Thursday, September 27, 2007

Internet Scale Identity, Collaboration, and Higher Education

Click on the title of this entry to be taken to Google Video for this presentation. First off a stern warning, the topic is a difficult one to discuss and the presenters do not do a very good job at it.

Firstly Bob and Ken do not adequately describe who they are or where they are from. The Internet 2 association consists of the majority of the university and other organizations, like Google, dedicated to "Providing both leading edge network capabilities and unique partnership opportunities that together facilitate the development, deployment and use of revolutionary Internet Technologies." Bob and Ken work in the "Internet 2 mid-ware initiative". Their presentation is about identity and its importance in collaboration and determining the validity of the party you are dealing with. Extending this to the type of collaborative interactions that will eventually be held in this application, and currently being specified in the People, Ideas & Objects Security Module, how are you assured that what is represented online is factual? There needs to be a method in which people can verify their identity and carry that with them through the day to day interactions discussed here in this application. The Federated Identity is described as follows.

Federated Identity

  • Enterprises exchanging assertions about users.
    • Often identity based but can provide scale and preserve privacy through the use of attributes.
    • Real time exchanges of standardized attribute / value pairs.
  • Basis for trusting the exchanged assertions via common policies, legal agreements, contracts, laws, etc.
  • Federations offer a flexible and largely scalable privacy preserving identity management infrastructure.
As a user of this system it will occasionally be necessary to find a welder in the area that you have production. How do you engage and ensure that the welder has the correct certification for operating in H2S environments. Conceivably the ticket that was issued to the welder for H2S operations would be available from the granting agency. The welder's "Federated Identity" would have the certificate issuer represented in the welder's Identity and the certified issuer would have the right to revoke it if for some reason the welder no longer qualified. This certification is assured at the point of initial contact with the welder. If the Federated Identity were for an individual, a company or a Joint Operating Committee (JOC) one could easily assure that the conduct of online interactions were assured to be valid. The inability to authenticate would preclude the user, company or JOC from conducting any further online transactions.

This style of interaction is currently being done in manual systems. Based primarily on past history, the user will call the welder up that finished the last job of his and not much more is done. And there is not much more that would happen in this virtual environment that I am talking about here. What is different is that a level of automation that eliminates much of the time wasting processing that is done in the manual style of systems. If the Federated Identity has enough terms and conditions that are necessary for the firm to hire that welder, they should be able to complete the majority of the contract prior to the issuance of the purchase order, which of course would also be the next step in this automated process.

These types of systems are being developed now not only for Internet2 but also for participating firms such as Google in their Google Apps for Education. Since we use Google Apps for People, Ideas & Objects, this type of Federated Identity is being built in the Security Module Specification that I am working on. The interactions are also an element of People, Ideas & Objects Compliance & Governance Module specification noted here. With the effective pooling of the participating producers human resources, requiring the Military Command and Control Style of organizations, these identity based interactions will be able to take on a dynamic matching of skills and function. One other area in which the Federated Identity satisfies is on the need to know basis. Even though all participants are from different companies their is no unnecessary leakage of information that would not have been pre-authorized to any other participant, individual or JOC.

The authors noted an Apache open source software "Shib 2.0" is capable of these types of Federated Identity and Shib 2.0 has just moved into beta. Much of the Federated Identity's ability to do these is contained within the "Technical aspects of Federations".
  • Federating Protocol
  • Enterprise signing keys
  • Meta-data Management
  • IdP discovery service
  • Enterprise Identity management practices.
Accreditation and certification are needed, and also difficult to achieve. The most difficult aspect is what is referred to as "Many to many user centric identity". The presenters were wise to point out the two methods, "multilateral" and "bilateral" means of achieving accreditation and certification. By using multilateral accreditation you achieve the Many to Many user centric identity without having to accredit every transaction, query or specification as bi-lateral, or one to one, certification requires. The presenters noting "Commonly manage which identities and which attributes can use the capabilities of the collaboration tools." And "Can offer delegation, privacy management, maybe even diagnostics."

To view some of the areas in which Federated Identity is currently operating see InCommon and the Internet 2 wiki.

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Wednesday, September 26, 2007

Jeffrey Immelt on MIT Video

Jeffrey Immelt is the current Chairman of General Electric. His video presentation is at the MIT Energy Conference. This is a very good video and I would encourage anyone to watch it for the unique perspective and insight that Immelt has. Click on the title for the url to the video.

Speaking about the difficulties in the energy field, Immelt noted that "market signals don't fit the time horizons", and I have to agree that is certainly the case. The three-months time frame that the capital markets operate within is not enough time for the energy industry to do anything. And the decades long lead times for satisfying the demand for energy are two areas where this disconnect happens. With such long lead times necessary to achieve anything in oil and gas, the markets always seem at odds.

He also spoke of the "notion that energy is free". This notion that he speaks of is, I think, is the same concept that makes people expect they have the right to energy. I hope that we can continue to experience these rights and entitlements; however, I think that our future holds occasional energy outages and increased costs.

Immelt noted from his personal experience in traveling to India that demand for energy from China and India would not stop growing. In satisfying the needs for energy he states, "This is the time that technology and innovation can have a value". He felt that coal, natural gas and oil were going to be as important as they ever have been. And noted his turbines where operating at 65% efficiency, and indicated that reducing consumption was an area where much innovation and savings would occur.

He finished his presentation with two of what he calls "Immelts".

If you want to do something, you have to do something.
and
You want it bad, you get it bad.

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Tuesday, September 25, 2007

BP announces reorganization.

Things are not as rosy as the $80.00 oil prices would make it appear. The new CEO of BP Tony Hayward is on record as stating that a re-organization is required. He wants to reduce the number of reporting levels from 11 down to around 7, and intends to do so on the basis of the need to manage its "dreadful" performance. Staff cuts were not expressly stated however Hayward noted "There is massive duplication and lack of clarity of who does what".

Recall BP's recent operational concerns have included a fire at a Texas refinery and pipeline leaks in Alaska. Financial performance appears to be following the operational difficulties and BP's stock was affected today by the comments of its CEO. It would appear to me that the organizations has not only duplications as it's problem, but some areas where no one is watching. Cutting the bureaucracy will most probably prove to be the wrong direction in terms of the safety of its employees, contractors and public in general.

A change in the organization requires a change in the software. This is a fact of life that we live with today, but many of the largest corporations consider that software is just a cost of doing business. Its not, it is the life-blood of the organization, and rolling in another version of SAP is the safest approach to career security. Any organizational changes not directly mirrored by similar changes in the software will lead a company to continue on in the same futile vein as BP has.

There is another important point that I want to highlight here, and that is the role of the user in making sure that the software is what is required. What does SAP know and understand about pipelines and miscible floods? I think the BP situation, with all the failures and problems, is symptomatic of too many organizational changes that were not planned, developed and implemented from a software point of view. The "duplication and lack of clarity" and "operational failures" are the two extremes of the same problem; the software is not functioning, as it should. And the software is not functioning because the user was never asked, involved, consulted or expected to define the requirements of the systems they need and want to do their job.

The hierarchies' life expired in the 20th century. Approaching this problem with the same tools of the 1970's and 1980's appears wrong to me, and certainly not the solution to the BP problem. Have we exceeded the collective imagination of the CEO's and managers of our allegedly greatest companies? What does Hayward and those involved with BP think will occur as a result of the compression of 4 management levels?

If the firm is unable to deal with the operation today, what does that spell for the future? The industry will need to perform at a higher level very soon, and in the near future it will only become more difficult. Contrast today's headlines with what we should be learning from these organizations. We don't hear the news that the industry is moving forward with greater technical achievements and major discoveries, only news that reflects they are stuck in a time and place where nothing positive ever seems to occur.

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Monday, September 24, 2007

Modularity, Transactions, and the Boundaries of Firms: A Synthesis


Professor Carliss Y. Baldwin of Harvard University has published a new working paper. The title "Modularity, Transactions, and the Boundaries of Firms: A Synthesis" (available here) provides an excellent opportunity for me to review these topics. I intend to use Professor Baldwin's synthesis as a summary of the work that we have done in reviewing Professor Langlois working papers. I had also reviewed a prior working paper of Professor Baldwins, located here.

In the past I have been able to specify a modular specification, defined roles of both the Joint Operating Committee, the corporation and a method of how compliance and governance (Military Command & Control Structure) is achieved. I trust that reviewing the article by Professor Baldwin will enable me to build upon and re-publish these specifications with the changes learned through the review.

This first table designates the area of primary and secondary responsibility. The boundaries of the firm and market can be discerned through this table, the "Market" is for all intents and purposes the Joint Operating Committee (JOC).

ConstructMarketFirm
Joint Operating CommitteePs
Military Styled Command and Control (Governance)sP
Transaction CostssP
Production CostsPs
InnovationPs
Routine, compliance and accountabilitysP
ResearchsP
Development (the D in R&D)Ps
Financial FrameworkPs
Legal FrameworkPs
Cultural FrameworkPs
Operational Decision Making FrameworkPs

P = Primary
s = secondary


A summary of our current module specification.

  • Access Control and Collaboration
    • Security specification
    • Google Apps for People, Ideas & Objects
  • Partnership Accounting Module
  • Petroleum Lease Marketplace
  • Resource Marketplace
  • Financial Resource Marketplace
  • Compliance & Governance Module
  • Research and Capabilities Module
  • Knowledge and Learning Module

A module summary with some detail can be found here.

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Sunday, September 23, 2007

A user vision.

This next week I want to continue to discuss what a successful software application needs in terms of its user involvement. Without extensive user involvement you end up with applications like SAP. This next week, I hope to explain a lot of what, where, why, who, when and how a user will work in the development of this software application. I also want to appeal to the people that want to do something about the current slow pace of recognition of this looming Peak Oil crisis. Those people that know we have to change, but also know that change has to be planned, and software built before we make any changes to the organization. If we ignore the fact that software defines the organization, any changes not supported in the software will render us to use manual systems.

I will start this week with a summary of the overall user vision of this application that will be built here at People, Ideas & Objects. With that in mind lets begin by stating some of the ways that I see that work may soon be carried out in the oil and gas industry.

...Mandatory attendance at the office for working hours has quietly faded into the background with not much management friction, or heavy pushing from those that have benefited from the elimination of long commutes. Anytime there is a meeting, they appear to be sporadic events that just seem to happen, and most of them being virtual. Face to face meetings almost never happen at the office but at a restaurant or Starbucks. The times where an office is required is usually for large groups using conference and meeting rooms. The downside of this is that work may happen at any time of the day, but most of it easily schedule-able within your calendar.

On-line use of the systems developed by People Ideas & Objects helps to collaborate with all of the people that are gainfully employed in the industry and have access through the system. The management, administration and commercial areas of the industry are managed through the applications interface. Years ago you may have been doing production accounting related work which required you to report the production from one facility. Now most of that work has been automated and your job has evolved to where your specialization requires that you interact with any and all producers / owners with production from the sandstone formations of the early Cretaceous period, your teams specialty. Your last "job" was in production accounting doing administrative work and your current role has 20% of those elements but on a much larger scale and volume of data. The engineering and systems related elements of your work make it unique and diverse, depending heavily on your background, education and training. Oddly enough the math and statistics courses you took are the skills that are most heavily relied upon during the day.

Working mostly in the U.S. and Western Canada, your contacts are mostly virtual and you frequently collaborate with your clients, the partners / investor in the energy assets, and the members of your team. Your primary responsibility is the validity of the systems algorithms used within the People, Ideas & Objects systems for the facilities in your specialty. Ensuring they are consistent with the agreements requirements for production, revenue and cost allocation. You are joined by many of your teammates who work with you to ensure the processes you are responsible for are operating correctly. Your team consists of yourself, an engineer, and a software developer, and you have reviewed a proposed methodology of production allocation based on the co-mingling of production from the Cardium zone. A proposal from another investor group that needs to process their production through a facility your investors own. This has been contentious with the work attempting to strike an agreement for the methodology of the production distribution.

Your work largely consists of a number of processes that validate much of the automated processes of reporting for the facilities. Data and information that you work with mostly consists of a variety of graphs, charts and statistics that summarize and highlight the areas of concern and / or opportunity. Your toolbox also consists of many forms of rich media where audio and video presentations and documentations are used to discern the desire of the clients, and enable your team to learn about the new and innovative ways that the facilities are changing. Your report to your clients regarding the new production from the outside group will consist of a summary of the historical production history and net income. And, what could be expected from the facility on a go forward basis if there were no changes. These pro-forma reports are compared against a number of scenarios that the new investor group has expressed interest in, and deemed acceptable. These different scenarios have been used to calculate the differences from the most recent reserves information. It is your recommendation to the ownership group that hired you that the economic externalities have predominately fallen in their favor and they should proceed with alternate B. Adoption of the teams' proposal is made and the new production begins to be processed. You and your team work to have the system amended to reflect the new changes, and your processes updated to reflect the new agreement. You then move on to your next assignment where your team has been asked to evaluate the effectiveness of a CO2 capture and injection scheme for another ownership group.

The key points I wanted to highlight is the lack of fixed office locations, the hyper-specialization of a team's work, and the time of day in which the work was done. How the rich media would be used to communicate concepts quicker and more effectively then with text, and the statistical and graphical representation of data was necessary to eliminate the overwhelming volumes of data. Also how the team was comprised of cross-functional teammates with their own specific skill set. And lastly how they moved from different ownership groups based on their specialization of certain categories of hydrocarbon bearing zones.

I will try to add more to this vision in this next week, but I think that most people would generally agree that it is plausible that these types of activities would take the industry to the next level of performance. Those of us that know the bureaucracies are "sleep walking" through this looming crisis can see the value in developing this software. This next week I will take the opportunity to consolidate the discussion of modules, transactions and boundaries of the firm, and specify exactly what I foresee a user will define what will be done in this development. Lastly, I want this week to be the beginning of an appeal to the community of like-minded thinkers at the Oil Drum, Association for the Study of Peak Oil and the Energy Bulletin.

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Wednesday, September 19, 2007

Where is the user?

SAP has announced a new product direction today. Offering SaaS (Software as a Service) functionality to small and mid-sized businesses of all industries. See here and here. The ability to service most industries with the same solution would be a tough sell for me. I am surprised that they would have tried such a strategy. The other problem is that SAP has been in development of this product for the past 3 years, what users were used to determine the functionality and requirements? I am not aware of any in the energy industry. And dare I ask what vision was used to unify the users behind one strategy. The answer to that question may be in the title of SAP's offering "Business ByDesign", which indicates to me they have designed this solution in their research labs!

The software service is targeted against other services such as NetSuite, and SalesForce.com. Each of which is offering a smaller component of the functionality pie then SAP. SAP provides the CRM and ERP functionality, as does Netsuite, but Netsuite has been available for 7 years and in the mind of Larry Ellison for the past 10 years. Reviewing NetSuite's targeted offering, it's audience appears to be currently using Quicken and Simply Accounting. SAP is expecting that some of their installed base of R/3 users will move to the "Business ByDesign" offering. Reflecting to me that they are positioning the product more in the mid to high end of their target audience.

I recently wrote about the business model of the traditional software company. And how the ability to deal with the constraints of code and customers eventually becomes such a problem that few enhancements are ever done to the code base. I therefore applaud SAP for at least attempting to break away from those constraints. It is a difficult prospect to restart your business from scratch in such a fashion. The redevelopment of SAP's SaaS solution is recognition of that flawed and outdated traditional model of software development.

Although I think that SAP did a smart thing in making the change to "Business ByDesign", not including the users could be fatal to the offering. It is the lack of users that tells me that SAP may have prepared the competitive offering with the wrong focus. Selling the same code base to thousands of customers as SAP has done in the past, makes it clear what the competitive offering is, the software code itself. Now SAP have shifted to a service and appear to me to be still looking to the software as the key competitive offering. I would therefore suggest they have misread the reasons for moving to SaaS. The competitive offering should be on the basis of the hosting of the application for the user base, and most importantly adding to the offering through enhancements demanded and driven by the users. Supporting hardware and software were not their forte but now needs to be. How will they host this environment within the corporation. Do they realize the business model has changed so fundamentally? The lack of user involvement would reflect to me that they have lost sight of the service offering. Secondly the software development capability becomes one of, and possibly the most important competitive offering. You can have the best developers in the world but they may not understand the user community and the ability to communicate may become a critical component that is missing in the "Business ByDesign" offering. Once the software is built there is no opportunity to build a user community.

People, Ideas and Objects is building its user community the hard way. Brick by brick and stick by stick the most important element of this development will be the user's knowledge and ability to communicate their desires and needs to the software development team. It is also inherent in the understanding of this project that the continuous development and enhancements are what the users need to do their work. In a manner very similar to how Google continues to develop applications that meet certain needs, with the overall vision of organizing the worlds information. What Larry Page and Sergey Brin have been able to build at Google has many parallels to what I foresee the user community wanting in this development.

If you share my vision of building great software, focused on the Joint Operating Committee, and built for the user, please email me and lets get started.

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Monday, September 17, 2007

Peak Oil's turning point?

A variety of news and information that makes the Peak Oil issue somewhat more real then yesterday. First up is Shell's former Chairman Lord Oxburgh declares the following points. Lord Oxburgh says the industry "has it's head in the sand" and warned:

We may be sleepwalking into a problem which is actually going to be very serious and it may be too late to do anything about it by the time we are fully aware.
and
And once you see oil prices in excess of $100 or $150 a barrel the alternatives simply become more attractive on price grounds if on no others.
The Association for the Study of Peak Oil published some comprehensive analysis on the US oil import data. Of the many countries that export oil to the US, what will be sustainable for the long term? This analysis answers that question and the following two graphs reflect this analysis.














and

















Our friends at the Energy Bulletin have noted such luminaries as Lee Raymond, formerly of Exxon Mobil and the National Petroleum Council and former Energy Secretary James R. Schlesinger quietly reflecting on probabilities and possibilities of Peak Oil. Another excellent resource highlighted by Energy Bulletin is the report from the Department of Energy report "Peaking of World Oil Production: Recent Forecasts."

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Sunday, September 16, 2007

Security Module.

I last wrote about the Security Module in October 2006. Now that we have established the general framework, or the infrastructure of the system, and indeed I have begun building the parts into a usable system, I now want to formally start the software development. As I noted in the October 2006 posting the security module would be the first item of development, therefore, I can now declare on Tuesday September 18, 2007 that we are indeed in development.

A few of the bits that we will be using as our infrastructure are Google Apps for People, Ideas and Objects, and Java Web Start and Java Swing. So lets start with that and build from there.

Google Apps for People, Ideas & Objects.

www.people-ideas-objects.com is the domain (and company name) that has been selected for this project. This is now operational on Google Apps and I am very pleased with the fit and finish. Key to their offering is the ability to integrate a Single Sign On (SSO) for the entire domain. Once the user is logged in through Google apps they will have access to the collaborative environment and application specific functionality. Recently Google announced the closing of their acquisition, Postini. Google will now offer a level of security that is in my opinion second to none.

With Postini Solutions, you can secure all of your electronic communications - email, instant messaging and the web – and manage your company's communication policies from one central location. Postini Solutions can also make it easy to meet your archiving and encryption needs.

Best of all, it's all 100% hosted, so there's no hardware or software to install or maintain. Whether you're looking to transition from or enhance your existing messaging infrastructure for better control, Postini enables you to provide employees the tools they need to be productive while reducing the cost and complexity of managing those tools.
I can now say unequivocally People, Ideas & Objects has the most secure communications of all ERP systems. ;-) To my way of thinking, lets up the standard to a higher level.

As I noted in the security module definition last October, Sun's new Solaris Z File System (ZFS) and elliptical encryption would be used for all of the data and information on the server side of the system. ZFS provides a level of journal-ling that will add real value to the users of this system. Apple have integrated Sun's ZFS in their next operating system (Leopard) release. Sold as the "time machine" feature, it enables a user to look at the various iterations of the file from the beginning to the most current version. The user will then have tools that will enable them to select the best version of the file. Secondly ZFS is 128 bit, just as IPv6, allowing for an unlimited addressing capability.

These points will be the first elements that will be developed. Google Apps for People, Ideas & Objects will be upgraded with the Postini functionality, and the Solaris based server side will implement ZFS and Sun's elliptical encryption as base for all operations from the Operating Systems, Java, Network, Database and File.

Java Web Start and Java Swing

Integration of Single Sign On (SSO) between Google Apps and the server side will provide the secure collaboration environment and the secure "Cloud" based operations. This will all be wrapped in a package that the user will be able to access anywhere and anytime with any capable computer. For the initial downloading, Java Web Start, Swing and other components of the People, Ideas & Objects application will be a minor issue with the bandwidth that is available today. The "environment" this creates is one that meets the highest level of security for any and all programming environments. Java was selected for its adherence to strong typing and inherent security model. No other programming environment comes with this standard of security. Even Microsoft's .net environment cautions the user about the inherently weak security model.

Java DB

Embedded within Java Web Start and Java Swing client environment is Java DB, a relational database with a small footprint. Originally developed by IBM it was open sourced and made the default client side database for use in Java environments. This database will hold the environment and other variables of each user, and much of the client specific data the user has used, cached, collaborated or searched from their user account. Recall that we have selected the Ingress Database for the "Clouds" database. All the data from the Java DB will be replicated with the Ingress database. Additional search facilities of the server side or "cloud" environment have not been resolved at this time. Recall I was looking into the use of Enterprise Search and security firms to assist in this area.

This area is complex and daunting, however, the need for bullet proof systems in terms of reliability and security are necessary for the enterprise. Particularly in the manner and method that they are being used here. Much of this architecture has not been implemented in any industry. Lastly I would point out that if a user were to access their system on a public terminal or a machine in which they have only temporary use of, the application and data would be inaccessible to any prying eyes after the user had left. With encryption and Java, the systems variables would be persistent only in encrypted form.

IPv6

Recall we have instituted the IPv6 protocol as part of the Technical Vision for all Internet communications for People, Ideas & Objects. IPv6 is available to us through our ability to secure a Tier 1 vendor of bandwidth. Almost all computers are capable of handling the protocol. The security model of IPv6 adds elements of security at the protocol level and includes these technologies.

Specification

These specifications will be encapsulated into one Web Service where the user, upon authorization and integration into the system, will have seamless access to their information. The reason this is the first module being built is that everything will need to be built upon it. To retrofit this level of security to a current application would be more problematic and costly then it would be worth. I am pleased that I can specify this level of security at relatively little cost. (A reflection of how systems have developed in the past few years.)

The primary issue of what needs to be resolved is the restrictions on use of high-level encryption systems in countries that are unable to access and use the high level encryption algorithms. The work around may involve limiting the users to the countries that are authorized to use these types of systems. Our focus being Calgary, Texas and Aberdeen Scotland, limited issues with the systems use outside of these three countries will limit the risk of using these algorithms.

Thankfully much of today's technological development environment closely replicates Leggo, define it, get the parts and build it. Where we go after the security specification will be to adopt the data model from the Public Petroleum Data Model (PPDM), tune it and test it, and from there we can start building the Petroleum Lease Marketplace functionality.

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Thursday, September 13, 2007

The same, but different.

First there is an article in the Wall Street Journal energy blog about $100 oil. In it the following comment is made;

“The two arguments against $100 oil, the ability of technology to raise new supply and the ability of price to limit demand, are falling quickly by the wayside."
This blog entry is going to address the differences between what I am writing about and the assumption that technology will ride in to save the day. To do that, I want to refer to an article posted in the "ArchDruid Report" by John Micheal Greer. Firstly the "ArchDruid Report" is a blog that everyone should subscribe to, the quality of his entries are second to none.

Secondly, it is important to recall that Peak Oil, as a theory, is statistical in nature. Denoting that 50% of the overall supply of oil has been produced. The other 50% of the oil remains in the reservoir and needs to be produced. These last few barrels require the producer to innovate on the sciences and learn new ways in which to produce the oil and gas. Much of these barrels are located in remote areas and can come in different forms. I would however, not count the tar-sands as reserves that fall into the traditional 50% of remaining reserves. I think Peak Oil can safely preclude the tar sands reserves from the calculation and effectively consider those resources a bonus. I believe the innovation necessary to produce the remaining 50% of oil and gas reserves will require significant technological increases in the earth science and engineering disciplines. The increase in the science and the associated innovation will only come about after a reorganization of the industry around the Joint Operating Committee. (JOC) This reorganization needs a dedicated software development capability, the purpose of this blog.

The great technology hope is addressed well in John Greer's blog entry "Innovation Fallacy". In which he uses a science experiment to draw an analogy of why the hope of some great technology will save the day is truly misguided. I agree with him that this technological wonder thinking is misguided, and feel the need to assert the difference between what I am writing about in this blog and the hope of some great technology.

I would add to John Greer's point that the installed base of gas furnaces and internal combustion engines makes the change to any other type of technology very costly as well as daunting. How anyone could retrofit the industrial infrastructure to a new technology in less time then the past century it took to install today's infrastructure, would be dreaming. The thoughts that food could be converted to energy is an either / or situation. We either eat or we drive, your choice. This discussion needs to be more openly debated to help the majority of people understand the true marvel of engineering that mother-nature has provided us in the oil and gas endowment. The ArchDruid Report accelerates this discussion.

I would also add that best analogy that I can think of is that you had 300 workers doing a job. Paying them enough for adequate food and housing is the cost of getting the work done. We need to think in these terms and learn that the value of mechanical leverage available through oil and gas is significant. The ability to replace those 300 workers with one 200 horsepower forklift using 10 gallons of gas / day brings into focus the true dependence we have on energy. Without it we are dead, or at least the civilization we are currently familiar with is. I hope the energy industry will soon adopt this thinking so that we can get on with the thinking necessary to produce that last 50%.

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Wednesday, September 12, 2007

Innovation through Global Collaboration: A New Source of Competitive Advantage

August 14, 2007

Alan MacCormack, Harvard Business School

Theodore Forbath, Wipro Technologies

Peter Brooks, Wipro Technologies

Patrick Kalaher, Wipro Technologies

This software development projects purpose is to create a transaction supported collaborative environment. The first steps in building this were initiated last month with the decision to use "Google Apps for your Domain." For a small annual fee we provide the user with a comprehensive collaborative platform. Recently CapGemini has announced a deal where they provide the integration of users work environments from Microsoft products to Google's. I think, based on my understanding of collaboration, Google Apps most closely replicate the way that work gets done. I find their product fit and finish as solid as Apple's, the move to Google App's was completely painless and instantaneous.

Why is this product category so important and what is a "transaction supported collaborative environment"? The product category is important because the next level of intellectual and social interaction can be facilitated in the software. So how and who will get the work done are important, but most importantly is that the aggregate intelligence of the group be represented in the actions the software provides. In answer to the second question of what are transaction supported collaborative environments?, well they don't exist yet and that is what I want to start building here for oil and gas. This working paper is available from Harvard Business School and begins the difficult task of identifying the needs of a "transaction supported collaborative environment" and the importance in innovation.

Abstract

One of the things that I have learned since being heavily exposed to collaborative environments is they are difficult, and the approach is never the same. Just as people are different, each collaboration is. The ability to proceed with preconceived notions just doesn't work. The need to adopt a flexible framework from the beginning and throughout the discussion is mandatory. How is it that collaboration brings the wisdom of the crowds? I think the authors begin to define it in this paper, so lets jump in with a clear definition of how collaboration is beginning to be used in industry.

Instead, innovations are increasingly brought to the market by networks of firms, selected for their unique capabilities, and operating in a coordinated manner. This new model demands that firms develop different skills, in particular, the ability to collaborate with partners to achieve superior innovation performance. Yet despite this need, there is little guidance on how to develop or deploy this ability.
This comment is consistent with the vision of this development project. As I have noted here in my research; the software defines and supports the organization. Before you can make a change it has to be implemented into the software first. Recognizing the JOC as the market structure of the industry will require software to be defined in order to mitigate the detrimental effects and enhance the benefits of collaboration.
This article describes the results of a study to understand the strategies and practices used by firms that achieve greater success in their collaborative innovation effects. We found many firms mistakenly applied an "outsourcing" mindset to collaboration efforts which in turn, led to three critical errors: First, they focused solely on lower costs, failing to consider the broader strategic role of collaboration. Second, they didn't organize effectively for collaboration, believing that innovation could be managed much like production and partners treated like "suppliers." And third, they didn't invest in building collaborative capabilities, assuming that their existing people and processes were already equipped for the challenge. Successful firms, by contrast, developed an explicit strategy for collaboration and made organizational changes to aid performance in these efforts. Ultimately, these actions allowed them to identify and exploit new business opportunities. In sum, collaboration is becoming a new and important source of competitive advantage. We propose several frameworks to help firms develop and exploit this new ability.
Facing "peak oil" the energy industry has no option to dabble in this area. This has to be a concerted effort to make these changes. Success is not an option and the time to change is now.

Introduction

I have shared my concerns with how the individual companies within the energy industry do not share the sense of urgency or concern for the overall supply of oil. Theirs is a commercial operation that is operating at record profits. The decline in their reserve base and production profile are an inherent part of the business and they are doing just fine. How this system gets built is a question I face every day. Individually, people within the industry comment that the idea of using the JOC is the right thing to do, however, no company will step up and make the first move. Its the worst Mexican standoff anyone could imagine. Irrespective of the reasons regarding innovation and the need for greater speed from an operational point of view. The new technologies are beginning to finally be assembled into their final parts. The capability and comprehensive nature of the offerings are now complete in terms of the needs for a system that is built for the purposes here. And that is the point of the authors in this next section.
This new model is being driven by a series of trends forcing firms to re-think traditional approaches to innovation. First, the complexity of products is increasing, in terms of the number of technologies they include. No longer is it possible for one firm to master all these skills and locate them under one roof. Second, a supply of cheap skilled labor has emerged in developing countries, creating incentives to substitute these resources for higher-cost equivalents. Third, different regions of the world have developed unique skills and capabilities, which leading firms are now exploiting for advantage. And finally, advances in development tools and technology combined with the rise of open architectures and standards have driven down the costs of coordinating distributed work. In sum, collaboration is no longer a "nice to have." It is a competitive necessity.
If peak oil is not a compelling call to action, possibly this technological trend should be.

Collaboration is not "Outsourcing"

I have written extensively about Professor Richard Langlois' theories around the boundaries of the firm. How the natural tendency is to have either the market or the firm be determined and configured to be the means to lower "transaction costs". And how today's Information Technologies can provide for lower transaction costs in a contractual or market environment. The authors provide further justification and clarification of how these changes are strategic and not inappropriate approaches to outsourcing.
Our study revealed dramatic differences in the performance of firms collaboration efforts, driven by contrasting approaches to their management. In particular, many firms mistakenly applied a "production outsourcing" mindset to collaboration, viewing the use of partners only as a means to achieve lower costs through "wage arbitrage" - substituting a US resource with a cheaper one of equivalent skill.
By contrast, successful firms went beyond simple wage arbitrage, asking global partners to contribute knowledge and skills to projects, with a focus on improving their top-line. And they re-designed their organizations, to increase the effectiveness of these efforts.
Managing collaboration the same way a firm handles the outsourcing of production is a flawed approach. Production and innovation are fundamentally different activities - while the former seeks to replicate an existing product at low cost, the other seeks to develop something entirely new and valuable. In addition, outsourcing and collaboration have very different objectives. Outsourcing involves producing a commodity asset or resource at the cheapest prices. Collaboration, by contrast, entails accessing globally dispersed knowledge, leveraging new capability and sharing risk with partners.
Firms which managed collaboration using an "outsourcing" mindset made three critical errors, as compared to more successful organizations:
  • They didn't consider the strategic role of collaboration, but saw it only as a tactic for reducing cost. As a result, their efforts were misaligned with their business strategy.
  • They didn't organize effectively for collaboration. Instead, they treated partners like suppliers of parts or raw materials, and manged them using a procurement function.
  • They didn't make long term investments to develop collaborative capabilities. Instead, they assumed their existing staff and processes could handle the challenge.
In combination, these errors meant firms systematically missed opportunities to use collaboration for competitive advantage. By contrast, successful firms found that attention to these critical areas generated new options to create value that competitors could not replicate. Below, we describe the principles that these latter firms employed.
Develop a Global Collaboration Strategy

A brief summary of where I foresee collaboration being used in the energy industry. The JOC may represent a property in any location, owned by companies registered in different countries and with different product knowledge and capabilities. The pooling of each producer's resources through the collaboration should be the first order of business. Having one company designated as the "operator", I think, is not desirable nor very productive. We see independent silo's representing the capability to conduct operations all around the world. And these capabilities are all duplications of one another and mutually exclusive to the needs of the various JOC's. With the shortfall of engineering and earth scientists in oil and gas, the ability to virtually pool individual resources necessary for the operation, based on the operations need is what the objectives should be. This is in line with the thinking of the authors of this Harvard document. The market of suppliers, vendors and contractors should interact with the JOC to support the operation and implement its plans for the facility or single well. This virtual environment supported and defined by the software, built for the energy industry by its users, and conducts the transaction requirements, the knowledge management and governance of the decisions made by the JOC. This is a very brief summary of this software developments proposal and I would recommend the review of the archives of this blog for further clarification of these ideas. Nonetheless, it is obvious to most that the need to have a purpose built system with a dedicated and focused software development team be deployed to make this application real.

The authors continue with the discussion of how their study reflected on two different strategies towards collaboration. I think it reflects my optimistic view of collaboration being a productive tool for management, and if the management see it as a threat or just another trend to be followed, they may miss many of the benefits.
Collaboration received little senior management attention; when it did, it was because expectations were not being met.
Leading firms, by contrast, developed an explicit strategy for collaboration, designed to support their business goals. In contrast to organizations that viewed collaboration only as a tool for reducing cost, these firms considered a variety of more strategic benefits, in particular, assessing how collaboration could improve their top line through increased product differentiation. Successful organizations achieved this in two ways: first, by leveraging a partner's superior capabilities (i.e., know-how that the firm did not possess internally); and second, by accessing a partners contextual knowledge (i.e., knowledge that the partner possessed by virtue of its local position). In combination, these benefits comprise the "3C's" of a global collaboration strategy.
The authors continue to assert the need for management buy-in. For the energy industry to succeed in this software development proposal there has to be a high level of commitment to it form management. I think the salient warning from CapGemini about these technologies affecting operations today is something management should think clearly about. Are these back door solutions to be stomped out, or should they be welcomed and supported as legitimate methods of achieving the necessary work. I also believe the time for these types of solution to be built and prospectively developed is drawing close. Management needs to get behind this with the long term perspective of developing these types of systems for the next 3 - 4 years.

Lowering R&D Costs
Leading firms however, lowered cost in a different way. Rather than swap one resource for another, they "reconfigured" their operations to optimize performance at the system level. While the decisions they made in isolation, sometimes appeared to add cost, these firms understood the need to change the way they organized to maximize the value of collaborative efforts.

Leveraging Superior Capabilities
Leading firms focused greater attention on how to leverage partner capabilities. We observed two broad types of capability in action: First, the ability to rapidly bring online large amounts of capacity, allowing firms to lower time to market and increase responsiveness, while avoiding the cost of full-time staff; and second, the ability to access unique competencies, technical know-how and / or process expertise that firms did not possess internally. Successful firms sought partners with a blend of both abilities, giving them instant access to a repertoire of skills not available in-house. As one manager recalled, "It takes us nine months to find and hire a new employee. But using our partner, we staffed up in two weeks, accessing a skill that we don't have internally."
Thinking Strategically

Thinking strategically is the point that I have tried to make. Clearly the easy oil is gone. The costs associated to produce one barrel of oil are increasing in lockstep with the costs of discovery. The amount of engineering and earth science effort per barrel of oil has probably doubled in the past 5 years. And it will continue to increase, not decrease over time. With the shortfalls in human resources today, I believe Adam Smith's division of labor theory will provide the additional resources necessary for the industry to deal with the difficult problems ahead. A reorganization around the JOC is 100% in compliance with the cultural framework of the industry. Pooled human resources, supported by markets will provide the productivity increases that Adam Smith's theories provide. A theory which has been proven correct for hundreds of years. This organizational change can not be implemented without the software defining and supporting the industry. Without the software a firm will be relegated to manual systems or loss of the opportunities I just wrote about. These are the associated choices for management today and the point of the authors.
To Illustrate, consider the strategies of two firms - A and B - depicted in Figure 2. Initially, firm B has a dominant position, with lower cost and superior differentiation. But firm A has identified opportunities to improve its position through collaboration. It can move along the horizontal to position C, achieving lower cost, or along the vertical to position D, achieving superior differentiation. Or it can move to position E, which is superior on both dimensions. In essence, collaboration has the potential to move firm A to the "frontier" of the space joining C,D, and E. Contrast this with a firm that views collaboration only as a way to lower cost; this firm sees only one position to move to. While this may be a good choice, this firm does not see that it is not the only choice.
That although I have stated the reorganization to the JOC is consistent with the culture of the industry. The culture of the industry is a very competitive one. The ability to compete and succeed in oil and gas takes a certain capability and understanding that many have stated as being second only to NASA in terms of complexity. From my 30 years experience, I agree. Changing this competitive culture to one of co-opetition or whatever buzz word that comes along will be difficult. In line with this thinking I have suggested that the land base and the companies research and development capabilities are their future competitive assets. Moving to this thinking will take time, and indeed, may never occur. I have placed my investment of time and energy in the idea that the common sense use of the JOC will ultimately prevail, with or without the support of current management. I have an undying faith that the competitive structure of the JOC will accelerate the capacity within the industry to the point where the bureaucracy would otherwise not be capable of competing. The area the authors call E in Figure 2 is where I expect to see the JOC leading the industry.
While successful firms often used different terms to those above, all had developed similar methods to align collaboration efforts to their business strategy. Collaboration received visibility at a senior level, and was an integral part of the strategic-planning process. Increasingly, the focus was not on wage arbitrage, but on using partners to increase business value. these firms grew more sophisticated in the use of collaboration over time; by contrast, poor performers remained stubbornly focused on cost.
Organize for Collaboration

Innovation in oil and gas is a difficult prospect. As I mentioned earlier in this post, the earth sciences and engineering disciplines make the industry second only in complexity to the space industry. There is another element of the complexity that needs to be considered and that is uncertainty. The ability to say unequivocally that this is factual is difficult when your talking about forces several thousand feet below. The uncertainty element invokes the commercial environment on the producer. Then to make things even more difficult the innovation has to be progressive enough to push the science. And as I noted in the plurality writings, there is a strong influence of the science in innovation, which leads to greater understanding and a further development of the science.
The need for a different model can be seen by considering the challenge of partnering along two dimensions: The degree of uncertainty over the product to be produced; and the degree of uncertainty over the process to produce it (see Figure 3). Replicating an existing product (i.e., production) involves little uncertainty while developing a new one (i.e., innovation) is far more uncertain. Similarly, some processes are routine and easily specified whereas others are idiosyncratic and rely on trial and error learning. When firms face little uncertainty on both dimensions - the arena of production outsourcing - traditional models work well, given firms can specify what they want and how it should be made. As uncertainty increases however, a more collaborative approach is needed.
It is at this point that I would also assert that the production process, which is inevitable and in constant decline, adds further uncertainty above and beyond that of the firm. This is why $79 oil seems very cheap to me. The following quotation of the authors provides a good understanding of the work that is done at the Joint Operating Committee. This is how the industry has developed and how it functions. Unfortunately all of the software development projects fail to capture this organization and its role in the day to day operations. This is the business of the business, and due to a number of forces the business of the corporations has become the oil and gas regulatory compliance, tax compliance, SEC compliance and this is where the ERP focus has lead the organizations to focus and consume their time.
Leading firms viewed partners as an extension of their own development organizations, seeking their participation in meetings and including them in internal communication. As part of this philosophy, they required greater continuity in partner staff, in contrast to a transactional model, in which people move in and out of projects. This ensured the "tacit" knowledge of a projects' context was retained, and improved communication between teams. As one manager explained, "It takes time to appreciate the skills of each team member and understand how to work together. When people leave, we have to go through that learning curve again. So we put a premium on ensuring staff continuity".
This focus on the business is where the industry has to move to. Compliance and governance has to be as a result of conducting the business of the business. As simple as that sounds the administration of oil and gas has become completely divorced from the reality of the business. This is primarily the result of the software vendors focus on ensuring the technical accounting and compliance of the firm.

The authors now approach one of the difficult areas of collaboration. Intellectual property (IP) is the source of much value in today's economy. Who owns what and where did it come from are important considerations when the partnership as represented by the Joint Operating Committee is concerned. Traditionally the Chairman of the JOC used his firms resources to operate the programs that were agreed to by the partnership. With the prospective pooling of the technical resources as proposed here, the intellectual property can become problematic. The manner in which IP is managed in this industry is consistent with the keeping of trade secrets. I have noted here before that the stickiness of knowledge moving through the organization is contrasted to the leakiness of knowledge through the various industry related disciplines. If someone discovers something new, it is generally fairly well known on the street in a few weeks. Therefore no one has the right of that property, and most importantly copyright law is designed to disseminate ideas throughout the community as quickly as possible. There needs to be some soul searching as to how firms manage their alleged secrets and the result of their research.
The final area in which firms made different organizational choices was in intellectual property (IP) management. Global partners increasingly develop their own IP - new components, technologies and processes - to improve project performance. Furthermore, collaboration often requires that partners re-use and add to a firms existing IP in the search for new solutions. Given these trends, traditional approaches to IP which assume that a firm must develop, own, protect and isolate its IP are increasingly outdated.
and
While successful firms in our study differed on the specifics of their IP policies, their actions reflected a common shift in values; towards a more open and flexible approach. these firms sought to leverage partner IP, focusing on the cost and speed advantages, which outweighed the concerns about the need for control. They developed mechanisms for partners to access their own IP, in a way that facilitated collaboration but ensured the protection of competitive assets. And they shared newly developed IP when the firm and its partners could benefit form its application, as long as the uses were not competitive.
Build Collaborative Capabilities.

Collaborative skills are hard to come by without the efforts of many who are willing to contribute and learn. These are standard fare for the process of collaboration and I apply this throughout the industry. The smartest, most educated and most recent additions to the firm are needed to adopt these perspectives. Here the authors begin to identify some of the salient points involved in good collaborative practices.
The final area separating leading firms from others was their willingness to invest in developing "collaborative capabilities." All too often, firms assumed that their existing employees, processes and infrastructure were capable of meeting the challenge of collaboration. But successful collaboration doesn't just happen - it is a skill that must be learned. Rarely do firms get it "right first time." Leading firms recognized this reality and made investments to enhance their performance over time.
and
Successful firms targeted investments in four areas: people, process, platforms and programs. We call these the "Four Pillars" of collaborative capability (see Figure 4). These investments were typically funded outside the budgets of individual projects, given few projects can justify the levels of infrastructure needed to perform well on their own. In essence, leading firms made a strategic decision to invest in collaborative capabilities, and sought to leverage these investments across projects and over time.
Developing People

My first truly collaborative environment came about in 2000 when I started my on-line MBA. The university had over 1,500 students located throughout the world and closely tied together in a Lotus Notes collaborative environment. It was fascinating to learn so many things about businesses that were in Kuwait, China and even your own province. My perspective changed over the course of three years of study. And I learned to adopt a broader point of view about the contributions that I made. Asking key questions after attempting to learn the unique perspectives of the participants and then attempt to build on the quality and quantity of knowledge held within the diverse groups, were skills that are not easy to come by. The intensity of the learning was heightened as a result of the close collaborations.
Superior performance in collaboration requires people with different skills, given team members often lie outside the boundaries of the firm, are located in far flung countries and have vastly different cultures, The "art" of management in such projects is in finding ways to exert influence over resources not under a firms control. Rather than a focus on deep technical expertise, managers therefore require a much broader skill set, associated with the need to orchestrate and coordinate the work of distributed teams.
I have not been able to specify the manner in which the process of this software development will proceed. Collaboration is a key component, as will software that defines the process and the roles of individuals and companies. The way that the Java Community Process is done is a given as far as I am concerned, however, there are other elements of how things get built that I have to research and determine before we start writing code.
Most projects we observed employed a formal product development methodology based upon a modified "stage-gate" or "waterfall" type process. These processes are increasingly popular ways to ensure greater control and consistency in the execution of projects. But these techniques, and others that share their roots, are often predicated on the assumption of single-site development. There is a need to re-think how they should operate when managing the distribution of work among a team of global partners.
Building platforms

The following in my opinion is a call to action for these types of activities to be conducted, coordinated and implemented on an industry wide basis. Decisions are being made without the input of others to ensure a timely start to these developments. Selecting the Google Apps as the platform to begin the collaboration and develop is a rather obvious choice, particularly when you consider where Google's engineering and innovation may take the product too.
Leading firms developed technology "platforms" to improve the coordination of work. These platforms comprised four main parts: First, development tools and technologies to improve the efficiency of distributed work; second, technical standards and interfaces to ensure the seamless integration of partner outputs; third, rules to govern the sharing of intellectual property among partners; and fourth, knowledge management systems to capture the firms experience on how distributed work is best performed. This collaboration "infrastructure" was leveraged across multiple projects over time. The goal was to promote a long-term view of the assets needed for effective collaboration.
For the risks and errors can be and are very large.
Consider the troubles at Airbus in developing its flagship A380 aircraft. Airbus' German and French partners chose to work with different versions of the Dassualt Systems' Catia design software. But design information in the older systems was not translated accurately into the new new one, which held the "master" version. With a physical mock-up, these problems remained hidden throughout the project. The result: 300 miles of wiring, 100,000 wires and 40,000 connectors that did not fit, leading to a 2 year production delay at a cost of $6bn. Yet the cause of Airbus's problems was not in choosing different versions; rather it lay in the lack of an effective process for dealing with the problems this created.
Managing Programs.

The energy industry has a choice. They can begin serious efforts down this road with the objective of building systems to enhance innovativeness and performance, or continue on in the manner that they currently are. At some point in time someone will realize the intellectual property that I have developed here in this blog is the constructive direction of the industry. If not then we would have the ability to modify it to make that assertion valid.
Successful firms managed their collaboration efforts as a coherent "program," in contrast to organizations which ran each project on a stand-alone basis. A program view was critical given collaboration projects rarely met expectations early on, and performance often deteriorated when the scope of efforts was increased. Leading firms did not differ from others in this respect; but they did differ in the rate at which they improved. Top performers put in place mechanisms to help improve their collaboration skills over time.
A New Source of Competitive Advantage
Firms that devoted attention to the three areas above - strategy, organization and capability development - were more successful in their collaboration efforts. For a few firms in our study however, these efforts not only lent support to their existing business strategies, but also led to new value creation opportunities. Their investments to build capabilities, in turn, created options to pursue strategies that could not be replicated by competitors; especially those that managed collaboration like outsourcing. For these firms, collaboration had become a source of competitive advantage (see Figure5).
In our view, Boeing's source of competitive advantage is shifting; it is less and less related to the possession of deep individual technical skills in hundreds of diverse disciplines. While the firm still possesses such knowledge, this is no longer what differentiates it from competitors such as Airbus, who can access similar capabilities. Rather, Boeing's unique assets and skills are increasingly tied to the way the firm orchestrates, manages and coordinates its network of hundreds of global partners. Boeing's experience is increasingly common across the industries we observed: Collaboration is becoming a new and important source of competitive advantage.


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Photos Courtesy the authors.

Tuesday, September 11, 2007

A researchers delight.

Google recently upgraded their "Google Books" search and information system. In the past I was able to use an application called "Books" to manage the library of books that I have. How many times I had wished for the ability to search just my books, and only my books. This was a dream that I believed would never be realized, then came Google. Their new product offering does just that, it lets you search the books you loaded into their new "Library" feature of Google Books. Giving you an index of just your books is something that should be in every users tool box.

An added feature of Google Books should be the capability to purchase Books, and maybe just electronic access for a short period of time. Or maybe an overall subscription that provides access to all books. Nonetheless a researchers delight to be sure.

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Monday, September 10, 2007

Google and CapGemini in agreement.

As I have indicated here before, "Google Apps for your Domain" is the collaborative environment chosen for www.people-ideas-objects.com. Today Google and CapGemini, Ernst and Young's technology division, announced that CapGemini would be supporting users for the use and integration of Google Apps.

CapGemini will be a resource that will be available to help the users of People Ideas and Objects collaborative environment. I look forward to using CapGemini's services in this area.

The warning that CapGemini notes in the announcement, about these collaborative environments being used within a company in an unauthorized manner, is similar to the warning I issued 42 months ago. That port 80 was able to allow these types of applications through the firewall was as big a danger then, as it is now. I can also assure you that when a major accounting firm is announcing the risk, it's too late to do anything about it. And I can certainly provide you with a domain name that is already being used in this manner for oil and gas. ;-)

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Sunday, September 09, 2007

Another perspective

The keynote address at the 2007 Influence Conference was presented by ICANN CEO Paul Twomey. ICANN (Internet Corporation for Assigned Names and Numbers) is defined on their website as;

ICANN is responsible for the global coordination of the Internet's system of unique identifiers. These include domain names (like .org, .museum and country codes like .UK), as well as the addresses used in a variety of Internet protocols. Computers use these identifiers to reach each other over the Internet. Careful management of these resources is vital to the Internet's operation, so ICANN's global stake-holders meet regularly to develop policies that ensure the Internet's ongoing security and stability.
ICANN's role is interesting due its focus of being the naming conventions and their assignment. More or less a quasi street light architect / traffic cop. A rather limited role, however, as noted in his keynote; he sought out to provide a number of answers to some important questions regarding the future of the Internet.

Here is a comprehensive summary of Twomey's comments during his keynote.

"While it’s difficult to be definitive about the future, here are some things I think we can expect:"

• Usage of the Internet will be limited only by access to electricity. As many as 3 billion people may be able to enjoy a truly global Internet.
• Many, perhaps most, will access the Internet by using mobile devices.
• We’ll see a very significant increase in broadband access (over 100 mb/sec indeed up to 1 gigabit per second). Many developing countries such as Morocco, China and Malaysia are adopting accelerated broadband distribution programs to deliver the Internet to their citizens.
• A machine-to-machine Internet will overtake today’s person-to-person Internet.
• We will see billions of Internet-enabled appliances at home, at work, in the car, and in the pocket.
• Third parties will use the Internet to monitor all sorts of activities and utilities — from washing machines to cars to electricity meters.
• Geo-location and geo-indexed systems will be much more common and emergency services will be more precisely dispatched.
• There will be significant improvement in spoken interaction with Internet-based systems.
• We will see an even wider array of delivery methods for intellectual property (movies, sound tracks, books, and so on) than is available today. VoIP will be prevalent and SIP may be the principal protocol means by which calls are set up. Voice communication will be essentially free, except perhaps for calls that terminate on traditional PSTN devices including mobiles.
• Almost no industry will be offline since most will rely on the Internet for customer interaction, customer discovery, sales, service, advertising, and similar activities.
• Group interaction and collaborative support tools — including distributed games — will be very common.
• And last but certainly not least, internationalized domain names and new gTLDs will open up the Internet to much more multilingual content.

"What will you be able to do in the future that you can’t do now? Here are a few examples:"

• Manage your appliances and home security systems through online systems.
• Use your mobile phones as remote controllers.
• Download videos, music, and books as an everyday practice. Video on demand will focus on watching previously downloaded video rather than watching streaming, real-time video. This is really just an obvious extrapolation of the iPod/TiVo paradigm.
• You will be able to talk to the Internet itself to search for information and interact with various devices — and it will respond.
• Search systems will be more precise because meta-tagging of information will have become more common. This is part of the semantic web movement.
• Maintenance histories of products that can be serviced will be keyed to radio frequency IDs or bar codes associated with the devices. This is one potential use of Internet Protocol version 6, or IPv6, which is the natural extension of the original IPv4.

"What will the technical underpinnings of the Internet look like by then?"

• Terabit per second local networking will be available as backbones for local networks.
• The domain name system will operate in multiple language scripts. Again, a result of deploying IDNs and new gTLDs.
IPv6 will be widely deployed, once the technical and financial issues have been worked out.
• Better confidentiality and authenticity will be provided through the use of a public key crypto. This will provide more authentication all along the network.
Much more inter-device interaction will be common, incorporating position location, sensor networks, and local radio communications.
• Spam, phishing, and various forms of denial of service attacks will continue a cold war-style arms race with defenses and better authentication techniques.
• Operating systems will continue to be troublesome sources of vulnerability.

There should be no confusion: broadband speeds required to participate in the internet in 10 years time will be measured in the 100s of megabits per second. Indeed network planners in South Korea are now moving households to 1 gigabit connections today.


Why is the appropriate approach to broadband so important? It is because the Internet will continue to represent a massive and accelerating force for the reduction of transaction costs across the global economy, and a force for unprecedented innovation in the delivery of private and public services.

Clearly we see many of these same opportunities for companies and people. The last point I have highlighted in italics is clear recognition that the direction that this blog and software development proposal are consistent with others perspective and vision. Transaction costs are best handled in markets. Markets, due to their (primarily) contractual nature, increase transaction costs. Information Technologies reduce transaction cost friction to their lowest level. People, Ideas and Objects will bring these technologies to the energy industry.

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Thursday, September 06, 2007

And so it begins.

Today Total Petroleum announced a decline of 20% of their projected production to 2010. Not their overall production is in decline; only there projected increases are revised downwards from 5% to 4%. This is more telling about the politics in big companies. Rarely would we have seen such a statement that production would be lower then previously reported. If its lower then just do more drilling, or whatever, to increase production to what was reported earlier. For Total to issue such a statement there must be a lack of faith in the company’s ability to increase production that extra 1%.

Now that the IEA and the National Petroleum Council have released their reports it's "OK" for the truth to be told. Total may be the first that I am aware of, but I am certain that there will be many more, and the volume and the pitch will be heard everywhere. Just as in the 1980's when the managers jumped over each other to prove they could cut their budget further then the last guy, the companies will quietly line up and announce one after another the increase in their associated production decreases.

Speaking of cover stories, OPEC can now pipe in and say that they will be experiencing some production declines. With the news of the major producers decline in production becoming yesterday's news, and a financial crisis in the home mortgage market, no one will actually hear OPEC announce the declines. (Possibly as soon as September 11.) And it will be too tempting for them not to make these announcements. After all reporting to their people that production is scaled back and revenues are way up will be easy to sell. Hugo Chaves may actually become that mythic hero he sees himself as.

I have repeated here many times that the constraints on companies are the reason for the associated decline in production. It’s a new time and a new place. We have to do something to affect the performance of these companies. Our choices are the status quo, build the software I speak of here, or if we do not define and support the Joint Operating Committee, as is suggested in this new software development, then we will be relegated to reorganizing to manual systems.

Clearly the status quo is not working. Join me in making this re-organization real. When you have the organizations actively jumping over each other to state the bad news, you know that their options are limited.

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Wednesday, September 05, 2007

Steve Jobs and his Apple iPod.

Today was a great day for the Apple faithful with a high profile presentation of the new iPods by Steve Jobs. I want to reiterate the risks of these WiFi enabled hard and ram disk devices in the corporate environment. Pod Slurping is the ability to access and copy corporate information for unauthorized purposes. Now with WiFi the risk rises. A relatively remote risk if you have a secure network, but with all things network, the number of ports and the number of methods is limited by human imagination. These devices, along with the SunSpots and Motes that I recently wrote about, will be perceived by some people as being either curses or highly effective tools. Since I am a glass half full type of thinker, I'll just mention how I use iPods today and what potential they have in the hands of the oil and gas industry that is supported by a capable software development vendor.

I currently have two iPods that I use constantly. I have used iPods for over four years and find them to be an indispensable tool in this day and age. Firstly I use an iPod Shuffle, the clip on 1GB model that I fill with PodCasts. The iTunes Music Store has many quality podcasts that I subscribe too. Unfortunately I listen to up to 2 - 3 hours of casts each day. The Shuffle allows me to control when and where I can listen to them. I clip it to my lanyard and have the earphones handy. A simple click of the play button and I'm right where I left off. With over 15 hours per charge, I have many PodCasts that I want to concentrate on when I am commuting, waiting, or just out and about. I like to think of this time as an increase in my productivity as I can generally listen and do something mindless at the same time.

What I have loaded on my Shuffle right now is Bloomburg on the Economy, EconTalk, Google Developer Podcast, The McLaughin Group, Meet the Press, 4 courses of lectures from UC Berkeley (2 economics, 2 information technology), Stanford which includes the Hoover Institute, MIT, Dr. Moira Gunn Tech Nation, NewsHour with Jim Lehrer etc. Jobs stated that there are now 125,000 podcasts, 25,000 video podcasts, so there should be something for everyone. I frequently felt frustrated that I was not keeping up on this valuable content. Now I can synch as frequently as I like and have the most up to date information available to choose from during the day, all thanks to the Shuffle.

I also have had a classic iPod for over 4 years and find them an indispensable and valuable tool for travel and the like. I also back up all of my data to them, frequently, creating a corporate risk if you lose the device. With the ability to watch movies, television, YouTube or Google videos they can provide an asynchronous portal to the entertainment / information you enjoy or need.

What will the iPod provide in the near future? I think we have seen enough of these devices development to know that the iPhone will become standard fare for the productive worker. Email may seem like a small increase in capability, however, email with rich media is a completely different tool. People are frequently working with more complex ideas and concepts. Text is the clearest and easiest to produce, but many important concepts can be articulated more clearly in rich media. Speeches, presentations and corporate summaries will be the types of media that can and will be produced. For anyone in the audience of a company that needs to know, the presentation could become central to the quality of its communications. Just as I think blogs will soon replace resumes, companies will need to revisit the definition of their audience and the communications to the people they need to communicate with.

The Technical Vision that I have presented for this software development project, noted that the volume of data will grow exponentially. I have also noted the need to be tied down into an office is becoming more redundant each day, with possibly energy, or rather the saving of it, may be the killer app for ubiquitous computing, Demanding that people be available anywhere and at anytime they are required. iPhone will be your portal to the control of the demands of daily living and completion of your work.

Or maybe transaction processing will be the killer application that brings these devices into the corporate world. That is where I am putting my time, money and energy. In bringing this software development to the 21st century oil and gas user and producer.

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