Sunday, March 13, 2016

Need to manage technology is more urgent than ever

Note: These are my personal views and not those of my employers, Tata Consultancy Services
I just read this article by HfS regarding TCS Ignio. I had written this article long ago regarding Ignio. HfS mention that over next few months "We’ll also shine a light on how the lessons of incident management can be ported to business process delivery to make it more intelligent". As I keenly await their view on this, I am sharing my view on this, since I think we are at the cusp of something radical. And I will take the example of insurance.
As mentioned in this article and this article, the competitive advantage for commercial insurers lies in their ability to capture and manage the knowledge of the individual and aggregate causal matrices of losses and translating this knowledge into tools for risk survey, risk selection, risk pricing, exposure management, capital allocation, claims adjudication and reserving decisions. Risk survey and loss adjustment data are static secondary sources of potential and actual loss data respectively, while IoT data can be the primary source of potential and actual loss data. Just imagine, if it were to be possible to apply a technology first approach to gather the knowledge needed to support the above types of tool, where will that take insurance to? Just like automated underwriting and claims processing has change the scenario in general insurance, will the same happen in commercial insurance too. Training new underwriters and claims adjusters used to be simpler before, but is no longer so.
If AI "tools" do more and more of the "use-cases", what will the role of humans in business processes be? Clearly it will be to handle the most complex, never-seen-before "use-cases". But how do we train humans to do this. And how do we "test" and "control" the AI over time, whether it remains correct and/or accurate. As humans lose knowledge and AI contains more and more of it, will we lose the ability within humans to make good quality decisions without AI? As we become more and more dependent on AI, will we lose the ability to survive without AI? I speculated on a lot of these fearful scenarios in 2013 in my blogs on blogger. Never felt that I would start thinking of those scenarios coming real so soon.
It is important to think long and hard about how we manage technology going forward to make sure that we survive and remain in charge over our destinies.

Avoiding monopolies in the digital economy

Note: These are my personal views and not those of my employers, Tata Consultancy Services.
Just read a fabulous article making a key point about how digital economy is different from non-digital one. I would like to summarize and crystallize the import of this article by saying that digital unicorns seek to reduce the scope of individual labor in providing the end-to-end services of different kind, by providing the environment which embeds disparate laboring individuals into a "matrix" such that the laborer is lesser and lesser in charge of the end-to-end service and the digital unicorn is in charge of operating this "matrix" to control the provision of the end-to-end service, seeking to derive monopolistic returns limited only by demographics.
Based on my observations about the free software movement and my thinking related to Oasis (particularly this article and this article), I think that humanity needs to figure out how much of the technosphere around it should be public and how much should be private. This is the only way to avoid the monopolies in my view.
Is this really surprising and new? The public and private divide existed in the non-digital world too. It exists because of the nature of the difference of the needs we separately have and the one's we together have. If the "public" sector's services and the "private" sector's services are both provided digitally as part of each end-to-end services with varying degree's of public and private elements in each public service, such that "core" services are public, it would only be a natural extension of our current ways of living and working into the digital realm. It is true that things are not visibly evolving in this direction yet, but I see the seeds of this in Oasis and am sure are visible elsewhere. The reason for this is that this is the natural solution to the nature of interest structures collision problem in a digital world.
I have been thinking about how a blockchain based end-to-end economy could work and might write about it in the future. We certainly have outgrown the analogue ways of living and working, (the iconic example being that fingerprints can easily be fudged from publicly taken high resolution photographs). The new ways of living and working are being experimented with all around us. If we remember and represent our best interests in our economic choices, I am sure we will arrive at the destination I describe sooner or later.

Impact of "legacy" on "ways of living and working"

Note: These are my personal views and not those of my employers, Tata Consultancy Services
I read this excellent article by Robin Merttens and quickly sent an update based on it "Juniors in London market are worried about that the inaction of seniors is jeopardizing their future, because non-London places might implement the required actions and reduce London's share of global market by offering lower financial/solvency risk, better price, more covers and better service. Why reduce just 9 basis points if more can be reduced? Why share operations but not data, despite obvious benefits in reducing financial/solvency risks, improving pricing, increasing covers and improving service esp. if the problems can be avoided?"
Then I saw an update by someone complaining how British broadband speeds are behind broadband speed in some developing countries. And knowing how many Banks and Insurers are struggling with FinTech and InsTech, due to legacy, I quickly realized "Everywhere it is the same story. Legacy prevents bank/insurers/brokers/telco's match the productivity levels that those unburdened by legacy can leapfrog to. And its the older folk guarding the fort jeopardizing the future of the young".
But thinking further, I realized more fundamental points about differences in business cases and the abilities to invest. Some have stronger business cases than others to invest, since the productive capacity that the investments will unleash are higher and so the investment is attractive. Secondly debt-laden folks can scarcely facilitate the investments required to rip out legacy and replace with the new, shiny things.
If the present ways of living and working are "good enough" for the older folk and the business cases of investment are not strong, because the benefits of the new ways of living and working are "abstract, fuzzy and difficult to predict", it is far too easy for the older folk to reject the investment. The burden's of previous borrowings for previous investments prevent flexibility anyway in incremental investments. So the decision becomes even more easy to make.
But someone elsewhere, unburdened by legacy is jumping on the next wave directly and leapfrogging. Their business case will be obvious and if they have the flexibility to borrow and invest in their own future, they will do so as many developing countries are doing.
Those who invest protect the future of their young and those who do not risk the future of their young. But we make investment decisions using net present value techniques and the pain and gain of future generations has less value in our present decisions. 
Is there any way, present generation investment decisions can be made by private, public and government actors in UK so that the future ways of living and working of the future people of UK are not compromised?
I think this theme deserves some deep thought extending Robin's proposal.