by Andrew White | August 29, 2014 | 3 Comments
I visited a client the other day and they wanted to talk about data lakes. Someone at the client, not at the meeting, had been promoting the concept of a data lake as an answer to question we explored. Before I tell you what happened, let me update you on my “opening” position.
A few weeks ago my colleague Nick Heudecker and I published a note (See The Data Lake Fallacy: All Water and No Substance) on data lakes. The note called out what appeared to be missing from the vendor hype related to data lakes, that being the lack of any sustaining practice (or technology) to help any value persistence from re-use of the data in the lake. There IS value in mining information in a lake. But to assume that the IP and structure used to expose that insight and value persists in the data lake is wrong. A data lake does not persist that. In the jargon, “no information governance, no sustainable or repeatable value”. It seems to be good advice.
Not everyone agrees. Another colleague of mine brought this InfoWorld “review” by a “strategic developer” to my attention – see “Gartner gets the ‘data lake” concept all wrong”. It seems we said that data lakes are not useful, and that somehow a large scale, enterprise wide, wall to wall governance effort is required. Apparently we were also touting proprietary technology. Since we don’t support either perspective (devoid of context, and data lakes is not sufficient in either case) I don’t even feel the need to respond. If there had been a response to the main fallacy we call out, I would have. Truth is, if you don’t maintain any structure in the data you use, how on earth can someone that follows you get a leg up, and avoid repeating your effort? Either way the hype around data lakes continues apace.
So let’s go back to the meeting this week with the client.
This client has several established data warehouses, each with some successful if local information governance supporting analytics. The client had 17 or so data centers, each supporting one of these data warehouses. The business uses these 17 systems a lot and gets value from the data- they rely on what they get from them.
There was one question: can we use a data lake? However we had to drill down to the REAL questions behind what was being asked. There were two real questions/desires:
- Can we reduce IT costs by reducing the number of data centers, and
- Can we increase synergy by supporting shared governance across the silos, as if we had a single, unified layer?
In truth this client wants to consolidate data centers, and quite separately adopt a focused information governance program to sustain common data spanning and connecting the local insights for additional value. As far as I can tell, a data lake plays no role in either question. Yet it was being pushed by a vendor to one of the end users at this client.
The end-user even spotted the fallacy themselves. They asked, “If we used a data lake, don’t we actually take steps backwards, in that we ‘lose’ all those currently silod yet effective IP and governance frameworks?
YES! A data lake by definition has a zero barrier to entry and so supports zero information governance. Any and all data is accepted because it has no need to confirm or relate to the rest of the data that exists in the lake already. If there IS a cost to enter, it is not a data lake. In contrast, a data warehouse or EDW has a higher barrier to entry. So why not go for a balance? In this case the user was right. A data lake would be a step backward. .
So why was data lake being referenced? Perhaps this vendor is selling a form of data warehouse but wanting to use the new silvery bullet-like name. My final recommendation to the client: forget the new names. Identify the real requirement (data center consolidation, and multi-warehouse information governance) and design the target architecture. If you really want a name for it, let’s chat again. But don’t use “data lake” since it does not seem to fit.
Category: Data Lake Enterprise Data Warehouse Information Governance Information Strategy Tags:
by Andrew White | August 29, 2014 | 2 Comments
Only a few months ago the ECB took the decision to reduce the rate it charges banks to ‘park’ funds at the ECB to negative territory. The policy, so the theory goes, was this: if it costs banks money to store their cash, they would rather change behavior and instead loan that spare cash to businesses to help spur the economy. Good theory? Partially.
What the policy fails to take into account is the prevailing deleterious nature of the economic environment as a consequence of politics in Europe. The ECB and many European governments are not aligned and are in fact at odds with other. There are many reasons why banks are nervous to cough up their cash and so increase their own risk. Increased and ill-defined regulation; restrictive employment laws slowing business investment; subsidies to inefficient businesses, pet investments to cronies and a basic structural imbalance between the rich north and the wastrel south that has to be addressed. The economy is in trouble; deflation is a gnats hair away. And yet business investment remains tepid. Why on earth would one banks’ negative interest rates change this?
News today in the US print edition of the Wall Street Journal that several Dutch banks, large depositors with the ECB, simply moved their money to other banks and facilities with positive interest rates. That was simple, wasn’t it. Governments need to be shut down for a while and the free market needs to be freed.
Category: Banking Banking Regulation Economy Euro European Central Bank (ECB) Tags:
by Andrew White | August 28, 2014 | 3 Comments
I had just left home and was driving to the airport for a trip to St Louis, MO and I realized I had forgotten a pair of dress (black) socks. I turned the car around and went back for a pair. I dutifully put them on the passenger seat and resumed my journey.
A couple of hours later I was in a cab on my way to a hotel. It was about 9.40pm. I suddenly remembered the socks. They were still on the passenger seat of my car back in Atlanta!
I checked-in at the hotel and asked if the small store in the lobby sold socks. I was told, ‘yes’. I asked at the little store counter and no, they had sold out of black dress socks. All they had were white socks! Disaster was in the air.
It so happened that a guy was standing close by and overheard my conversation. It turns out he had a spare clean pair of black socks and without hesitating he said I could have them!
I could not believe my luck . Here was a stranger about to save me. I thanked him and I asked if I could buy him a beer. He gladly accepted and we then shook hands and introduced ourselves. He was Shane and his girlfriend Laura. They wen back to their room to get the socks and we met back at the bar.
They were in town for a couple of days and were leaving the next day. They were, would you believe it, air traffic controllers attending a training conference. Funny how I am frequent flyer and these two guys spend their time orchestrating how the planes I live on fly safely around the country. We had a quick chat and it was fun spending a short time with them.
They had only recently become boyfriend/girlfriend, and there was I about to celebrate 20 years of marriage. We exchanged humorous stories of the two different situations. Anyway, the beer was good and the chat was fun. And Shane and Laura saved me in St Louis. Thank you!
Category: Air Traffic Controllers Tags:
by Andrew White | August 27, 2014 | 1 Comment
This week was another one of those blockbuster weeks where articles got my brain teeming with ideas. Some weeks are quite passive, other weeks the editorial team do a great job of inspiring thought and reaction. Here is a rundown of this week’s hot stuff (happened to be sitting on a plan to St. Louis reading it this week).
US Print Edition, The Economist, Aug 23-29th, 2014
China: Literacy, Bad characters. Short article explaining the potential demise, a long shot I feel, of the written Chinese character. With the rise of computers, the number of children that want or need to write Chinese (as in characters), is declining. The article suggests that it takes six years of primary education for children to master the 3,000 characters needed to read a newspaper. My older boy just started his third year of Mandarin Chinese at high school. My second oldest boy just started his first year. I guess between them they can do the crossword puzzle?
Essay: What China Wants. This is a very topical essay. I really encourage you to read it. China is our (the west) Gordian knot. Soon enough China will be the largest economy in the world. On a purchasing parity level is almost is today. The UK once dominated global trade, before the Great War, then after it America did. That shift pushed the UK from a creditor trading nation to a debtor, and the US was the worlds creditor. Now, 2014, the US has long lost its trade creditor status – it has been a debtor since the late ‘60s. China is the new creditor power. The greenback is king today by default, no longer by design. It may need to play well with Juan at some point. And soon. Either way China is a mystery. For a much longer period before the west dominated the global economy, China did. But what are the designs of China, and how will America respond. Should America reach out its hand and help, share power? Or should it push back and try to keep order? This article teases out the main threads of research we should all undertake if we are to survive and thrive in a changing world around us. Read the article and come back here and tell us all what you think.
Baghot: the great game. Why David Cameron, PM, should curry favor with Indian futures through cricket. Cricket is a wonderful game. One endearing characteristic is that it teaches you patience. Even if your opponent loses two quick wickets, the game is far from won. Cricket is a game of reflection. One reads the newspaper during the quieter parts of the (5 day) matches. Cricket is a game of friends. If you watch cricket, you are with friends. If you are on the field, you are with friends. Even the enemy is respected as a human individual with the same goals. If two nations should be ever closer, it should be Britain and India.
Finance and Economics: The foreign exchange markets: Fixed rates. With advanced countries and regions operating at near zero interest rates, there is little to differentiate between currency valuations. The entire FX market, once worth billions, traded on interest rate differentials that heralded the change in valuation of one currency over another. With a near zero interest rate, there is no differential and so the bottom of the FX market has fallen away. In a nutshell, the global money market is in disarray. Another way to look at this is that the term ‘global’ in ‘global trade’ is in the dock. We need competition, we need differential. As it stand a new “gold standard” has been adopted. Only problem is, it’s a lead standard.
Finance and Economics: Calculating European GDP: Changing the scales. I have bogged before (twice in fact) on the recent changes in standards used to measure GDP. GDP is an important measure. So note that absolute numbers change, but growth rates (or lack thereof) have not changed. We are still in the doll drums.
Free Exchange: Revisiting Ricardo: Why globalization is not reducing inequality within developing countries. A very depressing note- we really don’t know why inequality is increasing within several advanced countries, when in fact it is reducing between countries. The article refers to a new theory, but the reality is we just don’t know. It’s 2014, and we just don’t know why. The world is a wonderful many colored thing. And there is more, much more, to learn.
Category: Bretton Woods China Cricket Economy Euro European Union Foreign Exchange Globalization Tags:
by Andrew White | August 26, 2014 | 3 Comments
I was on an inquiry today with an end-user. It went like this:
- “We have an ERP system –its pretty much stable and OK – but the data within it is not really at the level of quality and consistency we need. We thought we needed to adopt MDM.
- “We have new and emerging requests to clean and govern that data, or some of it – along with other data – used and likely to be used by other applications and even our customers
- “We have a Systems integrator advising is “not to worry about MDM” per se, and instead to “do a complete new ERP replacement since newer ERP systems are better at doing MDM”
Really? Um no, that’s not true. That is mixing metaphors. Why use a hammer on a screw?
ERP systems were NEVER, and are NOT NOW, designed to “do MDM”. They might today do a better job of managing their own (application specific) data – but that is NOT the same as MDM. MDM came about due to the need to govern information (for re-use) across multiple applications or processes, whatever they are called. There is a certain overlap or similarity, but the two efforts are quite different. The ERP focus is ERP – so managing data in the ERP system. And MDM focus is not ERP focused – it spans ERP and any other application that published to or consumes from, ERP and any other application. Note that MDM is not “wall to wall” either – whereas ERP was once part of that sales pitch!
I get the feeling the System Integrator was selling this end-user “the old ERP road map of the 1980’s”. This old model would go like this:
- Sells ERP for a large amount of money
- Get to “user acceptance” as fast as possible *
- Get payment and get out of there ASAP
- Go past “go” and get paid again: Get called back, typically 9 months later, for another gig to “help clean up the data and ‘do’ that information governance thing”.
* Software and consulting vendors have little interest in selling you the ideal, up to date, road map for ERP that INCLUDES the needed information governance to include “before ERP, across ERP, and after ERP” since they are trying to sell THAT at a higher price than the original ERP footprint (w/o information governance). They would much rather you come back for more – and keep feeding their bank account. In a fair world, ERP would be CHEAPER, and part of the difference in cost would cover the MDM and information governance part. But that, my friends, is all in the art of the negotiation.
Here’s the kicker: though I refer to ERP, any 3 letter-named application suite counts just as well here – CRM, SRM/Procurement, SCM and so on. Even “application developed” and industry-specific application often works as well.
Category: Application Development Business Applications CRM Customer Data Integration (CDI) ERP SCM SRM/Procurement Tags:
by Andrew White | August 26, 2014 | 2 Comments
In the US print edition of the Financial Times this weekend I read an article looking at the
ECB president, Mario Draghi, calling for increased European government spending and relaxation of austerity and budget rules (see Draghi soften tones on austerity). This aligns with the high spending Italian position, and is diametrically opposed by the fiscally prudent German finance minister Wolfgang Schauble and Bundesbank president Jens Weidmann.
Due to persistent high unemployment and growing danger of deflation, the ECB is signaling that the Euro zone should spend its way out of trouble. Yes, you read that right. As if increased debt on what was a debt driven recession, helps. Yes, there is need for structural changes in Europe (changes in restrictive hiring practices, reduced government subsidies to inefficient industries etc) but that is not the kind of spending the high spending countries engage in (think Greece, Italy, Portugal, and Spain). They would increase funding for pet projects and wasted re building of perfectly good sidewalks.
Worse, this difference of opinion between the ECB and the Bundesbank reflects the real two tiered nature of the Euro zone. Fiscally prudent Germany and the northern bloc do not need or want to inflate spending outside of private sector growth, and want higher interest rates to slow growth factors. Such increased investment would stoke an unbalanced economy and sows seeds of economic pain much later. The southern, Mediterranean and profligate regions don’t care for the private sector as much and assume big government spending can replace it. They seek lower interest rates to help keep money moving towards loans. It is a fundamental difference of opinion in how economies work. It is imbalance that is painted over with a single currency.
The stresses between the two tiered Euro regions continues apace.
Category: Economy Euro Politics Tags:
by Andrew White | August 26, 2014 | 2 Comments
The CEO (Melissa Kieling) of Packit.com was on Squawk Box this morning and it was such an awesome story. This lady was a single mom, with less than $100 cash to hear name. She had struggled, like many of us do, with how to give our kids fresh, healthy good at lunchtime at school. Through experimentation, re using her shower curtain and plastic bags, she came up with a super idea that is simple, easy to use and clean, and is a hit with consumers. It’s a lunch bag that can sit in the freezer overnight – and keep food fresh for up to 10 hours as a result. Revenue last year was over $11M and this year it will be even bigger.
We have not yet tried the product but I get the feeling we shall have to acquire a couple of units to try them out. Demand suggests they are working a treat.
There is hope for us all!
Category: Economic Growth Entrepreneur Tags:
by Andrew White | August 19, 2014 | 3 Comments
More of the story of the failed submitted bank ‘living wills’ leaked out yesterday, on the front page of the US print edition of the Financial Times (see Fed blow to global banks over ‘living wills’). All of the required eleven banks have ‘failed’, according to the Treasury, with the submissions of a living will. Regulators required them to submit a proposal that would help alleviate a repeat of the financial crisis we just experienced. Well it seems the process so far has been almost a fiasco.
It turns out that banks had to make assumptions as a basis for their living will. One assumption followed the behavior of the Fed in opening up a ‘discount window to allow banks to borrow from the Fed at short notice. This active helped stem the tide of the panic that we driven from fear of lack of liquidity (due to an inability to value toxic assets). Without the discount window, no emergency cash flow, no bank operations, kaput.
The regulators are now sayings the banks cannot make that assumption as they are. Not supposed to use public money. Well that’s all well and good but why didn’t the regulator lay out the rules before the pupils sat down and did the test? Seems like the teacher changed the rules after the exam! What a waste of time. Then again, let’s think about this a second….
The goal is to come up with a plan to accommodate a safe break up of a bank that has failed. The circumstances for this failure are likely to be catastrophic. As such, it is hard to predict timing and actual behavior of agents involved in the event. By definition if the failure is catastrophic, how can we predict how the Fed will behave?
The bank’s seems to suggest that some limited Fed support might actually help the wind down of operations more smoothly. This may or may not play out in reality. The actual requirement from the regulator is to wind down a bank “safely” without any safety net from public funds. That seems to be almost impossible and somewhat Herculean.
In the last financial crisis bank’s had assets that no one wanted. As such, they had nothing to borrow against so shore up a run on the bank. Either they failed quickly due to loss of confidence in them, or get money for somewhere so slow the process down. If there is no safety net, and no assets, it’s all over. The Treasury and the banks ought to be collaborating and offering alternatives, in full view of the regulators.
The teacher knows as much, perhaps even less, about how the next crisis will play out. And they don’t even want to be part of the solution…
I first wrote about these bank “living will” failures August 7th: News of the Day: US trade defect mystery; Putin Fix; Dodd-Frank lunacy; Italian recession; F1; and Kabaddi – what more do you want?
Category: Banking Financial Crisis Financial Times Regulation/Compliance Tags:
by Andrew White | August 16, 2014 | 2 Comments
I thought Paul Ryan’s Opinion piece in Saturdays US print edition of the Wall Street Journal (see A better way up from poverty) was quite good. He rightly addresses the negative message implied when certain language is used related to the poor and poverty. The context is those in poverty or less well off and receiving federal transfer payments. The ‘offensive’ term is ‘takers’. The reality is that many of these folks, maybe most, are not ‘takers’ at all. They are normal folks, like you and me, that need a little help from time to time. The real issue is with those among us that get sucked into a dependency culture. Receiving benefits then becomes a norm, a right. These “benefits” even continue even when some begin to earn again. And there even some that are middle class and above that still claim some benefits. That’s probably wrong, in most cases.
Anyway the piece was as much an advertisement for his new book, due out thus next week. So he lays out his general ideas on how Ryan’s Conservatives would bring America forward from where she is today. All very nicely written. But I have two issue with the piece. First, some of his language is too high brow, complex and not meaningful. And second, he didn’t relate the change he offers to me.
First the language. It might seem a nit but I dint understand this point: “The vision also means promoting a foreign policy that rejects relativism and embraces exceptionalism, ensuring our prosperity and security.” I’m not all that dumb and I know what a large number of words mean, but I guess I missed a memo or news clips that would have given me the context for what relativism and exceptionalism means. Why can’t he be more plain and simple? Just say what the layman would understand. There are a few other examples like this sprinkled in the piece.
Second, on making this message relevant. When Margaret Thatcher came to power in Britain she was ousting an over spending, bloated, over bearing left wing government. Her message throughout the campaign used a strong metaphor that allowed the average punter to perceive her relevancy, far more than the suits in Whitehall on the left and right. She talked about being a housewife, and how she had to balance the books, and provide basic things to her children, and when and if they could all enjoy a little self-indulgence. She would talk about responsibility to each other and how she would ‘put back’ into society rather than assume society would give to her. She made her policies real; she made them relevant. Ryan is lacking this. His article, his ideas in it, and possibly his book, are all very good I am sure. But until he and the Republicans can bring the policies down to earth” I fear the worst for 2016.
Category: Paul Ryan Political Poverty Republican Tags:
by Andrew White | August 15, 2014 | 1 Comment
I said some months ago now that income inequality would be a hot topic for the next US general election. I am convinced of this even more. I was amazed to see that Standard & Poor, a rating agency, published a report on the topic. It was titled, “How Increasing Income Inequality is Dampening US Economic Growth, and Possible Ways to Change the Tide.
This is a complex topic that needs some context. First, is income inequality increasing? How is this measure defined? Are the assumptions underpinning that definition valid? Also, what is the cause for any such divergence in income, and is a resolution or reversal of said divergence good? Good for whom? And how would such reversal be achieved?
In a nutshell, here is my analysis:
- Yes income inequality has increased but only recently. There is ample data out there that suggests, in general, it has not increased over the last 30 years. Only in the last 5 has it diverged, slightly. This hog wash about “last 30 years” was recently exposed in Thomas Piketty’s new book – I blogged on the exposure of such fallacy – see The Promise of Piketty (new book: Capital) Doesn’t Hold Up.
- The single largest cause of this recent divergence is Quantitative Easing (QE). The US government, in trying to cope with its own self-inflicted slow-growth policies, has encouraged the Fed to pump so much money into the economy so that rich hedge funds and investors have taken advantage of cheap loans and near free money. I have not taken advantage of this money – and I would guess neither did you. So my income didn’t change. In fact in the last 10 years my position with respect to the population has been unchanged, or slightly fallen! But those that had millions of dollars before QE now have even more. The rest of us have less in comparison.
- Is this widening gap bad? We don’t’ know. There is a related argument that poverty is also increasing, due to the widening gap in income. I don’t accept that on face value. There is ample evidence that what we mean by poverty is not even valid; and that what qualifies in 2014 is very different to what we meant in 1914, even 1954. See my blog on The Tyranny of Numbers: Measurement and Misrule, by Nicholas Eberstadt.
- How do we reduce income inequality? Not sure yet but QE has to stop. However, as interest rates recover, and investors move their money from stocks and bonds into cash, they will reap the rewards more than the less well off, who have less to save. What is needed is strong GDP growth that would create a surplus of the state to increase funding in education and welfare. It seems we are going to do this, but from a Federal perspective (being far removed from those parents, children and teachers involved), without any surplus (i.e. more borrowing). Oh well. Nice try.
Here is one of my recent blogs on the topic of inequality and productivity: The Productivity Puzzle – The One Solution that can Negate the Inequality Issue.
And today, in the US print edition of the Wall Street Journal, there was an Opinion piece reviewing the S&P report, titled, “The supply-side case for government redistribution“, by Alan Binder, a professor of economics and public affairs at Princeton. His article starts off nicely showing how the S&P conclusions are in fact spurious or flat wrong. He then ends the article with some good advice, though based on a false premise that inequality is rising “for the last 30 years” and so is a drag on the economy.
He starts off by demonstrating data that shows how spending patterns for the vast majority of Americans do not in fact differ. The ‘vast majority’ here represent those with family income levels of between $20,000 (near the poverty line) and $200,000 (top 5% of earners). The impact on spend does differ for those at the extremes- below $20,000 and over $200,000. But the majority is not that different in terms of habits. So where is the drag?
Mr. Binder has some great suggestions, oriented on ‘equality opportunity’ as opposed to the fallacious ‘equal outcome’ school. Government should invest in education and welfare, most especially for those that are less well off. Yes, I agree 100%. There is a related issue here- who, federal or local government, is best situated to determine what is needed in each region. But let’s ignore that hot potato.
Lastly, Mr. Binder states, “Inequality has risen so much in the last 35 years that it may now be retarding economic growth on the supply side while leaving us with the finest government money can buy.” No, I don’t believe inequality has risen that much in the last 35 years. Second, poverty in 2014 is a whole better than poverty in 1914, or even 1954 for that matter. Transfer payments to the poor have ballooned and now represent over two thirds of federal spending – see A Nation of Takers. So I do accept his premise, supply side conditions might have an economic drag though this is in spite of all the educational and welfare peddling the federal government has done. Since that spending has not helped, shall we try something different?
Category: Economic Growth Economic Productivity Economy Income Inequality Inequality Quantitative Easing (QE) Transfer Payments Tags: