Cloud Computing and global platforms

Many companies think they need to go from running software in their own data centre(s) to move the software to the cloud. The outcome unfortunately is a very expensive migration project with very few advantages to show for it. Pre-cloud software does not like to be put on the cloud. Before the cloud, software needed a bigger server to scale. Software written for the cloud, goes to sleep when there is not traffic and can go from no users to millions in a matter of minutes. Cloud-native solutions support having one cloud platform on which many competing customers are hosted. Adding another customer is fully automated and boils down to adding an extra row in a table with active customers, never adding extra servers or configuring extra hardware.

So if one cloud platform can offer service to many companies, what should you do? You should become that industry-leading platform! Why? If you are not the industry-leading platform and a competitor is, then all your customers can be serviced by them infinitely cheaper than you can. Imagine you are active in investment management. Where you previously had investment teams behind each fund, you would now create a cloud platform that enables each customer to build their own fund and automate the management of it often through combining third-party solutions. The outcome is that competitors would still have one team per fund whereas a cloud native competitor would be able to offer millions of funds at an unseen price point. Cloud automation means that the leading platform can offer solutions to the whole industry. What happens next is called a positive network effect. More customers built their own funds, more money flows into the cloud platform. Due to their being more money on this platform, more partners will offer more building blocks to build more complex funds. More building blocks means more complex customers see the advantages of migrating. More complex customers bring even more funds which means even more building block partners are interested. At the end, a winner takes most of the market tends to happen. Because of this reason, you do not want to be number two or three in the market. Name the number three: search engine, social network, hosted email provider,... Anywhere a cloud platform can offer an ecosystem play that can eat most of the market, all other competitors will be pushed out.

AI and the power of automating boring tasks

Most human experts when asked if their job could be done by a computer will be adamant that this will be impossible. However there is a multi-step process each company should try:

1) shadow the experts - AI gets to see the data and decisions of the experts and learns but does nothing more.

2) suggest to the experts - The trained AI model starts making suggestions to the human experts and learns whenever the model is wrong by seeing if the expert follows the recommendation or not.

3) human approves - The AI model is now often beating humans but still edge cases exist where humans are better, so the human needs to approve all decisions which are now made by AI.

4) AI automated for most - Most cases can now be done via AI automatically. Only when certain edge cases come into play, the certainty of the AI is below a threshold or humans complain, will experts get involved.

5) AI full automation - This case is not always attainable or can take many years to achieve, e.g. autonomous driving cars. However if possible, then the business, who gets to this level first, is able to scale up enormously because they now can offer 24x7 service at a low cost.

Blockchain - the big unknown

Cloud and AI take the current approach and try to build a more efficient model. Blockchain enables businesses to rethink industries completely. A blockchain is a distributed ledger which brings a transparency never seen before. Tokenisation is the process of converting something or some process of value into tokens. Tokens can represent value, e.g. Bitcoin is like gold investments; fiat money, e.g. a stable coin like USDT/USDC equals $1; a unique asset, e.g. art, a building, a diamond; a utility, e.g. Filecoin allows you to buy storage just like on the cloud but from many providers; a vote, e.g. governance tokens allow participants to cast their vote on a business or governance problem; and many more things. Smart contracts can automate the creation, destruction, transfer [payment/loans], escrow [staking],... of tokens as well as encode business rules and fully automate a business. Smart contracts are linked to the distributed ledger so anybody can audit what happened.

By using tokens to vote and demanding an escrow/staking to be able to vote, many tasks which used to be done by experts and employees, can now be entrusted to strangers. If the stake you loose if you vote wrong [e.g. against the majority or validated after the event] is exponentially higher than the fee you stand to gain by voting right, the end result will be voting becomes a business for the knowledgeable.

How can this all be disruptive? Let's look at some industries:

* telecom - if you are a mobile operator then you need mobile spectrum. What if mobile spectrum would no longer be auctioned every few years but be tokenised? Anybody would be able to bid for spectrum in a specific location and for a specific time frame, e.g. next month, week, hour, day, minute,... If spectrum assignments can be made fully transparent, then mobile phone operators, satellite operators and industrial IoT operators could all bid against one another. Phone operators would likely win in big cities but not in rural places. A lorry/truck with a satellite dish built into the roof is more likely to get cheap service through satellite than having to roam between multiple mobile phone providers. Changing the way spectrum is licensed will change the way mobile communication is offered.

* banking - small blockchain start-ups are raising millions by selling utility tokens on Coinlist. If they can create viable businesses, then they will not need the traditional banks to loan them money. Instead they can stake (loan) their tokens and earn money. There will also not be an IPO because most blockchain start-ups are non-profit foundations which try to create a decentralised economy on top of their platform in which participants win, no shareholders. The end goal is that traditional payment, lending, investment, ... are at risk of being disrupted. Even the whole concept of stock exchanges, index-based investment,... is at risk.

* insurance - insurance is in the business of predicting the risk few people/companies have and getting a premium from many that more than covers the claims of the few. In a world of continuous new risks, e.g. the risk of a company being held ransom by a ransomware, and no reliable multi-year data, i.e. ransomware is a very new risk, means that traditional actuarial approaches cannot be used. Tokenising risk and selling it to many specialised investors will be the new way to price risk. A decentralised Lloyds of London on steroids.

* digital sales - using tokens to both represent ownership as well as for payment, will revolutionise digital sales. Anything from a game, patent, license, ... can be automated via tokens. Gone will be the days of paying intermediaries several percentages. Want to hedge against prices going up or down? No intermediaries required either. A software as a service platform which uses tokens for utility and payment will be more efficient than sending an invoice or paying credit card providers several percentages.

* any job market - why hire experts full time? Convert full-time jobs into micro job tasks and create ultra efficient job markets. What if your AI could be trained based on experts voting with governance tokens? All of a sudden decentralised platforms in which humans and AI work together are possible. Would we need so many executives who are people managers and experts at office politics in a world of many smaller decentralised companies offering interesting work to sole trading experts?

Conclusion

Using the latest and greatest technologies in order to built a faster horse is a waste of time and resources. Understanding why the horse is too slow and reimagining a decentralised AI-driven automated world without them, is a lot more interesting. Even if Blockbuster would have used a mobile app to reserve DVDs, AI to predict customers ' taste, drones to deliver them and Bitcoin to pay, Netflix would still have bankrupted them. You need to look beyond the rules of your current business if you want to be sure to be relevant tomorrow. New technologies can be very disruptive, very quickly. Disruptors like Elon Musk, blockchain/AI/cloud companies,... think in weeks, months at most. Most companies need to rethink their business today if they want to be relevant in the next few years...