Thursday, February 28, 2013

Reasons for boom in asset management in traditional oil economies


The primary oil export economies in the world are in transition. The traditional view is that change is happening since their reserves are exhausting, and hence the need to diversify. While that is probably one of the key reasons, however, I don't think that is the whole story.

Traditionally, these economies operated like a combination of an export economy for their global customers, and a welfare state for their citizens. In earlier era, the world had a very simple operating model. These countries had the world's largest operating supplies of something that everyone wanted to buy. Like an Apple Store on the morning of a new iPhone launch, they decided how the queue should form outside their gates. But then things started to change.

The changing customer segments

On one hand, with increased globalization and resulting demand for energy by paying top dollar from emerging economies, has meant that the demand for their stuff has started increasing and diversifying. On the other, the goal of energy self reliance by their biggest customer (united states) has started to look real. This all makes the need to operate in an international environment more necessary. They need to operate more like a company with multiple trading partners.

But perhaps most importantly, new demographic, social and economic realities are having a critical impact on these economies.

The demographic shift

These countries now have a larger population of young people who are well connected and increasingly well informed, but do not have the professional skills or the inclination to join a global and mobile workforce. Since these economies were traditionally one dimensional, there are limited business opportunities for the workforce to get absorbed. This is leading to some discontentment.

The leaders in these economies are realizing that they need to diversify fast, to create a local economy for people to get absorbed. But this requires a bigger local economy that has at least surpassed a minimum critical mass. For this, there is a need for an infrastructure where professionals from other countries can come and contribute till the local population is ready to take over.

This has meant a widespread investment on local infrastructure. But this brings a different problem. Historically, these countries were providing a decent infrastructure free of cost. But with larger percentage of consumers, coming from non-citizens, this approach is no longer sustainable.

The need to recover costs

There is a need to levy user charges so that operating costs and limited capital costs can be recovered. Some form of user charges are also needed as a demand control measure, since historically the region has some of the largest wastage rates in the world.

Unfortunately, levying user charges is not as straight forward. How do you convince a consumer that what they are paying is only their fair share and are not subsidizing poor efficiencies in the service delivery organization.
Delivery organizations also need to prove that they are only adding new capacity when and where it is needed.
Also the service delivery organizations need to prove that any stuff they already own, is being operated and maintained to maximize its service life. To explain, service delivery organizations have to prove that there are no unplanned service disruptions and expensive repairs. Also, not to try repair things more expensively than the replacement, specially if the repair will not give the benefits in terms of overall costs.

How do you prove that the service organizations have done their part?

This is an interesting challenge for service delivery organizations trying to move to a new model. Luckily, the business of consultants has come up with the next best idea. There are an ever increasing alphabet soup of accreditations and certifications, that will prove to the regulators and eventually the leaders, that the delivery organizations are operating efficiently.

Now everyone is happy...

Sunday, February 24, 2013

Understanding Land databases


Land administration is a major area of concern in many jurisdictions around the world. What seems as a fairly straightforward domain actually involves many datasets that do not integrate well with each other.

Types of databases

These include the following:
1. A Title or ownership database - A Title/ Ownership database is a record of ownership of land or property. In most areas, it maintains a reference to the piece of land through some unique identifier, a legal description of the title which may refer to a lot number in a specific subdivision plan, as well as a record of ownership and transfers. In case, the land organization maintains a separate document library, it will refer to the document and the filing number, or a book and a page number.

2. A Cadastral database - A Cadastral maintains a record of the geometry of land. A cadastral database may maintain its own numbering system for identifying a unique piece of land. A cadastral database typically records data in terms of plans. Each plan has a boundary denoting the study area as well as control points that are established for accuracy. Each plan will then have a set of surveyed lines and points (also called line points) as they are used to establish the accuracy of the lines.
Finally, resulting from these are parcel boundaries which are actually derived from the survey lines.

3. An Assessment or Valuation database - An assessment database keeps track of properties from a valuation perspective. Valuation or assessment maps are prepared in jurisdictions where taxes are collected based on uses and improvements done to a piece of land. The argument being that a five star hotel built on a property should be charged more than a piece of land that is being farmed. Property taxes are also levied so that people don't simply buy land for speculative purposes and leave it vacant but are forced to put it to some economic use. Based on this need, assessment maps are prepared that are then used by taxation authorities to track changes in usage and improvements done to piece of land.

Other information in primary datasets

Typically sales history is tied to the title database. Structures history is tied to the valuation database as these indicate improvements in land. The original subdivision planning is tied to the cadastral database as these include lot and parcel numbers.

Tied to all the above datasets are documents that include all sorts of records and plans around land transactions. Since all these databases do not have a consistent view of a parcel/ property, most land administration organizations maintain cross reference table such that as long as the user had one piece of information, other datasets can be accessed.

Saturday, February 23, 2013

Analytics and Business Intelligence in real life

There is a lot of hype around Analytics and Big Data in the media and technology journals. It is rivalled only by perhaps 3D printing that is touted as the resurgence of American manufacturing.

However, the hype cycle does not match the ground reality. I recently spoke to a customer who is also a good friend on the whole idea of analytics and BI and its place in the real world. He thought for a while, and said "The problem is.... What do you do with it?". In one sentence, he highlighted the main problem around analytics and BI. He alluded to the fact that most organizations are not equipped to take business decisions based on very insightful BI dashboards.

Its great, if you are fresh out of business school and have all your statistical models all on the back of your hand, and can derive actionable insights into what you need to do. Ofcourse, then have the will and the conviction to act on it. However, for most organizations, it needs continuous professional development, reinforcement and knowledge transfer on how to act on the data that the Business Intelligence dashboard or Analytics platform is giving.

The second more worrisome aspect to this problem is, do people truly understand the systems they are dealing with? Do they have Systems - Thinking? As almost all of us were taught as kids...."Every action has an equal and opposite reaction". Systems Thinking or Business Dynamics teaches how most actions lead to two disproportionate feedback loops. One feedback loop accelerates the rate of change in the direction of our actions, and other feedback loop counters the action and tries to put the system back into an equilibrium. Also, there is a lag before these feedback loops kick in. In business dynamics terminology, these feedback loops are called balancing (reaction to our action) or re-inforcing (accelerator to our actions).

Study after study has shown that when people do not truly understand the systems they are dealing with, they cause massive failures. Most accidents such as Chernobyl can be attributed to these.

I am sure that unless people are given richer mental models and system views of the systems they are dealing with - it could lead to worse than inaction....it could lead to disastrous consequences triggered by a desire to act. After all, the road to hell is filled with good intentions.

Friday, February 1, 2013

Going about building the Multi-perspective dashboard.

In my previous post on the topic, I had expressed my thoughts on conceptualizing a multi-perspective multi-organization dashboard. I had presented the ideas of operational, strategic and policy dashboards.

Tying together operational, strategic and policy dashboards

The key question then becomes how do you tie all these together. My personal understanding at this point is that each of these are related/ need to be related.

Essentially, based on the definition provided in the previous post , the only way these can be compared and eventually tied together is by looking at different time horizons. The operational dashboard is looking at real time data to decide if there is something that urgently needs attention.

The policy level is directing my attention at two levels. How am I doing towards my long term goals as well as if there is something that I did on the recent past where I deviated from my principles or the means I have adopted to achieve my ends.

Last but not the least, my strategy is measuring if the approach that I have adopted towards my goals is effective or not. These should all be driven from the same data points, but should present the data differently.

Going across organizations

In a multi-organization dashboard, the three perspectives mean different things to different people. Where as for a utility, an operational dashboard implies real time information probably being acquired from different sensors and a policy dashboard implies adherence to norms set by a regulatory body, the regulatory body would see the policy level KPIs from the utility being aggregated  and reported as part of its operational dashboard.

Also varying, would be the grain of the data. For a utility, a minute level or 15 minute interval data would be reported at the operational level, where as the regulatory body may see a day level or week/month level data as the grain at which data is reported. To me, all these aspects need to be storyboarded by the architects at the start of the project to make sure, we can achieve outcomes desired by different stakeholders within such multi-organization dashboards.

This is my take at this point, and lets see how this changes going forward.