Model of Risk

Posted on March 20, 2008 18:32 by fan

I like to build models, which help me to understand a topic in an abstract way, as simple as possible but a way that captures the essentials from the chaos.

I was trying to build a model, which shows how the risk management system works in the banking organizations. It sounds too complicated to finish in a couple of days. While,  I was determined to find out something towards this goal.

I do find out that the major classes of risk for a bank and the key risks are credit risk, market risk and operational risk. I also understand the core technology for a risk management includes

a good data management system (almost a data warehouse), which collect and store the data

a computational system to analyse the data and performance

a reporting system for generating reports or alerts for risk managers

The current vendors are formed from three different groups: the specialists who used to work for bank and now having their team to offer the software back to the bank; the giant enterprise application vendors who expand their offerings to risk management as clients request and the BI specialists who could take advantages from their data analysis experience.

It seems all make sense. Top 100 firms are listed in the Chartis Report 2007. Datamonitor predicts retail bank spending on risk management technology will reach $1.76 billion by 2012. So, great vendors, excellent systems and lot of dollars. Are the bank protected? Are they safe from all the risks?

JEROME Kerviel made international headlines earlier this year when it was revealed he had racked up losses of $US7.2 billion ($7.7 billion) at French bank Societe Generale, and he was able to get away with this because he found a way to work around the bank's risk management systems.

Is the risk system that fragile to break?

Criminal investigations have been launched against 17 companies in the fallout of the subprime mortgage collapse, the FBI disclosed late Tuesday.

It seems beyond the control of a risk system.

Alan Greenspan said this week : We will never have a perfect model of risk.

Risk management systems – and the models at their core – were supposed to guard against outsized losses. How did we go so wrong? The essential problem is that our models – both risk models and econometric models – as complex as they have become, are still too simple to capture the full array of governing variables that drive global economic reality.

....

This, to me, is the large missing “explanatory variable” in both risk-management and macroeconometric models. Current practice is to introduce notions of “animal spirits”, as John Maynard Keynes put it, through “add factors”

"Animal spirits." Greedy. It is as simple as it is, which hit us all.


The Power of Events

Posted on March 6, 2008 16:33 by fan

Power Of EventsYesterday evening, Paul Vincent finished his talk in BCS event (Advanced CEP and EDA) with his last slide, recommended reading: <<The Power of Events>>.

It is a good talk. We all appreciate it. You should not expect you learn everything from a one hour event. But it is far enough to get you think about it and explore more from a list of good references.

The talk is about Complex Event Processing (CEP) and Event-Driven Architecture (EDA). Recently these words are getting more attention and the the CEP technology and market are evolving because of the increasing demand for back-ending systems with a data warehouse needs real-time intelligent processing in many industrial areas.

I have heard of these word when I was exploring the Algo trading platforms, where there is a need to analyze fast moving data in real-time, with minimal latency. So think it simple, from one aspect, the CEP could be understood as a real-time business intelligence. My thought was confirmed when discussing with Paul about his example on modelling the customer behaviour as a sense&respond strategy to process the complex events in a retail banking scenario. Of course, there are much more about CEP, like track&trace, situational awareness etc etc...

EDA is not new concept but it was not as hot as SOA but it does complements SOA because services can be started by triggers such as events.

Then what is happening to these words this year? Marriage of SOA with Event Driven Architecture(EDA) and Complex Event Processing (CEP)? This is top of the news for many analysts, and something IBM, Oracle, and other vendors are positioning future offerings around. Is this the year when organizations will start linking SOA efforts closely to real-time processes?

IBM WebSphere CTO Jerry Cuomo recently said that he sees the SOA-EDA-CEP marriage as one of the most pronounced trends to watch in 2008. Yes, in January, IBM has already acquired AptSoft to expand their Business Events Software Market. IBM's CEP engine is a Java-based execution engine including a Eclipse based authoring tool.

Even CEP involves lots of computer technology, like pattern recognition, neural  network and machine learning, there is a start place for .NET developers:  NEsper, an open source component for developing CEP applications on the .NET Platform, which is looking to change the CEP development in the .NET world.


SaaS, new Silos?

Posted on February 1, 2008 17:28 by fan

I spent quite a long time thinking about the concept of Enterprise Integration, why it is needed and how important it is?

Enterprises need integration solution because the applications stacks are added, particularly with its own repository of data, organizations are having difficulty to centralize repositories of transaction data and ensure all the business applications remained on a common platform.

Enterprises need integration solution because they want to bring together the best enterprise applications to meet the demands that enable organizations to manage business with high performance and helps organizations build a robust and flexible architecture on which new applications, processes and strategies could be developed.

So as long as the data volumes and the numbers of applications continue to grow, organizations are forced to deal with the issue of managing and integrating data by vicious business pressures. It all makes sense with the traditional model of owning software.

But what if with the introduction of SaaS, the integration of systems includes systems that are, both, inside and outside of enterprise’s borders, those on the outside being owned and managed by 3rd party SaaS providers?

Ah... as title means: SaaS are new Silos! So integration problems still exist and even more demanding!

No, that is not what I meant after I read the comments from a SaaS practitioner, the CEO of TraverseIT.

The old model of SaaS (if you can believe SaaS is already “old” to some people) is that each SaaS provider provides you with a “single” tool to solve a single problem (i.e. One vendor provides you with CRM, another provides you with Project Management, another provides you with XYZ, etc.). The new model, which is what companies like our own are doing, is to provide you access to a “platform” of tools and technologies that are already integrated.

Oh...It seems SaaS providers are not new Silos. Quite opposite, they are the competitors for the traditional integration vendors.

BTW, I like his thought about Integration:

There are two broad forms of integration to worry about…

The first is “Data Integration”, which is at the lower levels, such as what you would achieve with Extract, Transformation & Load tools (ETL) or transformation scripts. This is about answering the question: “How do I share data between systems?”

The second form of integration to worry about is “Reporting & Business Intelligence”, which is at the higher levels. This is about answering the question: “How do I share data between systems and people?”


Enterprise Mashup

Posted on January 30, 2008 16:51 by fan

Enterprise Mashup is one of the buzz words which sit in my mind for quite a long time. I am not sure if I should pay some attention to this word, just like any other buzz words, which might appear and disappear at the same speed. When today I saw the new post "Enterprise mashups, SOA's killer app" at SearchSOA.com, which claims that it is sexier than SOA because it rings bells with business people. This also reminds me that just two weeks ago I came across the link about "Enterprise Mashup v Composite Application", saying that he likes the idea about re-birth ‘composite applications’ under the Enterprise 2.0 banner.

So, time to dig it out. Starting from Wikipedia, Mashup (web application hybrid) is defined as

a web application that combines data from more than one source into a single integrated tool...

That rings a bell. I have a google mashup! My personalized google home page is a perfect example about this definition. It pulls all the data for my RSS feeds I subscribed. This mashup is very important for me now as it tells me all the information I care around the world.

So why the enterprise needs a mashup?  Gartner Voice has a good explanation:

Mashups - Web technology-based lightweight composite applications created by sourcing capabilities from established content and systems functionality - are moving into the enterprise and are poised to enable end-user-assembled applications.

It becomes popular in the enterprise as there are more and more mash-able components  (because of the SOA implementation) and it enables people who do not have much programming experience could make a mashup application, which solves some particular business problem. Finance and government sectors are the two early adopters on mashup to quickly set up new applications which add new value on their existing legacy system, known as the long tail players.

I don't really interest in the differences between Enterprise Mashup and Enterprise Portal or Composite Application. I think the most important thing about Enterprise Mashup is people are seeing something from the SOA implementation, as Jason Bloomberg, senior analyst with ZapThink LLC says:

Enterprise mashups are becoming the killer use-case for SOA, that is, the ostensible reason for doing SOA from the perspective of the business. So, SOA is stronger than ever, it's just becoming part of the woodwork. Enterprise mashups are the part that shows."

Yes, I can see on the way towards Enterprise Web 2.0 technology, enterprise mashup will play an important role as many mash-able components are built with SOA implementation and the mashup technology brings more flexible development ability to the professionals as well as to the end users.


Towards Enterprise Web 2.0 ...

Posted on January 24, 2008 17:51 by fan

I have been reading some articles or blogs about 2008 Predictions. "While beloved Yankee guru Yogi Berra famously warned that it is dangerous to make predictions, especially about the future, people keep doing it". Among those predictions, one of the hot topics mentioned is Enterprise Web 2.0.

Pedicted by Oracle chief architect Ted Farrell, enterprise Web 2.0 was expected to be big in 2008 even it didn't take off as anticipated last year.

And, based on the 12 predictions for Enterprise Web 2.0 in 2008, we see SOA, Web 2.0 and SaaS (Software as a Service) are three main themes of next generation enterprises.

After announcing their WorkBook, a secured FaceBook for the enterprise, WorkLight offers predictions for Web 2.0 in the enterprise in 2008, saying that usage of Web 2.0 technologies in the enterprise will affect companies across three dimensions - People, Business and Technology.

- People seek to mirror their home computing experience at the office, build social networks in the corporate environment...

- Businesses seek to increase employee acquisition/retention and productivity through the use of Enterprise 2.0 solutions...

- IT departments have to seek security solutions out of Enterprise 2.0 solutions.

"But one of the problems with Web 2.0 is it lacks a clear definition making it hard for us to see where it has a value to knowledge works." Mentioned by Farrell. He said Oracle is now making an effort to explain the potential value of the Web 2.0 collaboration technologies.

Back to what I have been working on, setting up m35 blog platform and keep updating blog entries, seems like a case study of this trend. From my point of view, I do believe there is a lot of knowledge held within the company as everyone is an “expert” on something. And making this expertise easily available to everyone else would certainly bring benefits.

Of course, I should not get my hopes up too much - people don't post to the blogs as much as you'd expect. I have been warned. However, for the people who do post to and read the blogs, it brings benefit.

More Information:

Web 2.0 Definition in Wiki

Enterprise 2.0 / Enterprise Social Software

A Web 2.0 Tour for the Enterprise.


Oracle + BEA, a Happy Marriage?

Posted on January 17, 2008 18:14 by fan

Isn't life exciting! The corporate world of who marries who, and who are just sleeping together. :)

Investor Carl C Icahn will make money on this $8.5 billion acquisition in this recessionary or fearful climate.

Larry Ellison expects to make money from BEA assuming the BEA revenues will be robust even if there is a U.S. economic recession and he thought the two company's products would work together to become a market leader. Remember, BEA has very good reputation as well as market recognition in China.

At the same time, BEA or Oracle employees are worrying about their fate and their pocket of course.

Forrester research sees many opportunities for synergy in their market position and strategies:

  1. BEA and Oracle have many common customers
  2. BEA takes Oracle into high-end middleware
  3. BEA strengthens Oracle’s hand in telcos, brokerage, and big government
  4. BEA’s BPM and portal products run on .NET, as well as Java
  5. BEA and Oracle together can make a leading information fabric offering.
  6. Oracle and BEA have little partner conflict.

Gartner research believes Oracle would emerge as a portal, process and middleware vendor with revenue second in size only to IBM, the market leader, both of which will be the main players in the Java-centric middleware market, well ahead of Microsoft. But technically, they have significant overlap. like following points from SearchSOA:

  • Oracle Enterprise Service Bus, BEA AquaLogic Service Bus
  • Oracle BPA Suite, BEA AquaLogic BPM
  • Oracle Portal, BEA WebLogic Portal
  • Oracle Web Services Manager, BEA AquaLogic SOA Management
  • Orace Data Integrator, BEA AquaLogic Data Services Platform
  • Oracle JDeveloper 10g, BEA Workshop

How well Oracle and BEA mix and match their two product lines could either help them gain more customers or send customer to alternatives. Is this going to be a happy marriage? Let us see.


Overloaded Terminology: Service

Posted on January 10, 2008 17:46 by fan

How popular the word "Service" is now? When I was watching the video about BizTalk in Channel 9. Look at the title: "Service Oriented Architecture, Software as a Service, Software + Services, Enterprise Service Bus, Internet Service Bus, BizTalk Services".  I also heard the phase "Integration as Service", "On-demand Service" What a Service!

Steve Swartz mentioned a good point: "Service in SOA is not as same as the service in Software+Service". Ah! It is interesting to understand "service-orientation" when comparing to "object-orientation". Think both of them as a discipline in software development environment. Object orientation is applied in local application while service orientation is applied to distributed application. And David Chappell gave his great definition for SOA: Serious Overloaded Algorithm!

It seems true that there is no single global definitions for these words and it is quite common that people think differently. Steve also pointed out that the analysts or companies are just reengineering the words to make money.

I dig some stories out... see who are those companies. :)

Sun defined SOA in the late 1990s to describe Jini, which is an environment for dynamic discovery and use of services over a network.

Sonic Software and Gartner originally used the term ESB to refer to the XML-enabled SonicXQ MOM (Message-oriented middleware) product (which was later renamed "SonicESB")

Microsoft defined S+S when Ray Ozzie did his keynote in MIX last year.

And last week, Microsoft BizTalk Lab created "Internet Service Bus"!


Do not Forget the Data

Posted on January 4, 2008 15:24 by fan

I am very happy to see someone talking about data integration in SOA context, which we discussed a lot but have not found good references. Here are the comments from “The top SOA stories of 2007, part 2” with the title: “Don’t forget the data”.

"Many SOA initiatives began with a focus on application development and integration and data has always been the poor relation, and subordinate to applications," Macehiter (research director at Macehiter Ward-Dutton) said.

"We have long been advocating that organizations need to recognize the importance of common data models early in the process. For example, many of the ESB solutions have their origins in EAI and provide capabilities around data transformation within the service layer rather than behind the service interface where it should be."

I do not know why it is important to put the data transformation behind the service. I do think both ESB and EAI do not pay much attention to the importance of enterprise data. Fundamentally, data and processes are the two main enterprise assets, which support the business. From BPM or from SOA point of view, we should not forget the data.

Schmelzer (senior analyst with ZapThink LLC) sees room for optimism when talking about we are lacking information architects:

"On the plus side," he said, "there's a huge movement to focus SOA efforts on not just process, infrastructure, and application-oriented activities, but also on the governance, information and data aspects as well. We hope SOA serves as a great excuse to get EA (Enterprise Architecture) done right once and for all."

Finally, I am more convinced that data integration is the hot topic when found out the news in ZDNet: Data integration demand will grow in 2008.

Lower cost, easier to use, and more flexible data integration tools are beginning to emerge and will meet many of the integration needs in the coming year, replacing custom coding projects.


Architectures

Posted on December 31, 2007 15:17 by fan

I like to look at architecture diagrams. From those architectures, we can see how the vendors try to present their offerings in a simple and elegant way. It seems not fair to judge them only from the diagrams without looking at their implementations. While, they do tell us a lot.

image describes WebSphere product family into 4 users groups: business users, business managers and business-operations personnel, business analysts and "process engineers and integration specialists". It is quite nice to see that they list "integration specialists" as a special user group as that group plays very important part when implementing the whole BPM solution.

image

 

 image embedded their 3 main products into process lifecycles. it is clear enough to help people remember their products: SOA suite, BPM suite and Middleware.

image

image tried to tell too much on this diagram. The information involves process lifecycle, users group and even the product screen shots. But I guess that is the way they tell. Eventually, what remained in mind is highlighted 6 steps.

image

 image could not give less that that. The whole picture needs more information about the products. It only shows the abstract concept about process, SOA and middleware.

image

image highlights very well about their universal adapters efforts. The diagram shows different platforms, different service layers and different systems.

 

image

image made a good wrap up about their ESB platform, which is a service bus focused platform with BPM functions. At the same time, the platform works with legacy application infrastructure and offer services to the clients.

image

 image created a nice picture. It explains very well about their production function of data distribution as it targets the data integration problem: from reference data system to the front office, middle office or back office with on-demand transformation.

image


Tog@User Experiences

Posted on November 10, 2006 19:57 by fan

It is a great experience to join the tutorial by another guru in Nielsen Norman /group, Bruce “Tog” Tognazzini. I chose a seat in the first row, thinking to catch every word I hear. Everybody in the room is excited as we all tried very hard with our boss to get this chance.

I like to listen to the senior speakers. They can tell you real stories. Tog was talking about lots of experiences he had in Apple, in Sun and in WebMD…as well as his flying with his wife.

Tog led us going through the principles, theories and practices about HCI. Interestingly, he showed the MBTI studies of Apple Engineers and US population based on Carl Jung’s Psychological theories.  75% US populations are sensing (receiving data primarily from the five senses) while 75% Apple engineers are intuition (receiving data from the subconscious). That makes sense. I remembered every time I presented to my “perfectly designed” interface to users, watching how they moving their mouse, it is just not what I expected. There are two kinds of people in the world and we are designing the interface for the other kind!

Now Tog is talking about Fitts’ law, which I know but never tried in my design. The formula is just too complicated to be applied. He gave the example of Pie menu, start menu of Windows, file menu of Mac OS. Pie menu is the effective for user to target as it is right around user’s mouse.  It reminded me the product called “Visual Architect”, the resource-centric concept is a good Fitts’ law sample! Now It seems I have some ideas to apply Fitts’ law to my work…