Fall 2013: The New Digital Dawn

By Barbara Elmore

The leader of a business considering a journey into the unsettled world of cloud computing could take a lesson from a pilot. Those who fly rely on flight dispatchers to help them avoid turbulence. That’s because the dispatcher’s vantage point, equipment and training provide a vision the pilot lacks.

Silly comparison?

Only if the CEO has already had a conversation about employees using Dropbox on mobile devices. And only if top leaders know what a “deemed export” is and realize that the business could be fined $1 million for sending it somewhere it should not have gone. In fact, the most important things to know about cloud computing are things that most users do NOT know.

Almost anyone who uses a computer has used “the cloud” and almost all users would agree that cloud computing is not only efficient and necessary, it also can be simple and safe. Just like a pilot, however, businesses sometimes require guidance.

In simplest terms, cloud computing involves the storage of data and/or operation of software on servers that are not at your physical location and can be accessed over the Internet.
For example, said Baylor law and business professor David Henry, “This can involve all my files and software, where the servers may be in Dallas, while I am in Waco.” Henry, himself a pilot, is a patent attorney who lives in Waco but works worldwide. His arrangement is a simple one, and this kind of computing is not a problem for most businesses.

Bigger issues arise when the servers are in another country, or workers use a service like Google Drive to share company documents — and no one knows that they are doing it or what the risks are. This is something the IT department should be managing, said John Tripp, an assistant professor who teaches a Baylor Management Information Systems course that all business majors must take.

“The great benefit of the cloud is that as soon as a business identifies a need, and a corresponding cloud service that can address it, the company can bring the service in – without the need to establish infrastructure, train internal staff, and install and configure the technology locally,” Tripp said. However, many IT departments are so focused on keeping day-to-day operations running that they are unable to respond quickly to the business’s needs. This leads business users to take matters into their own hands, and the IT department may be unaware that confidential information is being shared in the cloud.

There’s also a body of law about what technologies can be shared legally in the cloud. Henry, who teaches patent and trademark law and integrates intellectual property subjects into courses at Baylor’s Hankamer School of Business, said he deals with many companies whose executives are stunned when they discover how easily they could violate U.S. export control laws. These laws govern the exporting of certain items and technology — including through so-called “deemed exports” — that involve merely sharing controlled technology with a U.S.-based employee who happens to be of foreign citizenship.

Business executives might discount the risks because they do not export any goods and have no intent to commit a crime. “They think that as long as they are not sending things out for sale, they are not exporting,” said Henry.

They would be wrong. Henry offered, in addition to the example of deemed exports, that of the business that stores information and data considered export-controlled technology in a cloud computing system with servers outside the United States. “Even sophisticated companies are often completely unaware of U.S. export control laws in many contexts,” Henry said. “In my experience, a minority of companies are fully aware of laws, the scope of controlled technologies, and the applicability of export control laws to things like mere data.” The result of running afoul of the laws, even unintentionally, can include sanctions and huge fines. Businesses can and do use cloud computing legally and ethically, however. Lawyers, for example, now file court documents electronically that used to be hand-delivered. Tripp uses cloud-based reference management for his writing, and cloud-based telecommunications to make conference calls with his research co-authors. Businesses and organizations use cloud-based computing to back up computers and store large documents for easy employee sharing.

But with intellectual property providing most of a business’s value, thinking through certain issues regarding how computers and other devices are used can help protect business practitioners and their employees.

Here are ideas for safeguarding information and avoiding legal pitfalls:

1. Store sensitive data onsite. This data can be anything from controlled technology to confidential client information to intellectual property.

2. Ensure that someone who understands the technology and terminology thoroughly reviews the provider’s terms of use to make sure the service conforms to a business’s ethical standards. Remember that some cloud services host data farms outside the United States, meaning that merely storing information on such systems may amount to a prohibited export, and that some terms of service allow the provider to divulge anything stored on the provider’s server if the provider is served with a subpoena.

3. Train employees about the services they can use on mobile devices and home computers. “In many corporations, the use of the cloud is not visible to the people tasked with ensuring content security,” Tripp said. “When anyone in your network can install Dropbox or Google Drive and start sharing files with anyone in the world, the enterprise can be caught out of compliance pretty quickly.”

4. Use the skills of your IT department. While cloud services are easy to use, usually without IT assistance, these departments are often full of visionary people who can advance business operations if given a chance, said Tripp.

5. Understand that intellectual property often represents the majority of the value of the business and don’t put it at risk. “Unlike Baylor, most business schools barely touch on the topic,” Henry said. “Lawyers and business people are often aghast at how IP laws work when compared with widespread and starkly differing beliefs.” Tripp noted that future cloud computing will enable companies to purchase IT infrastructure the same way they now pay for electricity. “In other words, metered for, and charged by use.” While this will decrease the need for internal IT staff to keep day-to-day operations running, it will increase the need for IT departments to function as advisers and coordinators that utilize a collage of cloud services to build and enable new business value. “The cloud is here to stay. Training users as to the proper use of these tools will go further than trying to put a finger in every hole in the enterprise data dam. At some point, you run out of fingers.”

Baylor Business Review, Fall 2013

By Barbara Elmore

Imagine a globe chock full of mobile devices, where almost everyone is connected to home, or work, or a leisure pursuit, no matter the place or the time of day. Millions of fingers glide silently over small screens. Occasionally, thumbs take over, tapping out a silent message using a language developed only recently.

There’s really no need to imagine; that scene appears minute-by-minute in the heart of the developed world and even in not-so-developed countries. Mobile devices wake us up and put us to sleep — and we rely on them for almost everything we do in between. GSMA, a worldwide association of mobile operators, says that almost half of the 7.1 billion people in the world use some kind of mobile device. By the time you read this, devices may outnumber people. That’s because some people own as many devices as they have ears or pockets.

That our devices are used in transformational ways by business is not new, either. What is new, and what may continue to astonish us, is the innovative ways people are harnessing mobile devices to suit their needs. Marketing professor Dr. Jeff Tanner puts it this way: “What’s more likely to loom on the horizon is not more technology, but the human capital to leverage technology.”

Baylor educates many of those leveraging technology. Students from the university’s Management Information Systems program have been recruited by business and industry, and also by the government when it needed professionals who could analyze massive data sets. “People who know how to analyze both structured and unstructured data to develop actionable business insight — that’s a really hot skill set,” says Dr. Tim Kayworth, chair of Information Systems. In fact, he says, the need is great for people who understand the role of information technology and how to apply it creatively to transform business processes and create new ways of connecting with customers. “Melding technical and business skills together is a very good combination,” he says.

All universities, including Baylor, need to be thinking even more about business education that turns out people who understand statistics, research and experimental design, Tanner says. “In the last couple of years, 180,000 marketing jobs were created to use Facebook as a marketing channel,” he notes. “Those people have got to understand big data and analytics. It’s a tremendous opportunity, but it’s going to make the quantitative part of business more important.”

Getting value out of Big Data

Tanner and others working in the areas of business research and business education provide strong examples of how to leverage technology. He is among those using technology to investigate how customers use technology, and conveying what he learns back to the business. The analysis can eventually transform the ways businesses connect with their customers and vice versa.

Tanner works with a “collaboratory,” a lab that’s part of the Baylor Research and Innovation Collaborative. The collaboratory includes business partners like Teradata Corp., a provider of a data warehouse that makes statistical analysis possible. Other partners include customer behavior expert iSIGN Media Solutions Inc. and Cabela’s, a store that specializes in outdoor gear.

Data analysis can yield what Tanner describes as “actionable research.” This is the kind of investigation that “addresses important academic questions and yields outcomes that companies can convert into revenue streams,” says Tanner. With Cabela’s, Tanner experiments with the integration of web browsing data into existing customer transactions. “This closes the loop from marketing activities to the sale so that you can improve your sales activity”

New technologies allow merchants to use their own or third-party data to market to customers through different sources: a store catalog, online browsing, call-center marketing or in-store transactions. Cabela’s can also use hunting and fishing license data. An automobile dealer could use data from state license tags. Other businesses might integrate data from sources likes the professional network LinkedIn.

In Tanner’s new book titled Dynamic Customer Strategy: Big Profit from Big Data, expected this fall, he includes a model that shows the processes of discovery, exploration and operation. He illustrates the model with research on products that went into a customer’s shopping cart first during Cabela’s Black Friday and Cyber Monday sales. “If items went into the shopping cart first, you had a chance of closing that transaction. We created offers around this product and compared that to standard offers. We were able to increase revenues substantially, but more importantly, we were able to increase margin. So we took the models and we are now back into the discovery phase. This allows companies to get the value out of big data.”

A ‘bring-your-own’ trend

The number of mobile devices on the market can overwhelm even those whose business is knowing about devices. But allowing individuals to bring their own devices to work is a growing movement that some say can encourage productivity.

Dr. Hope Koch and Lt. Col. Pat Curry, a doctoral student, are studying how the proliferation of devices like iPads and tablets affects business operations. The trend is called IT consumerization or BYOD, an acronym for “bring your own device,” and it started a few years ago with the popularity of iPads and iPhones.

The bring-your-own trend goes against the current of networked offices, where workers have a PC on their desks at work and perhaps another computer at home. The IT department provides the work computers and dictates the software. If someone needs to work after 5, he toils at the computer on his desk.

Now, however, tablets and other mobile devices spring up often at ballgames and in doctors’ offices, affording people the ability to work, play, and run personal errands simultaneously.

Good reasons exist for this less-structured work environment, says Koch:

• Most employees want to do a good job. Those who have a big workload and use their own devices believe they work faster and better. Recent research released by cloud company Citrix indicates some businesses agree. Eighteen percent of small businesses in the United States, Canada and Australia are achieving productivity gains of more than 30 percent “by adopting mobile workstyles, enabling people to work whenever, wherever and however they choose.”
• Mobile devices give workers autonomy. “Having the iPhone lets them move around a bit more and they can do their work when they want to,” Koch notes.
• Autonomy influences productivity. Koch uses an example of a pharmaceutical salesperson that might be able to catch a doctor for a beneficial conversation while walking down a corridor. “If the salesperson is dragging a laptop, the odds of him catching the doctor are not so great. An iPad allows you do to that more easily.”
• Mobile devices contribute to innovation by encouraging employees to find new ways to do their jobs. Koch notes that a hospital has made standard practice taking pictures of wounds before they are bandaged. This occurred after a nurse used this practice — taking a photo with her cellphone — to avoid having to unwrap a wound so the doctor, who had not seen it, could examine it.
• Some businesses can more easily retain their younger workers who are allowed to use their own devices. This is an employee satisfaction benefit because many younger people are happier using their own technology.

Koch and Curry are conducting research with professionals at major companies and have found that an integral part of bringing devices to work is the applications that come with them. That’s because BYOD is about more than devices. “It’s more like BYOD + A — it’s also about applications that can create issues with the government, for example. Information can’t be stored in a place where IT does not know what the vendor is going to do with that information.” And if the organization is highly regulated, like healthcare, government or financial services, they have a more authoritarian structure and using outside devices and outside applications is not allowed, Koch says.

But major corporations that only recently forbade personal devices or confiscated those brought to work are encouraging them now. “The challenge for the IT department is managing all of this, and that’s what Lt. Col. Curry is studying,” Koch says.

Attacks complex, but consistent

Although protecting a business run by mobile devices can be more complex, attacks remain consistent in their content, says Dr. Randal Vaughn, an Internet security veteran who has worked in private business and the military and teaches classes in cyber warfare. “Every now and then you see a new wrinkle — someone comes up with a clever way of attacking.”

He believes individual devices require individual responsibility, with each employee acting more carefully when using technology, asking himself whether he really needs another application on his device.

Mobile devices are easier to lose than a desktop computer, and thus can more easily contribute to information “leakage,” he notes. For example, an email could contain sensitive information, and the email might be on a phone that someone loses. “People take mobile devices with them all over the place. They are much easier to lose, and data in those devices is more vulnerable.” That makes them subject to different attacks than a PC, which is more prone to viruses.

Also, he notes, mobile devices are preloaded with vulnerabilities that may actually be “pulled in” by the manufacturer. “You have to trust your vendors,” he cautions.

One of the biggest new criminal attacks that concerns Vaughn is “spear phishing,” the name of a scam directed to the “C-level officers” of a company — like the CEO or the COO. In this scheme, attempts to compromise information arrive in email with a lure to a specific individual. The email tries to get the executive to act without thinking and click on an attachment. The goal usually is to access financials.

Even a small businessperson who is a very good user can be drawn in, Vaughn says. “And then they can install a low-tech infection like software that can read keystrokes.” This can capture credentials that are used for a bank account, monitoring when a person begins using his computer and when he connects to his bank. The criminal can add transactions while the bank account’s owner is making them.

This kind of crime hits individuals from small business owners to people who manage investment accounts online. “Those types of theft do not get published very much, but it doesn’t mean they are not happening.”

More sophistication, new policies

Generally, however, newer devices are easy to use, and we have all become a bit more sophisticated. “We have all developed a lot more skill, and we are seeing a little more savvy about what’s going on,” Vaughn says. “The question is always, ‘How do we know we are doing any good?’ There is no satisfactory answer, just long-term observation. We see students who have gone out and come back after 20 years, and have made leaps and bounds with the little bit of information we give them.”

Securing business information is a matter of education, he says. “You want to motivate your employees to use good hygienic practices with data, like taking care with personally identifiable information.” Protecting data and information, protecting customers and safeguarding business assets should be a corporate value, he says. Talking to employees about this is a matter of leadership.

And sometimes, new policies come into being to protect the organization legally. Companies can get in trouble, for example, if they fire an hourly employee who has been working on her own device and claims she is owed for hours of back pay. “Legal and HR departments are on top of these practices and are putting policies in place,” Koch says. “Often, non-exempt (hourly) employees cannot use their own devices. Or if an hourly employee does use one and works after hours, he has to get paid for it.” This means businesses must develop systems so they will know when their employees are working, even when the work is out of the office.

For businesses that want their employees connected, Vaughn offers basic advice that most parents give their children: Minimize exposure to potential threats. “We keep an eye out for bad people when we’re shopping. We look both ways when crossing the street. We don’t react quickly — we stop for a second. We don’t jump into things.”

He mentioned a bumper sticker that urges “Stop. Think. Connect.” put out by an organization of the same name (stopthinkconnect.org). “It just says stop and think before you connect. That’s good advice.”

Baylor Business Review, Fall 2013

by Beth Schultz

Big data and big company seems an obvious pairing — I mean, if large enterprises don’t have lots of data on their hands, and all different sorts of it, then what type of organization does? But big data, we know, doesn’t add up to big-data analytics.

In fact, when business analytics author Tom Davenport sat down early this year and contemplated research he intended on big data’s use within big companies, he wasn’t even sure he could easily find 20 or so companies that had big-data initiatives. But, as evidenced in “Big Data in Big Companies,” a May report he co-authored with Jill Dyche, vice president of best-practices at SAS, he did. For that report, he and Dyche interviewed 20 large organizations about how big-data played into their corporate data and analytics environments.

I met with Davenport for a one-on-one conversation just prior to the report’s publication. He recounted being “pleasantly surprised” about the level of big-data activity within big companies and said that he was “impressed by the commitment and investment levels” that he’d uncovered.

Yes, he admitted, some companies are still only dabbling in big-data. “But it’s quite striking to see those who are into [it] and how committed they are to make it happen.”

For big companies, “making big data happen” is, make no mistake about it, a big endeavor. Anybody who has ever grappled with integrating new technology and a legacy environment will no doubt know the type of big I’m talking about — big technology challenges, big egos, big budgets. Yet, Davenport and Dyche said in the report, big companies are well aware of the importance of integrating big data and big-data analytics with traditional data and traditional analytics.

“Overall, we found the expected co-existence; in not a single one of these large organizations was big data being managed separately from other types of data and analytics,” they wrote. The opportunities awaiting in the ability to garner insight and move decision making by combining the new (“voice or text or log files or images or video”) with the old are simply too great to ignore.

A retail bank, for example, is getting a handle on its multi-channel customer interactions for the first time by analyzing log files. A hotel firm is analyzing customer lines with video analytics. A health insurer is able to better predict customer dissatisfaction by analyzing speech-to-text data from call center recordings. In short, these companies can have a much more complete picture of their customers and operations by combining unstructured and structured data.

That’s even aside from continued use of more structured data streaming into a company via sensors and other operational data-gathering devices, they said.

All said, the integration of big-data and its analysis has been prompting companies to adopt an “Analytics 3.0” perspective on analytics. As we’ve written about previously, and as the authors also write about in this report, the rise of the Analytics 3.0 era is about companies enabling themselves to participate in the data-driven economy. “Banks, industrial manufacturers, health care providers, retailers — any compan[ies] in any industry that [are] willing to exploit the possibilities — can all develop data-based offerings for customers, as well as [support] internal decisions with big data.”

Beth Schultz is Editor in Chief of AllAnalytics.com.

She has more than two decades of experience as an IT writer and editor. She focuses on advanced IT technology and its impact on business users and is a thought leader on the revolutionary changes remaking the corporate datacenter and enterprise IT architecture.

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Baylor Business Review, Fall 2013