This is an edited transcript of a speech titled, ‘The cloud: understanding opportunities and challenges’, which was delivered by Dr Balan-Vnuk to the Committee for Economic Development of Australia (CEDA) in May 2016.
The conversation I’d like to have with you is around, “What is the cloud?” – but more importantly, “What is the potential of the cloud to power your business, and what innovation is available to you?”
I’d like to take you back about 150 years, to the invention of the steam locomotive. You can imagine that back in the 1860s people were used to horse drawn carriages – it was nice and quiet, and things moved at a certain pace. And then all of a sudden you had these upstarts with brand new technology that was quite frankly loud, scary and sometimes exploded.
People didn’t understand this new technology – they didn’t understand how steam worked – and so they were incredibly scared and incredibly nervous.
I’m not sure how many of you are aware of the Red Flag Act that was passed in 1865. The most intriguing aspect of that Act was the fact that someone had to walk 60 yards in front of a locomotive with a red flag to warn everyone that it was coming.
I think sometimes we might be a little bit like those folks who saw the first steam locomotive when we come across the cloud. What is it? We don’t understand it. Is it scary? How will it help me?
Embracing a safer future
If we fast forward about 150 years, we see these beautiful new driverless cars that, quite frankly, we would like to drive in. And the reason I think driverless cars are so incredibly important is because the car will be able to brake and react faster than any one of us in the room can.
How does that work? Through hundreds of sensors placed on the car – the tyres, the body of it – testing what surface that car is driving on? Is it bitumen, gravel, or sand? Is it wet, dry, or is there an oil slick? What objects are around that car? Are they stationary, are they moving? Are they moving towards the vehicle? It will react as it needs to in order to keep us safe.
But not only that. This data is also being sent up to the cloud. It’s being aggregated, analysed, dissected and the learnings are being sent back to every single other driverless car so that everyone can benefit from the same learnings to be safe.
My two girls are eight and six, and I’m pretty sure they’ll still get their driver’s licence. Not long after that we’ll probably be driving for fun, taking the car out for a spin, because these cars will actually keep us safer and get us places we need to go in a much more effective manner.
But not everyone has the luxury of having a Tesla, or a beautiful driverless car, for that matter.
Building solutions for those who can’t
I’d like to take you to somewhere very different, to a woman in a Sudanese refugee camp carrying a very heavy load of sticks, who is quite obviously pregnant. Unfortunately this is a scene we’d see in many parts around the world, including Australia. People who have no access to education, to healthcare, to sanitised water; they are at a real disadvantage, and their lives could be at risk.
Two medical students came across some really important information. Maternal anaemia accounts for 20% of maternal deaths globally. And that, in stark figures, is around 115,000 women every year dying from what is actually a preventable disease or condition.
These two students didn’t stop there. Of course the most reliable way to test, “Have I got anaemia?” is through a blood test. But if you can’t do that, the colour of the inside of your eyelid will apparently give a pretty good indication as to whether or not you might be anaemic.
And so these two students – not fazed by the question of, “How do I access technology?” – built a solution on the cloud. In fact, they built a selfie app.
They built an app where you hold on to your eyelid and, with the right lighting conditions, you take a photo of the inside of your eyelid. It gets sent up to the cloud, analysed, aggregated, and then the results come back to you and tell you the probability of you being anaemic.
Now, imagine you’re up in the Coober Pedy, APY lands, you’re pregnant, your nearest doctor is a few hundred kilometres away. You’d want to be able to tell pretty quickly if you’re anaemic and you need some medical assistance.
So these two students from Melbourne won Microsoft’s global Imagine Cup Competition, which is about young people solving solutions of the world using technology. They spent time with Bill Gates and Satya Nadella and they’re well on their way to commercialising that application.
This is the true power of the cloud. It’s the democratisation of technology.
You don’t have to be a BHP employee or an FBI agent or a NASA whiz to access really complex sophisticated technology. You can now access the bits you need to solve the problems that you’re interested in solving.
Blurring the lines between the digital and the physical realms
The Fourth Industrial Revolution is incredibly topical. I would direct you to read an article by Klaus Schwab, who’s one of the co-founders of the World Economic Forum. Schwab really defines the fourth industrial revolution as this blurring between the digital and the physical spheres.
I’m not wearing one, but has someone got a Fitbit on? Or Garmin, a Health Band? We’re using these devices now; it’s testing our heart rate, whether we slept well, whether we’re getting enough exercise. If it’s not already connected to health insurance providers, it’s in progress. Maybe they’ll give me a rebate because I exercise every day.
All of this information about our physical condition is now being sent up to the cloud so we can learn from it. But there are some other really fundamental changes that are happening in this period.
Reaching a market value of $1 billion
It used to take a company around 20 years to reach $1 billion in market valuation. Think about Snapchat and Airbnb; it took them two to three years respectively to reach $1 billion dollars’ worth of valuation.
I can promise you they didn’t do it by signing up and by building on-premises infrastructure. They leveraged the power of the cloud to build a truly global innovative solution that solves major challenges.
Let’s refer to a pyramid, a model you’re all familiar with: Maslow’s Hierarchy of Needs. It’s from humanistic psychology and really saying, look, for us to evolve as people, as humans, we need to get the basics right. The basics are food and shelter. Then once I’ve got that I feel secure, I’ve got a safe place to be. Then I have friends, family, I have intimacy in my life. At that point I’m confident, I’ve got self-esteem, people respect me. And at that point I can really realise my own full potential.
So I’d like to make a comparison to that model, as a framework for thinking about what the cloud can deliver for you and your organisation.
Recognising what the cloud can deliver for your organisation
The very first layer (and this is not discounting the fact that many organisations have on-premises infrastructure, and it’s likely that’s going to have to stay. You’ve got mainframes, there is old legacy technology that needs to stay where it is, and that’s fine. But there are certainly new ways to take advantage of what the cloud is doing.)
The first layer, which is Infrastructure as a Service, we kind of like to call the plumbing. That’s the servers, it’s making sure you’ve got geo-redundancy, you’ve got the patching in place; that the system and the environment itself is healthy and operating successfully.
For many people this is the first step; they’re taking the infrastructure they’ve got on-premises or with a hosting provider and they’re moving it to a cloud that’s global and scalable. But it doesn’t stop there.
The next one is Platform as a Service. One of the Chief Information Officers I work with in the South Australian government said to me, “Look, I’ve got a great information technology (IT) team – fabulous. But they’re busy running IT. I want them to deliver business value. I don’t want them patching servers. I want them working on the business applications that deliver value to our internal stakeholders and to our citizens and our customers”.
So Platform as a Service is really saying, “Someone else takes care of all of the plumbing. I just need it to work, and I build my intellectual property (IP) and my value on top of that”.
Now, getting to Software as a Service, who’s using Twitter, LinkedIn, Hotmail, Gmail? Everyone. That software is a service. It’s there. You sign in, you log in, you use it for what you need to and then you sign out again.
And now this is a really interesting point. If you think about the two medical students, their product is called Eyenaemia. That is Software as a Service. They can make that globally available to anyone and they can earn some money from it.
Equally established businesses now would consume Software as a Service for a customer relationship management solution, or for a productivity and collaboration platform. But equally you can develop services that you can sell and thus create a new business model for your organisation.
Building value from a template
Now, where I think it gets really exciting, is when we start talking about things like machine learning and artificial intelligence (AI). What’s really important about all these things? This is about the commoditisation of data science.
This doesn’t mean we don’t need data scientists. We desperately need more data scientists. But what we then need these people to do is to build value on top of a template.
Why start from scratch if you need to build a fraud detection system? Take a template that exists and customise it with your domain knowledge and expertise, and tailor that for your internal organisation.
Your time to value is incredibly fast, because you’re not starting from scratch. All of the grunt work has been done. You tailor and customise.
There’s an amazing amount of data we’re getting; data could be seen as the new oil in terms of an unlimited resource. It’s how we harness it, and how we use it to glean insights that we’d otherwise have no idea even exist.
Hailing the democratisation of technology
And the part I guess I get most excited about is artificial intelligence. This is where you start to see really interesting things such as conversation as a platform. What does that mean?
Say I’ve got a claim; I don’t want to get on the phone to talk through it because I know I’m going to be on hold for about an hour or two or three. Instead I go to the company’s website. There’s a little bot there that says “chat”. I start to have a conversation.
That’s not a person sitting there. That’s artificial intelligence learning what the intent is behind the questions that people are posing, and responding and trying to probe to give me the information that I need in response. We’re going to see more and more of this, and there are some amazing new APIs and ways of testing and experimenting.
This is true democratisation of technology. You don’t need to be a big player to access this technology and build the billion-dollar data centres. Anyone, students, start-ups, existing businesses, everyone can test this and try it out and see how it works.
So hopefully that gives you a framework of how we see the evolution and the growth of the cloud, and I’m sure there will be more layers above that, which we haven’t even invented yet.
Experimenting within your organisation
If we boil it down to real essentials, the business leader is there to grow profit for the organisation, to retain and grow shareholder value. If you’re a government agency, it’s about delivering effective and efficient customer and citizen services.
How do you do that? With the speed of change that we’re in at the moment, you need to really be very proactive and agile in grasping the opportunities the cloud presents to you.
I’d like to share an example of how some organisations are creating that petri dish of experimentation within their organisation.
I think many of you would know Zara, the fashion house. Their manufacturing line runs at 75% capacity. And you might say, “Well, that’s corporate suicide. Why only run at 75%?”
There’s method behind their madness. When I go into their store, there are video cameras tracking what I’m doing. They’re watching what I look at. They’re watching what clothes I take off the hanger and what clothes I put back. When I walk into the change rooms, what clothes do I choose not to buy?
And you know what? The staff are trained to ask me, and I say, “Well, I didn’t like the jacket, the way the lapel sat, the colour wasn’t quite right”. And they will go back and actually redevelop and redesign their clothes on a four weekly cycle so that they’re much more closely attuned to what their customers want.
In this way, 75% capacity is perfect, because it gives them room and flexibility to be agile and to meet the needs of the customers that they want.
Remembering the value of people
What about our people? It’s challenging in a very, very fast moving time. Our lives, personal and professional, are blurring incredibly. I don’t know how many of you check your phone in the morning for email, check it late at night for email, and maybe in the day you’re doing something personal. Our lives are really blending together.
And so how do we help our people make sure that they don’t get lost in this cacophony? Some of our colleagues out there in the IT space are quite nervous because in reality this means a ton of change for the way that they operate and the way they deliver services and value back to the business.
So I would like to do a very shameless plug for one of our start-ups in Adelaide called Teamgage. They work with us through the Microsoft Innovation Centre.
The team was founded by some people who worked in some incredibly toxic teams. And it was a miserable work environment. And we all know the story: people join companies and they leave managers.
Their premise was, “Well, hang on. Surely if the manager knew or the team leader knew how toxic the environment was, they could have done something about it”.
So they’ve created this amazing 20 second survey. And it truly only takes 20 seconds – we’re piloting it in the Adelaide office, for the team to give feedback.
A dashboard gives me colour charts to see “How is my team feeling?” We take this to our branch meetings and we discuss as a team what the challenges are. What do we need to change? What do we need to address and do differently?
This is an amazing organisation, Teamgage, building an incredible solution, Software as a Service, on a platform where they don’t care what the infrastructure is. They only care about being able to develop their application to serve customers around the world, not just in Adelaide.
Taking advantage of cloud opportunities
We are riding this incredible wave of opportunity. There’s a ton of change. Some organisations are going to coast along the crest of that wave to amazing success. And some others are not going to make it.
We all know the Kodak example. They didn’t make it because they didn’t innovate, they didn’t challenge themselves, they didn’t disrupt themselves and say, “Someone else is going to cannibalise my business, well, I’d better do it first, otherwise I’m totally out of business”.
So as business leaders, as new business leaders and students, really the onus is actually on you to experiment and to try to see how can you take advantage of these technologies for your own business benefit – by delivering profit, shareholder value, and great citizen services that we all expect from our government.
Dr Eva Balan-Vnuk
State Director for South Australia, Microsoft
This speech was first published by the Committee for Economic Development of Australia (CEDA). Read the original text and more of CEDA’s top 10 speeches on disruption and innovation here.
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