don't let this happen to you! cloud, complexity and drift

69
Don’t let this happen to you! Cloud, complexity and drift James Urquhart @jamesurquhart http://gigaom.com/cloud

Upload: jurquhart

Post on 18-Nov-2014

8.138 views

Category:

Business


3 download

DESCRIPTION

Presentation given at Gluecon 2012 on Thursday morning at 9AM MT. Covers complex adaptive systems and systems thinking as applied to cloud computing and the API economy.

TRANSCRIPT

Page 1: Don't let this happen to you! Cloud, complexity and drift

Don’t let this happen to you!Cloud, complexity and drift

James Urquhart@jamesurquhart http://gigaom.com/cloud

Page 2: Don't let this happen to you! Cloud, complexity and drift

May 6, 2010

Page 3: Don't let this happen to you! Cloud, complexity and drift
Page 4: Don't let this happen to you! Cloud, complexity and drift

”[A] large fundamental trader chose to execute [a $4.1B] sell program via an automated execution algorithm ('Sell Algorithm')."

- Findings Regarding The Market Events of May 6, 2010http://www.sec.gov/news/studies/2010/marketevents-report.pdf

Page 5: Don't let this happen to you! Cloud, complexity and drift

"...the Sell Algorithm…executed the sell program extremely rapidly in just 20 minutes.”

The market responded, and trading volume increased…

"... [The Sell Algorithm] responded to the increased volume by increasing the rate at which it was feeding the orders into the market."

- Findings Regarding The Market Events of May 6, 2010http://www.sec.gov/news/studies/2010/marketevents-report.pdf

Page 6: Don't let this happen to you! Cloud, complexity and drift
Page 7: Don't let this happen to you! Cloud, complexity and drift

Quick!What was the root cause?

Page 8: Don't let this happen to you! Cloud, complexity and drift

Market AAutomatic

Trading Algorithm 1

Page 9: Don't let this happen to you! Cloud, complexity and drift

Market AAutomatic

Trading Algorithm 1

Automatic Trading

Algorithm 2

Automatic Trading

Algorithm 3

Automatic Trading

Algorithm 4

Page 10: Don't let this happen to you! Cloud, complexity and drift

Market AAutomatic

Trading Algorithm 1

Automatic Trading

Algorithm 2

Automatic Trading

Algorithm 3

Automatic Trading

Algorithm 4

Market B

Page 11: Don't let this happen to you! Cloud, complexity and drift

Market AAutomatic

Trading Algorithm 1

Automatic Trading

Algorithm 2

Automatic Trading

Algorithm 3

Automatic Trading

Algorithm 4

Market B

Automatic Trading

Algorithm 5

Automatic Trading

Algorithm 6

Page 12: Don't let this happen to you! Cloud, complexity and drift

Market AAutomatic

Trading Algorithm 1

Automatic Trading

Algorithm 2

Automatic Trading

Algorithm 3

Automatic Trading

Algorithm 4

Market B

Automatic Trading

Algorithm 5

Automatic Trading

Algorithm 6

Page 13: Don't let this happen to you! Cloud, complexity and drift

Automatic Trading

Algorithm N

Automatic Trading

Algorithm N Market A

Automatic Trading

Algorithm 2

Automatic Trading

Algorithm 3

Automatic Trading

Algorithm 4

Market B

Automatic Trading

Algorithm 5

Automatic Trading

Algorithm 6

Automatic Trading

Algorithm N

Page 14: Don't let this happen to you! Cloud, complexity and drift
Page 15: Don't let this happen to you! Cloud, complexity and drift

“Root cause” is not an answer—it’s a clue.

Page 16: Don't let this happen to you! Cloud, complexity and drift

"May 6 was…an important reminder of the interconnectedness of our derivatives and securities markets, particularly with respect to index products."

- Findings Regarding The Market Events of May 6, 2010http://www.sec.gov/news/studies/2010/marketevents-report.pdf

Page 17: Don't let this happen to you! Cloud, complexity and drift

Interconnectedness

Page 18: Don't let this happen to you! Cloud, complexity and drift

The Internet is about interconnectedness.

Page 19: Don't let this happen to you! Cloud, complexity and drift

APIs are about interconnectedness.

Page 20: Don't let this happen to you! Cloud, complexity and drift

“The cloud” is about interconnectedness.

Page 21: Don't let this happen to you! Cloud, complexity and drift
Page 22: Don't let this happen to you! Cloud, complexity and drift

Both cloud computing and stock markets are

complex adaptive systems.

Page 23: Don't let this happen to you! Cloud, complexity and drift

COMPLEX?!?

Page 24: Don't let this happen to you! Cloud, complexity and drift
Page 25: Don't let this happen to you! Cloud, complexity and drift

What areComplex Adaptive

Systems?

Page 26: Don't let this happen to you! Cloud, complexity and drift
Page 27: Don't let this happen to you! Cloud, complexity and drift
Page 28: Don't let this happen to you! Cloud, complexity and drift
Page 29: Don't let this happen to you! Cloud, complexity and drift

A large number of individual agents

Page 30: Don't let this happen to you! Cloud, complexity and drift

Agents

State

Rules

OtherAgents

OtherAgents

Information/Actions

Information/Actions

Learning

Page 31: Don't let this happen to you! Cloud, complexity and drift

A large number of individual agents

+ dynamic interactions between agents

Page 32: Don't let this happen to you! Cloud, complexity and drift

Dynamic Interaction

From NetLogo 4.1.3

Page 33: Don't let this happen to you! Cloud, complexity and drift

A large number of individual agents

+ dynamic interactions between agents

+ rules for reacting to/interacting with other agents

Page 34: Don't let this happen to you! Cloud, complexity and drift

Rules

Page 35: Don't let this happen to you! Cloud, complexity and drift

Equals

Page 36: Don't let this happen to you! Cloud, complexity and drift

A system that:

demonstrates emergent behavior,

Page 37: Don't let this happen to you! Cloud, complexity and drift

Emergent Behavior

Page 38: Don't let this happen to you! Cloud, complexity and drift

A system that:

demonstrates emergent behavior,

can be modeled,

Page 39: Don't let this happen to you! Cloud, complexity and drift

Models

Time

Flocking model from NetLogo 4.1.3http://ccl.northwestern.edu/netlogo/

Page 40: Don't let this happen to you! Cloud, complexity and drift

A system that:

demonstrates emergent behavior,

can be modeled,

but

makes precise prediction of future behavior impossible.

Page 41: Don't let this happen to you! Cloud, complexity and drift

Unp

redi

ctab

ility

Page 42: Don't let this happen to you! Cloud, complexity and drift

Unpredictability

Page 43: Don't let this happen to you! Cloud, complexity and drift

Unpredictability

Page 44: Don't let this happen to you! Cloud, complexity and drift

Unp

redi

ctab

ility

Page 45: Don't let this happen to you! Cloud, complexity and drift

So…what can you do?

Page 46: Don't let this happen to you! Cloud, complexity and drift

EMBRACE COMPLEXITY

Page 47: Don't let this happen to you! Cloud, complexity and drift

Never!

Page 48: Don't let this happen to you! Cloud, complexity and drift

EMBRACE COMPLEXITY

SYSTEMS

Page 49: Don't let this happen to you! Cloud, complexity and drift

Embrace Systems Thinking

Page 50: Don't let this happen to you! Cloud, complexity and drift

Practical advice?

Page 51: Don't let this happen to you! Cloud, complexity and drift

Do your homework!

Page 52: Don't let this happen to you! Cloud, complexity and drift
Page 53: Don't let this happen to you! Cloud, complexity and drift

Design for resilience

Page 54: Don't let this happen to you! Cloud, complexity and drift

“The goal of producing a maximum sustained yield may result in a more stable system of reduced resilience.”

“Command and Control and the Pathology of Natural Resource Management”, C. S. Holling and Gary K. Meffehttp://landscape.forest.wisc.edu/courses/Landscape565spr01/Holling_Meffe1996.pdf

Page 55: Don't let this happen to you! Cloud, complexity and drift

“[T]he resilience-stability tradeoff is more than just a simple transformation in distribution. …[A]gents adapt to a prolonged period of stability in such a manner that the system cannot ‘withstand even modest adverse shocks.’”

“The Euro and the Resilience-Stability Tradeoff”, Ashwin Parameswaranhttp://www.macroresilience.com/2011/11/14/the-euro-and-the-resilience-stability-tradeoff/

Page 56: Don't let this happen to you! Cloud, complexity and drift
Page 57: Don't let this happen to you! Cloud, complexity and drift

Focus on relationships

Page 58: Don't let this happen to you! Cloud, complexity and drift

Automatic Trading

Algorithm N

Automatic Trading

Algorithm N Market A

Automatic Trading

Algorithm 2

Automatic Trading

Algorithm 3

Automatic Trading

Algorithm 4

Market B

Automatic Trading

Algorithm 5

Automatic Trading

Algorithm 6

Automatic Trading

Algorithm N

Page 59: Don't let this happen to you! Cloud, complexity and drift

Automatic Trading

Algorithm N

Automatic Trading

Algorithm N Market A

Automatic Trading

Algorithm 2

Automatic Trading

Algorithm 3

Automatic Trading

Algorithm 4

Market B

Automatic Trading

Algorithm 5

Automatic Trading

Algorithm 6

Automatic Trading

Algorithm N

Page 60: Don't let this happen to you! Cloud, complexity and drift

Circuit Breaker

Page 61: Don't let this happen to you! Cloud, complexity and drift

http://techblog.netflix.com/2011/12/making-netflix-api-more-resilient.html

Page 62: Don't let this happen to you! Cloud, complexity and drift

Avoid Drift

Page 63: Don't let this happen to you! Cloud, complexity and drift

Drift

Page 64: Don't let this happen to you! Cloud, complexity and drift

Avoiding Drift:Test production

Page 65: Don't let this happen to you! Cloud, complexity and drift

Release the monkeys!!!• Failure• Degredation• Usage

Page 66: Don't let this happen to you! Cloud, complexity and drift

Avoiding Drift:The agent is not the

system

Page 67: Don't let this happen to you! Cloud, complexity and drift

App-centric• Monitor each app

separately• Dig for root cause• Attempt to stabilize

System-centric• Monitor system at many

levels, and use as feedback• Search for system weakness• Focus on resilience

Page 68: Don't let this happen to you! Cloud, complexity and drift

Avoiding Drift:

YOUare part of the system

Page 69: Don't let this happen to you! Cloud, complexity and drift

Don’t let this happen to you!

Cloud, complexity and drift