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Who Owns The Cloud?

Cloud storage services have become big business.  And a handful of familiar names are quickly grabbing up ownership of most of it.

For starters, Amazon is by far the largest cloud provider today, garnering (according to Amazon Web Services CEO Andy Jassy) “several times as much business as the next 14 providers combined.”

Microsoft is next largest in terms of sales of the infrastructure services that store data and run applications.  But at last read, they were still less than one-fifth Amazon’s size.

And Google places third, even though they are now by market value the second-largest company in the world, though with only about one-fifteenth of Amazon’s cloud business revenues.

Still, Microsoft and Google aren’t standing still.  Microsoft’s cloud unit, called Azure, has won over some large customers lately including Bank of America and Chevron.  They are said (according to a recent article in Businessweek) to have done it by focusing on salesmanship and relationship building skills, something not necessarily the forte of the Amazon business model.  Microsoft CEO Satya Nadella has pushed his sales force into “a roving R&D lab and management consultancy.”  They’re hooking up smaller startups with potential investors and giving larger prospects access to a sales team that helps them market their Azure-based apps to their own customers.  Win-win.

Microsoft is also increasingly moving its traditional Office suite to the cloud via initiatives like Office 365 and the new Dynamics 365 products and branding.  This makes it more likely that when companies consider moving off their own data centers they’ll consider Microsoft favorably, exploiting that existing relationship when it comes to migrating to a public cloud.

To step up its game, Google recently hired the co-founder of VM Ware, Diane Greene, to run its cloud business, starting with a cloud sales force they are building from scratch.  Google also recently announced a partnership with Salesforce.com to take advantage of its list of preferred cloud providers, according to Businessweek.

One big advantage both Google and Microsoft will try to exploit over Amazon is the fact that Amazon often competes fiercely with many of its own prospective cloud clients.  Wal-Mart and others are not keen on seeing their AWS payments benefit the very retailer they most compete against.

It’s still too early to say who will end up on top, but the battle is fierce, and you can expect all three of these tech titans to be in that mix for years to come.  It’s already a $35 billion market that’s projected to grow to about $90 billion within four years according to Gartner analysts.

As AWS’s Jassy notes, “This is the biggest technology shift of our lifetimes.”

 

19 million employment positions in the U.S. will be automated out of existence in the next 15 years… while employers will create 21 million new roles.  So says Ben Pring, director of the I.T. services and consulting firm Cognizant Center for the Future of Work, in a new book titled “What to Do When Machines Do Everything.”

The question becomes – on both ends – what jobs go and what jobs will replace them?

We’ve already seen the massive disruption in retail, and autonomous vehicles are fast approaching, portending a grim future for certain transportation positions.  Taxi drivers have already been obliterated by the likes of Uber and Lyft.

For the future jobs, Pring and colleagues suggest titles as esoteric and wide-ranging as “gender diversity officer,” “virtual store Sherpa” and “personal memory curator.”  Don’t think so?  Then how about lower tech alternatives like “walker-talkers”: contract players (or “gig workers” as they’re commonly known today) who can answer calls to assist and provide companionship for the growing number of the elderly expected in the years ahead.

Robots, artificial intelligence and the march of automation give concern to many that machines will replace people.  But to a large extent we’ve been saying that since the industrial revolution replaced agriculture as the chief means of earning a living.  In fact, many studies have concluded that these new technologies will create still newer jobs – and in even greater numbers than the ones they replace.  To some, it feels like one of those watershed “industrial revolution” (or perhaps, info-data revolution) moments.

Recent efforts to control ‘fake news’ are just one example where AI can do part of the job, but it still takes real live humans to do the hard parts, like making the subtle discernments.  Facebook alone is hiring 10,000 such human curators, to manage the sprawl of news bots and fake news creators.  It seems that humans will have an active role in building and, especially, running AI tasks for a good while.  Just as in retailing, store jobs have been replaced by even more warehouse fulfillment jobs (usually at higher pay), jobs replaced by the various new forms of automation will be replaced by newer forms of work – which means that jobs lost are translated into new– and often better — jobs created.

In fact, according to Vanessa Fuhrmans in an article in the Nov. 16th Wall Street Journal, Pring and colleagues envision jobs that “involve helping companies manage artificial intelligence and automation” with “data detectives,” workers who dig into their firms’ data stockpiles and generate business recommendations.  This mirrors the “big data” movement today where companies (including ones right here in South Bend, Indiana) are employing Ph.D.’s and other so-called ‘rocket scientists’ to cleverly mine millions of bytes of computer and other machine-collected data, pawing through for trends that lead to sound business intelligence – and hence, the holy grail of competitive advantage to their owners.

In the end, as Pring concludes, “Work will change, but it won’t go away.”  Or as Bruce Springsteen once sang, “Them jobs are goin’ boys and they ain’t comin’ back.”

Ah, but newer jobs will – and the sooner we embrace them, the better for all.

“I think I can safely say that nobody understands quantum mechanics,” said Nobel Prize-winning theoretical physicist Richard Fenyman.  His sentiments were echoed by Bill Gates, who said recently that Microsoft’s quantum-computing project is “the one part of Microsoft where they put up slides that I truly don’t understand.”  Even Albert Einstein couldn’t wrap his head around it, so to speak, declaring that the thinking behind quantum mechanics was fundamentally flawed.

And yet… Scientists have since proved the theory repeatedly and conclusively.  More to the point, computers today are being built upon the principles of quantum mechanics – they actually exist.  And wouldn’t you know it, Google (a division now of Alphabet, Inc.) is taking a lead role.  (So is China.)

The oversimplified guiding principle here is that in the quantum world – the world at the atomic level – a strange phenomenon exists known as ‘superposition’ which states that a single atom can be in two locations at the same time.  In our ‘real’ world, that’s simply impossible, and so we can excuse Fenynman, Gates, Einstein and ourselves for not ‘getting it.’

But as Vijay Pande, a partner at Andreessen Horowitz, the Silicon Valley venture firm says, “If this works, it will change the world and how things are done.”  He’s not kidding.

How these things work is less important to most of us than what their working may portend for the future.  At the ‘how’ level, quantum computing involves using qubits rather than the traditional computer’s bits.  In bits, everything is either a one or zero.  In qubits, they can be a one and a zero at the same time.  This allows qubits to process a lot more information than bits, which are set in a specific state – exponentially so when they are combined.  Thus, while 1 qubit can equal 2 bits, and 2 can equal 4, by the time you get to 10 qubits you have the ‘equivalent’ (loosely speaking) of 1,024 bits.  And at 20 qubits, you have over 1 million equivalent bits.  You get the idea.

The practical application of this compounding expansion of computing technology becomes very relevant when you start looking at really deep and complicated problems, for example unbreakable encryption, or simply creating algorithms to calculate the fastest routes to the airport with minimum traffic.  A classical computer would take 45 minutes to take the data of 10,000 taxis and perform that task; an experiment with a quantum computer from the Canadian firm D-Wave (whose quantum PC is pictured above) did it in less than a second.

Because large-scale encryption can be enabled (reverse-factoring prime numbers is a common encryption technique) as well as unbound (or cracked), quantum computing power has attracted the attention of the NSA, where code-breaking quantum computers could be devastating to the national security.  NSA employees and vendors have already been put on alert that they will soon need to overhaul their encryption techniques.  Of course, the NSA (like Google) is building its own quantum computer.

The potential exists to upend entire industries, which of course is why Google is employing its quantum computing powers in the realm of AI.  Word is they already have a 22 qubit chip, frozen inside ‘cryostats’ in Santa Barbara, and that they plan to use their complex (and expensive) setup to deliver quantum computing via the cloud, possibly charging by the second according to reporters at The Wall Street Journal.

There are still some very real hurdles to overcome, from error-checking to the expensive containers for the chips used to power then, but if computers have taught us anything the past 50 years, it is that the future will always be faster, and hence more powerful – and the sky, or perhaps more to the point, the atom – is truly the limit.

 

In the warm afterglow of Thanksgiving, let’s give thanks for Indiana’s manufacturing sector.

Recently, Brian Burton, CEO of the Indiana Manufacturers Association noted in the Northwest Indiana Business Quarterly (Fall 2017) the importance of manufacturing to our home state of Indiana, and the lofty position that’s placed us in the national picture.  Following are a few highlights…

Most people, even in Indiana, have little idea how important manufacturing really is to the state.  In fact, it’s the driving engine behind Indiana’s economy.  Last year it accounted for $98.4 billion, or 29% of our GDP.  That dwarfs everything else we do: for example, coming in at a distance second place with only half the GDP impact was finance, insurance and real estate.  Retail stood at 6%, wholesale industry at 5% and construction at 4%.  For the record, the “information” industry recorded 2% of the state’s GDP, and farming was just 1%.  That might surprise a few folks.

In terms of that $98.4 billion GDP, Indiana ranks 6th in the nation overall, behind only California, Texas, Ohio, Illinois (barely) and North Carolina.  Moreover, on a per capita basis, Indiana ranks number one overall in the nation, with nearly $15,000 output of GDP per person.  That’s about two and a half times the national average.

From a jobs standpoint, Indiana is actually the most manufacturing-intensive state in the country, and the number-one manufacturing employer with over 528,000 residents employed in the sector.

Indiana also pays some of the highest wages, and manufacturing is the largest supplier of benefits, particularly healthcare.  When you combine wages and benefits the average annual compensation for manufacturing in 2016 was almost $74,000, compared to about $46,000 for all “nonfarm businesses” in Indiana.

Drilling down for a second, metal fabrication is the top category of manufacturing, with machinery manufacturing ranked second.  While transportation ranks fifth (think: Recreational Vehicles) from an employment perspective it’s number one by far, employing over 130,000 Hoosiers (metal fab employs 59,000).

Is there a downside to all this good manufacturing news?  Well, maybe.  Most folks here know that finding employees is a big concern, and that appears true across the state.  Finding qualified employees remains a top challenge, notes Burton, who wants to ensure that everyone in the state from elected officials to schools, parents, students and everyone else know of the many opportunities and bright future in our state for manufacturing.  In that regard, there is clearly still much work to be done, as Indiana strives to maintain its high national ranking in one of the key job-building forces in the nation.

But on the upside, we’re starting that effort from a very high place.

Happy Thanksgiving!

Everyone at PSSI wishes all our customers, partners, friends and families a peaceful and restful Thanksgiving holiday!

 

 

(We’ll return to more serious business next week.)

In the post-Equifax hack world, it would be easy to give up the ghost and just assume you’re going to get hacked at some point  Easy, but of course not prudent.  Thankfully, there are a few things you can do to make stealing your information harder – at least via your password-ing skills – without making your life harder too.  Here are a few we’ve found in our readings on the topic.

First, let’s start with the misguided notion that passwords must be ultra-complicated in order to be hack proof.  Not so say the experts.  While T!sK8%gB$x@ may be effective, its complexity is not necessarily… necessary.  The idea that passwords must be convoluted started with some 2003 guidelines from the National Institute of Standards and Technology that insisted you need a random combination of letters numbers and symbols.  Turns out, that wasn’t as effective as they thought it would be.

While you should still avoid easily guessed passwords, a strong password can in fact be logical and easy to remember.  Start with this bit of advice, courtesy of blogger and Internet radio host Kim Komando: A password should simply be able to withstand 100 guesses.  According to Komando, experts tell us that the bad guys can “guess” a password correctly about 73% of the time.  Worse, they can access other accounts of that user thereafter with mostly just slight variations on the original password.  (Come on, admit it… you do it too.)

Note too that dedicated hackers turn to your media feeds (Facebook, Twitter and Instagram) to scour info about you that may be useful.  That should rule out using numbers from your birthday, or pet names or other special favorites that could be easily deduced.

Today’s experts suggest that instead of complex, difficult to remember combinations, try using a phrase (or a “passphrase” in the parlance) that is easy to memorize but hard for others to crack.  Maybe your favorite cookie is a macaroon and your grandmother was a stenographer in Buffalo.  Ilovemymacaroonstenographerinbuffalo would be mighty difficult to guess, wouldn’t it?  Or you might use a phrase in which you take the first character of each word, and perhaps pump it up with just a couple numbers (or symbols), like: 18fsasyaofbfutcann63.  That’s the first words of the Gettysburg address (Four score and seven years ago our fathers brought forth upon this continent a new nation, framed by the year of the address, 1863.)  You may not like our phrase, but surely you can find one of your own.

All that said, the newest NIST guidelines now suggest passwords of as many as 64 characters, and even allow spaces.  Most of us still use the minimum required, usually about 8 characters, including numbers and special characters.  That’s not the most hack-proof approach, and it’s true that stretching it out will increase the safety of your password but, really… 64 characters?  Here again, stringing together a chain of words that only you could logically know and construct with a couple special characters thrown in, is about the only way to get there.

One final tip: If it ain’t broke, don’t fix it.  You don’t need to change your passwords that often.   When a password expires, explains NIST’s Paul Grassi, “it isn’t a motivator to create a brand new password, it’s a motivation to shift one character so you can remember the password” — thereby, of course, defeating the purpose of the change in the first place.

If you’ve created a truly strong password, set it and forget it – well, not literally, but you know what we mean – stick with it unless you’ve been notified of a breach of security.  And when in doubt, use two-factor authentication, whereby the site pings you back with a text message or email, and you can receive notifications on changes.

The solutions really aren’t all that difficult or complex.  The weak link here is that we are all, after all, such creatures of habit.  And we all know it.

How ERP Supports Lean

For a long time, the idea of implementing ERP and getting lean seemed like they were worlds apart.  ERP was robust and embraced all aspects of the business:  analyzing sales trends… forecasting inventory… pushing materials through production… managing the many aspects of the business.  Meanwhile, lean was small and responsive… material is pulled through production… just-in-time inventory planning becomes paramount… paring things down to their simplest proportions and keeping things moving constantly are key.

And yet.  When you look at lean coupled with ERP—as so many companies do today – you begin to see the synergies.  Streamlining processes (via lean), then automating them (via ERP).  Stripping complexity down (lean) and then using the improved process repeatedly throughout your workflows to eliminate redundant steps and waste (ERP).

Take kanban.  These are visual signals used to resupply inventory.  They’re an important early step in the lean process, and especially effective in single plant locations.  ERP supports kanban by turning these visual signals into electronic trigger points, and they work just as effectively across multiple locations.

A key principle of lean is the just-in-time inventory noted earlier.  You want just enough material to meet demand and keep flow moving.  It’s all about eliminating waste.

Well, with ERP, you can analyze individual workstations or shop floor cells.  You can investigate and analyze the impact of, say, setup times or machine changeovers or maintenance, and their effects on the overall schedule plan.

In the same vein, your ERP reports provide you with the data you need to compare your current inventory levels to your sales demands, and adjust accordingly – and quickly.  That’s critical to keeping inventories low, just-in-time and always moving.

In similar fashion, ERP can identify and track waste, the bane of lean.  You can’t improve something unless and until you can measure it, and with the right ERP setup you can track your most wasteful production areas, and know where to focus your efforts to eliminate it.

In other words, ERP allows you to analyze all of the many factors that come into play on the shop floor, and throughout the business.  It can provide the raw information you need then to begin to identify mistakes, inefficiencies and waste – on the way to getting lean.

We’re big believers in the combined power of lean and ERP.  In our view, they go together like a hand and glove – and together, they are the single most important factor in improving performance and profitability among firms that are growing – and those that want to grow.