There’s certainly some technology push contributing to the current high visibility of the Internet of Things (IoT). Cloud, embedded software and mobile communications all make the IoT possible. But the IoT business case needs identifiable, down-to-earth use cases and opportunities. This article uses some examples to highlight the value of the business know-how of corporate IT for successful IoT projects.
The IoT vision starts by connecting “things” – that is to say, objects of every description, from consumer goods to heavy machinery – to the Internet. With this communication channel in place, the vision is for cost savings, improved performance and functions you hadn’t imagined possible.
The connection of the “things” to the Internet is high tech and fascinating but not the focus of this article. Let’s assume engineering can build this capability into your company’s products. It’s remarkable technology, but it shares some of the characteristics of a telephone call to Mars. That’s to say, it’s only relevant if the conversation offers some added value. For this, it’s necessary to have someone or something at both ends.
With “things” at one end of the line, added value comes from business systems at the other end. So when you launch your organization’s initiatives in this area, you will probably need both engineering and corporate IT to buy in to your vision for new revenue streams, growth and profit. It’s worth remembering the business of music for consumer devices. The capability of a device to play audio files is a start. But disruption, transformation and new business also depend on an ecosystem of back-end services to deliver new music and album art as well as recommendations and reviews.
Let’s look at some examples.
Performance analysis. The opportunity might be for engineering to monitor in-service performance so that they can make the next version better. Or it might be for warranty processing to check claims and be sure the product was operated within its specifications. Or it might be for field service to run a help desk where products can trigger alarms and service people can connect to them to see what’s going on. The needs of these groups are all different. Engineering wants to see and think about all the information. Warranty needs legally defendable records of exceptions. Field service needs to work through a diagnostic or adjustment process.
Predictive service. This involves field service again, but this time seeking to offer a better service than existing third-party service groups. So the in-house service team wants to invest in data analytics that will interpret a product’s sensor readings and predict a need for service. They’ll reduce costs by eliminating unnecessary regular maintenance, and they’ll get better customer satisfaction scores.
Over-the-air upgrades. When product features are implemented with software, then new features can be delivered using over-the-air upgrades. Sales will want to make use of this and change the way that new software features are offered and delivered to customers. Perhaps free trials, or 30-day rental is appropriate.
Configure-to-contract. In the past, the local sales office or distributor might have earned points of margin for setting switches to match the needs of an international region. More recently, they may have needed to apply the bar code that the product reads on first start-up to configure itself. The IoT version of this is that the product phones home to find out what set of functions it should deliver during its current assignment.
The point is that to deliver any of these capabilities, the connected product is half the story; the other half is an efficient process integrating the connected product into back-end IT services.
The customer will not expect billing for over-the-air upgrades to be some separate process. The definition of contract conditions to automate configure-to-contract will need to be part of the normal sales process. A service group needs to offer predictive service in a way that fits parts distribution, technician scheduling and customer contact procedures.
New connectivity to in-service products can raise some interesting business questions. What if sensor readings show the help desk that a pump on the other side of the world is about to burst into flames? A whole-business view will be needed to ensure the right actions are both taken and recorded.
Two different CIO perspectives
For some CIOs, the IoT challenge is irresistible. It represents something that is not only mission critical (like the ERP system) but is also truly at the sharp end of their company’s reason-for-being. The cost-efficiency and razor-sharp administration of a great ERP implementation may be important, but it’s not usually the subject the CEO chooses to talk about at an investor meeting, nor is it a candidate for the unique selling points the sales teams want prospects to hear about.
For this group of CIOs, there’s only one option: own the IoT data, architect the systems, guide the line-of-business groups, run the projects and show the CEO that IT is not just a cost to be squeezed and that it can be a source of core value to the customer.
For other CIOs, the balance is different. If the business has a diverse set of business units, it may well be that the key value-add from a central IT function is much more to do with governance, risk-management and compliance. So the focus is the vision of consistency and integration with core corporate systems.
This does not mean that IT should be the source of rules and restrictions that stop things from happening. Far from it – IT’s experience of agile development projects will be a key source of risk mitigation and the way to ensure visibility of complex change. This is the capability that will enable the company to run experiments, learn from them, engage stakeholders and identify the most effective way of creating and operating IT for the IoT.
IT team needs to get involved early
If your organization might be affected by the IoT, the key is to get involved in the early conversations. Here are four tips:
- Show line-of-business teams that the IT team has something to say and something to offer in relation to new business opportunities such as those above.
- Show the executive team that alongside the opportunities presented by engineering, sales and service, there is also a set of complexities and risks that are familiar territory for IT professionals.
- Help your organization beat the competition by encouraging experiments and prototypes.
- Create the roadmap that moves existing applications and databases forward to support your IoT devices with a solid, fast, scalable platform of IT services for the future.
Peter Thorne is managing director of Cambashi. Peter has applied information technology to engineering and manufacturing enterprises for more than 20 years, holding development, marketing and management positions with both user and vendor organizations. Immediately prior to joining Cambashi in 1996, he headed the UK arm of a major IT vendor’s engineering systems business unit, which grew from a small R&D group to a multimillion-pound profit center under his leadership.