Challenges for the next five years: Security and interoperability

Challenges for the next five years:Security and interoperability TSANet Europe Members MeetingMainz 2nd December 2004 Prof. Jim Norton Independent Director Senior Policy Adviser UK Institute of Directors www.profjimnorton.com

Issues to be covered • Setting the scene - technological cost-performance continues to grow exponentially. • E-Business is now mainstream business… • Affordable broadband access: benefit and curse. • Can the existing model of highly distributed computing be made secure? • New models from Grid Computing and ASP? • Some final thoughts.

The second half of the chessboard Original idea: George Gilder at the Cato-Brookings Institution conference "Regulation in the Digital Age," held in Washington D.C. on April 17-18, 1997.

1,000,000,000,000 100,000,000,000 10,000,000,000 1,000,000,000 100,000,000 10,000,000 1,000,000 100,000 10,000 1,000 100 10 1 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 The cost-performance of electronics doubles every 18-24 months (Moore’s Law) 33 Doublings Source: Analysys

Pentium 4 Pentium III Pentium II 8008 Pentium 80486DX 80286 8080 4004 8086 80386DX Moore’s Law in Action:Intel Microprocessors 2T/18 Source: Intel & Silicon Image

Yemi Lawal: pp346003 op fibre & 45 000 40 000 35 000 30 000 Mbit/s 25 000 20 000 15 000 10 000 5000 0 1975 1980 1985 1990 1995 2000 2005 Opto-electronics follow the same path (Moore’s Law operates in telecoms, too) 31 Doublings Source: Analysys

Gigabit Ethernet installed base growth Millions Source: IDC & Silicon Image

1,000,000,000,000 100,000,000,000 10,000,000,000 1,000,000,000 100,000,000 10,000,000 1,000,000 100,000 10,000 1,000 100 10 1 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 The cost-performance of magnetic storage doubles roughly every 18months… 26 Doublings Source: Silicon Image

Disk storage density is growing exponentially too… Source: IDC & Silicon Image

Magnetic disk costs (3.5” platters) Source: IDC & Silicon Image

Cooper’s law for wireless 42 Doublings Cooper’s Law, (after ArrayComm Chairman, Martin Cooper), states that the number of conversations (voice and data) conducted over a given area, in all of the useful radio spectrum, has doubled every two and a half years for the last 105 years, ever since Marconi discovered radio in 1895 Source: ArrayComm

23 000 Miles of wire in the USA 12 000 2000 40 1850 1852 1846 1848 Year But we have seen this before in the context of the telegraph… Source: Tom Standage, The Economist, “The Victorian Internet”

Microsoft Corporation, 1978 The first half of the chessboard has already delivered some surprises

Mobility will drive the second half of the board… ….welcome to the world of m-business

How will the mobile phone change to become a true m-business device? • Keypad - removed in 2005 - replaced by continuous voice recognition. • Screen - upgraded by end 2006 - made as large as you wish using foldable amorphous semiconductor. • Communications - upgrading: • now nationally to 28.8 kbps (HSCSD) and 40 kbps (GPRS); and • Now rolling out 3G to 384 kbps wide area 2 Mbps in building. • Processing - by end 2006 as capable as as top of the range year 2003 laptop. • Battery life - probably the biggest problem! Methane based micro-fuel cells by 2006/7. Source: A little informed speculation!

Don’t forget the short-range mobility technologies In five years time: • no devices will be tethered to fixed infrastructure. There will be extensive use of: • Bluetooth - up to 723 kbps, range 10 to 100 metres; • Personal Area Networks - up to 480 Mbits/sec, range 1-10 metres; • UMTS - DECT enhancements • WiMax - up to 70Mbits/sec 50km reach; and • Wireless LANs 11 & 54 Mbits/sec. • there will be massive fibre capacity to the curb or building, but extensive use of radio for the last 10 metres internally and last 100 metres to 5 kilometres outside; and • devices will be dual standard for use both inside and outside buildings.

Estimated hotspot users worldwide at end 2003 Total users = 9.1 Million Wireless LANs taking off.. Exponential growth in hotspot locations. It is expected that, worldwide, by the end of 2005 there will be Wireless LANs operating in: • 420 airports; • 5,000 enterprise guest areas; • 23,500 hotels; • 85,500 retail locations; and • 30,500 community points. 71,000 public wireless LANs were expected to be operating worldwide by the end of 2003. Getting users to take security seriously continues to be a major nightmare… Source: Gartner July 2003

We are drowning in data…. Where is the life we have lost in living? Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information? T S Eliot, Choruses from ‘The Rock’, 1934 And a codicil for the 21st century… Where is the information we have lost in data? The World produces more than 2 Exabytes (2 Billion Gigabytes) of unique information per year, more than 250 Megabytes for every man, woman and child on earth…

We have moved on from where this all started… With acknowledgement to the UK Office of the e-Envoy

A cartoonist sums it up beautifully… With acknowledgement to Roger Beale at the Financial Times - 13/3/01

It was ever thus…the e-Biz trough of disillusion Source: Gartner Group - 1999

With acknowledgement to Roger Beale at the Daily Telegraph...

Why is e-Business important? The e-business scope compass “When I took a look at Boeing’s interaction costs and discovered that e-enabling the business could save as much as 50%, I became an instant believer…” Phil Condit Chairman & CEO The Boeing Company - 2001 The e-business scope compass source: Mohanbir Sawhney - Kellogg Management School Northwestern University Chicago

Developing enterprise integration is a long climb… The further we climb up this ladder the more inter-working of disparate systems is required across both organisational and corporate boundaries. A classic TSANet challenge…? The ladder of e-business initiatives, source: Mohanbir Sawhney - Kellogg Management School Northwestern University Chicago

Resolution of the Solow productivity paradox Policy-makers and economists have long debated the role of information and communications technology (ICT) in the economy. The traditional view in the 1980s and 1990s was that its impact was limited. This was well characterised by the Solow Productivity Paradox that "you can see the computer age everywhere but in the productivity statistics". A confluence of new evidence based on analysis of US economic performance in the late 1990s demonstrates a strong inter-dependence and that ICT has had a substantial impact on GDP. This view has been supported by research by the EC that lies behind the claim by Erkki Liikanen, Commissioner for enterprise and information society, in October 2003 that "there is more and more evidence that the adoption of ICT is a key to productivity growth. In the US, it has been unusually robust, and has spread to the wider economy." Innovation in ICT has a transformational impact on productivity and growth - in the US, ICT produced an estimated one percentage point increase in yearly GDP growth in the late 1990s. Evidence and reasoned argument point to this productivity and growth improvement continuing for many years to come. Applying the same logic to the European economy, ICT could increase our future GDP growth rate from 2 per cent to 3 per cent. ICT can do to our economy in the 21st century what railroads did in the 1800s and electricity in the 1900s. Source: Andrew Heaney of Spectrum Strategy Consultants and Brian Williamson of Indepen, "Reaping the Telecoms Dividend" January 2004. Quoted in the Financial Times 18 Feb 2004

Adopt Impact Environment Deploy People Aware Technology Processes Assembling the ‘Sophistication Index’ Based on a fusion of the ‘three pillars’ and ‘technology innovation lifecycle’ approaches with 54 sub-indicators. Source: UK DTI Business in the Information Age: International Benchmarking Study 2003 Page 124 www2.bah.com/dti2003

Sophistication Index 2004 - Results The order of merit is: Sweden, Rep. Of Ireland, UK, Germany, S. Korea, Canada, USA, Australia, Italy, Japan, France. Source: Business in the Information Age, International Benchmarking Study 2004 Page 107 UK Department of Trade & Industry / Booz Allen Hamilton http://www2.bah.com/dti2004

Integration of ICT systems with suppliers Whilst many companies now routinely interact online with suppliers (e.g. to order or pay for supplies or to track orders, only 20% have so far moved to tighter integration such as automated call off of orders Source: Business in the Information Age, International Benchmarking Study 2004 Page 85 UK Department of Trade & Industry / Booz Allen Hamilton http://www2.bah.com/dti2004

Integration of ICT systems with customers Similarly, whilst many companies now routinely interact online with customers (e.g. to accept orders and payments or to allow orders tracking, only 23% have so far moved to tighter integration such as automated replenishment of supplies. Source: Business in the Information Age, International Benchmarking Study 2004 Page 86 UK Department of Trade & Industry / Booz Allen Hamilton http://www2.bah.com/dti2004

Broadband access: A working definition “Always on access, at work, at home, or on the move provided by a range of fixed line, wireless and satellite technologies to progressively higher bandwidths capable of supporting genuinely new and innovative interactive content, applications and services and the delivery of enhanced public services.” Source: UK Broadband Stakeholder Forum - Jan 2004

What we mean by ‘Broadband’…Speed Large business has had access to broadband for many years, only mass market, affordable broadband is new… Mass market broadband is a journey. There is no simple, single definition that holds over time: Stage Typical Speed Typical Application 1st Generation 256kb/s - 2Mb/s Fast Internet access 2nd Generation 2Mb/s - 5Mb/s Applic. Serv. Prov. 3rd Generation 5Mb/s - 50Mb/s Real time video Broadband services are ‘always on’ and charged simply by rental or by volume of data shipped not by connected time… Source: UK Broadband Stakeholder Forum

Broadband Internet penetration in Europe • Broadband quarterly growth rates are: • UK 17% • France 11% • Germany 8% Source: UK Ofcom Communications market update Oct 2004

Dramatic growth of broadband connections in UK UK still adding more than 50K broadband customers each week…. Source: UK Ofcom Communications market update Oct 2004

ADAPT ABSORB ADOPT Benefit Time • Speed up processes • Fast always-on access for e-mail and web • Improved communications • Improved productivity • Improved staff satisfaction • Reduced costs • New processes • Address new markets • New business models • Outsource non-core functions • Reduce office space • Adapt processes • More efficient procurement • More flexible working • More e-Learning • Adapt sales & mktg. • Exploit VoIP Broadband impact on e-business processes Source: UK Broadband Stakeholder Forum

What quantifiable benefits are we seeing from business use of broadband access? 84.3% of respondents cite productivity improvements from broadband access. 64% of respondents see a direct link between broadband and increased profits. Source: UK/IoD Policy Unit survey on broadband access Oct 2004

Many respondents believe that broadband access brings very significant business benefits Better and faster R&D. Better information for decisions Can now do jobs we would not have contemplated four years ago. Couldn’t do business without it. Improved communications with/for outworkers Transforms way of working. Speed and ability to work anywhere in the World Quick access to worldwide web with huge increase in use at low fixed monthly cost. Source: UK/IoD Policy Unit survey on broadband access Oct 2004

What measures do you take to protect your home (or home office) PC against viruses and other security threats? There are still significant vulnerabilities with 10% of respondents not using a firewall and 23% not regularly installing security updates… Source: UK/IoD Policy Unit survey on broadband access Oct 2004

Can the existing model of highly distributed computing be made secure? Today’s model, based on individual processors and servers on the end of 120+ million broadband connections across the world, is inherently insecure. Even with the heroic assumption that 99% have fully configured firewalls, up to date virus protection, and fully patched browsers, this would still leave more than 1 million processors vulnerable. Current research suggests, for example, that a broadband attached PC without a functioning firewall will be located and infected within about 20 minutes… It will almost certainly become infected with “trojan” viruses and able to participate in denial of service attacks. I submit that this is not sustainable for much longer…

Average loss by business issue type, US businesses (‘000US$) Source: Computer Security Institute /FBI Computer Crime & Security Survey 2004 - Average of total loss reported by 269 businesses

More issues with ‘Malware” • The top five malware families of all time including hybrids are: 1. MyDoom; 2. Netsky; 3. SoBig; 4. Klez; and 5. Sasser. • The total economic damage worldwide from malware proliferation - with an additional 480 new species in 2004 alone - is now estimated to lie between $166bn and $202bn for 2004. • With an installed base of around 600 million Windows based computers worldwide, this works out roughly as average damage per installed machine of between $277 and $336. Source: mi2g briefing 21st November 2004. See: http://www.mi2g.net

New models from Grid Computing and ASP? I suggest that processing will move into the network (along the model long highlighted by Sun and Silicon Image) where it can be fully and professionally protected. This will leave very thin clients (screen scrapers) only at the edge with little if any processing to infect. Software, processing and storage will be available on a pay per use basis - e.g. Application Service Provision (ASP). Recent research in the UK by IoD/Dell suggests that SMEs are now much more willing to consider an ASP model… This model powered by broadband access will greatly benefit small business…

Some final thoughts…. • E-business has not gone away! The excess of gloom on the ‘downside’ was just as wrong as the earlier excess of ‘hype’. • Normal ‘Darwinian’ processes have removed from the market those who had wacky business plans and little common sense… • E-business is now being integrated into ‘traditional’ business, bringing major cost savings, service enhancements and new business opportunities. Secure interoperability is an essential element of these savings and improvements… • Affordable broadband access levels the playing field between large and small business but, combined with the fallibility of small office & home users, raises major security exposures. • The major challenge for the next five years is to find ways of stabilising the existing model of distributed processing - or replacing it with a new model…

Oh dear…! But always remember that major change can sometimes have unexpected impacts….

Questions & Answers Slides can be downloaded from: www.profjimnorton.com/tsanet3.ppt

Challenges for the next five years: Security and interoperability