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Digital Culture, Digital Technology, Technology Services

The Panama Papers – a Symbol of True Digital Disruption

April 6, 2016 Keith Haviland Leave a comment

The word disruption is used so very often it has almost lost its power. But there are times the world is genuinely disrupted, and on a global scale.

The current Panama Papers’ scandal is a symptom of one such disruption. It is extraordinary in its scale and global reach. It demonstrates the insecurities of our digital society, the almost-death of privacy, and indeed issues with the way our connected world is governed.

A Prime Minister Resigns

At the time of writing, the scandal has claimed its first major victim with the resignation of Iceland’s embattled prime minister, Sigmundur Davíð Gunnlaugsson. The UK Guardian said:

“A mass protest planned in Reykjavik later … turned to celebration as Icelanders vented their anger at the outgoing prime minister following revelations that he had once owned – and his wife still owns – a secret offshore investment company with multimillion-pound claims on Iceland’s failed banks.”

This is an event likely to lead to new elections that may change the face of Icelandic politics.

Global Impact

Other threads of the emerging story link the papers to Chinese and Russian leadership, FIFA’s new president Gianni Infantino, and the father of the British Prime Minister David Cameron. Another connects billions of dollars of foreign funds to London property, exacerbating concerns about affordability for the young. There are implications and investigations across Africa, Austria, France, Italy, Australia and New Zealand.

President Obama made the following observation, highlighting some of the systemic issues the scandal illuminates:

“We’ve had another reminder in this big dump of data coming out of Panama that tax avoidance is a big, global problem. It’s not unique to other countries because, frankly, there are folks here in America who are taking advantage of the same stuff. A lot of it is legal, but that’s exactly the problem. It’s not that they’re breaking the laws, it’s that the laws are so poorly designed that they allow people, if they’ve got enough lawyers and enough accountants, to wiggle out of responsibilities that ordinary citizens are having to abide by.”

The Source

The Panama Papers consist of 11.5m documents created across a period of four decades that describe the details of 214,000 entities. These were leaked from a Panamanian law firm called Mossack Fonseca, passed to German newspaper Sueddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists (ICIJ). The analysis has been undertaken by journalists from 107 media organizations in 76 countries – connecting the BBC, the Guardian, the Washington Post, El Pais and many more giants of media. The scale of the leak is breathtakingly gigantic, consisting of 2,600 Gb of data compared with around 1.7 Gb for the 2010 Wikileaks event.

Observations

How this particular saga will play out is unpredictable. The sheer scale of the data released means we are in for turbulence in certain parts of the world, and privileged parts at that. It is a journalist’s dream. But there are some intriguing general themes here that are already visible, and of relevance to many enterprises.

Digital Insecurity, Digital Trust

Digital tech has made the world insecure in an utterly fundamental sense. In the case of the Panama Papers, a very bright light has been shone into dark places. But of course, data leaks are not always for noble purpose.

Data for every member of a country’s population can be easily held on a small single device. Another recent event was the apparent illegal release of data for a huge section of the Turkish population. Information including names, birth dates, national id numbers, addresses, and parent names were posted online in a downloadable 6.6 Gb file. This looks like one of the biggest public leaks of personal data ever and one that puts maybe the majority of the country’s population at risk of identity theft.

Another example: a group of cyber-fraudsters researched the the internal processes of Bangladesh’s central bank, then – using that information – posed as officials to request a series of transfers to illicit accounts which approached $1 billion in value. The scale of the transactions, coupled with a spelling mistake in a name noticed by Deutsche Bank, halted the fraud but not before around $80m was lost – essentially one of the biggest known bank robberies in history

Technology is the friend and enabler of the committed politically-driven leaker or equally committed cyber-criminal. For better or for worse, it is possible for an individual or small group to shake the foundations of a business, of a nation and of a global system.

The implication of this for enterprises and individuals is profound in the long-term. It will be better to start in the right place, and operate with public values and transparency as far as humanly possible. Where security and privacy do matter – few would want to be transparent about their credit card numbers for example – then the creation of true digital trust, using technologies like block-chain, becomes one of the key challenges of future business. And every organization will need to treat transparency, values and security as connected C-level issues.

Digital trust will be as important to modern capitalism as the invention of double-entry book-keeping was at its birth.

The High Velocity of Crisis

The velocity of the news cycle becomes ever more gruelling. The Icelandic and UK governments are facing major crises within hours and days of disclosures of overwhelming volume. In the specific case of the Panama Papers, corporates like HSBC are also caught in the global tsunami. Other data leaks have caused high profile issues for a long-list of other companies: Sony, Target, JP Morgan Chase, T-Mobile, Talk-Talk and many more.

In the end, responses need to fast, clear and rooted in truth, solid values, strong technical action and PR expertise to be seen as credible. Leadership everywhere will need to combine integrity, rigour and agility in the way they prepare for and deal with issues.

The Issues of Governance in a Part-Globalised World

There are real tensions in our systems of business and political governance. The global elite and global businesses are ever more connected. Conversely, Tax systems are balanced between complex global treaties and the historic centres of gravity in national tax regimes. Some will seek to hide their wealth through the complex system this creates. On the other hand, many expat workers will grind their teeth at the frustrating processes required to avoid double taxation. Within major corporates, tax is seen as a global issue where networks are designed – generally perfectly legally – to optimize profit. To do otherwise would be less than competitive.

But most politics is still national. In the West, there is growing democratic frustration at globalization on both left and right. (Although ironically the Panama Papers are being analyzed by a global consortium of journalists.) There is a long road ahead to balance the powers of global political and commercial networks against the needs of citizens and democratic consensus. Some would say one of our most urgent tasks is balancing the perceived privileges of the elite against a growing desire for fairness.

Globalization has driven huge benefits, and the position of the average human has improved mightily in the last half-century. We talk about this less often than we should. But there remains a lot to be done, and the leaders of any modern global enterprise need to be deeply aware of the local demands and sensitivities of their customers and stakeholders. Above, political leaders have a field of nettles to grasp to ensure a more efficient and equitable global trading system.

Conclusion

What we are seeing are the growing pains of what has been called “The Second Machine” age. Digital Technology has become powerful, bringing huge benefits to consumers and producers in both the developed and developing worlds. It also brings people together in new and intensely creative ways.

Simultaneously, it creates wholly new challenges around trust, security and the why the world operates. It enables light to be shone in places long used to the dark. In the end, enterprises and leaders that focus on values, integrity, organizational resilience and rigour will thrive.

Keith Haviland is a business and technology leader, with a special focus on how to combine big vision and practical execution at the very largest scale, and how new technologies will reshape tech services. He is a former Partner and Global Senior Managing Director at Accenture, and founder of Accenture’s Global Delivery Network. Published author and active film producer, including being Co-Executive Producer on “The Last Man on the Moon”. Advisor/investor for web and cloud-based start-ups.

Digital Technology, Technology

Digital Abundance, and the Second Half of the Chessboard

August 11, 2015 Keith Haviland Leave a comment

We live in an time where the rate of change in digital and cloud technology is exponential. The word “exponential” is used a lot, often without rigour, but in this case the statement reflects reality closely, and the implications are perhaps staggering. We already seeing – and often taking for granted – a rate of innovation greater than any other period in digital history.

Fable of the Chess Board

To understand the extraordinary power of exponential growth, set’s start with the fable of placing rice (sometimes wheat) on each square of a chessboard, starting with one grain on square one, two grains on square two, four grains on square three and so on – doubling each time. The well known question is: how many grains of rice would be on the chessboard at the finish? The story is often told in the form of a servant speaking with the Chinese emperor, but the tale is linked more clearly to the writings of Islamic scholars around the 10th century, or sometimes to the invention of Chess itself in India.

The final square alone would end up with 2 raised to the power of 63. That is a very large number indeed, and there would be enough rice on the board that placed end-to-end the grains would span the gap to the nearest star, Alpha Centauri, and back again.

Moore’s Law

The one real place in human endeavour where this type of process exists is IT. It is (of course) enshrined in Gordon Moore’s “law”, where in 1965 he predicted a doubling every one to two years in the number of components per integrated circuit.

Moore’s Law is now a cliché, mentioned in articles and on stages an untold numbers of times. It is not even a law in the normal sense, but a remarkably astute observation. But as a description of actual progress it is real, and remains real. It also carries through to memory capacity, disk capacity, the number of pixels in digital cameras, and much more. The drum beat of progress is remarkable, sustained, even relentless.

Ray Kurzweil and the Second Half of the Chessboard

In 2001, Ray Kurzweil – computer scientist, inventor and futurist – wrote a seminal essay about the rate of change in digital tech that contained the following observations about the rice and chess parable, to illuminate the future power of the Moore’s law process.

It should be pointed out that as the emperor and the inventor went through the first half of the chess board, things were fairly uneventful. The inventor was given spoonfuls of rice, then bowls of rice, then barrels. By the end of the first half of the chess board, the inventor had accumulated one large field’s worth (4 billion grains), and the emperor did start to take notice. It was as they progressed through the second half of the chessboard that the situation quickly deteriorated …. One version of the story has the emperor going bankrupt as the 63 doublings ultimately totaled 18 million trillion grains of rice. At ten grains of rice per square inch, this requires rice fields covering twice the surface area of the Earth, oceans included. Another version of the story has the inventor losing his head.

Ray Kurzweil from “The Law of Accelerating Returns”

In other words, it is in the later phases of exponential growth that the effects become extraordinary, and beyond all common-sense models. Kurzweil uses this as part of building the case for the singularity – a predicted epoch of miraculous tech-driven change – that sits at the ragged edge of futurist thinking.

1958 – 2006

Erik Bryonjolfsson and Andrew McAfee of MIT develop the chessboard metaphor further in their excellent book “The Second Machine Age”.

They take a start point in 1958. The late ’50s were a remarkable and forgotten period of progress in tech, where many of foundation concepts were created. 1958 also marks the moment when the first use of the term Information technology was made in the Harvard Business Journal .

Assuming a doubling of IT power every 18 months, we entered the second half of the chessboard in 2006 – a year that saw the launch of twitter, youtube and Amazon Web Services in a form we would understand today.

Digital Resource Abundance

The point that Bryonjolfsson and Andrew McAfee are making is this: remarkable capacity is now available, and continuously increasing, for innovators, inventors and entrepreneurs. Such abundance of resources allows us to have driverless car technology, smart phones with the capacity of high end PCs of the past, and games consoles with the capacity of former supercomputers. Digital abundance has also led to the first usable voice-based agents such as Siri, vast and responsive social networks, and robots that begin to mechanically move and act in the world like humans or animals. We have data, and potential insight, at scales that stretch our ability to describe in the current metric system. Social Commerce enterprises, like uber and Airbnb, have connected legions of customers and citizen suppliers on a scale that is breathtaking. We have arrived in the foothills of the future sooner than we were perhaps expecting.

Implications for Enterprises

For enterprises, this richness of compute and storage power allows the redundancies that make large-scale cloud computing not only feasible, but competitively essential and inevitable. For most purposes, it is already inherently cheaper, more (potentially) agile and secure. The new technologies also facilitate new types of business model, new sources of insight on a gigantic scale and new demands from their end clients. Immediacy in business matters more than ever. As a result, Enterprise IT has embarked on a long period of transformation and change – maybe a decade of marvels and dark dangers. Any organisation now needs to think more about tech opportunity and invention, than optimisation of the server estate, or cost per development hour.

Whether we will create true AI in the next decade, or next century, or ever remains an unanswerable question. The current rush to digital will prove to be part-bubble driven by over enthusiasm. There will be broken promises, and conventional challenges around service and costs. Legacy rarely dies, but grows larger.

But what is clear is that the opportunity to invent and innovate grows ever more profound as we move into the next great phase of digital history. It’s time for imagination, and for all technology practitioners to look forward.

Keith Haviland

Keith Haviland is a business and digital technology leader, with a special focus on how to combine big vision and practical execution at the very largest scale, and how new technologies will reshape tech services. He is a Former Partner and Global Senior Managing Director at Accenture, and founder of Accenture’s Global Delivery Network.

Published author and active film producer, including Last Man on the Moon. Advisor/investor for web and cloud-based start-ups.

Agile, Delivery, Technology, Technology Services

The Bifurcation of Technology and the Revolution in the IT Industry

October 30, 2014 Keith Haviland Leave a comment

Sometimes people start to use a phrase or word that captures a moment of change. You hear friends and colleagues using it, and it starts to crop up in the media. One such example I’ve heard several times in the last few weeks is bifurcation, as a dry shorthand for the current momentous transformation in IT and IT services. The trends I noted in an article (here) in the summer are accelerating, and fast.

A recent, excellent article in the Economist covers this well. The bifurcation is the dual-track nature of growth in IT. Services and products related to mobile and cloud are expanding, and sometimes with extraordinary growth rates. Conversely, traditional IT sectors “are growing slowly or even shrinking”. The sectors under pressure include most types of hardware, traditional enterprise software, and classical IT services.

The combination of the differential growth characteristics means the IT industry overall is showing modest growth. The Economist quotes a number of 3% overall. Other commentators will give numbers even closer to zero. It is a challenging environment.

One result of this is the beginning of significant change in the corporate structures of IT suppliers. Larger companies are acquiring faster-growing companies. That is the usual cycle. More profoundly, some large companies will radically reshape themselves. As the Economist describes “HP’s recent decision to break itself up was merely the opening shot … Others will shed businesses that have become commoditised …IBM announced that it will pay Globalfoundries, a contract chipmaker, to take its semiconductor business off its hands.”

The changes in technology driving these changes in business are very real. Over the last 20 years, the relentless increase in available compute power, network bandwidth and storage capacity has moved us to a world where a wide variety of very powerful devices – not always operated by people, but increasing by other machines – can connect reliably to remote services of increasing breadth and sophistication.

And what this means is that such services can potentially take advantage of real economies of scale, and can be built and provided to the entirety of the universe of consumers and business with an ease that a generation ago would have seemed startling.

A new underlying industry architecture for software is forming. It includes a complex infrastructure layer that provides cloud services, which itself faces real change as the concepts of commoditized data centre and commoditized server becomes blurred. It includes a complex range of platform options that link humans and their devices to apps and cloud services. The architecture is crowned by applications and functional services – and it is the richness of these that will accelerate the change in IT. Importantly for established businesses, there is an explicit need to add an integration layer to the architecture – since we are on a decade-long transformation, and the interfaces with legacy systems will be key concerns. Overall, the concepts of Infrastructure-as-as-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS) introduced by Gartner have served us well, but need refreshing as this form of architecture becomes dominant.

These changes in architecture also change the expectations for the delivery of software and services. New companies especially want their back-end support systems to be easily, immediately and cheaply available, and provided as elastic services that will grow with them. They do not seek uniqueness or differentiation here. Instead, they want innovation and rapid development of those services that face their customers. More generally, monolithic applications are being replaced by systems of services. This brings more architectural complexity, but it allows development to be parallelized and – if well managed – delivered in much more agile ways.

There are obvious dangers here for the providers of IT services (and you can include IT departments under this heading) who are sometimes surprisingly disinterested in the way they deliver their technology services, although this is often what clients are buying.

For example: a typical feature of large companies is operator dominance where a focus on cost becomes primary – growth in a changing world is much harder and requires fortitude. Taken to excess, the focus becomes optimization of legacy services, and too much focus on tools such as global delivery – wonderful as part of a toolkit, but most effective in combination with client-facing services that bring new technology opportunity into the heart of businesses. Indeed, the best India-based IT providers realize exactly that, and understand that conventional outsourcing now has a limited shelf life.

Another sign of dysfunctional effects are mash-ups of old and new which resemble failed experiments in genetic engineering. We all know of large projects where agile approaches have been introduced at too large a scale to deal with mad schedules, and client and suppliers try to handle this with conventional procurement approaches. Fixed-price contracts and flexible iteration can be unlikely bedfellows.

But real, sun-bright opportunity at scale also exists. An eco-system of service providers has appeared around the dynamic and fast-growing company Salesforce. Salesforce transaction volumes are in 9 figures daily, and much of these are via their platform technologies, showing people are building their own apps around its Software-as-a-Service core.

Another positive example: I have come across one agile based company that hires the very best developers – aspiring for the top 1% – and undertakes only small projects with direct and strong business support. It seems to genuinely deliver the benefits of agile approaches, with great reliability. This emphasizes to me a coming focus on skills and expertise that can marry client need and the power of new tech. Like all times of change, smart tech-savvy people who understand clients and can integrate complexity will be at a premium.

And the growth rates of many larger consultancies are respectable, or simply plain good – reflecting client needs for advice and support in their transformations.

So, as always I end very optimistically. There are new opportunities for those technology service providers who can develop architectures and architects for the new world, and who can create app and tech services that can be reused across their clients. Good companies of the future will get to grips with better, more nimble ways of integrating, assembling and crafting solutions for clients as systems of services. They will invest in building the new skills and high-end expertise for 21^st century delivery – both close to clients and in their global centres. They will create new types of career, and new types of personal opportunity.

I will be writing about these positive trends in future articles. Stay tuned.

Keith Haviland is a business and technology leader, with a special focus on how to combine big vision and practical execution at the very largest scale, and how new technologies will reshape tech services. He is a Former Partner and Global Senior Managing Director at Accenture, and founder of Accenture’s Global Delivery Network. Published author and active film producer, including Last Man on the Moon. Advisor/investor for web and cloud-based start-ups.

Technology, Delivery and Digital Culture