Call it the Internet of Things (IoT) or The Internet of Everything (IoE), players in this burgeoning field are facing a common set of challenges as I fathomed from a conversation with a leading vendor venturing into this space:
"Where are the Guinea Pigs?" (Early Adopters): The biggest one is getting people willing to pay/invest in this area since most are not able to visualize the benefits of the analytics which can be generated or the operational efficiencies which can be realized using IoT/IoE. Vendors have an uphill climb trying to explain how they can help improve operational efficiency till they can find a stakeholder forward looking enough to make the small investments and allow the vendor access to at least a subset of the environment to do a pilot and prove the use case. The vendors with proven success stories have a head-start.
"No Cookie-Cutters": Every environment is unique. A cookie-cutter, one size fits all approach cannot work. While a vendor can suggest their platform as a offering they still need to work with other partners to deliver an integrated solution. The vendors are finding themselves challenged to deliver services to the customers tailored to their unique and completely different environments. A big opportunity for strategic/implementation partners.
"Missing Sensors": The biggest technical challenge is not security as one would expect but the fact that lots of devices do not have the capabilities to capture the data/metrics to generate the required analytics. The vendors need to leverage sensor technology to add sensors to legacy devices to pull back requisite data esp. in the Manufacturing and Buildings industry sectors.
Are you working in the IoT/IoE space? What are some of the challenges you are facing? Please join the conversation.
Originally published on LinkedIn. You can join the conversation there.
Yes, that's right. It's no typo. I mean PReDICTT. It's the acronym for a unique program we initiated this year : Peers Reflecting on Developments in Current Technology Trends.
The idea behind it is simple. In our roles as technology individuals, we are consistently exposed to technology and innovation trends: some directly related to our work endeavors and some seemingly unrelated, and these make us wonder what their influence may be on us in the days to come. Some examples Include: Bitcoins, Self-Driving cars, The Internet of Things, Millennials in the Workplace, etc. We often wish for a forum where we could learn more about these trends and openly share our own ideas and thoughts with others in anopen, candid, non-judgmental fashion.
The PReDICTT Program (Peers Reflecting on Developments In Current Technology Trends) gave the team an opportunity to periodically engage in some creative brainstorming and sharing of ideas distinct from our day-to-day responsibilities. The opportunity to view the world through a telescope rather than the rearview-mirror or windscreen for a change. A key premise being that innovation thought even unrelated to normal line of work makes individuals more effective in whatever they do.
This program was comprised of “Open Mike” sessions at a regular cadence where volunteer/guest speakers shared their thoughts on a Technology/Innovation trend and its likely implications. The requirement for speakers was not that they be experts in the topic but that they feelpassionately enough about it to be willing to share their ideas related to it with their peers.
By this program, even as we bring “Innovation” thought to the fore with a regular cadence driving positive downstream impacts we also strove to:
Enhance Communications to employees / partners
Enhance Employee motivation and skills for presenters
Enhance image of our Information Management group with partners with forward looking topics
Provide opportunity to recognize individuals to step outside their primary job responsibilities
We had 8 very interesting sessions during the year spanning the gamut of innovations:
Security in the era of BYOD
Steganography and Cryptography
The Changing Forms of Money and What it Means for Us- Bitcoins et al
Ubiquitous Internet: Balloons, Drones
Jugaad- Frugal Innovation
Autonomous Vehicles, Driverless Cars
Future of Computing
As intended, all presented by volunteers. What was even more stimulating was the excellent exchange of ideas following the presentation and which often spilled over into our vibrant Yammer group. Lots of thoughts on how these can impact what we do on a daily basis and our marketplace.
The PReDICTT keywords reiterated at every session are:
Share & Participate
Develop & Grow
Ideas & Innovation
Passion & Fun
2016 promises to be even more exciting for PReDICTT as more groups warm up to the idea and join; and even more Innovations keep appearing in the world we live in!
So one of the trends I predict for 2016 is more companies launching initiatives like this to engage their employees in "Innovation Thinking", as I call it.
What about your company? What do you intend to do in 2016 to keep your employees intellectually stimulated and engaged even if their routine jobs may be relatively routine and mundane?
And then, maybe, many of you are aware since given the globalized nature of the world economy you or one of your vendors most likely has operations in Chennai(esp. if you are in the BPO, tech or automotive sectors).
One thing that struck me as sitting in the US, I interacted with friends who were marooned in the city was the big role played by social media - facebook, WhatsApp and the like in enabling people to stay connected and in ensuring that help and resources are directed to the most needy. On the flip side social media though helpful was also rife with rumors and misinformation. Internet connectivity was also a problem as a sizable portion of the population there still relies on "wired" internet - the cable breaks and power outages did not help.
A picture can say it better than thousand words! A missing piece of critical information for both the stranded people and the first responders is real-time imagery of flood affected areas to comprehend which streets are open, which areas are submerged and how the floodwaters are moving. Google Maps can play a big role in addressing that gap. Currently I believe the satellite imagery or street-views in Google Maps are refreshed after long periods of time.In crisis situations like these the satellite imagery could be updated more frequently perhaps even near real-time so that users have the latest information. With the correct updated maps being available I am sure the user-community will crowd-source to tag them with relevant highlights - roads/bridges to avoid , drinking water stocking points , food stocks etc.
Of course Google will need to allocate some resources to ensuring that their satellites - "birds" (or those of their imagery providers) get positioned appropriately. Crises like these could be another opportunity to leverage Google'sLoon Project. Those stratospheric balloons instead of just enabling internet connectivity could also provide real-time imagery.
Rather than this being just charity, it would make sound business sense too:
Make Google's service more "sticky". People are not likely to forget the tools/technologies/companies which helped them in time of crisis.
People will continue to visit these sites, use these apps even during times of crisis when visits to other kinds of sites are likely to fall. So Google's quantum of "eyeballs" or "clicks" will not fall.
Insurance companies and the like would be willing to pay for access to more near real-time information.
As the nature of business becomes more “digital” a pay-as- you-go Consumption based IT cost model is likely to emerge as a major disrupter to the traditional view of IT as a Capital Expenditure. The authors investigate some of the drivers for this shift; how it is likely to play out in the board room and the approaches which can be used to make this disruption a positive one for the corporation.
Synchronicity of IT Spend with Corporate Revenue
As we look at the IT–Business interaction from a strategic perspective esp. as it relates to the cost/funding dimension (manifested in the annual and long term budgeting exercises and periodic cost-reduction initiatives) we see one of the basic issues as “synchronicity” – How can IT spend be more closely aligned with the ebbs and flows of the business revenue stream?
In many large corporations this issue also impacts the IT long term vision of transitioning to a simplified, streamlined end-state architecture (vis-à-vis the convoluted mish-mash of legacy applications which generally exists) as thebusiness becomes increasingly wary of making the large investments required to drive the necessary changes as their own revenue projections fluctuate. In fact in some cases the large IT investments seem to be paying off at least initially but as time progresses the IT cost increase is far more disproportionate to the revenue increase.
Pay-as-you-go (Usage Model)
From a CFO perspective, then, a pay-as-you-go model seems very attractive. In the most simplistic configuration all applications will be hosted in the cloud with business users being charged based on the actual consumption of resources.
Rather than implementing any major platform initiative in-house with its associated fixed costs (Capex), technology vendors will be required to provide the desired capabilities as a consumption based service (Opex). Technology products if built in-house can be done so using the pay-as-you-go resources from a cloud vendor. These capabilities can also be leveraged to evaluate the feasibility of the product from a business perspective and to pilot risky projects without significant budget commitment. This shifts the initial fixed investment outlay into smaller outlay paid every month based on the usage.
Another key premise is that since the vendor will be leveraging economies of scale over a larger user base they will be able to drive the costs down significantly more than if the company would be able to do hosting applications in-house.
IT Supply Chain – Digital Products
The nature of the products and services offered by corporations are also dramatically changing with the “digital” component becoming a key part of the offering and value proposition for the customer. For example a traditional product may now be bundled with a digital service enabling customers to access and store content. IT processes and infrastructure will play a role in securing the digital files, storing them and enabling access to these files.
As a result the IT infrastructure component of the cost of the offering needs to have a more direct alignment to the total cost rather than just be an allocation of a fixed charge. In essence since IT infrastructure is essentially becoming the digital supply chain for the offering and as for any conventional product, the supply chain costs have to be in alignment with the revenue for the product.
The CEO’s Viewpoint
Couple this with the growing CEO perspective that most of IT spend is“non-differentiating for the business.” They also realize that as their business becomes more “digital” creating and securing their digital assets is critical to maintaining the corporate reputation. As IT spend is growing CEOs would like to demand more out of it. And they would definitely like more accountability and transparency about the burgeoning expenses. A granular Pay-as-you-go cost model creates more transparency in what the “non-differentiating” portions of IT are costing on a per transaction or a per user basis.
The CIO’s Dilemmas
Not many CIOs have climbed this bandwagon though. Some of their wariness comes about because of the security implications of moving everything off-premises and also from the viewpoint of looking at the historical investments in-house IT infrastructure and data-centers as a sunk cost. Economists would argue that the sunk-cost dilemma is moot, per the “bygones principal” only the "extra" or "marginal" costs and benefits of every decision need to be evaluated. Ideally the past costs should be ignored and the future costs and benefits taken into consideration when making such a decision: A hard-headed calculation of the extra costs one will incur and weighing them against extra advantages. But this is most easier said than done. Also, what many times gets ignored is that while the one-time cost of implementing an application or building an infrastructure may have been “sunk”, there are associated recurring costs – licensing, electricity, manpower etc. which are very much real and need to be factored in.
CIOs are also not yet fully sold on the idea of a pay-as-you-go or Consumption based IT cost model being as “variable” as it is touted to be. The likelihood of vendors introducing some “fixedness” ((start-up charges, launching charges, termination fees etc.) to the mix looms large. In some cases vendors have begun allaying the fears by agreeing to abstain from any “fixed” components in their cloud offerings. They also fear that their organization may not have the clout to motivate vendors to move to such an opex model. But that is likely to change as increasingly larger number of companies demand something similar.
CIOs have to worry about their in-house legacy applications too. The ones that cannot be hosted outside for a myriad of reasons. They can be though moved to private clouds – changing from “fixed charge allocation to business” cost model to consumption based usage charges. And then, what about the vendors who are not able to offer their capabilities as a cloud hosted subscription/usage based solution? Multiple vendors collaborating to resolve this is an option – one provides the application and other the cloud access.
Driving the Costs Down
This brings us to another very important point. While organizations may not be ready to move to a pay-to-go-model yet there is still a considerable opportunity to leverage the model to drive IT costs down. In theabsence of a consumption based “tariff”, a “Tragedy of the Commons” kind of scenario plays out where a shared common resource is inefficiently or sub-optimally utilized, somewhat like the scenario where free electricity or water leads to more waste and a lesser incentive to conserve. Currently IT cost reduction initiatives are generally periodic percentage cost reduction targets emanating from Corporate Finance or Business Leadership. IT generally responds by chipping away at cost elements to the best it can.
Transactional Cost Modeling for a Pay-as-you-go Approach
If organizations choose to move to the cloud or embrace a public cloud vendor or have everything on an in-house cloud, it is essential that they embed transactional cost modeling into the design of the IT solution or product. In this approach the IT architecture is used as a basis to model all the cost elements associated with the application. Even legacy applications can be modeled as if the applications were hosted on a private cloud and then can be benchmarked against the rates quoted by cloud providers like Amazon Web Services or Microsoft Azure for the same capabilities. Business users can be exposed to this cost comparison as an element of a “Go Out vs. Stay In” decision making.
The rigors of such a cost modeling exercise will also expose the business to discrete elements of IT costs which have hitherto remained hidden in larger silos. For example the cost associated with an IT solution or an application is not just the cost associated with the Production infrastructure. Even the Development and Test infrastructure that is used needs to be counted towards the operational cost of the application. If the company doesn’t have an offshore team or only works in two shifts then the development instances can be operational only during the actual hours of working reducing the number of hours in a year from 8760 to 2008 hours a reduction of over 75%.
Even production applications do not have to necessarily operate outside a time window and by building a flexible downtime capability within the application, one can schedule downtimes to minimize the costs outside the window of operations.
Failure to recognize the pay-as-you-go IT model as a platform disrupter can be very detrimental for organizations. The successful ones will leverage the trend to drive down costs and will reap the benefits. Adoption of the model does not need to be a revolutionary change as organizations can follow a more evolutionary approach by first focusing on it as a mechanism to get a better understanding of their own IT costs and endeavor to make them more “variable”, truly reflecting the demand patterns.
Deepak has expertise in Business Process and Technology.He is an acknowledged expert in the area of Business Intelligence helping companies establish an effective strategy & framework, selecting appropriate technology, vendors, implementation partners etc.
He has led several global initiatives for various leading Corporations. He has extensive experience in sales, finance and information technology in Asia, Africa and the Americas.
He has an engineering degree from the Indian Institute of Technology and an MBA degree from the Indian Institute of Management Calcutta. He has served as the Chair for the South Asian Employee Network and Member, CEO's Diversity Council at Bausch & Lomb, as the President of the Jain Society of Rochester, on the Board of DIAL (Development of Indo-American Leaders) and on the Editorial Board of the Rochester Democrat and Chronicle. Mr. Seth has contributed a number of management and current affairs articles to publications such as the Wall Street Journal, Rochester Democrat&Chronicle, the Times of India and The Pioneer.His observations and comments have been published in the Harvard Business Review and the McKinsey Quarterly.