20240626 Finance Transformation - PSU Event Series.pptx

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Date: June 26, 2024
ISSIP_Events_20240626
Title: 20240626 Financial Transformation - PSU Event Series
ISSIP_Blog Series_Post: https://issip.org/psu-issip-industry-transformation-discovery-series-launch-engineering-the-21st-century-service-economy/
Event registration link: https://docs.google.com/forms/d/e/1FAIpQLSeJzlGXdv9_fT3c1tJ4U0DyDcb6wvzbzYwiVjxfeR3tipOLZQ/viewform

Co-Hosts
Vittal Prabhu
https://www.linkedin.com/in/vittalprabhu/

Jim Spohrer
https://www.linkedin.com/in/spohrer/

Panelists

Shanker Ramamurthy
https://www.linkedin.com/in/shankerramamurthy/

Kartik Gada
https://www.linkedin.com/in/kartikgada/
Interview: https://youtu.be/5ljPpl5xtcM

Robert Kozma
https://www.linkedin.com/in/robert-kozma-ph-d-26b7278/
Interview: https://youtu.be/hv6MvHoq3H0

Eoin Cumiskey
https://www.linkedin.com/in/eoin-cumiskey-617b758/
Interview: https://youtu.be/bYXLBlsp5WE

Additional Interviews

Markus Warg
https://www.linkedin.com/in/markus-warg-653151178/
Interview: https://youtu.be/dkGj9y6PTdc


ISSIP_YouTube Recording: https://youtu.be/WhvlXmx-XUQ
ISSIP_Slideshare Presentation: https://www.slideshare.net/slideshow/20240626-finance-transformation-psu-event-series-pptx/269926109
ISSIP_LinkedIn_Company Post: https://www.linkedin.com/feed/update/urn:li:activity:7211103781478912000
ISSIP_LinkedIn_Discussion Post: https://www.linkedin.com/feed/update/urn:li:activity:7211080492769497088


Transformation Survey and SIG (Special Interest Group)
For those who are passionate about industry transformation, and who would like to become part of the ISSIP Industry Transformation Special Interest Group (SIG) please fill in the survey here: https://docs.google.com/forms/d/e/1FAIpQLSfBX4N-4RjwkZqnj4l3BGuwmCOi-dknJNJiu3y-KIzlQ2riPQ/viewform

Thank-you!
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1. 2024 Industry Transformation Event Series Engineering the 21 st Century Service Economy June 26, 2024 https:// issip.org /psu-issip-industry-transformation-discovery-series-launch-engineering-the-21st-century-service-economy/

2. Today’s Agenda Welcome! Speaker Series ( Vittal ) Challenge Transformation & Measures (Jim) Financial Sector Transformation Panelists Q&A Closing Co-Hosts Panelists Vittal Prabhu Jim Spohrer Shanker Ramamurthy Kartik_Gada Robert Kozma Eoin Cumiskey

3. Healthcare – May 1 Finance – June 26 Education – August 28 Energy & Information Tech – December 11 Supply Chain & Logistics – November 20 Retail & Hospitality – October 30 Vittal Prabhu

4. Finance – June 26 Vittal Prabhu Penn State University (PSU) 1 st Industrial & Manufacturing Engineering 1 st Service Systems Engineering Broaden the aperture… ISSIP-PSU Industry Sector Transformation Speaker Series Survey Events Whitepaper

5. In the news… June 19, 2024 Citi predicts that AI will automate more banking jobs than any other sector, but more AI upskilled & augmented managers and compliance staff will be needed.

6. Challenge - Industry Sector Transformation: Observations & question Costs down Marginal cost of computing going to zero Productivity up Early service robots and AI digital twins of people Which service system characteristics matter most? New measures? Concerns: Energy-Climate, Skills-Jobs, Institutions-Investing in new social contract Lens: Service system entities investing/becoming better future versions of themselves Old measures? Nation: GDP/Worker Business: Revenue/Employee Jim Spohrer William Bruce Cameron

7. Jensen: You imagine a tiny chip… The H100 weighs 70 pounds… 35000 parts… $250K cost… It replaces a data center… Full of computers and cables… Jim: Driving the marginal cost of computing to zero… Drives the demand for new service offerings based on computing through the roof We see the marginal cost of computation going to zero…

8. We see early-stage service robots and AI digital twins of people… Watch: https:// youtu.be /-HizP4UQvug Watch: https:// youtu.be /-HizP4UQvug

9. 1960 1980 2000 2020 2040 2060 2080 $1,000,000,000,000 (Trillion) $1,000,000 (Million) $1,000,000,000 (Billion) $1,000 (Thousand) $1 Gigascale (10 9 ) Terascale (10 12 ) Petascale (10 15 ) Exascale (10 18 ) Zettascale (10 21 ) Yottascale (10 24 ) Ronnascale (10 27 ) GDP/Employee Trend We wonder about the new sector transformation measures? Based on USA Historical Data Year Value 1960 $10K 1980 $33K 2000 $78K 2020. $151K 2023 $169K Kiloscale (10 3 ) Megascale (10 6 ) Cost of computation goes down by 1000x every 20 years (left to right diagonals), driving knowledge worker productivity up.

10. Shanker’s position statement: Hard truths to comforting realities Six hard truth’s CEO’s must face… 29 th edition of IBM C-suite study series 4 elements of the generative AI opportunity canvas 5 pillars to scale transformation & value delivery with generative AI 6 hard truths… transformed into comforting realities 2 final reflections… don’t be used by AI and disrupt yourself while you can! Shanker Ramamurthy

11. Kartik’s position statement: Key points to prime discussion Point 1: Economy is going high-tech ATOM to Third Millenium Economics Point 2: Innovation anywhere … … impacts innovation everywhere Kartik_Gada < Additional interview ISSIP YouTube https:// youtu.be /5ljPpl5xtcM

12. THIRD MILLENNIUM ECONOMICS Kartik Gada

13. Third Millennium Economics Today’s Hi-Tech advancement increases productivity rapidly by reducing costs sharply through non-material goods (e.g. software) Non-material knowledge-based goods alter economic assumptions because they meet infinite demand with almost no variable cost per unit A rethinking of macro-economics is needed to reflect these new changes The proportion of knowledge-based/high-tech goods in the economy is rising exponentially Economic progress comes almost entirely through technological progress Tech value creation and diffusion are accelerating exponentially in our times Economically, knowledge-based goods cause a money supply gap through deflationary effects 7 1 3 6 4 5 2

14. Robert’s (“Bob’s”) position statement: Introduction & key quotes Introduction and book Key quotes to prime discussion Progress measure: AI helps end poverty Robert Kozma < Additional interview ISSIP YouTube https:// youtu.be /hv6MvHoq3H0

15. Robert B. Kozma, Ph.D. Author, Make the World a Better Place: Design with Passion, Purpose, and Values, 2023 Emeritus Principal Scientist, SRI International, 2002-Present Independent international consultant, 2002-2014 Principal Scientist, SRI International, 1994-2002 Professor and Research Scientist, University of Michigan, 1974-1994

16. “Whatever you do in life, leave the world a better place than you found it.” Robert A. Kozma   “Everyone designs who changes existing situations into preferred ones.” Herbert Simon, Nobel Laureate in Economics   “… technologies are inherently moral entities, it implies that designers are doing ‘ethics by other means’: they are materializing morality.” Peter-Paul Verbeek, Rector, University of Amsterdam and philosopher of technology   “This will be the greatest technology humanity has yet developed.” Sam Altman, CEO OpenAI   “There is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits …” Milton Friedman, Nobel Laureate in Economics

17. “I believe that at the end of the century the use of words and general educated opinion will have altered so much that one will be able to speak of machines thinking without expecting to be contradicted.” Allan Turing 1950   “… to pass the Modern Turing Test, an AI would have to successfully act on this instruction: “Go make $1 million on a retail web platform in a few months with just a $100,000 investment.’” Mustafa Suleyman, CEO of Inflection AI   “… let's be aspirational. After all, this is a technology that will change the world. Perhaps a truly aspirational benchmark for intelligence would be to come up with a way to end poverty, something we humans haven't yet figured out.” Robert B. Kozma  

18. Eoin’s position statement: Key points to prime discussion From ideas to execution Gartner hype cycle Innovation adoption curve Forecasting reality What are key financial sector measure? Convenience of paying for something? Lower opex ratios and plateauing of staffing levels? < Additional interview ISSIP YouTube https:// youtu.be /bYXLBlsp5WE Eoin Cumiskey

19. From idea to execution | Gartner hype cycle AI Innovation ©2023 Mastercard. Proprietary and Confidential Hype cycle helps explain the uptake of new technologies whilst pointing out the pitfalls in loosing momentum at a time when you need to achieve escape velocity to complete the realization of new innovative technologies. Whilst it can be a crude tool it resonates with the lifecycle management experiences of innovators in industry. Keeping perspective on the development of how an idea or technology needs to be managed through the challenging stages of deployment will keep innovators grounded in understanding how best to navigate the inevitable push back that new ideas encounter.

20. From idea to execution | Innovation adoption curve AI Innovation ©2023 Mastercard. Proprietary and Confidential On the point of the inevitable challenges that new ideas will encounter, the Innovation adoption curve can also provide a useful ‘baselining’ reference to ensure innovators don’t lose hope on their deployment journeys. These stages are not locked in and can be compressed &/or distorted to an innovators benefit through robust change management practices. Underlines the old adage of “you do change with people, not to people”. Awareness of wider context of the environment into which new innovation initiatives are being implemented supports increased effectiveness and efficiency of change efforts.

21. So, what are the key takeaways from the brief oversight of the previous two slides? Fundamentally it’s about understanding the journey from ideation, beyond implementation, onto scaling and into evolution of the concept. Whilst not comprehensive, the below bullet list captures some other notable innovation decelerators which can affect the success of innovation implementation efforts. Regulatory requirements: New technologies can often leapfrog existing regulatory control frameworks e.g. crypto assets. Pre-existing regulatory frameworks often require sufficient market development time to elapse before the regulators themselves are able to update accordingly. Existing change roadmaps: Innovation is constant therefore the landscape into which new innovation concepts arrive is often crowded with the backlog of previous innovation implementation sprints e.g. IoT, Big Data, Cloud & Edge architecture re-orgs etc. This means the battle for share of resources and share of mind for the departments and teams responsible for delivering new tech solutions is a significant challenge for most new innovators. Weak business cases: Just because ‘it can be done’ doesn’t necessarily always translate into ‘it should be done’ Innovation in industry demands alignment with pre-existing growth and revenue strategies. If the proposed change benefits can’t be measured in dollars and dimes, then getting it off the launchpad becomes ever more difficult* ©2023 Mastercard. Proprietary and Confidential From idea to execution | Forecasting reality AI Innovation There are notable exceptions for companies whose modus operandi demand innovation for innovations sake with revenue conversations occurring after innovation delivery e.g. Google Maps

22. Markus’s position statement: Interview Point 1: Service systems & Service-Dominant (S-D) logic Point 2: Service-Dominant Architecture (SDA) Hyper-personalization coming Measure: Are you able to attract & retain key talent? Markus Warg < Interview ISSIP YouTube https:// youtu.be /dkGj9y6PTdc

23. Q&A Moderators’ questions & comments Panelists’ questions & comments Participant’s questions & comments feel free to use chat and/or come off mute Panelists’ last comments Moderators’ closing

24. Healthcare – May 1 Finance – June 26 Education – August 28 Energy & Information Tech – December 11 Supply Chain & Logistics – November 20 Retail & Hospitality – October 30 Closing – and Next Event

25. Backup Slides Thoughts… Interviewees Additional perspectives Transformation of Industry Sectors Marginal Cost of Computing Goes To Zero AI for roles in business and society Digital Twins of People to Accelerate Communications, Coordination, Collaboration – Win-Win Outcomes Change Requiremennts David Nordfors & Toyama (2015) Geek Heresy Name (Actionable - Will), Definition (Logic - Mind), Narrative (Story – Heart) Interviewees Markus Warg

26. Markus Warg Interviewee