Cloud services firms and the Internet of Things – facing up to the challenge of being ‘big enough’

SUMMARY:

The argument is not whether a company like NetSuite has the capability to be the lynchpin in managing Industrial Internet solutions; it is whether mega-businesses perceive similar cloud service providers as big enough.

internet of things - itThis may be expecting the company to run before it has learned to walk, but the recent appearance of NetSuite CEO Zach Nelson, presenting a keynote address at an IoT conference marked a point in the company’s development that many large businesses may like to take note of. Indeed, I do wonder if it is possibly more important than Netsuite itself realizes.

Nelson was speaking at General Electric’s (GE) Minds and Machines Conference, held in San Francisco at the end of last month. GE is already establishing itself as one of the behemoths of IoT and what it focuses on particularly – the Industrial Internet.

Over the last few years, GE has been working on the development of its Predix Cloud, which since August this year is pretty much all in place and ready for prime time.

As a cloud service, this holds out the potential for enterprise users to access the management capabilities needed for their industrial internet activities with far less time and cost invested in developing and building solutions from the ground up. In addition, because of its existing market penetration in sectors such as aviation, energy, healthcare and transportation it is able to pre-configure services for enterprises operating in those areas.

There is also now a formal partnership between GE and NetSuite, with the latter becoming available to GE users via Predix.

So far so good, but there is an argument which suggests that this now puts NetSuite in a particularly strong position, one that could be particularly attractive to enterprises looking to the integration and management of their industrial internet in the wider context of achieving desired business outcomes. This is most obviously to be seen in areas such as manufacturing.

For a start, NetSuite has pulled together expertise it has developed over recent years in tuning its core ERP and business management code to create a dedicated manufacturing suite. In addition, the company has a two-year-old partnership with Autodesk, one of the kings of computer-aided design and a vast range of associated capabilities.

Throw in the GE industrial internet partnership and what you get is a very tantalising triangle covering the core aspects of just about any enterprise. The ability to design and manage and distribute the design process is a core part of achieving a positive business outcome. Managing, monitoring and pro-actively controlling a wide range of industrial processes, so that they work effectively and reliability, is also crucial to achieving a positive business outcome.

But managing all the aspects of the business itself, including these vital stages of design and production management, is arguably the most crucial of all. It is the lynchpin that holds everything together.

Starting point

Design is a usual starting point of any business process, but in practice it is rarely an exercise undertaken in a vacuum. It is usually kicked-off as a direct result of work done through the efforts of marketing departments collecting and collating data about what customers seem to want from hither and yon.

With the advent of social media and a thousand other ways of getting a feel for what existing and potential new customers think they need next – with CRM systems, of course, probably being the major contributor – the granularity, richness and complexity of the data now available to business managers is enormous. So BI and analytics systems have become essential tools in the process of deciding what direction that design should take.

These results can feed into both product and business planning stages, making ready for the business of producing and selling what design has created. As part of that, data about the design can then be used to drive the materials and component procurement, scheduling of just-in-time (JIT) deliveries and the manufacturing process itself.

The IoT is in charge of the manufacturing, and is increasingly automated. Driving the automation requires a plan – when to do what, and why. That is created and fed by the business system, using engineering plans created by the design tools.

The processes and tools will need to be constantly monitored and managed according to a business plan and market objectives.

Some of its monitoring work will result in reports that identify imminent failures of machine tools or processes, all of which must not only be managed and remediated in themselves, but also fed into the business management system to modify stock, delivery and sales schedules in advance of the problem occurring.

What seems to emerge here is that the business management system becomes the focal point that is driving, or way or the other, all the core processes essential to a business successfully achieving its desired goal of selling product or service ‘X’ at a reasonable margin and having it work reliably for the user.

It is, arguably, fundamentally in charge of everything.

Triangular thinking

With the addition of the Netsuite/GE partnership to the existing Netsuite/Autodesk relationship the triangle is now in place. The ability for the trio to present a united front to large swathes of the global industrial sector, with a ‘packaged solution’ to many of their business and operational issues, has a huge potential to be an attractive prospect.

This does, however, this does raise an inevitable element of doubt. This that the whole ‘package’ could easily be perceived by many large enterprises as somewhat larger than Netsuite, as the business management tool, may be able to manage.

That is not to say it can’t. In fact, it almost certainly can. But for many large enterprises it may not be seen to be big enough, or have  a long enough track record, to carry that mantle or responsibility. Here the firm needs to focus on its messaging in order to be seen as the kind of serious-mega-business management player that buy side mega-businesses automatically turn to as ‘one of us’.

In the end, this is the dilemma now starting to face many vendors of cloud-delivered services. The potential they offer business users can be huge, but at what point do they become substantial enough to be taken seriously enough to rank as a ‘given’ that they are sent to RFIs by the biggest enterprises.

While many cloud businesses are approaching that Rubicon, NetSuite’s GE partnership, and the potential of that tantalizing triangle, put it in a position where it can move across, and move quite quickly.

My take

There for the taking, but much will depend on whether NetSuite sees the potential in all this to move into the Industrial Internet ‘heavyweight’ class, or whether this is just another partnership that might bring in some revenue.

 

Disclosure – at time of writing, NetSuite is a premier partner of diginomica.