How to Rewire the Organization for the Internet of Things

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Success in the IoT requires new levels of speed, agility, and flexibility, not just from the systems delivering IoT services but also from the people charged with making those services happen.

Hyperconnectivity, the concept synonymous with the Internet of Things (IoT), is the emerging face of IT in which applications, machine-based sensors, and high-speed networks merge to create constantly updated streams of data. Hyperconnectivity can enable new business processes and services and help companies make better day-to-day decisions. In a recent survey by the Economist Intelligence Unit, 6 of 10 CIOs said that not being able to adapt for hyperconnectivity is a “grave risk” to
their business.

IoT_Isbel_QA02IoT technologies are beginning to drive new competitive advantage by helping consumers manage their lives (Amazon Echo), save money (Ôasys water usage monitoring), and secure their homes (August Smart Lock). The IoT also has the potential to save lives. In healthcare, this means streaming data from patient monitoring devices to keep caregivers informed of critical indicators or preventing equipment failures in the ER. In manufacturing, the IoT helps drive down the cost of production through real-time alerts on the shop floor that indicate machine issues and automatically correct problems. That means lower costs for consumers.

Several experts from the IT world share their ideas on the challenges and opportunities in this rapidly expanding sector.

qa_qWhere are the most exciting and viable opportunities right now for companies looking into IoT strategies to drive their business?

Mike Kavis: The best use case is optimizing manufacturing by knowing immediately what machines or parts need maintenance, which can improve quality and achieve faster time to market. Agriculture is all over this as well. Farms are looking at how they can collect information about the environment to optimize yield. Even insurance companies are getting more information about their customers and delivering custom solutions. Pricing is related to risk, and in the past that has been linked to demographics. If you are a teenager, you are automatically deemed a higher risk, but now providers can tap into usage data on how the vehicle is being driven and give you a lower rate if you present a lower risk. That can be a competitive advantage.

Dinesh Sharma: Let me give you an example from mining. If you have sensored power tools and you have a full real-time view of your assets, you can position them in the appropriate places. Wearable technology lets you know where the people who might need these tools are, which then enables more efficient use of your assets. The mine is more efficient, which means reduced costs, and that ultimately results in a margin advantage over your competition. Over time, the competitive advantage will build and there will be more money to invest in further digital transformation capabilities. Meanwhile, other mining companies that aren’t investing in these technologies fall further behind.

qa_qWith the IoT, how should CIOs and other executives think and act differently?

Martha Heller: The points of connection between IT and the business should be as strategic and consultative as possible. For example, the folks from IT who work directly with R&D, marketing, and data scientists should be unencumbered with issues such as network reliability, help desk issues, and application support. Their job is to be a business leader and to focus on innovative ideas, not to worry for an instant about “Oh your e-mail isn’t working?” There’s also obviously the need for speed and agility. We’ve got to find a way to transform a business idea into something that the businessperson can touch and feel as quickly as possible.

Greg Kahn: Companies are realizing that they need to partner with others to move the IoT promise forward. It’s not feasible that one company can create an entire ecosystem on their own. After all, a consumer might own a Dell laptop, a Samsung TV, an Apple watch, a Nest device, an August Smart Lock, and a Whirlpool refrigerator.

It is highly unrealistic to think that consumers will exchange all of their electronic equipment and appliances for new “connected devices.” They are more likely to accept bridge solutions (such as what Amazon is offering with its Dash Replenishment Service and Echo) that supplement existing products. CIOs and other C-suite executives will need to embrace partnerships boldly and spend considerable time strategizing with like-minded individuals at other companies. They should also consider setting up internal venture arms or accelerators as a way to develop new solutions to challenges that the IoT will bring.

qa_qWhat is the emerging technology strategy for effectively enabling the IoT?

Kavis: IT organizations are still torn between DIY cloud and public cloud, yet with the IoT and the petabytes of data being produced, it changes the thinking. Is it really economical to build this on your own when you can get the storage for pennies in the cloud? The IoT also requires a different architecture that is highly distributed, can process high volumes of data, and has high availability to manage real-time data streaming.

On-premise systems aren’t really made for these challenges, whereas the public cloud is built for autoscaling. The hardest part is connecting all the sensors and securing them. Cloud providers, however, are bringing to market IoT platforms that connect the sensors to the cloud infrastructure, so developers can start creating business logic and applications on top of the data. Vendors are taking care of the IT plumbing of getting data into the systems and handling all that complexity so the CIO doesn’t need to be the expert.

Kahn: All organizations, regardless of whether they outsource data storage and analysis or keep it in house, need to be ready for the influx of information that’s going to be generated by IoT devices. It is an order of magnitude greater than what we see today. Those that can quickly leverage that data to improve operational efficiency, and consumer engagement will win.

Sharma: The future is going to be characterized by machine interactions with core business systems instead of by human interactions. Having a platform that understands what’s going on inside a store – the traffic near certain products together with point-of-sale data – means we can observe when there’s been a lot of traffic but the product’s just not selling. Or if we can see that certain products are selling well, we can feed that data directly into our supply chain. So without any human interaction, when we start to see changes in buying behavior we can update our predictive models. And if we see traffic increasing in another part of the store in a similar pattern we can refine the algorithm. We can automatically increase supply of the product that’s in the other part of the store. The concept of a core system that runs your process and workflow for your business but is hyperconnected will be essential in the future.

qa_qPrivacy and security are a few of the top concerns with hyperconnectivity. Are there any useful approaches yet?

IoT_Isbel_QA03Kavis: We have a lot less control over what is coming into companies from all these devices, which is creating many more openings for hackers to get inside an organization. There will be specialized security platforms and services to address this, and hardware companies are putting security on sensors in the field. The IoT offers great opportunities for security experts wanting to specialize in this area.

Kahn: The privacy and security issues are not going to be solved anytime soon. Firms will have to learn how to continually develop new defense mechanisms to thwart cyber threats. We’ve seen that play out in the United States. In the past two years, data breaches have occurred at both brick-and-mortar and online retailers. The brick-and-mortar retail industry responded with a new encryption device: the chip card payment reader. I believe it will become a cost of business going forward to continually create new encryption capabilities. I have two immediate suggestions for companies: (1) develop multifactor authentication to limit the threat of cyber attacks, and (2) put protocols in place whereby you can shut down portions of systems quickly if breaches do occur, thereby protecting as much data as possible.

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