2022

Digital, Phygital, Fiddlesticks

Digital is a rather abused term that has been round the block a few times, and now we have “Phygital” which is a load of bull..

I was prompted to think about the meaning of “Digital” recently by the unlikely conjunction of two disparate events, viz:

The first is a great step forward for a brand that has up to now been firmly “bricks and mortar”, and the second is apparently something “phygital” with the incursion of technology into actual clothing for reasons.

I get the commercial consumer driven logic of the first, but the second is somewhat more puzzling and perplexing. However, I don’t really care about clothing and fashion so it is a market logic that I would have to work hard to understand, so we’ll see how that business model succeeds over time.

Anyway, it set me thinking about words…

Digital has been around for many years, but “phygital” is a much more recently coined term, attributed to Chris Weil, Chairman of Momentum Worldwide, in 2007 (Thanks, Chris), picking up momentum c.2017. You can look at the frequency of some key technology terms in Google NGram Viewer…

NGram frequency of key technology terms by year

PCs were obviously quite a thing back in 1985 and also gave mainframes a little bump at the same time too. I tried “minicomputer”, but that barely features in this scaling, so apparently was not something that people talked about so much back then. Whilst departmental computing was a big wave of change versus mainframe in the 1970s and 80s, it was only in the business domain and so general awareness and interest was lower, I suppose.

Web and Internet were clearly also big talking points in 2000-ish, and beat down the Microcomputer Revolution in volume. But throughout you can see “Digital” growing steadily until it has actually overtaken what were the leaders, “Web” and “Internet”, with Web taking a sudden down-turn.

Most of the other newer terms like AI, “blockchain” and “metaverse” still bumble around at the bottom of awareness at this scale so not hitting it by the current 2019 end date of the NGrams corpuses. “Fintech” also is a relatively low scorer, even though it has now spawned a constellation of many new digital “<ANYthing>Tech” neologisms, like “InsureTech”, “PropTech”, “FemTech”, “EdTech”, “LegalTech”, “FoodTech”, “AgriTech” and so on). These are also probably more business vertical specific than broad-based so don’t get the volume of attention.

And don’t bother looking for “phygital” which also dribbles along the bottom of the chart if you add it to the query.

Before around 2015, “Digital” used to mean stuff related to computers generally. However, from then onwards it started to acquire jazzy new meanings related to exciting things like customer experience, digital marketing, mobile apps and otherwise being a “Digital” business, and with “digitalisation”, the process of becoming that thing. McKinsey had a go at defining it which you can read at your leisure.

What got lost is that many businesses have been digital for years and that technology rubbed up against the real world in many places, often not so glamorous. Like in manufacturing, supply chain, vending machines, door locks in hotels, the kitchen systems at KFC

To get to grips with this you can draw up a simple gameboard that maps out business typology against its manifestation.

Business classification – Typology vs manifestation

The business typology separates the places (“venues”) where people interact (e.g., actually trade or just get together and interact to do people stuff, like throwing sheep) from the actual trading businesses themselves, i.e., those those that generally exchange some value for some thing or benefit. These can be actual products, services and money but also in the wider context, could be social kudos, environmental benefit or other non-monetary value. For these purposes, broker-type businesses fit in the “trading” slot as they facilitate other peoples’ trading.

By the way, for the bankers reading this, we shall deliberately ignore where the trading transactions (financial, social, emotional, environmental, or otherwise) are cleared and "payments" handled, let's keep things simple for the purpose of this treatise.  

The manifestation dimension separates the real from the non-real. Physical covers what you expect (to be construed according to context as the lawyers say): buildings made of straw, sticks and bricks in locations with actual geographic locations, or cars, or books made of paper. The virtual covers everything that isn’t that, a nicely mutually exclusive definition. So can include virtual assets like photos, videos, software, financial products, and virtual businesses that provide places for people to connect and trade.

You can map out some businesses onto the landscape to see how the Pickup Sticks fall.

Digital business classification – some examples

What you can see (obviously) is that those which fall into the virtual column are heavily technology based (indeed, since we have selected this to exclude ectoplasmic spirit world businesses, wyverns, harpies, vampires, magic wand shops and other virtual manifestations of a more mystical sort). Whilst some of the virtual venues like Facebook support virtual interactions, a virtual platform like Uber facilitates real world transactions between car drivers and their passengers. And Utility Warehouse is a virtual business that loosely speaking brokers people-energy trading.

In this classification, the Metaverse is just another venue, and it could yet be a three-star Michelin restaurant experience or just a greasy spoon, as we shall see. But like the financial exchanges of today, the venues (exchanges) make a dribble of money in comparison with the eye-watering value that flows in the trades they facilitate. It’s largely what you do that makes the money, rather than where you do it (whether you have Meta-legs or not…).

The caveat to that is that a business with a captive supply base, and monopolistic channel control, like the Apple App store, can make shed-loads of money at its 30% transaction tax. Similarly, Facebook as a venue makes lots of money by selling access to its users for advertisers compared to the unfathomable value of the social interactions that take place upon it.

The key point here is that the businesses in the right-hand Physical columns also use technology, and often extensively, although not so visible to the untuned eye. Even the Louth Livestock Market, a very physical place with real farm animals and open outcry selling round the ring, also has a website and online auction trading. In other words, they are Digital businesses too.

So Digital is embedded in both Physical and Virtual manifestations and forms a solid and critical substrate on which almost all businesses run today. Like a seam of gold running through quartz…

Digital substrate embedded in most businesses

What does a “Digital” business actually look like these days? Well, it would undoubtedly include, internally, solid chunks of systems for Customer, Product & Operations and Performance & Control, and externally, multiple channels, non-linear supply chains and the like. But that is is a story for another day,

We used to see businesses sprout silo’d business units separate from the mainstream and built on electronic channels (oh yes, Digital channels) back in the early 2000s. This is less xenogenesis to birth something new and quite unlike its parent, than it is temporary firewalling to incubate a new way of doing things in the same business. Consequently, these offshoots have long been absorbed back into mainstream business models as they matured.

Many businesses have been omni-channel for years; it is no longer a rocket scientist level insight to suggest that, for example, you should have common stock management between an online store and physical shop, for example. However, the wave of the reworked “Digital” businesses in the last 5-7 years regurgitated the concept as something new, when indeed it is not.

The upshot of all this above this is that the newer Virtual businesses were called Digital by their over-enthusiastic and imprecise evangelists in thrall to a form of cognitive bias and so Virtual has been confused with Digital. This created the misbegotten conflation of two terms to describe an omni-channel experience across Physical and Virtual.

So we got “Phygital”. However, Digital embraces Virtual and Physical, so “Phygital” should really be “Phyrtual”, or “Virtical” or someother bull.

Digital is perfectly good…we don’t need Phygital, let it wither and die, like the eCommerce business units of old

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30 Year Affair with Pen Computing

I’ve had a 30-year affair with pen computing technology, although good handwriting recognition has always eluded me. And now another generation of device comes along to tempt me…

I have always had a keen interest in pen computing (or even a passion, perhaps, in the modern way), all the way from the heady days of the first release of Windows for Pen Computing, 30 years ago. I’ve indulged myself over the years with various devices and the timeline looks like this…

30 years of my life in pen computing devices

You can see some patterns in the evolution of the technology across the years, with the pace of new device availability increasing in the past 5 or so years:

  • the long development of Windows PC-based pen technology, from the first steps with the TriGem Pen386SX designed by Eden Group, through XP Tablet edition, to Windows 10 / 11, which actually mostly works as an integrated experience
  • a cluster of “write-only” pen devices, the “write-only” characteristic making them mostly rubbish, although the Anoto-paper version of Filofax that came with the Nokia SU-1B was a lovely bit of leather
  • some pen-enabled screens which offer the joy of scribbling on a virtual Whiteboard or shared PowerPoint whilst on a Teams call at my desk
  • various Android tablets and E-Ink e-reader crossovers, always rather disappointing that they don’t do either job very well
  • the nirvana of dedicated writing tablets, exemplified by the Remarkable Tablet and the now discontinued Sony Digital Paper

I actually visited Eden Group in their chapel in Rainow, Cheshire, back in ’92 and developed a small Visual Basic demo app (a doctor’s Ward Round) for their pen computer, which looked like this (courtesy of an archived edition of Byte Magazine):

Eden Group designed TriGem Pen386SX

It was pretty slow compared to modern standards with its mighty 20MHz Intel 386SX processor, 4MB of RAM and 4MB of flash memory, and some PCMCIA slots (hands up who remembers those), but it did work and ran the demo which looked cool (of course).

The thing that has always eluded me, however, is fulfillment of the promise of scrawling great thoughts with my pen; then having that transcribed into a perfect machine-readable digital rendering that you can then also file and search in some useful way.

The path to that destination has been rocky and unsatisfying. For example, the Nokia SU-1B had a transcription service that came with it. It was very poor: you wrote notes in the leather Filofax diary and the software turned those into complete garbage that it carefully wrote into the corresponding slots in your Outlook calendar. So sad.

Even the Remarkable, which is indeed remarkable, does a pretty average job of transcribing my handwriting. Although it is probably more of a case of “no, it’s not you, it’s me” due to my outstandingly bad calligraphy and poor penmanship. They tried to make me write better at school with handwriting lessons and a big fountain pen, but all to no avail, as it still looks like this…

The Remarkable makes a fist of transcribing that and comes out with this pithy screed…

Here is an example of my herd wily converted to hold the Remarkable tablet is vey goal as a paper replaced but is defeated my hard way when it comes to conversion to tend

As transcribed by Remarkable

To add some spice as I am writing this post, and as always to learn something new, I briefly tested the accuracy of some transcription systems using my handwriting sample, measuring the Word Error Rate (using Amberscript). The results are not encouraging…

SystemWord Error Rate (%)
Google Lens24%
Windows 11 / Office26%
Remarkable Tablet30%
Pen to Print (Android App)36%
Transkribus Lite (“Where AI meets historical documents“)76%
Handwriting Transcription Word Error Rates (WER) by system

Whilst Microsoft and Google managed to get about 75% of the words right and with Remarkable coming in third, the other solutions are just worse. So, for me, automated handwriting transcription is largely a pipedream.

In fact, by far the best system ever for recognizing my handwriting is Roger Hill V1.0. Over the years, Roger has painstakingly transcribed my rocket surgeon chicken scratch to create great looking PowerPoint pages, with a WER of probably 1%!

This is Roger, from his LinkedIn profile picture which has not updated since about 1997, I think…Kudos, Roger!

Roger Hill V1.0 – the best handwriting transcription system in the world

And so, now, to a taster of the new generation of colour e-reader/pen devices, the one in my hand is the Boox Nova Air C. The idea of a colour eReader / handwriting device is a major move on from the previous generation of monochrome renderings.

Obviously, you can get colour handwriting and drawing on a mainstream Android tablet like the Samsung Galaxy Tab, but the screen is too smooth and slippery and so the writing/drawing experience is not good. The Boox Nova Air C, like the other devices from the same maker combines a Wacom stylus, an Android 11 system and a Kaleido Plus colour screen (actually the colour is a layer on top of the monochrome eInk).

Boox Nova Air C

Sadly, the rather pastel colours are just underwhelming and really seem just a gimmick. Also, whilst the primary handwriting optimized apps give a good experience, the standard Android apps (like Office, etc.) have very laggy response to the pen which is not usable, and video is not a good idea on eInk. It could replace my Kindle Oasis that is losing its battery life, but it would not replace either the Remarkable or the Samsung Galaxy Tab.

Roll on Remarkable 3?

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SaaS deployment creates cloudy cost conundrum

Technology cost optimisation has never been easy, but now there are devils lurking in the decisions driven by SaaS deployments…

Back in the day, the traditional layered structure was one of the organising principles for IT architecture, and was probably alright in the 90s…

Traditional layered information technology architecture

That manifested in an IT application and hosting infrastructure mirroring the layering with data centres full of servers to host the apps and a veritable throng of IT Operations people to run it all…

How Enterprise IT used to look

In terms of cost optimisation, a key strategic enterprise consideration was in the tension between vertical specialization and horizontal standardization and cost consolidation, with some simple tradeoffs…

Old view of technology architecture and cost tradeoffs – a simple dilemma of horizontal and vertical

In this simple world, the dilemma was whether you allow business units have their heads and anything they want in the application space or standardize and consolidate applications and infrastructure to get the volume and standardisation benefits. Of course, the decision varied depending on the application types. For example, driving between specialised customer facing apps where the business might be beholden to the requirements needed to deliver best customer experience and competitive advantage. Contrasting with the back-office applications where there is no sense every business unit having a different finance or HR system; that complexity just creates non-value-adding cost, so standardization wins out. The “tin & iron” infrastructure was simple too, as it all ran in the company’s data-centres or perhaps in more exotic cases, in outsourced supplier’s locations.

So a simple life, with easy decisions…yeah…

But then SaaS came along and just busted out of the joint, breaking up the simple layered model and disturbing the simple inward-looking contemplations of the various decisions IT…

SaaS busts out!

The consequence of the bust-out is a substantive reshaping of the enterprise technology landscape for many companies – turning the old layers sideways and abolishing some treasured assumptions. In doing so also the new enduring technology organisations that run that new shape (should) also get smaller since they no longer need to have the people to manage the “tin” (and, for those following the story above, the “iron”)…

SaaS “hollows out” traditional Enterprise technology environment

The “hollowing-out” of the traditional IT infrastructure with separate SaaS services fragments the overall technology cost base, for example, by the separation and vertical integration of hosting costs into the individual SaaS towers. This pushes against some of more traditional levers of infrastructure standardization and creates some new tradeoffs to consider.

Architecturally speaking, under the covers, the actual composition of the SaaS towers is a heterogenous mixture of parts, albeit with some dominant patterns of deployment. SaaS vendors may host their own services, but often enough, they will use commodity IaaS cloud services, e.g., Genesys Cloud and Workday both run on AWS, as does Salesforce which also has self-hosted services. Equally in reverse, Microsoft who do host their own SaaS services, offer an on-premise Office Online Server for those organisations who need to embrace the data themselves, maybe for data residency/sovereignty/security reasons, but also want the reflection of Microsoft 365 online services in their lives.

This admixture of potential solutions creates a trilemma with many more tradeoffs to balance between the different dimensions of the service and cost optimization equation, thus…

Technology architecture and cost tradeoffs – the new trilemma

So, it is a multi-dimensional problem to consider with the application architecture decisions having a considerable impact on the TCO of the resulting technology environment. Compared to the simple days of moving lots of ancient “tin” (and, of course, “iron”) to a shiny virtualized cloud infrastructure, moving to cloud (whether SaaS or IaaS/PaaS) is not these days a slam dunk guarantee of optimal costs; it depends very much on the transformation journey and where you are coming from and heading to, and how tightly managed that new place is.

To be sure, moving from a on-premises landscape with, for example, a multitudinous miscellany of disparate finance systems to a harmonised online SaaS ERP system, should generate some operational cost savings, as well as business benefits from process standardisation and shared services. There may or may not be associated benefits in the hosting infrastructure depending on the existing level of consolidation and virtualisation of the physical assets and support services. On a like for like basis, whilst the internal IT Operations labour costs should go down, it is possible for the (non-transparent) embedded hardware and related costs to go up. So you still need to “follow the money” by looking at the wider TCO benefits or disbenefits as well as just getting excited about the shiny new toys.

Sourcing the right solution, both software and implementation partner together, is crucial with a guiding commercial-technical design considering the target operating model, business and technology architecture, commercial and TCO levers, and beyond that potential for business operating model transformation to deliver the goods

Beware the devils…


Footnote

In furtherance of technology understanding, I used the DALL-E AI to generate the featured image at the head of this post. Here are some of the other ideas it came up with…

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Non-linear what?

It is fashionable to concoct phrases to create neologisms to try and make other people think the neologisers are somehow just so much smarter. Sometimes the new terms created are actually meaningful and sometimes just Deepak Chopra-style nonsense B*S. Non-linearity is one of those sort of tag phrases that has been dragged kicking and screaming out of the world of mathematics and physics with mixed results.

Non-linearity has a sort of smart feel about it, linear = simple, straight-forward and actually only quite a small part of the universe; non-linear is quirky, eccentric, and a bit edgy, and pretty well most of the universe.

You can google for quite a few things that you might expect to be non-linear, like…

  • “non-linear algebra”
  • “non-linear dynamics”
  • “non-linear control theory”

…and a whole lot more things that you wouldn’t necessarily…

  • “non-linear thinking”
  • “non-linear innovation”
  • “non-linear people”
  • “non-linear social network”
  • “non-linear politics”
  • “non-linear justice”
  • “non-linear economy”
  • “non-linear clothes”

Apparently non-linearity is a thing in physical architecture now…

The so-called nonlinear architectural design is the thing that using the essence of architectural complex as a starting point we get multiple factors affecting buildings through analyzing, which we organize through the parametric model by reasonable logic in designing, and finally use the computer to create complex forms according with the requirement of architectural complexity.

The Realization of Nonlinear Architectural on the Parametric Model – MinWu, Zhiliang Ma, 2012

No, I don’t know what it means either: apparently part of the architectural process these days is to take photos of stuff or maybe existing artwork, stick that in Photoshop and trace out something that then looks like a Dali-esque bad dream or a bad acid trip.

You can see it in buildings like the Bella Sky Hotel in Copenhagen, which is quite dramatic

Bella Sky Hotel, Copenhagen
lglazier618, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons

In the Bella Sky, there is some distinct sacrifice of function subordinated to fashion in the large amount of steel that you have to walk around in the rooms. It is however very democratically configured in diagonal form, so anybody of any height can bash their brains out…

Bella Sky hotel room – with metal stanchions…
Just as an aside, the restaurant "Basalt" in the Bella Sky is a total hipster joint, offering "food from the bonfire", basically a small selection of hard nodular charred black vegetables, with a bit of sooty meat and some flavoured smoke 🤯

Back to something more like the real world of the supply chain, the old-world view is that of the linear supply chain like this…

Linear Supply Chain

However, that has been tagged by non-linearity, if you google “non-linear supply chain”, with the most obvious examples being current visualizations of the circular economy where the Worm Ouroboros eats its own tail with recycling.

Circular Supply Chain

Deloitte made a rather gruesome rendering of the future state in their “Supply Chains and Value Webs” story where the world ends up as an entropic collection of blobs in a bunch of value webs, which looks a bit like this…

Supply Chain Mesh
Consultants are often very good at come up with ideas that so hi'falutin' and analytically dense that they cannot be handled by mere mortals.  A world built of that value web complexity obviously needs a load of consultants to help make sense of it.  
Also on the topic of complexity, I recall seeing once an IT systems architectural concept of "white spaces" which manifested as a spreadsheet that mapped out the intersections between different systems, but was ultimately a very sparse matrix, of guess what, mostly interstitial white space, which didn't really do anything to simplify the situation
“White Spaces” – more gaps than glue…

From an engineering perspective and also for the sanity of us mere mortals, the sort of tangled mesh represented by “value webs” is not sustainable and a more rational structure is essential. So you have to draw the threads together and create some level of coordination and organising principle which supports the non-linear structure but glues it all together, thus…

Non-linear Supply Chain

These are the types of “non-linear supply chain” model that are currently tagged with “Digital Supply Chain” or “Industry 4.0” monikers to freshen them up and make them seem modern. However, there is nothing new under the sun, of course, and these are actually retreads of ideas from 2000 and behind (e.g., from the CPFR concept of the 90s). (I have a slide on this topic I used in 2001)

In software terms, and back to the start of this story, that structure with the central “digital eco-system” might be classed as a “non-linear software architecture”, oddly enough when I googled that term I came up with no results at all!

“Non-linear Software Architecture” was there none…

So maybe I can claim to have coined that term myself? Whichever way, when people start talking about “non-linear software architecture”, remember you heard it here first!

Non-linear what? Read More »