The Internet of Things and the era of “mass personalization”

There was a time when cars were assessed largely by their horsepower or miles-per-gallon. These were the yardsticks of comparison in the analog age. But now, the question asked of car owners is more likely to become, “What OS version do you have?”

Increasingly, our vehicles are becoming traveling data centers, with Wi-Fi hotspots, operator-assisted navigation, sophisticated diagnostic computers, smartphone-based control apps and real-time tools like parking assist and lane change warnings. They are no longer dumb machines, nor are these innovations exclusive to the most expensive prestige automobiles.

In fact, such talents are not exclusive to cars at all, since refrigerators, washing machines, thermostats, and devices of all kinds have joined this intelligent party. Even the most intangible of objects, insurance, has started to move into this sphere.

#IoT creates an endless transaction loop, thanks to the nature of the system-upgrade paradigm

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These items play a role in the new era known collectively as the Internet of Things (IoT), in which devices large and small communicate with owners, operators, manufacturers and suppliers to pro-actively maintain their operational health, and more importantly, to create a direct channel for up-selling and ongoing revenue opportunities. No company is excluded from this transformation.

As General Electric CEO Jeff Immelt said at a 2014 Minds+Machines summit, “If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.”

IoT-based products are different from their analog predecessors. A permanent, high-speed Internet-based relationship guarantees that vendor and manufacturer need never be detached from the products they sold, or from the customers they sold them to. IoT has spawned new partner ecosystems, and these, in turn, demand new business models.

• The Cactus, a compact car from European automaker Citroën, comes with a variation on the traditional lease, one based on “pay-per-use.” Citroën acknowledges “there is a portion of the population that is not willing to buy a car, but is willing to buy the use of a car.” This manufacturer joins the ranks of  car-as-a-service operations like ZipCar, but ups the ante – and improves the convenience factor – by allowing a customer to keep the vehicle permanently in the driveway as their own car (for a small base rate), and then pay the balance according to when and how it is used.

• Inside the home, IoT washing machines can now schedule service calls and part replacements directly, but more importantly can offer the owner a subscription for detergent delivery, with a three-month free trial, as well as other up-sells and cross-sells.

• New insurance companies are rolling out health plans whose premiums decrease with the amount of exercise performed by the member, as reported by a wearable fitness tracker.

• Cars and trucks of all types are now busy sending their diagnostic data back to the dealership, to ensure prompt servicing as well as increased up-selling potential between dealer and owner.

These physical examples of IoT represent more than an innovation in product design. They also demand a change in the perception of the consumer. Whether in the B2B or B2C markets, there is now just an audience of one. This forces a shift from a mass production mindset to one of “mass personalization,” using the power of data to understand and serve each customer on their own terms.

Pricing, too, must change. Where once there was one pricing model, other options exist, for even the largest of big-ticket items. These can include:

• “buy-once” products bundled with a subscription
• free trial/freemiums, leading to recurring payments or subscriptions
• pay-per-use pricing; and
• entitlements (such as 2 free appointments with a personal trainer when purchasing exercise equipment)

The IoT revenue model ushers in an updated and more reliable style of loss-leader pricing, starting with a negative BOM (bill of materials), but then subsidizing the cost of the hardware with the revenues from bundled services. Loss-leader pricing in itself is not new; razor blade manufacturers, among others, have been using a negative BOM model for years. But now the analytics have become more accurate, and the customer relationship more individualized, consequently tipping the concept from a traditional loss leader to a more reliable positive cash flow formula.

Bringing these thoughts back to the notion of cars being assessed by their OS version, it is important to bear in mind that an operating system is, by its very nature, upgradeable, and reinforces the link between manufacturer and purchaser. In a way, the purchase is never complete, since upgrades bring along with them new features and additional support and purchase opportunities.

That is where the Internet of Things truly shines. It is a permanent pathway linking seller and buyer—a dynamic relationship of mutual benefit that grows and improves over time.

How to Rewire the Organization for the Internet of Things

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 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.

Where 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.

With 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.

What 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.

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

Kavis: 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.

Our Digital Planet: Rise of The Digital Worker The New Breed of Worker

British-Australian mining giant Rio Tinto has employed autonomous trucks, excavators and drills recently to create the first workerless iron ore mine in Western Australia. The drivers – if they can still be called that – work out of a remote operations centre hundreds of kilometres away, where data scientists mine data collected from the vehicle’s sensors. This dynamic, known as the ‘human and digital recombination’, is but a single step on the path to a changed workplace, as connectivity and automation drive the transition to digital on an unprecedented scale.

Real-time analysis, together with emerging digital technologies and intelligent digital processes, have upended the workplace as we know it; and businesses are today subject to a deep cultural shift in work organisation, culture and management mind set. The impact is a shift towards workers looking at available information as opposed to ‘explorative surgery’ measures when the damage is already done.

Human and digital recombination, cutting-edge decision making, realtime adaptation and experiment-driven design are pushing this transformation, not just in manufacturing but in every conceivable area of the workplace. And while the technology has done much to facilitate the transition to digital, the challenges are many.

Fat tags

Aside from Rio Tinto’s automated vehicles, other software-enabled, manufacturing- friendly marvels are around the corner, such as kilobyte-rich radio frequency identification (RFID) tags. Basically position finders at present, tomorrow’s tags will have so much storage capacity that they will act like transponders and actually tell people what to do.

As Siemens’ Markus Weinlander, Head of Product Management, predicted: “[RFID tags] can make a major contribution to the realisation of Industry 4.0 by acting as the eyes and ears of IT. For the first time, transponders will be able to carry additional information such as the production requirements together with their assembly plan. All of this will be readable at relatively large distances.”

These ‘fat tags’ will do more than boost automation. They will also make companies more nimble-footed and, say experts, allow small businesses to compete with the giants. According to Weinlander, the new wave of RFID rags will greatly facilitate customised products because they will contain all the essential information for small runs. “To remain competitive in today’s global market environment, many companies have to be able to produce in tiny batches without higher costs”, he said.

Other practical benefits are likely. For instance, maintenance and repair work will be made simpler, faster and more timely. As BCG Consulting points out, technicians will identify any problems with a machine from a stream of realtime data and then make repairs with the help of augmented-reality technology supplemented, if necessary, by remote guidance from off-site experts. In this way, downtime per machine will be reduced from one day to an hour or two.

Digital people

In this brave new world of hyperconnectivity, the ‘digital worker’ – a data-driven individual skilled in converting information into revenue – will stand in the middle and direct traffic, as it were. As SAP put it in its D!gitalistmagazine, the digital worker will “create instant value from the vast array of real-time data.”

Instead of the traditional approach of gathering, processing, and moving data around while spending valuable time creating reports, digital workers will be forced to move towards predictive, scenario, and prognosis-based decision- making. SAP’s article goes on to explain: “The speed of information and data is driving such significant change in how and where we work that the digital worker is becoming a critical resource in decision-making, learning, productivity, and overall management of companies.”

HYPERCONNECTIVITY HAS LED US TO A NEW ERA, WHERE PETER DRUCKER’S “KNOWLEDGE WORKER” HAS COME TO AN END AND THE “DIGITAL WORKER” NOW NEEDS TO STEP UP AND CREATE INSTANT VALUE FROM THE VAST ARRAY OF REAL-TIME DATA

In organisations where data-savvy individuals may know more about what’s happening than the boss, the top-down hierarchy will be overturned. In short, everybody will be a leader in their own particular area of expertise. “The traditional management and organisational model is quickly getting outdated in the digital economy, and true leaders are changing their management approach to reflect this”, said SAP. Senior executives will have to be more visible and approachable for employees and customers alike – in short, both colleague and captain.

“[Managers] must juggle a distributed contingent workforce with digital workers who require real-time analysis, prognosis, and decision making. At the same time, they must develop the next generation of leaders who will actively take responsibility for innovation and engagement”, said SAP.

If done properly, this new collaborative workplace could reduce the complexity that bedevils most large organisations in an era of globalisation. According to the Economist Intelligence Unit, 55 percent of executives believe their organisational structure is ‘extremely’ or ‘very’ complex and 22 percent say they spend more than a quarter of their day managing complexity. More than three-quarters say they could boost productivity by at least 11 percent if they could cut complexity by half.

More jobs

But will the superconnected workplace destroy jobs? BCG Consulting thinks not. In a study of German manufacturing released in October, the think tank concluded that higher productivity actually equals higher employment at home. “As production becomes more capital intensive, the labour cost advantages of traditional low-cost locations will shrink, making it attractive for manufacturers to bring previously off-shored jobs back home”, the study predicted. “The adoption of Industry 4.0 will also allow manufacturers to create new jobs to meet the higher demand resulting from the growth of existing markets and the introduction of new products and services.”

Experts such as Ingo Ruhmann, Special Adviser on IT systems at Germany’s Federal Ministry of Education and Research, agree with this finding. “Complete automation is not realistic”, he told BCG Perspectives. “Technology will mainly increase productivity through physical and digital assistance systems, not the replacement of human labour.”

However, it will be a new kind of human labour. “The number of physically demanding or routine jobs will decrease while the number of jobs requiring flexible responses, problem solving, and customisation will increase”, Ruhmann predicts. For most employees, tomorrow’s workplace should be a lot more fun.

What is Going to be the future of Documents?

Remember when closing an agreement meant that your team had to go through each page of a paper contract with a client, have them initial or sign by hand, then scan and email it back and forth? Thanks to the emergence of e-signature software, those days are gone.

E-signatures are already having a direct impact on the productivity of companies in a variety of ways. In fact, back in 2013, Ombud Research surveyed United Healthcare and found adopting a paperless e-signature process saved the company more than $1 million in administration costs. The provider-contract turnaround was also significantly reduced, going from an average of 32.5 days to only 2.

Others are seeing benefits, too. Salesforce declared in its annual 2014 report an average savings of $20 per document after implementing electronic signing.

As more businesses realize the benefits of document automation technology, adoption rates will grow, furthering development. Business leaders who don’t adopt this technology soon will be left behind with an outdated process that impedes growth.

To keep up, here’s what’s ahead in document automation:

1. E-signatures will become fully commoditized.

Since the passing of the Electronic Signatures In Global And National Commerce (ESIGN) Act in 2000, signing all agreements on paper is no longer necessary. Electronic signatures for e-commerce agreements are legally binding and protected by the same rights as ink on paper. E-signatures are already increasing in popularity because of their convenience, and in a few years, they will be widely accepted as a transactional commodity.

As adoption grows, the demands for functionality in e-sign tools will grow, too. Signing will move beyond even some of today’s e-signature software features, like uploading a saved image of your personal signature or converting your typed name to script. Eventually, signing won’t require any typing. You’ll be able to sign with a voice command.

2. The use of enterprise automation platforms will expand.

Research from Raab Associates predicted revenue from B2B marketing automation would grow 60 percent last year, reaching $1.2 billion. The adoption of enterprise automation platforms will continue to increase as more companies experience the benefits: faster sales cycles and streamlined collaboration.

In fact, 58 percent of top-performing companies — or those where marketing contributes more than half of the sales pipeline — have already adopted marketing automation, according to a 2014 Forrester report. As marketing automation grows, businesses will be able to process more documents quickly, enabling growth.

B2B growth affects the document landscape, too. Sales is most innovative and efficient when it comes to adopting new technology. In fact, high-performing sales teams are the first to embrace new tech tools to streamline the sales process, with 44 percent using offer management tools, according to Salesforce’s 2015 State of Sales Report.

The rate at which sales grows will serve as a predictor of overall growth.

3. Document assembly will be entirely cloud-based.

Today, most sales documents are created and stored locally, either in PDFs or word processing programs. Creating and storing content in the cloud is a relatively new practice for many companies, but with the increased need to be always connected we’ll see a shift to cloud-based content, which can be accessed from any computer or mobile device.

Cloud-based office suites like Google Docs will be standard, almost entirely replacing word processing software. Compatibility will no longer be an issue, as it was with different versions of word processing documents, which will completely alter the day-to-day experience of people who work with documents. The ability to share and edit documents instantly will support tight deadlines and increase expectations for productivity.

4. Integrations will make projects seamless.

Bringing together data from separate systems that don’t otherwise talk to one another results in one complete view of the entire process. Several CRM integrations have already been developed among various document creation and storage platforms to import and keep track of customer data seamlessly.

Open API will continue to provide a vehicle for people to access and share data regardless of where or how it is stored. Extra steps of printing, signing, and scanning will be completely eliminated.

5. Processing and payment will be instant.

With the increased demand for integrations, there will be no need to upload documents into any system for approvals, payment processing, and storage; cloud-based app integrations will take care of that. Not only will it enable instant credit card transactions, but management approval will be simplified through automated requests managers can view and approve anywhere via mobile device.

Payments will be processed instantly within the document itself through integration with tools like Square andPayPal. Eventually, with the rise of virtual currencies like Bitcoin, smart documents will be able to accept payments, completely cutting out the middleman.

Once documents are processed, they’ll be automatically saved and uploaded right into the integrated cloud storage system of your choice. With a few keywords in the search bar, anyone from the team will be able to pull transaction and approval records immediately.

Even if you’re already using a document automation platform, think about areas of opportunity you could be missing. Many of the features that will be the norm in a couple of years are already available; they’re just not yet widely used. Look at how making some simple changes now might give your organization a head start on better sales efficiency.

What are some other changes you expect to see coming from document automation and e-signature software in the next few years?

PARTNER MANAGED CLOUD vs ON PREMISE DEPLOYEMENT

Posted By – Gervasis Paracka

You are driving around in your old faithful car that has never failed you and you see through the corner of your eyes a bright red, shiny, flashy car and it whooshes right past you. SAP on premise deployment is your faithful car that you drive to work every day and took your wife out to your first date. The red shiny car is Partner managed cloud, efficient fast and what you need to get rid of your mid-life crisis.

Partner managed cloud provides traditional SAP solutions Hosted on an SAP partner’s private cloud on a subscription basis as compared to the high upfront capital required for an on premise deployment of SAP.

Key benefits of Partner Managed Cloud

• Strategic : Decreased response times for changes in business processes and new requirements
• Financial: 30% lower Total cost of ownership in a span of 5 years and an optimised positive cash flow.
• Operational: Better utilization of resources towards better functionality of SAP than system maintenance.

The primary drivers of the low Total ownership cost are the result of the key components of Partner managed cloud.

• Scalability: Increase or decrease of resources according to demand and proper utilization of the Sap Landscapes.
• Flexibility: Quick deployment of changes in business processes.
• Speed: Fast deployment of the service to customers leading to less down time.
• Pooled Resources: Expertise is spread across multiple customers hence more profitable use of resources , also the customers do not have to invest in dedicated SAP resources

On Premise Deployments require more cash Upfront , almost 31 % of the investment in the first year while Partner Managed cloud has an evenly distributed cash flow of about 20 % per year for a period of 5 years.

Partner managed cloud services are more in tune to the needs of Small and Medium scale industries which need an efficient ERP to streamline all their business processes without having to break the bank.

Discover more on how ITChamps helps to deploy SAP on Cloud services.