In a highlight of Amazon Web Services’ annual conference last week, CEO Andy Jassy described how cloud computing gives its users super powers, reports ARTHUR GOLDSTUCK.
The annual re:invent conference hosted by Amazon Web Services (AWS) in Las Vegas is notable for the fact that it packs tens of thousands of developers and business partners into a single convention centre. Astonishingly, almost all of the delegates are paying for the privilege of having AWS pitch its products and services to them. If that is a great business model for AWS, then the core message from the event masks an even greater business model.
To put it in perspective, consider these two sentences from the book, Exponential Organizations, by Salim Ismail of the highly respected Singularity University think-tank: “It used to require millions of dollars in servers and software to launch a software company. Thanks to AWS, it now costs just a tiny fraction of that amount.”
The title of the book offers a clue to how cloud services like AWS are transforming businesses and bringing the concept of “disruptive technology” to the centre of new business strategies. At re:invent last week, AWS CEO Andy Jassy used his keynote address to spell out the core role played by cloud services in making global disruption possible.
Stressing that re:invent was not a sales and marketing event, but an educational conference with more than 400 technical sessions, he said that the business made developers – AWS calls them “builders” – feel like super heroes. The reason? It gives them capabilities that allows them to overcome any challenges they try to conquer, and implement any idea they dream up.
“It can feel like you have been given super powers,” he said. With Singularity University saying almost the same thing about AWS, it doesn’t sound entirely like hype.
Jassy outlined what he called the five superpowers that the company’s millions of active customers use to boost their competitive abilities:
1. Supersonic speed.
“Almost always, the number one reason companies move to the cloud is the agility and speed they get from the cloud. What allows them to move fast is having a plethora of infrastructure services at their fingertips. We have over 70 services, and the pace of innovation means we offer new capabilities daily.
To prove his point, Jassy invited on stage Fabio Veronese, head of infrastucture and technical services at Enel, Italy’s main power utility and a world leader in smart meters for energy and water management. These meters are at the heart of another technology revolution, the Internet of Things (IoT), which is seeing a rapid rise in the number of devices sharing data via the Internet.
“The energy world is changing. There is a decoupling between GDP and electricity demand, where you used to see demand rise with GDP. Last year Germany went up 2% in GDP, but went down in electricity consumption, thanks to improved energy management.
“IoT means we will completely transform the energy management model in the next few years. Our strategy was straightforward: go to the cloud as fast as you can.”
2. X-Ray Vision
“We can now offer the ability to see through the handwaving and bombast,” Jassy told a laughing audience. “In the old days, because it was so hard and so expensive to test and experiment for any period of time, you used to get old guard leaders who would make all kinds of wild claims, and you had no ability to know what was real. You had to make a buying decision before you could figure out if it worked. On the cloud, that ship has sailed.”
A range of new artificial intelligence tools were also announced at re:invent to enhance the so-called X-Ray vision: a face matching technology called Rekognition, with can conduct a batch analysis of millions of images in real time; a text-to-speech recognition service called Polly, which translates text and outputs it as audio, with 47 different voices in 27 languages; and LEX, which lets computer systems ranging from pizza ordering to appliance controls understand natural language questions and instructions.
Jassy quickly addressed the sceptical looks when he suggested immortality as a new superpower.
“This generation is the first that can live substantially longer, and that is very pertinent to businesses, as it’s very hard in business to persist for a very long time. Only 12% of the first Fortune 500 from 1955 is still in the Fortune 500.
“If you want a chance to live forever in business, its clear you have to take advantage of evolving technology trends and changes. You see that with startups who have build incredible businesses, breathing new life onto virtually every industry, from accommodation to shaving. Every single one is able to leverage the flexibility and power and cost of cloud.”
Even traditional businesses like McDonald’s are embracing this new normal. It is presently moving its entire Point-of-Sale system, comprising 200 000 cash registers and 300 000 devices in restaurants across the globe, into the cloud.
“Many of us have the yearning to have the freedom to fly. For builders, the same yearning for freedom exists, to build faster, to use your data better, to unshackle from customer-hostile database providers.”
He pointed out that commercial-grade database providers were not only very expensive, but locked customers in with punitive licensing terms. As a result, builders were moving their databases to open source engines as fast as they could.
AwS has built a platform called Aurora to offer them the same speed and availability as commercial databases, but with cost effectiveness of open source. The most startling comment of the day was that Netflix, the global leader in video-on-demand services, had moved its entire service over to this platform.
5. Shape Shifting
The freedom of cloud choice has long been a sticking point for business users, who sometimes had to select between keeping everything on premise or moving it all into the cloud. The hybrid cloud evolved to address this need.
“You don’t have to choose between on-premise and the cloud,” Jassy insisted. “We want them to be able to operate their on-premise services as seamlessly as possible on AWS. As a result, AWS recently entered a partnership with cloud software leaders VMware to offer a service called VMware Cloud on AWS, addressing this need.
When VMware CEO Pat Gelsinger joined Jassy on stage to discuss how companies ranging from Amadeus to Zynga were using the service, it was the coming together of two of the biggest names in the business. The ability to achieve that team-up was probably AWS’s biggest superpower of all.
VoD cuts the cord in SA
Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.
That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.
The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.
Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.
Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”
The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.
“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”
New data rules raise business trust challenges
When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.
The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.
GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.
The fundamentals of trust
GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.
The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.
This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.
What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.
The risk of compliance
Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.
A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.
A three-step plan of action
So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:
Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.
Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.
Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.