Is your system ready for 50 billion connected things?

Profile picture for user irfan.kahn By Irfan Khan December 17, 2014
Summary:
SAP's Irfan Kahn has seen customers tackling the Internet of Things, and poses the question: is your system - and business - ready?

crossroads
The world's first connected device other than a computer was a toaster powered through the Internet in 1990. The first refrigerator with the ability to sense items stored inside it using barcode and RFID scanning was announced in the year 2000. By 2008, the number of things connected to the Internet exceeded the number of people on Earth.

Since then, the IoT has evolved into an increasingly sophisticated network of devices and machines. Cisco Systems estimates that approximately 12.1 billion Internet-connected devices were in use in April 2014. That figure is expected to rocket past 50 billion by 2020, facilitated by the advent of the joined-up, superfast, all-encompassing 5G network enabling everything from connected cities and driverless cars to remote surgery and advanced robotics.

Selling solutions instead of products

When discussing IoT there is a tendency to focus on the gadget side of the equation. While devices are the enablers of the Internet of Things, they are merely the tip of the iceberg. Most of the expected IoT growth will not come from people buying the latest smart watch from Samsung or thermostat from Google. People or companies will be buying full solutions, enabled by this new connectivity, without even realizing that devices are part of them.

Innovative companies like John Deere, for example, were quick to capitalize on IoT technology years back and use it to transform themselves from companies selling products to companies that sell holistic solutions. Today, John Deere prides itself on being an agricultural advisor that happens to include tractors in its package. Take a look at what John Deere envisions for the future.

Falko Lameter, the CIO of Kaeser Compressors, says the IoT has radically changed their business. Kaeser produces machines for industrial activities like drilling, pressurizing and vacuum packing. To improve the lifecycle of their products and provide customers with greater insight into maintenance needs, Kaeser measures the performance of their machines through sensors by the second, amassing one million measurerments per day, adding up to over one hundred terabytes of data per year.

Kaeser, like many other companies, has been creating big data through machine to machine communications for over 15 years, making them experts on the Internet of Things (IoT). What differentiates them is the way they analyze the data and use the insights for collaborative projects, impacting not only their own sales and service teams, but their entire ecosystem. Five years from now, says Lameter, Kaeser will be a service provider, not just selling machines but selling a package of services and usage models including fleet management so that the customer just uses the product without having to maintain it.

Is your system ready?

I think the first hurdle for companies that want to embrace IoT will be scaling existing backend systems, ERPs, analytics solutions, and storage to handle many new sources of information. Today the actors interacting with your ERP are humans - hundreds or thousands of people. Tomorrow, millions of sensors will be deployed along your production lines in your factories, all connected back to your ERP. Can your system handle it?

Case in point: when the utility industry started deploying smart meters they ended up with streams of data that were more than 200x times what their data centers had been designed for. This is why smart meters deployed in the field still have little impact on the way utilities operate. The existing infrastructure is simply inadequate for handling such volumes of data, but in time, that will change!

Key considerations

Building such end-to-end solutions will require a range of skills, all the way from hardware, networking to software analytics as well as deep industry knowledge. All in all, we can expect that IoT will call for stronger partnerships than we’ve ever seen before and even some mergers or acquisitions that wouldn’t seem to make sense today. Enterprises that want to succeed in this new environment should think carefully about three things before embarking on the IoT journey:

  • Where is the market going in my industry and what is my competitive impact and unique selling value?
  • What investment is required and what will be the long term return on it?
  • What culture is required for innovation and what will it take to implement that culture throughout the enterprise?

Learn from pioneers like John Deere, Kaeser Compresors and many others to understand why they made the commitment to IoT and see if this applies to your business. Those that take action now can be the forerunners in their industry helping them to not only survive but thrive as we fast forward into a world of 50 billion connected things.

Image credit: Choices of a businessman © alphaspirit - Fotolia.com