Data, and more specifically data usage, is not a new concept, but it remains elusive. It comes with terms like “the Internet of Things” (IoT) and “the cloud,” and no matter how often they are explained, smart people can still get confused. And then there is the amount of information available and the speed with which it arrives. Software is ubiquitous. It’s in coffee makers and watches, collecting data every second. The question is how to take all the new technology and leverage the potential insights and analytics. It’s not a small question.
“Understanding what digital transformation is can be difficult,” says Abel Sánchez. But as executive director and director of research at the MIT Geospatial Data Center, that’s exactly what he does with his work helping industries and executives change their operations to make sense of their data and use it to improve their bottom lines.
Managing the rhythm
Data can lead to better business decisions. This is not a new or surprising idea, but as Sánchez says, people still tend to work based on intuition. Part of the problem is that they don’t know what to do with the available data, and there is usually a lot of data available. Part of that problem is that so much information is produced from so many sources. As soon as a person wakes up and turns on their phone or starts their car, the software runs. It’s coming fast, but because it’s also complex, it “overwhelms people,” she says.
As an example with Uber, once a person clicks on the app to take a ride, predictive models start firing at a rate of 1 million per second. All this in order to optimize the trip, taking into account factors such as school schedules, road conditions, traffic and driver availability. It’s useful for the task, but it’s something “no human being would be able to do,” he says.
The solution requires a few components. One is a new way of storing data. In the past, the classic approach was to create the “perfect library,” which was too structured. The answer to this was to create a “data lake,” where all the information would come in and somehow people would make sense of it. “This also failed,” says Sánchez.
Data storage needs to be redesigned, and a key element is greater accessibility. In most corporations, only 10 to 20 percent of employees have the access and technical skills to work with data. The rest have to go through a centralized resource and get into a queue, an inefficient system. The goal, Sánchez says, is to democratize information by moving to a modern stack, which would convert what he calls “inactive data” into “active data.” The result? Better decisions could be made.
The first big step that companies must take is the willingness to make the change. It is partly an investment of money, but it is also a change of attitude. Corporations can have an ingrained culture where things have always been done a certain way and are reluctant to deviate from it because it is different. But when it comes to data, a new approach is needed. Managing and curating information can no longer be in the hands of a single person with institutional memory. It’s not possible. It is also not practical because companies are losing efficiency and productivity, because with technology, “what used to take years can now be done in days,” says Sánchez.
the new player
The above exemplifies what data coordination across four intertwined components has entailed: IoT, ai, cloud, and security. The first two create the information, which is then stored in the cloud, but it is all in vain without strong security. But a relative newcomer has entered the scene. It is blockchain technology, a term that is often bandied about but not yet fully understood, further adding to the confusion.
Sánchez says that information has been managed and organized in a certain way with the World Wide Web. Blockchain is an opportunity to be more agile and productive by offering the possibility of having an accepted identity, currency and logic that works on a global scale. The obstacle has always been that there has never been any agreement on those three components on a global scale. It leads to people being left out, inefficiency and loss of business.
An example, says Sánchez, of the potential of blockchain is hospitals. In the United States, they are private and it is necessary to constantly integrate information from doctors, insurance companies, laboratories, government regulators and pharmaceutical companies. It leads to repeated steps to do something as simple as recognizing a patient’s identity, which often cannot be agreed upon. With blockchain, these various entities can create a consortium using open source code with no barriers to access, and could quickly and easily identify a patient because they established an agreement and thereby “eliminate that level of effort.” It is an incremental step, but one that can be used to reduce costs and risks.
Another example – “one of the best examples,” says Sánchez – is what was done in Indonesia. Most of the rice, corn and wheat that comes from this area is produced on small farms. It is costly for those granting loans to understand the risk of farming these parcels of land. Compounding this, these farmers have no state-issued identities or credit histories, so “they don’t exist in the modern economic sense,” he says. They don’t have access to loans and banks are losing good potential customers.
With this project, blockchain allowed local people to collect information about farms on their smartphones. Banks could acquire the information and compensate people with tokens, thus incentivizing work. The bank would see the creditworthiness of the farms and the farmers could end up getting fair loans.
In the end, it creates a beneficial circle for banks, farmers and the community, but it also represents what can be done with digital transformation by allowing companies to optimize their processes, make better decisions and ultimately make profits.
“It’s a tremendous new platform,” says Sánchez. “This is the promise.”