Month: June 2017

Categories
Economics Geopolitics Technology

Emergence of the New five data sisters

On August 28, 1928, in Achnacarry Castle of the Scottish Highlands, there was a private appointment among a Dutchman, an American and an Englishman. If anyone knew the potential of oil, which could turn the fortune of corporations and empires, it was them. The Dutchman was Henry Deterding of Shell, American was Walter Teagle of Standard Oil the current Exxon and the Englishman, Sir John Cadman from Anglo-Persian Oil Company, soon to become BP.

With fuel-hungry ships, planes, and tanks on one side and the fast developing automobile industry on another side, when the oil became “the blood of every battle and economy”, it was these corporations that the oil men founded later known as the seven sisters, became the cartel that waged the merciless contest of money. There were times prior to the 1973 oil crisis when these Seven Sisters controlled around 85 percent of the world’s petroleum reserves.

Now let us consider the same perspective for the data. Since the time of counting, we have used information for making decisions. But it was never before this information used to be so concentrated in the hands of a five new emerging sisters. ‘Google’, ‘Facebook’, ‘Amazon’, ‘Apple’ and ‘Microsoft’. If we consider Google, there are over 100 million active users. It also has youtube with 1 billion unique monthly visitors. Facebook boasts around 2 billion monthly active users (Let alone the Instagram and the marketplace). Apple too has over 1 billion devices that are actively used around the world. Over half of the product searches happen on Amazon that has over half a billion active users. As far as the oldie Microsoft is concerned, 1.2 billion users use their product globally across over 100 countries. With Internet of things (IoT) developing, the world we survive is turning to a mine that churns out the new precious commodity data.

So what is the data that these companies are collecting from their users? They gather the information such as ad clicks, device details, email addresses, facial details, IP and location details, phone numbers, personal profile, search queries and the time information.They do it through cookies, device tracking and third party codes that we may not be much aware. We may not be even so much concerned about this information. But it makes a lot of logical sense for these companies to understand and predict the user behaviors. We will understand their power when PWC estimates the addressable market size of data to be at $1.3 trillion by 2019.

The question that whether the data is the new oil is not new. The data explosion has been predicted since 2006. There are 3 characteristics that are common for any resource that become such a powerful economic driver.

First is it’s omnipresence. If you consider the oil, it is not just a driver of our car. It is vital to the production of many everyday essentials. Oil’s refined products are used to manufacture almost all chemical products, such as plastics, fertilizers, detergents, paints and even medicines, plus a whole host of other products that you might not expect. Overall only 60-70% of the oil is consumed in the transportation sector that includes land, air, and water. Balance is consumed in chemicals and pharmaceuticals industry.

If the same parlance is taken, the mobile and smart devices that we use ever day has become the opportunities for interactions that produce customer data. The 2017 global edition of the GSMA’s ‘Mobile Economy’ report reveals that there is a 5 billion mobile subscriber base out of the global population of 7.5 billion. This is massive !!

Second is its economics. Through its extensive supply chain, the oil and gas industry employs hundreds of thousands of people and make a major contribution to the global economy in terms of global trade and technologies. Over 5-6 million people work directly in this industry globally and several million more indirectly. According to market research by IBISWorld, a leading business intelligence firm, the total revenues for the oil and gas drilling sector came to $5 trillion in 2014. 2015 estimates for global gross domestic product range between $77 trillion and $127 trillion. The oil and gas drilling sector make up between 6% and 8% of the global economy.

If we take the statistics, according to Forrester Research, Global tech industry is over $3 trillion and approximately it is over 3% with an average growth rate of over 5%.

The third is the potential for high correlation to the global economy. If we look at the correlation between the oil prices and the global economy, it is fairly complicated. The prices of the oil determine the fiscal and monetary policy of the governments.The fluctuations of its price could severely impact the corporate and sovereign ratings thus driving the investments in and out of a country. This is a direct impact on the common man whose daily life is impacted in all ways by the fluctuations of this commodity.

Similarly, if we take the impact of data, it is the dark horse that drives the consumer behavior. The targeted advertisements and customized product launches for specific user requirements are the ways to go.

But can we expect the nationalization drive that happened in the oil-rich nations will not happen again? The way in which governments responded to the 7 sisters, by nationalizing the oil resources, we possibly could see the nationalization of data. Since the new 5 sisters are extracting this resources free of cost and profiting from it, it may not be long enough to see this transformation. But I never expected that the history would repeat so perfectly.

Categories
Fintech Technology

Finance – A theory of transition to a new world

Working in the finance sector, possibly the only sector that I had worked since graduation, I have encountered a systematic shift in the perception of the jobs. I believe that we are in an era of transition of the financial industry for good or bad. When I joined my initial assignment 15 years back, I was working on trade solutions. We used to have over 20 people who were designing customized reports and running them at a specific time for various businesses across various continents. The requirements were flowing to refine the solutions so frequently that a significant amount of resources were deployed to tackle the future plans. Within a few years such a futuristic team underwent a significant headcount reduction and now I believe that technology itself does not exist. This is when the quote of Bill Gates becomes prominent. ‘We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.’

When I joined my initial assignment 15 years back, I was working on trade solutions. We used to have over 20 people who were designing customized reports and running them at a specific time for various businesses across various continents. The requirements were flowing to refine the solutions so frequently that a significant amount of resources were deployed to tackle the future plans. Within a few years such a futuristic team underwent a significant headcount reduction and now I believe that technology itself does not exist. This is when the quote of Bill Gates becomes prominent. ‘We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.’

This is when the quote of Bill Gates becomes prominent. ‘We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.’

I had been fortunate to work a good portion of my life in understanding the investment perspectives of money. So let us understand money from that context. Being an industrial engineer, I always have been enthusiastic about the time-motion study. It is a business efficiency technique combining the works of Frederick Winslow Taylor and Frank and Lillian Gilbreth. This integrated approach to work system improvement is known as methods engineering and it is applied today to industrial as well as service organizations, including banks. Let us see how the transition could happen through a basic time-motion study of how an investment professional would approach an investment.

The first step for anyone is to get stock of your finances and spending pattern. With the intrusion of privacy through smartphones and data crunching and machine learning capabilities, the firms that we depend on for our everyday needs can predict our requirements to a reasonable extent. If our needs are translated into their sales, this information can be treated as a sales input for a company. In other words, it could serve as a leading indicator for one’s investment. This could create a vicious cycle by which users of a specific product could be made to buy the stocks of those products that they consume. These stocks would be recommended by very same companies that took the data from the same set users. Is it going to be fun? Can we say that this data tech is going to the next investment advisors?

As on today, we have many applications on our fingertips that could tell us the amount that we had spent, are spending and will be spending. If these data companies can build a predictable certainty on this consumption pattern, will there be a concept of a market? Will there be market buy and sell on risk and uncertainty? The result could be that one may not trade, he could just put money for a reasonably predictable future. Will that be an end of speculation in markets, which our modern day banks have invented?

The second step is usually to understand the products that would make sense for the user. As I mentioned today we have applications that can fairly predict the outcomes of investments through game theory and scenario analysis. With the enormous information that is being generated by us on a daily basis, the suitability of the products and judging our risk tolerance will become much easier. The feeder information for this judgment would be our own data provided through various means to the data aggregators of the internet such as Google, Facebook, Apple, Amazon, and Microsoft.

For your information, 95% of global data was created in the last 3 years. It is expected that by 2020 the digital universe – the data we create and copy annually – will reach 44 zettabytes or 44 trillion gigabytes. This is the data that would drive the future of money.  Anyway, this data would be input for the setting one’s goals and determining your risk tolerance. So tomorrow your decision to buy a car or a decision for a holiday could be taken by these technology companies. The days are not far, that even the style of investment and the returns that one can expect from a specific type of investment can be determined with a fairly good accuracy. Once this information is available to the public through, let us say ‘open source investment codes’, who would want to pay for the current products, that our banks and financial institutions sell as exotic products.

It would be something like our Android phones, which almost monopolized the mobile industry. We are currently on the Nokia Symbian environment as far as financial industry is concerned. Once we have a platform that would enable the users to transact, select, deploy, track, review and rebalance money on a universal level, that would be the death knell for the current financial industry as we see it today.

This is a pivot moment for the financial institutions. It could be the block chain, peer to peer services, internet of things, wearables or/and augmented reality, but I am sure that the future of money in the next 15 years will not the same that we see today. It will be a great concoction of these new age thoughts. Such innovations could either be with the current financial institutions or against such institutions. If they are on the other side it would be the end of such institutions as we see today.

Categories
Economics Environment Technology

Technologies in the new era of agriculture

I had been on a casual chat with my brother in law, who is running agri-business in Africa. I was surprised with the efficiency with which the agricultural economy was running and how the farmers are even using drone technology to do aerial surveillance of their farms. Curious on these advancements, I decided to do some research on the new developments in the field of agriculture.
The agriculture as a sector has a mammoth problem in hand – to feed the 9.6 billion people (as per FAO prediction) who are going to inhabit the planet by 2050. If this number is achieved by our efforts, then the food production must increase at least by 70% from the current levels. This has to be achieved despite the limited availability of cultivable lands, increasing need for fresh water and change in weather patterns that would come with the impact of climate change.
There are a few technologies that I found interesting and could change the way the food comes to our table. Have you ever imagined what is the average time for a newly harvested apple to reach to your table? One week, one month, three months..sorry! On an average, it takes around eleven months to reach your table. By that time you can be pretty sure that it is just a sugar ball rather than a fruit rich in antioxidants. So what if we could do a teleportation of such food items from one corner of the world to another corner. It is not a new Starwars movie in making.
Through the Open Agriculture Initiative at MIT Media Lab, we have made personal food computers possible. This could possibly make you and me the farmers of the future. This is a tabletop-sized, controlled environment provides agriculture technology platform that uses robotic systems to control and monitor climate, energy, and plant growth inside of a specialized growing chamber. By manipulating climate variables such as carbon dioxide, air temperature, humidity, dissolved oxygen, potential hydrogen, electrical conductivity, and root-zone temperature we will be able to yield various phenotypic expressions in the plants, means we would be able to create a “climate recipe” suiting our taste. Through this project, this information can be shared across the globe on an open architecture platform to develop customised fresh vegetable and fruit recipe.Soo tomorrow we could have an apple made suiting the crispiness and sweetness customised for our taste buds. It could potentially allow farmers to induce other abnormal conditions such as drought and saline environment producing desirable traits in specific crops that wouldn’t typically occur in nature.
Another silent breakthrough happening is the creeping of Internet of Things (IoT) to the agriculture. We have started to use remote sensing technologies to make agri-farms more intelligent – means to make smart farms or feedback farms. So how do such farms work? These farms use remote sensing technologies that would observe, measure and respond to inter and intra-field variability in crops using the data gathered from farm and crop yields, atmosphere and soil-mapping, food and fertiliser consumption and weather data and apply feedback to the support systems. Such information collection is done not just in farming, but also in livestock and fishing. There are companies such as Anemon from Switzerland and eCow and Connected Cow from UK that tracks the health of livestock and recommend live solutions to the owners.Similar technologies are coming in the fish farming too. Eruvaka from India has developed a system that would control pH, dissolved oxygen, physical composition of water thus helping the water quality to be maintained effortlessly in aquaculture.
The main concerns that could come in implementing such cutting edge techniques are the ownership of data and the issues in communicating the technicalities to the farmers. In 2000, there were 525 million farms on record, out of which not a single farm was connected to the Internet of Things. IBM expects that by the year 2025 with the same base of 525 million farms, there will be 600 million sensors in use at these farms and by 2050, there will be two billion sensors used in 525 million farms – representing a major shift towards technological advancements.
Another development that would be of my interest is the one that has been developed during the interplanetary exploration endeavours of NASA in the late 60s. Since the travel time to Mars could take a year or even longer and the space on board and the resources were limited, NASA had figure out how to produce food with minimal inputs. It involved single-celled microorganisms that used hydrogen from water and the carbon from the carbon dioxide exhaled by the astronauts and converted into a nutritious, carbon-rich crop and eventually to a meal. The types of microbes that they used were called hydrogenotrophs – nature’s supercharged carbon recyclers. These organisms created a virtuous carbon cycle that would sustain life onboard a spacecraft, thus creating a closed-loop carbon cycle.
How beautiful would it be if we can convert the increased carbon levels in our atmosphere to edible food and solve the problem of hunger? To cope up with the incoming demand of the food, I believe the modern agriculture simply cannot sustainably scale to meet that demand. We could use the existing land resources to get better outputs through the new methods of the web and dig out the techniques that could have been used for our interplanetary expeditions.
The future of food is not about fighting over what can be done and what cannot be done. The future of food is about networking the billions of farmers and the consumers and empowering them with a platform to ask and answer the question, “What if?”