The ‘Big Data’ revolution - CIPS and Events... · 2017-01-26 · The ‘Big Data’ revolution: What is it and what does it mean for procurement? Passion for Procurement – Digital

The ‘Big Data’ revolution:What is it and what does it mean for procurement?

Passion for Procurement – Digital Age of Procurement

24th January 2017

Prof. Jim Norton FREng.

External Board Member, Parliamentary Office of Science & Technology

Past President, BCS – The Chartered Institute for IT

Former Director, Cabinet Office PIU e-Commerce team

www.profjimnorton.com

• Setting the scene - the impact of exponential growth.

• Remarkable growth of fixed and mobile Internet.

• What do we mean by ‘Big Data’?

• The impact on procurement.

• Summing up - fertile soil.

Issues to be covered

The second half of the chessboard

Original idea: George Gilder at the Cato-Brookings Institution conference "Regulationin the Digital Age," held in Washington D.C. on April 17-18, 1997.

The cost-performance of electronics doubles every 18-24 months (Moore’s Law)

110

1001,000

10,000100,000

1,000,00010,000,000

100,000,0001,000,000,000

10,000,000,000100,000,000,000

1,000,000,000,000

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030

Source: Gordon E. Moore. Cramming more components onto integrated circuits. Electronics Magazine 38(8), 19/4/1965, available at ftp:// download.intel.com/museum/Moores_Law/Articles-Press_Releases/ Gordon_Moore_1965_Article.pdf and Analysys

39 Doublings

Moore’s Law in Action:

Source: Intel & Financial Times

The “Kaby Lake” processor architecture announced 30/8/2016 is based on circuits with just a 14 nm feature size.

Next target is “Cannonlake” at 10 nm and then 5 nm feature size using extreme ultra violet light to mask chips prior to etching.

Moore’s Law v Biology?

Source: Peter Cochrane’s Blog

Opto-electronics follow the same path (Moore’s Law operates in telecoms, too)

Source: Hecht, Jeff (2011-04-29). "Ultrafast fibre optics set new speed record". New Scientist

49 Doublings1980 1985 1990 1995 2000 2005

0

5000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

1975

Mbit/s

The current record transmission rate is of 101 Terabits/sec using 370 multiplexed optical channels from a single laser on a single fibre…

The cost-performance of magnetic storage doubles roughly every 18months…

110

1001,000

10,000100,000

1,000,00010,000,000

100,000,0001,000,000,000

10,000,000,000100,000,000,000

1,000,000,000,000

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030

Source: E. Grochowski and R. D. Halem. Technological impact of magnetic hard disk drives on storage systems. IBM Systems Journal 42 (2) 21/4/2003

32 Doublings

Cooper’s law for wireless

1

100

10,000

1,000,000

100,000,000

10,000,000,000

1,000,000,000,000

100,000,000,000,000

1895 1905 1915 1925 1935 1945 1955 1965 1975 1985 1995 2005

Cooper’s Law states that the number of conversations (voice and data) conducted over a given area, in all of the useful radio spectrum, has doubled every two and a half years for the last 107 years, ever since Marconi discovered radio in 1895. Latest is WiGig Alliance developing 9Gbit/sec WiFi…

45 Doublings

Source: ArrayComm

The first half of the chessboard has already delivered some surprises

Microsoft Corporation, 1978

• Setting the scene - the impact of exponential growth.

• Remarkable growth of fixed and mobile Internet

• What do we mean by ‘Big Data’?

• The impact on procurement.

• Summing up - fertile soil.

Issues to be covered

Source: Internet World Statistics http://www.internetworldstats.com/stats.htm

Internet users – world distribution 2016

Communications spend as a proportion of household income increased from 1995 -2009 across the OECD countries…

Source: OECD Communications Outlook 2011

Total Mobile Monthly Voice & Data - Ericsson

Source: Akamai “State of the Internet” Report Q3 2016

Where is the information we have lost in data?

2006: 161 Exabytes (1018) of data created, stored and replicated:

- 3 million times all books ever written- 20 Gigabytes for every person on the planet

2013: 4000 Exabytes (4 Zettabytes) of data created, stored and replicated.

Source: EMC http://www.emc.com/leadership/digital-universe/expanding-digital-universe.htmand Richard Currier (2013-06-21)

We are drowning in data….

Where is the life we have lost in living?Where is the wisdom we have lost in knowledge?Where is the knowledge we have lost in information?

T S Eliot, Choruses from ‘The Rock’, 1934

• Setting the scene - the impact of exponential growth.

• Remarkable growth of fixed and mobile Internet

• What do we mean by ‘Big Data’?

• The impact on procurement.

• Summing up - fertile soil.

Issues to be covered

The wit and wisdom of Dilbert…

Cumulative benefits of big data: £216 billion for 2012-2017 (CEBR)

£45,252

£32,478

£27,929£27,649

£20,405

£14,384

£13,740

£12,417

£6,408

£5,430 £5,275£4,595

Industry benefits, 2012-2017 (2011 prices)

Manufacturing

Retail

Other activities

Professional services

Central government

Healthcare

Telecoms

Transport and logistics

Retail banking

Energy and utilities

Investment banking

Insurance

Source: CEBR Units £million

Combination of new technology, big data and AI drives disruption…

Source: Financial Times 27/12/2016

• Setting the scene - the impact of exponential growth.

• Remarkable growth of fixed and mobile Internet

• What do we mean by ‘Big Data’?

• The impact on procurement.

• Summing up - fertile soil.

Issues to be covered

Co-operation - new types of intermediary

Customers’ agents for collective purchasing or to manage risk.Suppliers’ agents to generate critical mass from a large number of small companies

Aggregators acting for small businesses...

Source: http://www.agriculture.com

Commitment - ensuring fulfilment works...

“In a gold rush those who are really smart get there fast and sell shovels”.Enhanced safety and stability in the fulfilment backend rather than the ‘dot com’ front end.

Cost - driving it down through new approaches

Pushing stock holding elsewhere in the supply chain.

Increasing competition among sub-contractors

Enhancing logistics

Gaining cash flow at the expense of suppliers

Evolution in B2B exchanges (1)

• change the balance of power in entire sectors by aggregating the purchasing and selling power of large numbers of small companies;

• foster (rather than destroy) supply chain relationships for collaborative development, innovation and the creation of ‘competitive edge;

• offer options to manage the risk associated with ‘just in time’ approaches to inventory management.

In the B2B space, infomediaries – in the guise of the next generation of trade exchanges – will:

Manufacturing - the car industry - Feb 2001

Founder members of the Automobile Network Exchange (ANX) which had cut $1bn per annum of cost out of the global car industry.

In February 2001, planned to join Daimler-Chrysler and Renault-Nissan to create ‘Covisint’ with around $250Bn purchases each year.

GM expected to transact purchasing only through Covisint by end-2001.

• 30,000 suppliers;

• $100 bn purchases of goods and materials each year

• $500 bn extended supply chain

• Launching ‘TradeXchange’with Commerce One.

General Motors and Isuzu: Ford:• 30,000 suppliers;

• $80 bn purchases of goods and materials each year

• $300 bn extended supply chain

• Launching ‘AutoXchange’with Oracle.

“Covisint” represented a key test case

Source: www.covisint.com

Evolution in B2B exchanges (2)

• maintain online registers for the location of scarce resources or high value spare parts;

• support escrow accounts as part of a payment offer in order to transfer payment upon agreed fulfilment;

• develop anonymised and accurate market intelligence based on aggregated actual purchasing behaviour;

• help to manage exchange rate risks; and• provide real-time on-line credit search for

accreditation of third parties.

In the B2B space, infomediaries – in the guise of the next generation of trade exchanges – will also:

Trade exchanges can add value…

Source: https://www.aeroxchange.com/home.jsp

• Setting the scene - the impact of exponential growth.

• Remarkable growth of fixed and mobile Internet.

• What do we mean by ‘Big Data’?

• The impact on procurement.

• Summing up - fertile soil.

Issues to be covered

Some final thoughts….

• Exponential growth in technological capability is unlikely to abate anytime soon.

• After thirty years of ‘coming soon’ genuine AI applications are now with us.

• Areas where relationships and inter-personal skills matter will be where AI will continue to be the servant and not the master.

• The importance of resilience, being able to manage tightly coupled supply chains despite disruption will be increasingly valuable.

But always remember that new technology can sometimes

have unexpected impacts….

Oh dear…!

Questions & Answers

Slides available to download from:

http://www.profjimnorton.com/cips2.pdf