Don’t dream big when taking on industrial or enterprise IoT

As inspiring as the phrase business transformation is, I’ve decided that when it comes to industrial or enterprise IoT, it’s better to start small. Most executives by now are well aware that you should begin with a use case, but what’s become more clear as time has passed and projects have failed is that maybe business transformation shouldn’t be your first goal.

Peter Zornio, chief technology officer at ‎Emerson Automation Solutions, says that in his experience, the operations guys in building systems or in a plant want a use case and an ROI, while the IT shops tend to want to install a platform so folks in the business can build their own applications on top of it.

“Tangible ROIs that are easy to see are great,” Zornio says. “Operational guys love that because they have to justify their spend, while the IT guys want to think big. These are the guys that 15 years ago convinced everyone to spend hundreds of millions on ERP systems.”

Zornio isn’t bashing ERP systems, but if you ask ERP buyers if that money was well spent, many of them wouldn’t really know. Which is why Zornio is a big fan of metrics when discussing IoT projects.

He’s not alone. Jason Shepherd, a senior director and IoT CTO at Dell, says, “Too many IoT projects start as science projects (e.g., “Wouldn’t that be neat?”) with no clear metrics for success.” You know what’s really hard to measure? Business transformation.

So if measurement is the key, how should you think about that? In some situations, a use case and the subsequent savings are crystal clear. For example, if you automate data collection that normally requires an employee, calculating the savings is easy.

But Zornio says other use cases, such as ensuring reliability, are more difficult. First you have to come up with the number of times a particular part or machine fails, then you need to figure out the cost to the production process or the team. You also have to factor in the cost and time it takes to make those repairs. Replacing a part that is commonly in inventory vs. replacing something that might have to be ordered will factor into those costs.

Those kinds of calculations are more subjective than calculating the cost of replacing a worker. You could debate how often equipment fails. Or how much it costs when it does fail, depending on what a company values. For example, downtime in one part of the plant might be relatively unimportant because there’s a backup or low demand during certain times of the year. So it’s always better to search for the obvious. Sometimes, the flamingly obvious.

“We had a customer come to us about monitoring pumps. There, the risk wasn’t downtime, but that when one of the pumps failed it tended to catch on fire,” says Zornio. “In that case, the ROI wasn’t about money saved as much as it was about deciding how valuable it was to the organization to avoid fires in their factory.” (That entire conversation has me thinking that an enterprising IoT systems integrator should scour the trade press for industrial disasters to find their next sales prospect.)

Assessing IoT projects’ value isn’t just useful for the companies buying into connected sensors or products. It’s also important for companies trying to build solutions for industrial and enterprise IoT.

That platform mentality is a common one in Silicon Valley, but it’s hard to sell. Especially if you need a deep understanding of specific industry data around costs and functioning of equipment. That’s why many of the big companies are teaming up with those in specialized verticals to pitch their platforms or services.

But again, it appears that success today is found most often in the smaller projects as opposed to the business transformations. Shepherd advises that when choosing a project to ensure that the use case is relatively straightforward so the company can get a “quick win.”

 “A quick win can grow into more advanced benefits, but don’t try and start with too much. For example, start with basic monitoring for visibility and then add analytics,”  he says.

We’ll talk more about what this means in future issues of the newsletter along with the challenges associated with making sure that your employees don’t sabotage your business goals—or the eventual business transformation itself.

Stacey on IoT | Internet of Things news and analysis

Why Companies Don’t Respond to Digital Disruption

Knowing digital disruption is happening and doing something about it are two entirely different matters. The philosopher William James noted that “thinking is for doing,” meaning that the purpose of us knowing things is to enable us to act in accordance with that knowledge. You might expect, consequently, that every organization has a well-developed strategy and action plan for responding to disruption. But the reality is quite different, just as homeowners in disaster-prone areas often seem caught off guard when an actual hurricane or cyclone strikes.

In MIT SMR and Deloitte Digital’s research on digital business, we asked survey respondents, “To what extent do you believe that digital technologies will disrupt your industry?” The great majority (87%) of executives surveyed indicated that these technologies will disrupt their industries to a great or moderate extent. Only 3% of respondents believed that digital technologies were likely to have no impact on their industry (we didn’t ask this 3% when the last time was that they read a physical newspaper, installed software from a CD, or booked a trip through a personal travel agent). We also asked survey respondents whether their companies were adequately preparing for the digital disruption their industries were likely to witness. Only 44% said their companies are doing enough.

The gap between the 87% who say digital disruption will affect their industry and the 44% who say their company is adequately preparing is, in a word, staggering. The majority knows digital disruption is happening. Yet, only a minority report that they are doing enough to respond effectively. Why aren’t companies responding with greater urgency to the threat of digital disruption?

Why Aren’t Companies Acting?

It may be that executives don’t understand enough about technology to make the changes or understand the urgency necessary. It may be that board members and investors care more about short-term profits than long-term viability. It may be that many leaders are just counting out years to retirement, and they don’t have the energy or the interest in engaging in the types of changes that will be necessary to adapt the organization for a future in which they will not participate. I’m sure that all of these reasons and a myriad of other explanations are partially to blame.

While I can only speculate about some of the reasons why companies aren’t acting in response to digital disruption, our data can rule out one possible explanation. We wondered whether some executives just didn’t think digital business was important for their future; while digital disruption might affect an industry, for example, perhaps it was not perceived to change a specific company. Yet when we asked whether being a digital business would be important to the success of their organizations, a whopping 85% of our respondents either agreed or strongly agreed. The vast majority of leaders surveyed recognized that digital business was in fact important to their future — but their organizations still weren’t doing enough to respond.

The gap between knowing that there is a need and taking action is a well-documented phenomenon that is not confined to managing a company during a time of digital disruption. Jeffrey Pfeffer and Robert I. Sutton described the “Knowing-Doing Gap” in a Harvard Business School Press article and book in 2000. As they write in their introduction to the article, “Why do so much education and training, management consulting, and business research and so many books and articles produce so little change in what managers and organizations actually do?” They assert that the first step in resolving the gap is focusing on “why before how,” arguing that “[t]oo many managers want to learn ‘how’ in terms of detailed practices and behaviors and techniques, rather than ‘why’ in terms of philosophy and general guidance for action.”

Are Managers Overly Optimistic?

Our survey data presents a related reason for this lack of action — that leaders have too optimistic a view of digital disruption. We asked respondents the extent to which their companies viewed digital technologies as an opportunity or a threat to their organization. The disparity between the responses is striking. While nearly 75% of respondents who reported that their organizations respond adequately indicate that their organization viewed digital technologies as an opportunity, only 25% viewed it as a threat.

In other words, many organizations aren’t responding because they don’t perceive the dangers posed to their organization by digital disruption. This striking disparity is logically inconsistent and represents a naïve optimism on behalf of business leaders. It is reminiscent of Voltaire’s character, Dr. Pangloss, who believed that he lived in the best of all possible worlds. But if digital technologies represent an opportunity for your organization, they also represent a threat for your competitors — and vice versa. This reason for not responding more aggressively is inadequate at best — and potentially catastrophic at worst, as a multitude of companies that have faltered in their digital transition can attest.

The tendency to overlook the risks in a slow response is reflected elsewhere in our data. We asked respondents whether they expected demand for their organization’s core products or services to increase or decrease because of digital trends in the next three years. Over two-thirds of respondents indicated that they expected demand to increase, while only 10% reported that they expected demand to decrease. It’s certainly possible that the digital tide will raise all boats by expanding markets and increasing buying power. Indeed, these companies may all be headquartered in the mythical town of Lake Wobegon, “where all the women are strong, all the men are good-looking, and all the children are above average.”

Our findings suggest the reality is that these respondents are simply underestimating the extent to which digital disruption will also lift the fortunes of their competitors, who may be paying a similar (or greater) amount of attention to the same digital trends. Or they may not recognize that digital trends could also introduce all sorts of new competitors who use digital technologies in entirely different ways to disrupt their industries in unexpected ways. After all, who would have guessed a decade ago that ubiquitous smartphones could disrupt the taxi and hotel industries?

That same smartphone has an alarm function on it. It’s ringing. If you’re leading your company into its digital future without an action plan for adapting to digital disruption — a process already underway — then it’s time to wake up.

MIT Sloan Management Review

Alexa, play me an ad that I don’t want to hear (said no one ever)

Here’s a good news, (potentially) bad news story.

First the good news: Even though it typically doesn’t provide sales numbers for its product lines, Amazon touted record purchases of Alexa-enabled products this holiday season.

Given how mainstream and relatively inexpensive Echo and Fire TV devices are, that’s not a surprise. I’d expect record sales over last year’s numbers for those reasons. However, a recent Amazon press release did give us some inkling of the sales figures, which are impressive:

[T]ens of millions of Alexa-enabled devices sold worldwide. Echo Dot and Fire TV Stick with Alexa Voice Remote were not only the top-selling Amazon devices this holiday season, but they were also the best-selling products from any manufacturer in any category across all of Amazon.

The company also noted that usage of Alexa on Fire TV is up 889% in the U.S. since last year. Clearly we’re getting close to the point where it might be odd not to see or talk to an Echo or Fire TV in most households. Again, great news for Amazon.

Now for the potential bad news: With a fast growing user base across all types of households, Amazon is looking forward to further monetization of its Echo products. And that may come in the form of Alexa voicing more spoken ads or product promotions to you and your family members. A report from CNBC shares limited details of discussions between Amazon and top-tier consumer brands such as Procter & Gamble as well as Clorox.

I say this is possible bad news from a consumer standpoint, mainly because we seem to go in cycles with digital advertising: Every time a new device, medium or service hits the big time, annoying ads typically follow. I can’t get through a few Instagram photos, for example, without seeing some sponsored product. That wasn’t an issue when Instagram was building an audience, but once it did, the ad revenue started flowing. I don’t want to see the same thing happen with Alexa-enabled devices for a few reasons.

While they’re often an necessary evil, ads can be annoying. I’m now trained to generally ignore them when surfing the web at this point. (Yes, I know I could use an ad-blocker.) But that training essentially took years of using the web before ads essentially became so invisible to me that I just focus in on actual web content.

How will that work with voice, though? Not well, unless Amazon provides noise cancelling headphones with every Echo or Fire TV sold, which of course won’t happen. So Amazon will be walking a very fine line if it decides to ramp up spoken ads on Alexa-enabled devices. Too much “in your face” advertising and Amazon runs the risk of upsetting its customer base. Will those folks abandon the U.S.S. Alexa and get on board with Google, Microsoft or Apple? Probably not but Amazon prides itself on keeping customers happy, so this is risky business at best.

Amazon could integrate contextually relevant voice ads with spoken queries, but I’m not a fan of that. If I say I want to buy a Brand A toothbrush, I don’t want Alexa to tell me about Brand B.

It’s possible that companies could sponsor certain Alexa Skills, which would be decent approach in my opinion. After all, users choose to install a Skill or not, just like they choose to install mobile apps with or without ads. That puts some of the power in the hands of end users because they’ll know for sure if they can expect advertising or not from their personal assistant.

I’m also wondering if Amazon decides to replicate its advertising options on Kindle readers and tablets: You could pay less for an Alexa-enabled device in return for some limited amount of (hopefully not too intrusive) advertising. If you want to squelch the ads, you simply pay the small “upgrade” fee to be rid of them. Since some Echo devices are so inexpensive, I couldn’t see this working on an Echo Dot or Fire TV Stick. But a full sized Amazon Echo Plus or Echo Show? The numbers could work.

We’ll have to see how this all plays out of course. I suspect Amazon is very carefully weighing its options on this front. In the meantime, I’m going to converse a little more than usual with Alexa now so I can enjoy an ad-free experience.

Stacey on IoT | Internet of Things news and analysis

Consumers value IoT, but they don’t trust it, says Cisco

Consumers value IoT, but they don’t trust it, says Cisco

New research finds that fears over data privacy persist but aren’t enough to get consumers to pull the plug on smart devices. 

Cisco has announced the findings of new consumer-focused research, based on a survey of over 3,000 US and Canadian consumers, that the networking giant says is designed to help businesses that offer IoT-based products and services give the market a boost when it comes to customer confidence and adoption.

The message from the report, The IoT Trust/Value Paradox, is clear: consumers believe these products and services deliver “significant value”, but they don’t understand or trust how the data they share with providers is managed or used.

No change there, it seems: the same could be said of any of the major social networking sites. And, as with social networking sites, consumers are unwilling to disconnect from IoT services, even temporarily, despite their concerns.

According to Cisco, 42 percent of respondents said the IoT was too deeply integrated into their daily lives to simply ‘switch it off’. From this, the company deduces that they find it easier to tolerate uncertainty and risk than to pull the plug on IoT.

Read more: Study reveals in-person service essential in creating smart homes

What is the IoT, anyway?

A lot depends, of course, on how a consumer defines the IoT. In the Cisco report, respondents were twice as likely to recognize personal IoT devices such as wearables and smart home security systems than they were public ones, such as smart streetlights and wind turbines.

That stands to reason, given the hype around consumer devices and the relatively limited exposure to  IoT that many people have had in their working lives to date, unless they’re directly involved in making strategic decisions about their company’s digital direction.

But even at home, while it’s perfectly true that many people now have smart devices, others are perfectly happy to potter along in a relatively ‘dumb’ home that ‘just works’ for them, unless they see real value in making a switch. For a vast swathe of the world’s population, of course, this isn’t even an issue.

What does stand out, in Cisco’s research at least, is that respondents are overwhelmingly positive about the value the IoT brings to them, however they define it. Fifty-three percent say that IoT makes their lives more convenient, 47 percent say it makes them more efficient, and 34 percent say IoT increases their safety.

Read more: Survey: UK consumers wary of smart home products

A matter of education?

At the same time, only 9 percent of respondents say that they trust that their data, collected and shared through IoT, is secure. And only 14 percent feel that companies do a good job of informing them what data is being collected on them and how it is used.

According to Cisco, “As companies build their businesses around IoT services, they need first to understand the importance of educating their customers on the role of IoT in delivering new, valuable services that will enhance their lives. Only when customers understand the value of IoT – and trust that these new services can be delivered in a way that respects and protects their data – will mainstream adoption increase.”

There’s some truth in that, certainly. A great deal more work needs to be done by smart device makers on data privacy – and, while they’re about it, they should definitely cast an urgent eye over device security. But if “mainstream adoption” is truly the goal here, an education in the IoT might be overkill.

At Internet of Business, then, our take is this: the onus rests with smart product device makers to sort out privacy, tackle security – and do a much better job of explaining to customers what value might look like, in terms of the impact we can expect connected devices to have on our day-to-day lives.

And, here, interoperability is going to be key, because a thousand different apps to turn on lights, track our pets, measure our fitness efforts and curb our energy usage is unlikely to be workable for many in the longer term.

Read more: Smart home device metadata offers hackers insight into residents’ habits

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Internet of Business

Save money by getting rid of the space you don’t use

When it comes to space in a building, there are three key types. There are spaces that make your business money, such as labs or offices. There are spaces that cost you money, like a cafeteria. But, the most egregious waste of space is that which sits unused. It is both an expense and an opportunity cost for your business. So what is the best way to optimize your facilities to keep unused space to a minimum?

The nature of facilities management

Sitting here at TRIMax this week, it’s hard not to put the topics of conversation into context. As our speakers talk about space utilization and creating buildings that understand our movements, you start to wonder how that is put into practice and what that experience is like. Imagine a workplace that understands how frequently you come into the office or where you spend most of your day.

The very nature of facilities management (FM) revolves around understanding occupancy trends and asset performance. Understanding these trends enables improved utilization of the space you have and can improve financial performance. Consider the savings for your bottom line if you could eliminate the unused space that you pay for. Rather than just estimating by walking around the building, you could have data that supports those hypotheses and eliminates the guesswork.

Understanding your space occupancy is more complex than just walking around the building. – Jennifer Wickwire, Teradyne

Facilities management is as complex as it is fun

There are four key inputs that drive the management of your workplaces and buildings. These are people, places,  processes, and technology. To align these four drivers, it is key to drive upon principles of engineering, architecture, planning, accounting, finance, management, and behavioral science. It’s no small order!

We often attack FM from three angles of responsibility: strategic, tactical and operational.

Strategic: this includes acquisition and disposal of properties, environmental considerations, long range planning and capital forecasting

Tactical: at a more granular level, this is the upkeep and maintenance of the building, space allocations, employee move management, and safety policies.

Operational: At this level, it’s all about day-to-day operations of the facilities, including utility management, emergency response, and budgeting.

For those most interested in space management, the tactical responsibilities are extremely important.

Teradyne re-invents space allocation for their buildings by tailoring the workplaces to the worker

Teradyne, a designer and manufacturer of automatic testing equipment for the semi-conductor industry, has 70 locations with 4900 employees. Headquartered in Boston, or the “center of the universe” as our speaker liked to fondly refer to it as, they were looking for a better way to optimize their spaces.

Not too long ago (1998), they were managing and analyzing space allocations straight from CAD drawings. This was both time-intensive and prone to inaccuracy.

“There was really no accountability within our allocation process.” said Jennifer Wickwire, Facilities Manager/Architect at Teradyne. “Our CAD files didn’t relate to any of our database records. There was a lot of guesswork involved.” And it was always a cumbersome and manual task.

Fast-forward to today

From a $ 20,000 investment in 1998 grew a much more efficient and cost-effective operation.  Each year they send out a view of allocations and managers can update their allocations online in the portal. There’s no walking around and making best guesses. They can accurately determine where their people are and how the space is being used.

Four things to consider when implementing an IWMS initiative

Through their years of experience with implementing TRIRIGA in their facilities, Teradyne had four key considerations to think about when kicking off a similar initiative.

1) Start up time: Kickstart within 3-6 months and use a beta site to get the kinks out.

2) Cost: determine based on scope of work. You will likely need to invest in services.

3) Personnel: craft a solid team with strong technical skills. Trust and mutual respect are very important!

4) Ongoing Maintenance: there is a lifetime commitment to keeping your data fresh!

Learn more and let us know what you learned at TRIMax!

To learn more about IBM TRIRIGA, visit the IBM Marketplace.

And don’t forget to follow the event on Twitter using #TRIMax2017 or via the Watson IoT channel: @IBMIoT

Read some of the other posts featuring TRIMax activities!

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