Internet of Things…Let’s Make Connections
The Internet of Things is literally connections; connections between machines, connections to the Cloud, connections to business applications, connections between people. At this time I see three phases of IoT; the launch phase, where we are today is to monitor and alert, phase two, intelligence within things, and phase three, self-learning things. In parallel to these phases will be continued development of artificial intelligence, augmented/virtual reality and robotics to take IoT into the next stage.
What I see lacking in IoT today are defined, easy to use connections between IoT devices and data and business applications like ERP and CRM. I have no doubt these connections will come in the future so companies do not have to reinvent the wheel each time they implement an IoT solution. In this post I want to take a look at how IoT is being and can be used within businesses to make connections which help them better serve customers.
In Manufacturing IoT has been in use for many years now. With the advances in technology over the last few years IoT has exploded within the Manufacturing industry creating new business opportunities that were not possible with the older technology.
Machine to Machine (M2M) communications is just one area which could be unlimited potential for manufacturers. The scheduling and routing of machines and manufacturing processes is a complex set of activities and if one machine stops working then contingency plans need to be executed to keep the manufacturing schedule on track. IoT enabled machines can alert your systems when there are problems, communicate with other machines to find options for rerouting and provide information back to your ERP system to assist in managing schedules and rerouting work. Using IoT devices in this way can reduce downtime, reduce costs of maintenance and alleviate many other problems down the Supply Chain.
In recent years a new word has come into the business lexicon, servitization. Servitization is transitioning a product business into a service business. Through servitization of your products there is potential to address efficiency, risk and customer engagement all at once.
For example, a chemical manufacturer based in the U.K. supplies treatments for industrial plant machinery. Their customers are large operators with many sites and installations and they use a network of independent contractors to dose the machinery to maintain performance and service life. In the past, the independent contractors sent samples of treated fluid to the chemical manufacturer for analysis and when it is confirmed the dosing was performed correctly is payment made to the independent contractor. This process exposed the chemical manufacturer to a number of risks including product substitution and even product avoidance. Some contractors would not dose systems properly, but instead simply submited samples of the diluted chemical, presenting a potentially huge reputational risk from high failure rates of supposedly protected systems, combined with the loss of revenue.
Looking for a solution, the chemical manufacturer saw a way to bring value both to equipment operators and independent contractors using sensing and dispensing techniques connected via the cloud. The new process incorporates a combined sensor and dosing port that reports system status to a cloud server. Service calls are scheduled based on the constant monitoring of each machine. RFID ensures that the right chemical treatment is applied to a given machine while at the same time ensuring that substitute chemicals cannot be used. And because the condition is monitored continuously and automatically, there is no need to collect samples for analysis. Instead, using a smartphone app, the maintenance operator simply receives immediate confirmation from the cloud platform that the service call was completed satisfactorily and payment is on its way.
The types of data that can be acquired and used within Retail is unprecedented. This is data that allows you to better understand how external factors like the weather and social sentiment affect the business. IoT devices can track data that allows Retailers to "see" in-store behavior, which previously was only provided by web site analysis.
New data analysis tools provide Retailers with capabilities to work with large data sets in much less time. And the ability to get tangible, replicable insights from such things as video and smartphone behavior and heat-motion-light-moisture sensors in real time. All alongside standardized transaction and customer logs…and all at much less cost.
New revenue-generating services are becoming possible for Retailers. Services based upon the deep knowledge of shoppers, or the deep knowledge you provide shoppers about your product origins and quality.
Where Do I Start?
Don’t go into IoT with your traditional business model and expect new growth. To be successful with IoT you need to explore new business models that build on the data gathered from connected things. You will want to explore opportunities in software, cloud, and services, and consider different, innovative business models like usage-based pricing. These new approaches allow you to turn the sale of a product into an ongoing revenue stream that spans the entire product lifecycle, not just at the time of purchase.
IoT creates its own set of challenges in terms of security and data privacy, connectivity barriers, and a lack of standards to name a few. So start small with one part of your product and services. The data generated by connected devices creates opportunities to expand into many new vertical industries. But you can't go after every opportunity all at once.
Is your data trustworthy? Plan to spend time reviewing and refining your data management strategy to ensure the decisions you make based on that data are high quality and trustworthy. And your systems and processes are ready for you and your customers to manage the data explosion. Prove out your new business model; get the executive team behind it.
To succeed you cannot go it alone. No single company can do it all. You will need to establish new partners and engage with a broader ecosystem. You have to be ready to transform your traditional business model to position your company to succeed in a world with billions of connected things.
Posted by Mark D. Jensen, Sr. Manager Product Marketing, Distribution, Epicor
Follow Mark Jensen on Twitter @markdjensen