seeking the future: five forces that will drive the next techno-economic revolution

© Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

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11 May 2012 Larry Ryan Chief Technologist, Financial Services Industry HP Enterprise Services

Seeking The Future Five forces that will drive the next Techno-Economic Revolution

©2011 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice


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KONDRATIEFF CYCLES TO TECHNO-ECONOMIC PARADIGMS

Nickolai Kondratieff (1892-1938)

FRENZY

ERUPTION

Tech

nolo

gy D

iffus

ion SYNERGY

MATURITY

Big Bang Crash Recovery and Transition

RECOVERY

Time

Excitement

Optimism

ThrillAnxiety

Denial

Fear

Desperation

Panic

Despondency

Hope

Relief

Optimism

Euphoria

INNOVATION & GROWTH

MATURITY NEXTInflectionPoint

Joseph Schumpeter (1883-1950)


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INSTALLATION PERIOD TURNING POINT

DEPLOYMENT PERIOD

Bubble prosperity Collapse & Recessions

“Golden Age”

Prosperity Maturity

FIVE TECHNOLOGICAL REVOLUTIONS

•The “Industrial Revolution” (machines, factories, and canals) •Britain

FIRST: From 177

•Age of Steam, Coal, Iron and Railways •Britain and spreading to the Continent and USA

SECOND: From 1829

•Age of Steel, Electricity, and Heavy Engineering •USA and Germany overtaking Britain

THIRD: From 1875

•Age of the Automobile, Oil, Petrochemicals and Mass Production •USA and Spreading to Europe

FOURTH: From 1908

•Age of Information Technology and Telecommunications •USA, spreading to Europe and Asia

FIFTH: From 1971

•Age of Biotech, Nanotech, Bioelectronics and New Materials? SIXTH: From 20??

* The Direction of innovation after the financial collapse, Carlota Perez, 9th Triple Helix Conference, July 2011


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FINANCIAL INNOVATIONS IN THE 5TH WAVE

Financial Tools Derivative Explosion • Swaps: interest rate, currency • Credit default swaps • Total return swap

Asset Backed Securities • Collateralized Debt Obligations (CDO) • Auto, credit card, student, home equity

Banking Channels • Mobility • Online banking Markets • FX, currency, equity, futures, commodities,

forwards

Payment Channels • SWIFT • Credit and debit cards growth (online

authorization) • Online (PayPal), mobile (Square), wallets • Micro transactions

Value systems • Airline mileage, hotel points, Bitcoin virtual

currency, Facebook credits

Quantitative Finance • Risk management • Pricing, portfolio valuation


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FINANCIAL INNOVATIONS IN THE 5TH WAVE

Treasury Capital Markets & Funding • Growth retail trading • Trade finance • A/R factoring • Securitization • Commercial paper

Cash & Liquidity Management • Forecasting cash needs • Pooling • Global monitoring and inter-connectivity

Risk Management • Enterprise Risk Management • Hedging risks: interest, credit, currency, commodities • Credit risk management • Global risk management

Corporate Finance • Valuation methods • Capital strategy • Investment management • Corporate debt • M&A, outsourcing • Multi-currency/multi-geography contracts

Treasury Operations & Control • Global integration front, middle and back office • Electronic bank interfacing • Corporate system integration (i.e., SAP) • Visibility and reporting


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ASSET-BACKED SECURITIES

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

Asset-Backed Securities Outstanding (Billions) Automobile Credit Card Equipment Home Equity Manufactured Housing Other1 Student Loans

-200,000.00

300,000.00

800,000.00

Asset-Backed Securities Issurance (millions) Auto Credit Cards Equipment Home Equity Manufactured Housing Other Student Loans


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UNITED STATES GROSS DOMESTIC PRODUCT


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UNITED STATES GROSS CAPITAL FORMATION


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US DEBT MARKETS

0.0 500.0

1,000.0 1,500.0 2,000.0 2,500.0

Jan/

2007

A

pr

Jul

Oct

Ja

n/20

08

Apr

Ju

l O

ct

Jan/

2009

A

pr

Jul

Oct

Ja

n/20

10

Apr

Ju

l O

ct

Jan/

2011

A

pr

Jul

Oct

Ja

n/20

12

US Commercial Paper Outstanding (USD Billions)

0.0

500.0

1,000.0

1,500.0

1996

19

97

1998

19

99

2000

20

01

2002

20

03

2004

20

05

2006

20

07

2008

20

09

2010

20

11

US Corporate Bond Issurance (USD Billions)

Investment Grade High Yield

0.0 2,000.0 4,000.0 6,000.0

US Outstanding Money Market Instruments (USD

Billions)

Commercial Paper Bankers' Acceptance Lg. Time Deposits


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5 FORCES DRIVING THE FUTURE BIO-TECH, NANO-TECH, ENVIRO-TECH, INFO-TECH2, ROBOTICS


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• Cellular level rejuvenation

• DNA computing

• Hybrid robotic/biological systems

• Genetically Modified Foods to feed billions

• Uber-humans

BIOLOGICAL TECHNOLOGY


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BIOLOGICAL TECHNOLOGY The demand for replacement organs will increase as Boomers pay for their misspent lifestyles

Contact lenses with circuits, lights a

possible platform for superhuman vision

Craig Venter http://www.ted.com/talks/craig_venter_unveils_synthetic_life.html

Craig Venter and team at Synthetic Genomics engineered the first, human-

created, artificial lifeform


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• Ultra-pure, ultra-light, ultra-efficient . . . ultra-everything

• Invisible computers and infinite storage

• Alternative, alternative energy

• Homogenous by the billions

• Heterogeneous by the molecules

NANO TECHNOLOGY


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NANO TECHNOLOGY Nanomaterials – ultra-pure, ultra-strong, ultra-lightweight, ultra-capable

Nanomachines – extremely small machines

Glowing Report

Seek and Destroy

Power Pack

Tiny Turbine

Alien Invasion

Smart Bomb Medicine Cabinet

Cell Control


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• Ultra-efficient compute, storage, communications

• Parasitic powered medical devices

• Ultra-efficient, ultra-clean energy generation

• Smart everything = Green everything

ENERGY & ECOLOGY TECHNOLOGY


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ENERGY & ECOLOGY TECHNOLOGY

Building

• Southern Exposure • 95% shell reuse • 65% salvage recycled • 25% new from recycled • High efficiency Roof

Cooling

• 97% Outside Air Economizers

• Variable Speed Fans • low velocity

undercroft plenum pressurised to 20 pascals

• ~50% carbon reduction*

•Encapsulated Cold Air Aisles

•Distributed High Performance Servers

•Light Grey Racks •Higher operating set

points

Lighting

•Dimmable, Addressable, Lighting Interface

•40-50% energy reduction

•45º orientation

•ENMS system continuously monitors and optimizes energy consumption

•BREEAM expected rating “very good” Monitoring

Data Hall

•Groundwater Recovery System •Restored Ecosystem •Public Transportation

Grounds

Power

•10% Renewable (not on premises)

•High efficiency UPS and generators

•20+% total power consumption reduction*

* to comparable conventional facility


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ENVIRONMENTAL TECHNOLOGY

Traveling Wave Nuclear Power Thermopower waves

High efficiency direct conversion of radiation to electricity

ENERGY - BEYOND “RENEWABLE”


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• Nano-strong, nano-light materials

• Biomimicry movements - Nature as Model, Measure and Mentor

• Bipedal, humanoid, or whatever you want/need

• Autonomic actions

ROBOTICS TECHNOLOGY


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HUMANOID ROBOTICS Thinking Reasoning • Optical Computing • Memristors • Neuromorphic Computing

Muscles Skeleton • Carbon nanotube • Electro-elastic polymers

Senses • Inertial Guidance • Chemical Sensors • Pressure/Temperature

Kojiro Robot Tokyo

University

Energy • Nanotechnology-

based batteries


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NON-HUMANOID ROBOTICS RoboFly


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• 3rd Wave moving to the 4th Wave

• Exploding Edges

• IT everywhere – flexible, dynamic, invisible

• Autonomic Operations

• New capabilities, new uses, new opportunities

INFORMATION TECHNOLOGY


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CONTINUED EXPONENTIAL IT

What will fill

this hole?

Memristors & Neuromorphic Computing Photonic Computing

2D to 3D Architectures

Quantum Computing


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– Millions of sensors • Sense, interpret, correlate, and summarize all financial related

events • Cash flows, Expenditures, Funding • Investments & Assets • Trade Finance

– Real-time Signal analysis to interpret and forecast • Liquidity management • Pro-forma financial position • Multi-currency & multi-value • Fraud • Risk Exposures & Management • Efficiency & Cost Analytics • Valuation, pricing, Black Swans

– Applied learning methods • Changing landscape: banks, customers, partners, and portfolio • Cash & Liquidity Management • Fraud • Risk Exposures

– Simulation & Back-testing

– Distributed and ubiquitous

NEUROMORPHIC COMPUTING AND FINANCE

Slide


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