNN iReport post appeared saying Steve Jobs had had a major heart attack. Apple said the story was false. Stock prices fell as much as 5.4 percent before rebounding, according to Bloomberg. UPDATE: Here's CNN's official statement . CNN says it removed the story because the community brought the story to its attention. Importantly, CNN also refers to the content as "fraudulent," which is much stronger than "inaccurate." The SEC has already launched an investigation. What happened? In all cases: systems unchecked by human beings made a mistake resulting in massive damage to an already fragile market. What else can we expect???????????? But the episodes aptly illustrates how jumpy the markets are and how easily they could be manipulated. Posted by Dr. Jimmy Schwarzkopf

Companies wake up !!!!!!! ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info CHARLENE LI JOSH BERNOFF

Google 10 years of innovation 1995 1998 2000 2003 2005 2004 2007 ? Core Search Ads Monetization Communications Collaboration ? All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info

All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info Add your room to your site Invite your friends to chat and help decorate Express yourself Customize your avatar and stream personal photos and video Create your own virtual space Chat and interact with your friends in rooms you design

Second Life is the biggest virtual world ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: http://secondlife.com/whatis/economy-graphsphp Million Square Meters of Second Life Land Total User Hours (millions) Source: Linden Lab

Currency: Linden$ ,[object Object],[object Object],[object Object],[object Object],US$ Spent by Users (in Millions) US $ Exchanged on Lindex (in Millions) 270 L$ =$1 USD

Economy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Advisory/Analyst firms H&R Block Island BDO Stoy Hayward Island KAWG&F (Baltimore MD CPA firm), CPA Island Accenture We hope that during 2009 STKI will be present there and will have it’s first SUMMIT

Business Motorati SpokesAvatar: caLLie cLine H&R Block IBM Dr. Dobbs Life 2.0 Conference Cisco Best Buy’s Geek Squad Preen Principal: Aimee Weber Preen

Academia, museums, non-profits Princeton Art Gallery Science Friday International Spaceflight Museum Computer History Museum American Cancer Society Relay for Life

Government, politics and collective action US Congress European Community US Congress – hot topic legislation Campaign HQs Davos protest

METAweb REVOLUTION ,[object Object],[object Object],[object Object],[object Object],All Rights Reserved 2008@STKI Moshav Bnei Zion, Israel +972 9 790 7000 www.stki.info The revolution may have started in a garage in California but it has already crossed every border moving as freely around the globe as a cloud

2008 service based economy???? the future

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2008 service based economy???? the future