Tag Archives: IoT
Recently, I got to speak to a CIO at a Global 500 Company about the challenges of running his IT organization. He said that one of his biggest challenges is getting business leaders to understand technology better. “I want my business leaders to be asking for digital services that support and build upon their product and service offerings”. I think that his perspective provides real insight to how businesses should be thinking about the so called Internet of Things (IoT), but let me get you there first.
What is the IoT?
According to Frank Burkitt of @Strategy, by 2029, an estimated 50 billion devices around the globe will be connected to the Internet. Perhaps a third will be computers, smartphones, tablets, and TVs. The remaining two-thirds will be “things”–sensors, actuators, and intelligent devices that monitor, control, analyze, and optimize our world. Frank goes on to say if your company wants to stake a claim in the IoT, you first need to develop a distinctive “way to play”—a clear value proposition that you can offer customers. This should be consistent with your enterprise’s overall capabilities system: the things you do best when you go to market.
While what Frank suggests make great sense, they do not in my opinion provide the strategic underpinning that business leaders need to link the IoT to their business strategy. Last week an article in Harvard Business Review by Michael Porter and James E. Heppelmann shared what business leaders need to do to apply the IoT to their businesses. According to Porter and Hepplemann, historical, enterprises have defined their businesses by the physical attributes of the products and services they produce. And while products have been mostly composed of mechanical and electrical parts, they are increasingly becoming complex systems that combine hardware, sensors, data storage, microprocessors, software, and data connectivity.
The IoT is really about creating a system of systems
Porter and Hepplemann share in their article how connectivity allows companies to evolve from making point solutions, to making more complex, higher-value “systems of systems”. According to Russell Ackoff, a system’s orientation views customer problems “as a whole and not on their parts taken separate” (Ackoff’s Best, Russell Ackoff, John Wiley and Sons, page 47). This change means that market winners will tend to view business opportunities from a larger versus a smaller perspective. It reminds me a lot of what Xerox did when it transformed itself from commoditized copiers to high priced software based document management where the printer represent an input device to a larger system. Porter and Hepplemann’s give the example of a company that sells tractors. Once a tractor is smart and connected, it becomes part of a highly interconnected agricultural management solution.
According to Porter and Hepplemann, the key element of “smart, connected products” is they take advantage of ubiquitous wireless connectivity to unleash an era where competition is increasingly about the size of the business problem solved. Porter and Hepplemann claim that as smart, connected products take hold, the idea of industries being defined by physical products or services alone will cease to have meaning. What sense does it make to talk about a “tractor industry” when tractors represent just a piece of an integrated system of products, services, software, and data designed to help farmers increase their crop yield?
Porter and Hepplemann claim, therefore, the phrase “Internet of Things” is not very helpful in understanding the phenomenon or even its implications. They say after all what makes smart, connected products fundamentally different is not the Internet, it is a redefinition of what is a product and the capabilities smart, connected products provide and the data they generate. Companies, therefore, need to look at how the IoT will transform the competition within their specific industries.
Like a business slogan, the IoT is about putting IT inside
IT leaders have a role to play in the IoT. They need to move IT from just assisting business management drive improvements to the company value chain to organizations that as well embed IT in what become system oriented products. How perceptive, therefore, was my CIO friend.
Porter and Hepplemann claim connectivity serves two purposes. First, it allows information to be exchanged between a product and its operating environment, its maker, its users, and other products and systems. Second, connectivity enables some functions of the product to exist outside the physical device. Porter and Hepplemann give the example of Schindler’s PORT Technology that reduces elevator wait times by as much as 50% by predicting elevator demand patterns, calculating the fastest time to destination, and assigning the appropriate elevator to move passengers quickly. Porter and Hepplemann see as well intelligence and connectivity enabling an entirely new set of product functions and capabilities, which can be grouped into four categories: monitor, control, optimize, and autonomy. To be clear, a systems product can potentially incorporate all four.
- Monitored products alert users to changes in circumstances or performance. They can provide a product’s operating characteristics and history. A company must choose the set customer value and define its competitive positioning. This has implications design, marketing, service, and warranty.
- Controlled products can receive remote commands or have algorithms that are built into the device or reside in the product’s cloud. For example, “if pressure gets too high, shut off the valve” or “when traffic in a parking garage reaches a certain level, turn the overhead lighting on or off”.
- Optimized products apply algorithms and analytics to in-use or historical data to improve output, utilization, and efficiency. Real-time monitoring data on product condition and product control capability enables firms to optimize service.
- Autonomous product like are able to learn about their environment, self-diagnose their own service needs, and adapt to users’ preferences.
Smart, connected products expand opportunities for product differentiation
In a world where Geoffrey Moore sees differentiated products constantly being commoditized; smart, connected products dramatically expand opportunities for product differentiation and move the competition away from price alone. Knowing how customers actually use your products enhances a company’s ability to segment customers, customize products, set prices to better capture value, and extend value-added services. Smart, connected products, at the same time, create opportunities to broaden the value proposition beyond products per se, to include valuable data and enhanced service offerings. Broadening product definitions can raise barriers to entrants even higher. The powerful capabilities of smart, connected products not only reshape competition within an industry, but they can expand the very definition of the industry itself. For example, integrating smart, connected farm equipment—such as tractors, tillers, and planters—can enable better overall equipment performance.
Smart, connected products will not only reshape competition within an industry, but they can expand the very definition of the industry itself. Here Porter and Hepplemann are talking here about the competitive boundaries of an industry widen to encompass a set of related products that together meet a broader underlying need. The function of one product is optimized with other related products.
Porter and Hepplemann believe that smart, connected products allow as well companies to form new kinds of relationships with their customers. In many cases, this may require market participants to develop new marketing practices and skill sets. As companies accumulate and analyze product usage data, they will as well gain new insights into how products create value for customers, allowing better positioning of offerings and more effective communication of product value to customers. Using data analytics tools, firms will be able segment their markets in more-sophisticated ways, tailor product and service bundles that deliver greater value to each segment, and price those bundles to capture more of that value.
Some parting thoughts
So summarizing their position, Porter and Hepplemann believe the IoT is really about taking smart things and building solutions that solve bigger problems because one can architect the piece parts into a solution of solutions. This will impact marketplace dynamics and create competitive differentiators in a world of increasing product commodization. For me this is a roadmap forward especially for those at the later stages of product lifecycle curve.
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Thomas Davenport Book “Competing On Analytics”
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Author Twitter: @MylesSuer
Last week I had the opportunity to attend the Gartner Security and Risk Management Summit. At this event, Gartner analysts and security industry experts meet to discuss the latest trends, advances, best practices and research in the space. At the event, I had the privilege of connecting with customers, peers and partners. I was also excited to learn about changes that are shaping the data security landscape.
Here are some of the things I learned at the event:
- Security continues to be a top CIO priority in 2014. Security is well-aligned with other trends such as big data, IoT, mobile, cloud, and collaboration. According to Gartner, the top CIO priority area is BI/analytics. Given our growing appetite for all things data and our increasing ability to mine data to increase top-line growth, this top billing makes perfect sense. The challenge is to protect the data assets that drive value for the company and ensure appropriate privacy controls.
- Mobile and data security are the top focus for 2014 spending in North America according to Gartner’s pre-conference survey. Cloud rounds out the list when considering worldwide spending results.
- Rise of the DRO (Digital Risk Officer). Fortunately, those same market trends are leading to an evolution of the CISO role to a Digital Security Officer and, longer term, a Digital Risk Officer. The DRO role will include determination of the risks and security of digital connectivity. Digital/Information Security risk is increasingly being reported as a business impact to the board.
- Information management and information security are blending. Gartner assumes that 40% of global enterprises will have aligned governance of the two programs by 2017. This is not surprising given the overlap of common objectives such as inventories, classification, usage policies, and accountability/protection.
- Security methodology is moving from a reactive approach to compliance-driven and proactive (risk-based) methodologies. There is simply too much data and too many events for analysts to monitor. Organizations need to understand their assets and their criticality. Big data analytics and context-aware security is then needed to reduce the noise and false positive rates to a manageable level. According to Gartner analyst Avivah Litan, ”By 2018, of all breaches that are detected within an enterprise, 70% will be found because they used context-aware security, up from 10% today.”
I want to close by sharing the identified Top Digital Security Trends for 2014
- Software-defined security
- Big data security analytics
- Intelligent/Context-aware security controls
- Application isolation
- Endpoint threat detection and response
- Website protection
- Adaptive access
- Securing the Internet of Things
As a Tesla owner, I recently had the experience of calling Tesla service after a yellow warning message appeared on the center console of my car.” Check tire pressure system. Call Tesla Service.” While still on the freeway, I voice dialed Tesla with my iPhone and was in touch with a service representative within minutes.
|Me: A yellow warning message just appeared on my dash and also the center console.
Tesla rep: Yes, I see – is it the tire pressure warning?
Me: Yes – do I need to pull into a gas station? I haven’t had to visit a gas station since I purchased the car.
Tesla rep: Well, I also see that you are traveling on a freeway that has some steep elevation – it’s possible the higher altitude is affecting your car’s tires temporarily until the pressure equalizes. Let me check your tire pressure monitoring sensor in a half hour. If the sensor still detects a problem, I will call you and give further instructions.
As it turned out, the warning message disappeared after ten minutes and everything was fine for the rest of the trip. However, the episode served as a reminder that the world will be much different with the advent of the Internet of Things. Just as humans connected with mobile phones become more productive, machines and devices connected to the network become more useful. In this case, a connected automobile allowed the remote service rep to remotely access vehicle data, read the tire pressure sensor as well as the vehicle location/elevation and was able to suggest a course of action. This example is fairly basic compared to the opportunities afforded by networked devices/machines.
In addition to remote servicing, there are several other use case categories that offer great potential, including:
- Preventative Maintenance – monitor usage data and increase the overall uptime for machines/devices while decreasing the cost of upkeep. e.g., Tesla runs remote diagnostics on vehicles and has the ability to identify vehicle problems before they occur.
- Realtime Product Enhancements – analyze product usage data and deliver improvements quickly in response. e.g., Tesla delivers software updates that improve the usability of the vehicle based on analysis of owner usage.
- Higher Efficiency in Business Operations – analyze consolidated enterprise transaction data with machine data to identify opportunities to achieve greater operational efficiency. e.g., Tesla deployed waves of new fast charging stations (known as superchargers) based upon analyzing the travel patterns of its vehicle owners.
- Differentiated Product/Service Offerings – deliver new class of applications that operate on correlated data across a broad spectrum of sources (HINT for Tesla: a trip planning application that estimates energy consumption and recommends charging stops would be really cool…)
In each case, machine data is integrated with other data (traditional enterprise data, vehicle owner registration data, etc.) to create business value. Just as important to the connectivity of the devices and machines is the ability to integrate the data. Several Informatica customers have begun investing in M2M (aka Internet of Things) infrastructure and Informatica technology has been critical to their efforts. US Xpress utilizes mobile censors on its vast fleet of trucks and Informatica delivers the ability to consolidate, cleanse and integrate the data they collect.
My recent episode with Tesla service was a simple, yet eye-opening experience. With increasingly more machines and devices getting wireless connected and the ability to integrate the tremendous volumes of data being generated, this example is only a small hint of more interesting things to come.