Why the Internet of Things (IoT) is a Really Big Thing
At the risk of adding to all the hype, I want to tell you there is no doubt about it: The IoT will be a very big thing for many big companies. I say that not as a newbie technologist who’s star-crossed over the prospect of products in the field continually reporting whether they’re about to break to the companies that made them.
Rather, I say it as a consultant who has been around the block with information technology for the last 27 years, and SAP software for the last 22. (You can just imagine how many technology hype cycles I’ve been through.) This Internet of Things is for real, as I’ll explain in this and subsequent blog posts leading up to SAP’s SAPPHIRE NOW conference, May 5-7 in Orlando, where I’ll be speaking on the topic.
The IoT is especially real for companies whose SAP systems support high-ticket products whose customers can stomach little product downtime. If your company makes construction equipment, aircraft engines, power-generating turbines, automobiles, trains, buses, ships and other gear that keep the economy chugging, you need to take big notice of IoT. If you haven’t done so already, now is the time to plan how your company will use IoT technology, and what it means for the way you architect your SAP and other enterprise systems.
Why will IoT be a game-changer for many industries? The fundamental reason is that what it makes possible for the sectors like those mentioned above is unprecedented: the ability for companies to continually monitor the status of their products as customers are using them – on the construction site, in their offices, at their bank branches, in their shopping center stores, and so on. From the moment customers take delivery of an item to the time they dispose of it, your product’s sensors, embedded software, communications devices and other technologies can inform you 24×7 how your equipment is performing in the field.
I just can’t overstate how ground-breaking that capability is. To deliberate how IoT will strategically impact the competitive landscape, TCS and Harvard Business Review recently published an analytical report, after discussions held at this year’s Davos. Download this report to gain insight from Professor Michael Porter of Harvard Business School, Adi Ignatius, the Editor-in-Chief of Harvard Business Review and TCS CEO, N. Chandrasekaran, who was appointed as Chairperson of the IT Industry Governors Steering of the World Economic Forum. The capabilities that IoT will give companies will mean they can shift from getting the occasional snapshots of their products’ performance (e.g., when customers complain to their call center that they aren’t working) to generating real-time updates on their status. Through IoT, a manufacturer or user of a bulldozer, plane, train, power turbine or other industrial equipment will be able to understand the operating performance of those products in the field and fix or maintain them before a problem hits.
Consider General Electric, one of the biggest prosylethizers of the IoT. GE has predicted that over the next 15 years the IoT will save the aviation industry $30 billion, the power generation business $66 billion, and the healthcare sector $63 billion by keeping crucial equipment running. GE sells expensive equipment to those sectors (aircraft engines, turbines, CAT scanners, etc.). It has a vested interested in keeping those customers happy.
The central theme that runs through these kinds of products is that their customers rely on them to work every hour of the day that they themselves are working. Perhaps IoT will be less important to makers of, say, low-end home appliances. If your coffee maker dies, you can always go down the street and buy coffee from Starbucks or the local donut shop. If your lawnmower fails, your neighbor’s teenager and his mower may be available. But if you’re an airline, electric utility, oilfield equipment maker or construction firm, equipment that is down will cost you dearly.
So what does all of this have to do with your company’s SAP and other enterprise systems? In fact, practically everything. Simply streaming IoT data from your products in the field back to your SAP systems (whether on-premises or in the cloud) won’t be enough. You’ll need an industrial-strength database management system such as SAP HANA to handle the enormous volumes of real-time data following in.
But your SAP systems must be able to do much more than simply understand whether your products are heading for failure in the field (although doing that alone will be hugely important). Your SAP systems must be able to automatically set into motion the business processes in your company to deal what that pending failure. In other words, you’ll need to connect your IoT systems to the SAP modules that book orders, pick items from warehouses, and put delivery trucks in motion. For example, if you make equipment (like GE) that’s installed on airplanes and can ground a plane if it isn’t working, your IoT system needs to trigger the right actions in your SAP system so that the part is automatically picked at the closest warehouse and ready for shipment, and a truck is ready to deliver it to the right airport.
In other words, your SAP system and the business activities it supports will need to be prepared for the new world of real-time field data – e.g., how a company’s products are performing for customers. In that manner, IoT is ushering in a whole new world. In my next post, I’ll delve into what this new world means for your company’s IT architecture. The short answer is this: a lot.