Finding Value in the Internet of Everything

The first known reference to the Internet of Things dates back to Kevin Ashton in the late 1990s.  Speaking, at that time, about early RFID tagging of goods throughout a distribution chain the metaphor was descriptive and compelling, but, did not generate an immediate, broad market reaction.

In recent years as the Internet has become a fundamental of life and the number of connected devices has exploded more and more attention has been paid to the idea.  A very recent addition to the many written analyses of the phenomenon and its potential was published by The Economist as “The Internet of Things Business Index.” According to the report:

  1. Most companies are exploring the IoE (Internet of Everything)
  2. Two in five members of the C-Suite are talking about it at least once a month
  3. Investment in the IoE remains mixed

Step 2 imageThe Economist says that there is a quiet revolution underway but that many important unknowns remain.  Companies are preparing for the future IoE with research, by filling their knowledge gaps, and by working with governments and trade associations on the definition and adoption of standards that will be needed to enable real leverage.  The Economist believes the IoE to be, “an ecosystem play,” by which they mean networks of companies creating new industries, new economics, new value definitions. The “productization” of these networks and what they do is the biggest economic opportunity. But they don’t say how to get there.

In talking with our clients, most companies are discussing the IoE but without consensus on what it is or what to do about it.  We have a suggestion.  Companies should apply “Design Thinking” methods to systematically find the best targets; to increase your chances of achieving disruptive success. Design Thinking describes the orchestration of a group of well-known techniques (see below), with some adjustments, to find those opportunities that are truly transformational and successful.Design Thinking

It is purposefully different from asking mobile phone users in 2003 if they want a camera, a GPS and a sound system in their phone, or asking the casual coffee drinker in 1983 (the year Starbucks began) if they thought paying $4.00, eighteen times per month, for a cuppa’ joe, was an attractive idea.

Instead of asking how the IoE can transform our world we should take a series of business challenges, identify how our customers actually experience them, develop an array of ways to transform the customers’ experience for the better (with the IoE in mind), select the best ones and build models and low-fidelity prototypes with customers refining and extending as we go.Stella Modeling

This approach works for the IoE, for Big Data, for Social Business: instead of starting with the technology, start with the business challenges that are not being solved with traditional analyses and solutions; start with the “mysteries.” See how the underlying, visceral customer needs can be better served and how IoE might be part of it.  Visualize and prototype as you go.  Iterate, iterate, iterate.

Doug Brockway
November 6, 2013

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A Model for Transition to IoE in Manufacturing

In a recent interview, executives from Robert Bosch GmbH and McKinsey discussed the Internet of Everything (IoE) and its impact on manufacturing.  They described significant changes to the production process and to the management of supply chains from this “fourth industrial revolution.”  The IoE allows for the interconnection of factories within and across regions and the exposure or “display” of the status of each component of each product for each customer via each distribution method.  Sensors in machines and in components will be able to keep universally in synch about what has to be done, what has been done and how well it was done.

A global decentralization of production control is now possible. Creating this reality will require new forms of intercompany and interdisciplinary collaboration.  The buyer, seller and distributor will all be involved in product design, engineering, and logistics.

GE Industrial InternetToday, physical flows and financial flows and information flows are different for manufacturing.  The IoE vision has them increasingly fusing together.  This transformation to what GE calls the Industrial Internet begs a set of questions: In this future how will orders be placed and with whom?  Who or what verifies the accuracy of an order or a deliverable across a network of suppliers, manufacturers and distributors that is formed, of an instant, down to the level of at an order at a time?

In this coming future state information, via the cloud, will be real-time available to all concerned parties.  The decisions to be made based on this information will be subtle, situation-sensitive, and so voluminous and time dependent that people won’t be making them. Algorithms running in machine-machine (M2M) systems will.  On first consideration this all seems overwhelmingly complicated.  We’ll need a model, an example to build from, on how to make the transition.  It turns out we have one.

Changing the trading cycles for Wall Street are recent, real examples that provide a roadmap for the manufacturing transition.  In that world the number of days allowed to settle a trade, the “settlement cycle,” has undergone major transitions. The most notable was from 5 days to 3 days, so-called T+5 to T+3, occurred in 1995. That change required almost every firm in the US to make some changes to their processing flows and systems.  Since the move to T+3 various exchanges have made further improvements towards T+1.  The table below shows some of the major changes, the before and after, that were accomplished:

T-5 to T-1 Table

T+1, even if never mandated, can be viewed as an example of industry opportunity through dislocation. At some level, IoE capabilities can enable dramatic cycle time gains by unlinking end-to-end dependencies (e.g. I no longer need to “affirm” trades based upon evaluating “confirm trade” messages). Some entities/roles will become more independent, some more dependent. Some may disappear if they no longer add value.

The parallels for manufacturing in an Internet of Everything world are clear (though some elements used in trading may not be used here or at the same level of emphasis).  Cross-industry governance will be needed on the format and import of transactions, acceptable technical modes of sending and receiving the messages, management of the quality and timing of the messages both in content and technically, and how to handle disputes.

Douglas Brockway

Ira Feinberg

July 16, 2015

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