If CIOs aren't dialed into the transformative effect the Internet of Things (IoT) will have on business, the road ahead is going to be a tough one.
"Companies understand that IoT isn't just for the service organization. It isn't just to create a new application the customer uses. It feeds back to engineering; it aids sales and marketing; it touches every aspect of the company," said Howard Heppelmann, general manager for connected product management at PTC Inc. in Needham, Mass.
Heppelmann joined experts from IBM, Dassault Systèmes SE, PTC and The MathWorks Inc., in a panel discussion at the Massachusetts Technology Leadership Council's (MassTLC) IoT conference. The panelists came armed with examples of connected medical devices, instrumented automobile parts, sensorized solutions to traffic congestion and even stories about smart washing machines that know how to use detergent effectively. The machines "analyze the water, the type of dirt in the water and, based on historical data of how other washing machines have performed, will change the washing program," Michael Munsey, director of semiconductor strategy at Dassault, said. "It blew my mind."
IoT's impact on the business -- and, more specifically, on business processes, the focus of the panel discussion -- is so comprehensive, it's even giving rise to a new C-level position: the chief IoT officer (CIoTO?). Making room for a chief IoT officer underscores the emphasis -- and the urgency -- senior leaders are placing on the technology. "In the past, you could get to market late," Heppelmann said. Today, competition is brutal, and being late to market is not only a missed opportunity, it's a failure to understand that "data exhaust coming off of products gives you new leverage over your customer base."
Worse? Businesses (and not just of the vendor variety) that aren't jumping on first-to-market IoT opportunities put themselves at risk for becoming copycats, what Heppelmann called the "me too" companies. A conservative watch-and-learn approach could create setbacks that "me too" companies can't recover from -- not the least of which is keeping pace with rapidly evolving technology. "Products five years from now will not look anything like, behave anything like or have the architectures of anything like what we know today," Heppelmann said.
Plus, as connected devices become more integrated into everyday life, the IoT will impact the very relationship businesses have with their customers. Rob Purser, development manager of hardware interfacing for MATLAB at MathWorks, pointed out that in the past, businesses owned and controlled both the technology and the data generated by that technology. But the IoT creates a new wrinkle: The customers own the technology (i.e., a Fitbit), and the business collects and analyzes the data. Businesses will need to cultivate and build customer trust in a way they've never done before, both by safeguarding the data and by providing individual insights into the data, Purser said.
And, yet, judging from the audience reaction, IoT proselytizers like those on this panel are great on vision but a bit cavalier on the nuts and bolts. Discussions revolve around the power of cloud computing, for example, or the potential of connected devices, but they skirt other infrastructure fundamentals -- like the pipes necessary to connect the devices to the cloud. As one attendee astutely pointed out, IoT should be "a three-part conversation. Why does no one talk about the network?"
While Munsey conceded infrastructure is a "limiting factor right now," Heppelmann brought the discussion right back to the devices themselves. "The big thing changing in the Internet of Things isn't the Internet," he said. "It's the fact that value is shifting from mechanical devices to software; software value is shifting from embedded to cloud. And it's the 'things' that are making the Internet."
Who to work with
Chris Rezendes, founder and partner at INEX Advisors and panel moderator at MassTLC's IoT conference, didn't tell audience members who to call to get a jump on IoT; instead, he shared his approach, which included the following five points:
1. Start with what you know. "Start with what you know and love about the physical world," he said. Specifically, figure out what you're a subject matter expert in and realize, no matter what, aspects of that expertise will become instrumented.
2. Find the right partners (note: he does not call them vendors). They should understand instrumentation is coming, he said.
3. Partners should be up on new rules of engagement. Inside those companies, Rezendes advised finding folks who know and understand the new rules on data governance.
4. Corporate social responsibility should be a factor. Rezendes said a good partner will understand that instrumenting the physical world means there's "a hell of a lot more work to be done than just producing financial rewards." The perspective may seem a little, well, "tree hugging/pinko liberal," he said, but it can ultimately help pad the bottom line. "When we instrument the physical world with intention, we will have the opportunity to create and throw off a ton more financial value than Chambers' $19 trillion," he said, referring to an IoT market prediction made by Cisco's outgoing CEO John Chambers.
5. Choose partners you want to work with for the long haul. Rezendes said to make sure you can end up "falling in love" with hand-selected partners. "To instrument the physical world, to do IoT, you're going to have to rip open yourselves and your organizations and bear it all," he said.
One of the more provocative statements made at the MassTLC conference had to do with Smart dust, tiny sensors powered by radio waves. Niko Pipaloff, team leader of the emerging tech lab at PricewaterhouseCoopers LLC, said soon these tiny sensors "will be in the ether," collecting data about the very air we breathe. "Who owns that data?" he asked attendees.
One audience member cried foul, likening the idea of smart dust to the number of angels that can dance on the head of a pin. "You're beginning to push the limits of physics," the audience member said.
Read how Whirlpool CIO Mike Heim has embraced the IoT to transform the business.