Interesting research at Intel

We are all heading towards cloud based computing. Billions are being invested in centralized processing and storage facilities to offer processing and storage on demand. For Google to run their services requires them to own the most processing and storage power in the world. And has anyone stood up and asked if this an effective way to conduct computer based functions? Well Intel has and the results are surprising.

In a document released yesterday, Intel documents the research they did on the processing and network bandwidth demands of the two prominent methods of computing. Comparing "Virtual Hosted Desktop" with "Embedded Application" which relies on remote processing on a virtual server, to "Stream OS" with "Stream Application" which relies on streaming of operating system software to hardware client platforms.

The results show that streaming the operating system and application to the client platform for user based actions was, from a server perspective, far more efficient. 20 clients accessing the server for these services used only 1% of the servers performance. Whereas the "Virtual Hosted Desktop" solution took up to 45% of the server processing requirements for the same 20 clients. Intel even crippled the script of the test for the Virtual Hosted Desktops to remove the high processing required for graphics. I assume that the network bandwidth of data would be small and therefore incidental to the performance of either method.

Sun Microsystems has moved in this direction with their SPARC based offerings, Solaris and Java products. Using the "Stream OS and Application" method provides us with a reduction in processing requirements, and, an increase in performance on the client desktop. The only caveat that Intel mentioned was the initialization of operating systems on the client side could cause momentary increases in processing and network demands. Suggesting that "if" all 20 clients logged on at the same time, the systems may have performance issues.

This "Streaming" architecture provides the People, Ideas & Objects application with the performance and reliability that is necessary for the users. This architecture also allows us to control all the required software necessary for the user to do their jobs. Such that if there were a bug in the systems we would know about it, and who to fix it.

Technorati Tags: People's, Development, Research, Sun, Specification,

Tailor's to the Emperor

I have not been kind to the Emperor's (the oil and gas companies) in this high energy price era. I more or less follow the money in situations like these. And with the energy companies receiving 100% of the revenues from oil and gas, they are the ones that should have done something about it. With the industry leadership meeting in Spain last week, unaware of how this problem came about, I am reluctant to give them any slack at this point. However, in this entry I will provide the energy companies with a temporary benefit of the doubt, and focus on the SAP and Oracle applications, and more broadly the technology community.

To call these Information Technology companies the designers and tailors of the Emperors new clothes makes for the perfect analogy. Particularly SAP and Oracle who command such fees and mind share in the oil and gas market. These firms are complicit in providing systems that are woefully inadequate for the innovative oil and gas producer.

Being the "big" suppliers of systems to oil and gas does not provide their firms with an excuse to sell systems that are inadequate and inappropriate for the market. No one was ever was fired for recommending these big applications, does not give SAP and Oracle a license to sell something that doesn't fit. It is my opinion that you should at least try to understand the market you are selling to.

If the producers where provided with systems that supported the Joint Operating Committee and innovation in general, would the firms have been able to explore and maintain production for the markets demands? Instead they have provided systems that identify, support and entrench the bureaucracy.

There has been a technological revolution in the past 5 years. Has any of these new technologies been integrated into the oil and gas firms? Not that I am aware. It's Stampede week here in Calgary and I can assure you that the marketing arm of these "suppliers" have a good understanding of where their next meal is coming from. Role in another server or two and database licenses for all.

Witnessing this festival of greed during Stampede makes me think I am the only one out of step. Don't solve problems, just sell.

Technorati Tags: People's, Call-to-Action, Failure, Tradition, Trends,

People's value proposition.

In last weeks entry I noted three items that were causing our software development budget to increase substantially. They are;

• Paying the user.
• Undertaking a global scope.
• Employing a 36 hour work day.

This entry will note why these costs are not as onerous as they would be under past software development methodologies. And in turn defining our business model's value proposition.

I am critical of the software development methods used in the past. The SAP and Oracle model have proven successful for their companies, but recall they are applications from prior technology era's. And no one would suggest that the model of "build it and they will come" is relevant today. The two major constraints of an innovative software developer are the code of the application, and the customers that use it. Users that are looking at new and innovative ways of deploying either SAP or Oracle are met with a bureaucratic process that makes changing organizations a much easier task. Upgrading the software comes with high costs and many promises that do little but entrench the vendor further in your organization.

If SAP and Oracle were to spend the required budget to build this People, Ideas & Objects type of application, the producers would end up paying for this code several times over. There has to be a better way.

Why doesn't the oil and gas industry as a whole pay for the ERP system code just once. Why not share the costs of development over the entire industry on the basis of costs plus a percentage for the developer. A developer on this basis would only interest themselves in what makes the software better. And that is the ability to interpret the users demands and build the software they want. If the user wants to scrap a module and replace it with two new ones, based on this proposed business model the developer would be most pleased with that.

This is how I have proposed the People, Ideas & Objects application from the very beginning. An industry wide software development capability, designed and defined by its users, supported by distributing the costs of development across the global producer population. Has their been a software developer that has used this model today? I think Google does it this way and therefore this comparison imputes the development will never stop. The innovative process is iterative and it never stops, why does software development?

It is my opinion that using the Joint Operating Committee in the manner that is defined in the draft module specifications provides me with the competitive advantages that I need to build this software development capability. This advantage is not open to any other software development firm as I have the rights to the ideas secured. This IP based competitive advantage is necessary to ensure that a series of competitive look-a-likes to this development don't dilute the focus to get this right.

In summary this is the value proposition of this software development project.

• Establish an innovative footing for the oil and gas producer.
• Eliminate the constraints of code and customers.
• A "software development capability" based competitive advantage.
• User driven and focused developments.
• Determining and interpreting User needs.
• Charge the oil and gas industry on a software development cost-plus basis.
• Focus the industries actions through management of Intellectual Property.

Join me here.

Technorati Tags: People's, Development, Innovation, Proposal, User,

The IEA gets it.

The IEA has as their guiding principle "Energy Security, Growth and Sustainability through cooperation and outreach." This is the appropriate position for every energy consumer or producer. As consumers we should not limit ourselves in any manner. Acceptance of a lower standard of living, or a future that is constrained by energy, is a defeatist attitude and capitulation of the benefits of globalization.

As a producer the efforts to fulfill that promise to the consumer now comes with extremely attractive financial incentives. Isn't it too bad that the industry, which is at record levels of capital expenditures, is moving backwards in their production volumes. As is painfully obvious to most, the organizational methods of the industry do not enable them to participate in this market for much longer. This is not a job for the bureaucracy.

You can however mark me as surprised when I read the following in the Australian Business;

The IEA's outlook resonated with the views of oil company executives at an industry conference in Madrid, who said the red-hot oil market reflected deep-seated pessimism about the industry's ability to open the spigot to satisfy rising demand.

The industry actually kind of admitted they understand the problem. I have certainly made it clear that the producers management lack the motivation to do anything about it. And it will be the investor class that needs to fund these software developments in order to provide them with an alternative form of organization for their oil and gas assets. This quotation from a number of faceless executives at a conference is the first tangible recognition that a problem exists. We however, do not have the time to wait for these companies to do something about it. Our first act should be to axe the management of these failing firms.

Perhaps one of the most disappointing figures to emerge from the IEA report was its assessment of oil production by nations outside the OPEC cartel. Non-OPEC supply was "paltry to say the least", said Mr Eagles, the IEA's head of market analysis, and had been revised down since last year's market report. He said crude supply from non-OPEC countries would remain at or below 39 million barrels per day over the next five years, though it would rise after 2013.

The Wall Street Journal noted the following in their blog;

Project delays averaging 12 months, coupled with global average decline of 5.2% - up from 4% last year – are the factors behind these revisions. Over 3.5 mb/d of new production will be needed each year just to hold global production steady. “Our findings highlight again the need for sustained, and indeed, increased investment both upstream and downstream — to assure that the market is adequately supplied,” stated [IEA Executive Director Nabuo] Tanaka.

And Yale comes in with the following;

Global leaders fret about climate change and economic growth, throwing out blame in many directions. But finding fault or inequities does little to solve the problem of rising demand for energy and a declining supply, argues Chandran Nair, founder and CEO of the Global Institute for Tomorrow. The bottom line is that the world economy has become too dependent on fossil fuels.

It is tiresome to be reading these quotes about the problem. If you read the 2007 annual reports the companies could not be happier with the situation. They had the opportunity to do something about this almost five years ago. When I proposed this software development solution in September 2003, an idea that they clearly understood, and an idea they stole from me and handed over to Daniel Yergin's company, Cambridge Energy Research Associates to research. Isn't it also ironic that Daniel Yergin's "unprecedented 16 million barrels" of new production never showed up? Good thing CERA's 220 PhD's were'nt as quick as I was in publishing.

If the producers management thought it was such a good idea to spend money on the idea of using the Joint Operating Committee as the key organizational construct in September 2003 with CERA, doesn't this prove they are guilty of allowing this situation to occur? I repeat the management are not realizing this situation in a conference today. Matthew Simmons has been warning about it for almost a decade. These companies are not acting in anyones interest but the self-absorbed managements. Take any companies stock options and calculate the amount they "are in the money" and you'll see how effectively the scam has worked.

For example taking our favorite company in Canada, Petro-Canada, has options that "are in the money" for $410 million. And total 2007 option based compensation (Using $53.62, their end of year price) was $82 million. Just to make sure they don't seem too greedy, they did issue $255 million in dividends. (Note this was a topic of discussion on this blog in 2006, so it is fair to say the management did know about this.).

Technorati Tags: People's, Organization, Failure, Governance, Yergin,

Uh, actually it's three applications.

I was running through the options in how the People, Ideas & Objects application modules can be implemented with Solaris 10 and Java. What has quickly become obvious is that the application that we are building is actually three different applications. Categorized on the basis of either a Producer, a Person or a Joint Operating Committee (JOC). Each category having access to the eleven modules of the People, Ideas & Objects through different interfaces.

The Solaris operating system provides containerized virtual instances of the operating system. For all intents and purposes these virtual instances of Solaris are as separate and distinct to the two operating systems running applications in ExxonMobil and ChevronTexaco. A virtual instance of Solaris is created for each person, JOC and producer company. This provides the separation and access of resources to only those who are authorized. Interactions between instances is through the Java enabled transaction management capabilities.

This provides enhanced security flexibility to each person, JOC or producer company. With each virtual instance of Solaris accessible by the owner they can grant access privileges based on Solaris' 50 user definable roles. Root access is available to be granted to a variety of people who need that access, yet it only provides root access to those areas. Audit, compliance and others will be able to access what they need to do their jobs without the risk of granting global root access to people who need it.

Each of these virtual instance will provide a server side MySQL database that manges the data model for their type of user, a person, JOC or producer. I believe this helps in avoiding much of the complexity and confusion that "might" occur if we ran this application as one monolithic instance. One might assume that the hardware requirements would explode in terms of cost and complexity, and this is where Sun has obviously spent some engineering time. And why this will be run on Sun's network.com or cloud computing platform. Each processor could handle 16 virtual instances, and, are able to scale dynamically to use the number of processors any application may demand. Making the decision to use Sun's cloud computing the equivalent of a "doh!" as Homer Simpson would say.

Technorati Tags: People's, Sun, Software, Development, Specification,

Optimists and Pessimists.

Does anyone still believe there is no problem in terms of our energy supply? Other then the companies themselves, I don't think anyone would assert that all is well, carry on. $140 oil and $13 natural gas are telling the market, "Houston, we have a problem."

Now the level of discussion of the problem is increasing substantially each day. Supply and demand focused discussion contrast the optimists point of view, others document the pessimistic scenarios. What this discussion doesn't provide is any focus on a solution.

Organizational changes, supported by the Information Technologies will provide a solution to the painfully slow, bureaucratic oil and gas producer's. Based on the producers comments over the past few years, that all is well, one can clearly conclude they haven't got a clue. What was reasonable performance for any firm in the 20th Century pales compared to the Global expectations of the 21st Century.

The Information Revolution is the solution to the problems of today, just as the Industrial Revolution was the solution to the over-population and hunger of its day. From an energy consumption point of view having x million drivers stuck in gridlock twice a day becomes one of silliest things that we humans do. From an energy consumption point of view, the car whether it is hybrid, electrical or hydrogen (all pipe dreams) is not the solution. The car died with the cheap energy era, get a Segway. Hauling 200 pounds is much more economical and energy efficient then hauling 4,000 pounds.

What are the potential results of a reorganization of the industry? Many times in my career I have been surprised by the collective capabilities of the industry. Several times they have been able to achieve and exceed the impossible in terms of their collective abilities. We need to tap into this collective capability and accelerate it to a speed that will provide the energy marketplace with reasonable volumes of petroleum. Reasonable volumes that a Segway rider could appreciate.

Technorati Tags: People's, Change, Peak-Oil, Capabilities, Organization,

What a difference a day makes.

I have quoted on several occasions the number of words that are "consumed" in this weblog. Previously I quoted 400,000 and most recently 350,000. Either one of these numbers is impressive in terms of the expression of the idea of using the Joint Operating Committee.

Google is always making changes to the Blogger service that I use. Recently I upgraded to their "Blogger in Draft" service and was able to download the .xml file for the entire blog. To my surprise there are now over 692,000 words in the blog. That's the equivalent of seven books! So much for my previous attempts to calculate this number.

The important aspect of this is the fact that this idea has created such a rich and fertile ground for new ideas in the oil and gas industry. What will be really surprising will be the volume of ideas that the global User and Developer community generates.

Technorati Tags: People's, Ideas, User, Development, Collaboration,

I swear, a day has 36 hours.

Going over the budget numbers for this software development project. In doing so I want to bring back a term that was used in the pre-2000 era technology. That is "burn-rate". Not something that you necessarily want to brag about but this project may have one of the largest "burn-rates" in technology history.

First off I want to note the costs of development in the May 2004 proposal was detailed at $70 - 85 million. Two changes have made these previous development numbers pale in comparison to what they will be in the future. A third change works to expand the number of hours in a day, which leads to even higher annual costs.

As I have mentioned on many occasions, the Users need to be involved in this software development. I have argued that SAP knows nothing of drilling wells and NGL operations. And as a result SAP doesn't work for oil and gas. The need to have the Users involved in development from the start is necessary to get this system right. There is no other way to deal with the issues of determining who, what, where, when, why and how the software has to work then asking the people who hold this tacit knowledge collectively.

OK so the users need to be compensated. Asking them to volunteer their time is an excessive request that extends well beyond the reasonable or even surreal. I have also noted here before that the oil and gas industry is headed towards an annual turnover of $4.5 trillion. I'll bet even Dr. Evil would choke on those numbers. The cost increase that I am talking about here is that the user-to-developer ratio will range from a low of five-to-one and an upper factor of ten-to-one. That's up-to ten User hours for each developer hour.

The second aspect of the original proposal was that it was just for Canadian operations. Back then my thinking was limited to that market, and rather quickly realized that the global audience needed to be targeted. Having only one geographic location being serviced by this application is a reduction in the real value of using the Joint Operating Committee. Besides the supply of energy is a global problem. Therefore, the royalty, tax and compliance requirements of the total population of global producers needs to be considered on top of just the Canadian operational environment.

Lastly I want to add fuel to the fire of my adversaries by noting that the compression of time is something that will be implemented in this application. Instead of budgeting for four years, I think it can be done in two and half years to initial commercial release. (Maybe even less!). We are approaching a systems use that may start the day in Russia and China, move to the Middle East, Europe and then the United States. Users from these regions will be able to collaborate in an asynchronous manner. Hence providing for potentially a "day" of user driven development that totals 36 hours.

To deal with this wealth of information we need the developers to be writing code at approximately the same pace. I have thought about this and have come up with a one-third, one-third, one-third solution. Each third of the time allocated to developers will be sectioned off in the following manner. Open-Source developers, Sun Microsystems and Indian based development houses.

Open-Source developers will be welcomed in this development and be able to add this project to their client list. These people are generally doing what they are doing because their recognized skill set is exceptional. The type of developers that are able to produce ten fold what other developers can do.

Sun Microsystems developers. And here we are accessing the Solaris, Java and MySQL developers. Sun has hired many of the best developers in the world. I also believe that this project will be the first test of Sun's integrated environment, and it is therefore incumbent upon them to prove to the world that it is a viable environment. Essentially setting the bar as high as has been attained in terms of technological risk and implementation.

Lastly I am a fan of the Indian based model of software development. That these are offered at a discount is only gravy for this projects budget. Although they may be fairly new to the overall development world (in terms of the fifty year history of computing) they have inherent advantages in that they speak on average 7 different languages and communication becomes their forte. After all Java is only another form of communication. Secondly they are able to fill in the gaps of time in our 36 hour clock. Lastly they will be a quick and efficient resource in terms of taking many of the boiler plate technological frameworks that exist today and implement them in our code. What I mean is the PPDM, (Petroleum Producer Data Model), XBRL, (Extensible Business Reporting Language) of the SEC, Alberta Crown Royalty frameworks etc. These have become the building block of many companies and we will be able to leverage heavily off this infrastructure.

That in a nutshell is how we will develop the eleven modules in the People, Ideas & Objects application. Anyone want to guess what the total cost will be? I think the annual costs are quoted in the B (Billion) range. This also does not impute the Users and Developers are chained to a desk for 8 hours a day. Some Users, and some developers may only contribute a total of eight hours to the project and some will find life-time employment with this project. Life time employment, as Google has shown, development never stops.

Technorati Tags: People's, Sun, Development, Strategy, Software,

Following up on Sun.

Yesterday's post commented briefly on Sun Microsystems software, hardware and service offering. Sun published their HPC (High Performance Computing) newsletter, and here are four excellent articles from that publication.

First is Sun co-founder Andy Bechtolshiem talking about the building of "commercial" grade systems for "cloud" computing. Andy makes the comment that he spends more of his time on physics these days. Bechtolshiem always provides fascinating talks.

Second is another pertinent article, "Big Data Changes the Rules," regarding this software development project. Recall the Technical Vision that is a key part of this application. How it predicts a data Tsunami will provide key competitive advantages to those in oil and gas that can manage and use this data. The article notes some of the details of how the unsuspecting oil and gas firm may have difficulty with these data volumes.

The third article is an interesting read on how Sun's network.com is being used in innovative ways.

Lastly a comparison of MySql database vs. Oracle. Our choice of database is to use MySQL since Sun purchased the company. This now provides us with a one system vendor solution for all our needs. SPARC chip-set, Solaris Operating Systems, Java and Databases are proprietary technologies of Sun. No more finger pointing as to who's fault it is.

Technorati Tags: People's, Sun, Vision, Strategy, Software,

Google, McKinsey & Sun

These three firms have been at the forefront of providing the resources for this software development project. Google never stops providing more robust and useful tools. Although the interfaces are simple and effective, understanding the global scope and scale of their applications, from simple account management to their many API's (Application Programming Interfaces), provides a challenge to the user. I am only now beginning to feel like I am using the full services of the applications offered.

McKinsey on the other hand are defining the Information Technology driven organizational changes for all industries in the 21st century. They like Google require a commitment to review their excellent resources on an ongoing basis. Three documents that were recently released provide further justification for the changes needed in oil and gas. The three documents are;

• The Next Step in Open Innovation
• Managing Capital Projects for Competitive Advantage. (Should be considered as incremental material to the Petroleum Lease Marketplace, Financial Marketplace and Research & Capabilities modules.)
• Gulf States Must use Oil Wealth Wisely. (McKinsey Global Institute)

I have commented before on Sun Microsystems offerings here.These three firms are providing much of the ideas and infrastructure for the innovative oil and gas producer. They have defined this as a market of interest, and the users and developers of the People, Ideas & Objects application are the benefactors.

Technorati Tags: People's, McKinsey, Organization, User,