Michael Snowden has mined his PhD research – completed 31 years ago – for a cloud service to be deployed by OneNet, of which he is chief executive. The product, Profit Maximising Software, is a set of software modules which mathematically determines the optimal operational and financial decisions to maximise profits, based on uncertain forecasts of future opportunities and current financial position of an enterprise.. In a background paper on the project, Snowden explains the software uses ‘Monte Carlo methods’ - a reference to thousands of simulations that are run to build an overall ‘roulette wheel’, or probability distribution, of demand. The uncertain future is tested under thousands of different possible combinations of outcomes to help determine the overall likely future, given the best guesses that can be made today. Future demand is projected with probability estimates for all services and other key variables. The software calculates the absolute maximum profit that could be obtained, given the assumptions made. Snowden says his PhD research used simulation and optimisation to gain these results but was hampered by the cost and availability of high performance computing at the time. In the late 1970s, for instance, building a financial model of a firm could cost up to hundreds of thousands of dollars. He pitched the software to be part of this year’s Infosys 345 Business Project at the University of Auckland. Three senior students from the Department of Information Systems and Operation Management: Michael Hoskins, Kyle Folster and Joshua Monteiro, worked with OneNet to apply it to actual business scenarios.
Snowden says the project allowed the software to be tested in a low risk and low financial investment environment. The software might otherwise not have been produced given the uncertain market potential and the enormous commercial cost of developing such software, he adds. Michael Hoskins, team leader of the students assigned to test the software, concurs, saying in the past, enterprises wishing to tap the capability the software offers had to create a custom system. “But to build it from scratch can cost quite a lot of money," he says. In the background paper on the project, Snowden says the Monte Carlo simulation was originally used during the Manhattan Project, which led to the development of the atomic bomb. But large firms now employ Monte Carlo methods to help reduce the risk of an uncertain future. Snowden says the project which led to the development of OneNet’s profit maximising software, is at a commercial “fledgling” stage. He says OneNet and its resellers will be the first to offer the capability as a service and expects it to be available to the general business community in the middle of next year.
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