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Forget Consumer IoT—Industrial IoT Will Be The Revolution

Danielle Beurteaux

Recent big news in the IoT-sphere isn’t about intelligent toasters or sentient vacuum cleaners. It’s about the Industrial Internet of Things, which is about to blow us out of the water. Tom  Siebel, founder of Siebel Systems, recently renamed his latest company C3 IoT (previously known as C3, the firm focused on energy), with a broadened aim to provide enterprise-level software to a broader range of industries, from utilities to aerospace.

Computer maker Dell also recently launched an industrial IoT environment PC, and GE and Tata Consultancy Services partnered and will start off with GE’s industrial cloud, Predix, which GE launched last summer.

Research from Accenture claims that IIoT could increase GDPs in 20 economies by a total of $10.6 trillion by the year 2030 . That’s based on current IIoT investment trends; with more investment, the potential growth is even greater.

A white paper by IDC and sponsored by SAP, “IoT and Digital Transformation: A Tale of Four Industries,” looked at manufacturing, healthcare, retail, and consumer products and found that “business benefits from IIoT will be realized at different speeds and on different scales.”

They’re calling it Industrie 4.0 in Germany, but regardless of the name, getting from where we are today to a future of ubiquitous IIoT has some hurdles, according to Kai Goerlich, idea director of thought leadership at SAP. Will we be ready?

SAP: How will we make a living?

KG: The last digitization was largely driven by telecommunications. We could view mobility as the first wave of IoT. The difference now is the mobility connected people, and IoT is connecting everything into a large grid, mesh, whatever you want to call it. The danger is job loss. The World Economic Forum had a graph; in highly automated countries, job loss won’t be that high, about a 10% risk. But the U.S. has a 30 % risk. The U.S. is still relatively service heavy with many people in functions as compared to Germany, which has already automated a lot.

IIoT, or Industrie 4.0, in my opinion will lead to a total redefinition of how markets run and economic production without humans. Automation poses the risk that we automate so fast that society can’t adapt. It took us 60 years from the 40’s and 50’s to fully automate operations, and now within 20 years, we have the Internet and mobile. It’s really a very fast speed; within a short lifetime two or three revolutions and our systems are not fast enough to react to it.

SAP: Will business models change?

KG: IIoT is a big game changer for business models. We’re taking out some of the in-between process in the value chain with direct one-to-one consumer sales. The old economy was run on the old sequential value chain. Digitization completely wiped out the value chain.

SAP: How important are data and interoperability?

KG: On the good side, with more sensors in all devices, we could make more sense out of the world. If we can exchange data, have more data points, our picture of the world may be more real time and realistic than in the past. That needs interoperability—make things work together and data exchange and create insights.

The real money is where data is, you can already see this happening. All use cases are basically on the data level. It will be totally ambient; in 20 years everything will talk to us. IoT was invented around 2000, but it won’t be used for much longer. Industries are already defining it differently—remote maintenance, connected, etc.

IIoT will digitize physical assets and make everything connected. Estimates put savings at 50% of fixed assets costs, that’s a big sum. If you just take the top 10 companies in each industry, there’s a lot of money in it. A lot of savings in sharing products and lifecycle maintenance.

For more insight on how IoT is impacting real-world businesses, see The Internet Of Things And Digital Transformation: A Tale Of Four Industries.

 

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What Support Looks Like In The Era Of The Cloud And The Internet Of Things

Fred Isbell

As we near the end of this year’s spring event season, one thing is clear: Digital transformation is in the air.  The annual SAPPHIRE NOW and ASUG events are now behind us, but people are still buzzing about the sessions, stories, lessons learned, and best practices shared. There’s profound interest in how innovations are adopted, such as running a Live Business, digital boardrooms, and enabling the latest technology.

After listening to customers, practitioners, and analytics throughout the first half of this year, I was inspired to invite the following panel of subject-matter experts for the third installment of a webcast series sponsored by Digital Business Services from SAP:

  • Elaina Stergiades, research manager of IDC Software and Hardware Support Services
  • Michael Rieder, senior vice president and global head of SAP Enterprise Support & Premium Engagements
  • Sei Drake, chief architect of Co-Engineering and Innovation at SAP America

To kick off the conversation, we discussed the rise of the 3rd Platform that IDC says is a factor driving growth of innovations, new business opportunities, and more. Yes, digital transformation is front and center, but with it comes a need for simplification, not increased complexity. And on top of it, there’s an incredible explosion of data from a variety of places, including the fast-accelerating Internet of Things (IoT).

What should businesses do? The idea of tackling these issues and providing the support needed to succeed is reminiscent of Edvard Munch’s “The Scream” painting!

Future of Support-1

According to Elaina Stergiades, the promise of the 3rd Platform and the evolution of solutions that support it are transformational. Moving away from a reactive, manually intensive, and linear process, businesses are steadily adopting a proactive and more predictive model. In fact, this new brave world is bringing great technology to innovate the support process and customer experience, including:

  • Cloud solutions: Delivers wider access to support data from anywhere to share across the entire user experience and with new levels of integration
  • Social technology: Supports collaboration far above traditional hierarchical (and inherently slower) support processes
  • Enterprise mobility: Enables support monitoring anywhere and remote support and resolution without traditional, closed boundaries
  • Predictive analytics: Forecasts issues before they reach crisis level while offering a better and more direct, personal response

Michael Rieder continued the discussion with insightful observations about the market dynamics that businesses are facing. He supported Elaina’s perspective and the need for proactive support for on-premises, cloud, and hybrid environments. He noted that it is critical for businesses to reimagine support by keeping six foundational pillars in mind:

  • Mission-critical support
  • Total cost of ownership
  • Continuous improvement
  • Accelerated innovation
  • Integrated support
  • Business service support

Sei Drake has weighed in on this topic before in his blog post on “How to Prepare Your IT Landscape for the Digital Economy.” From his perspective, the evolution of support is happening against the backdrop of changes in the IT industry and the marketplace. The rise of cloud-based solutions and the growth of the Internet of Things (IoT) are bringing a whole host of new considerations, especially the need for DevOps and co-innovation. We found his suggestions for customers’ considerations quite helpful with examples across several industries.

Like the webcasts I hosted before it – Unlocking the Potential from the Internet of Things and Transforming Digital Visions into Reality – this third in our series was another insightful thought-leadership webcast from Digital Business Services. Be sure to view the on-demand replay and share with your colleagues.

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About Fred Isbell

Fred Isbell is the Senior Director of SAP Digital Business Services Marketing at SAP. He is an experienced, results- and goal-oriented senior marketing executive with broad and extensive experience & expertise in high technology and marketing. He has a BA from Yale and an MBA from the Duke Fuqua School of Business.

The Internet Of Things And The Explosion Of Life At The Periphery [INFOGRAPHIC]

Kai Goerlich

Facts about the Internet of Things (IoT) are clear and have been widely published. The number of IoT sensors will grow to 50 billion by 2020, according to Cisco, and Intel estimates that we’ll have 200 billion Internet-connected things by 2030. Data will be the new sunlight as we create, replicate, and consume 44 zettabytes (or 44 trillion gigabytes) of data by 2030, according to EMC and IDC. And as if all this wasn’t enough, the speed of analytics will intensify thirty-fold by 2030 – with 95% of queries answered in mere milliseconds, according to SAP estimates.

If these trends continue (and they likely will), our lives will soon be powered by ambient computing, where most things, devices, and machines sense the world around us, communicate and analyze data, and more or less, act independently.

Although most organizations still classically store and analyze their data on laptops, smartphones, and data centers inside and outside the cloud, it’s safe to assume that data collection and analytics will eventually move into the periphery as well, at least partly. For example, smart machines – such as those used in connected vehicles – generate a massive amount of data, and we have yet to make most things intelligent.

The opportunity is boundless.

Economic impacts within your reach

Most of us who have spent a lifetime in the traditional IT industry will find it difficult to consider how an ambient computing economy and society will operate and appear. Even millennials born into the age of smartphones will probably be surprised when the focus shifts from the phone as the primary device to other levels.

We know from evolution and chaos theories that the highest level of creativity reveals itself within a system’s border. Because we are creating new boundaries for the IoT right now, businesses will eventually explode at the periphery of their current IT and business systems. In fact, the IoT will fundamentally create more sensors and receptors on the outside of our business systems, allowing us to gather and analyze more and better data. And as we cooperate with other companies and organizations to share this information, new business models will emerge with unprecedented diversity.

In the short term, changes are happening across strategic asset management, customer and consumer experience, product management, and services – bringing savings through lower carbon emissions, improved asset management, reduced replenishments, and downtime prevention, among others. However, over the long term, IDC research indicates that nearly 25% of all companies view the IoT as strategic and over 30% of industry leaders believe they will be disrupted by it at some point.

The economic impact will only become more significant as our reliance on the IoT grows. And when it comes to long-term transformation, you’ll know where to look: The periphery.

IoT and Digital Transformation

For more on how our increasingly connected world is changing lives, see Three Ways The Internet Of Things Can Improve Citizens’ Lives.

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Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Idea Director of Thought Leadership at SAP. His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation.

How Much Will Digital Cannibalization Eat into Your Business?

Fawn Fitter

Former Cisco CEO John Chambers predicts that 40% of companies will crumble when they fail to complete a successful digital transformation.

These legacy companies may be trying to keep up with insurgent companies that are introducing disruptive technologies, but they’re being held back by the ease of doing business the way they always have – or by how vehemently their customers object to change.

Most organizations today know that they have to embrace innovation. The question is whether they can put a digital business model in place without damaging their existing business so badly that they don’t survive the transition. We gathered a panel of experts to discuss the fine line between disruption and destruction.

SAP_Disruption_QA_images2400x1600_3

qa_qIn 2011, when Netflix hiked prices and tried to split its streaming and DVD-bymail services, it lost 3.25% of its customer base and 75% of its market capitalization.²︐³ What can we learn from that?

Scott Anthony: That debacle shows that sometimes you can get ahead of your customers. The key is to manage things at the pace of the market, not at your internal speed. You need to know what your customers are looking for and what they’re willing to tolerate. Sometimes companies forget what their customers want and care about, and they try to push things on them before they’re ready.

R. “Ray” Wang: You need to be able to split your traditional business and your growth business so that you can focus on big shifts instead of moving the needle 2%. Netflix was responding to its customers – by deciding not to define its brand too narrowly.

qa_qDoes disruption always involve cannibalizing your own business?

Wang: You can’t design new experiences in existing systems. But you have to make sure you manage the revenue stream on the way down in the old business model while managing the growth of the new one.

Merijn Helle: Traditional brick-and-mortar stores are putting a lot of capital into digital initiatives that aren’t paying enough back yet in the form of online sales, and they’re cannibalizing their profits so they can deliver a single authentic experience. Customers don’t see channels, they see brands; and they want to interact with brands seamlessly in real time, regardless of channel or format.

Lars Bastian: In manufacturing, new technologies aren’t about disrupting your business model as much as they are about expanding it. Think about predictive maintenance, the ability to warn customers when the product they’ve purchased will need service. You’re not going to lose customers by introducing new processes. You have to add these digitized services to remain competitive.

qa_qIs cannibalizing your own business better or worse than losing market share to a more innovative competitor?

Michael Liebhold: You have to create that digital business and mandate it to grow. If you cannibalize the existing business, that’s just the price you have to pay.

Wang: Companies that cannibalize their own businesses are the ones that survive. If you don’t do it, someone else will. What we’re really talking about is “Why do you exist? Why does anyone want to buy from you?”

Anthony: I’m not sure that’s the right question. The fundamental question is what you’re using disruption to do. How do you use it to strengthen what you’re doing today, and what new things does it enable? I think you can get so consumed with all the changes that reconfigure what you’re doing today that you do only that. And if you do only that, your business becomes smaller, less significant, and less interesting.

qa_qSo how should companies think about smart disruption?

Anthony: Leaders have to reconfigure today and imagine tomorrow at the same time. It’s not either/or. Every disruptive threat has an equal, if not greater, opportunity. When disruption strikes, it’s a mistake only to feel the threat to your legacy business. It’s an opportunity to expand into a different marke.

SAP_Disruption_QA_images2400x1600_4Liebhold: It starts at the top. You can’t ask a CEO for an eight-figure budget to upgrade a cloud analytics system if the C-suite doesn’t understand the power of integrating data from across all the legacy systems. So the first task is to educate the senior team so it can approve the budgets.

Scott Underwood: Some of the most interesting questions are internal organizational questions, keeping people from feeling that their livelihoods are in danger or introducing ways to keep them engaged.

Leon Segal: Absolutely. If you want to enter a new market or introduce a new product, there’s a whole chain of stakeholders – including your own employees and the distribution chain. Their experiences are also new. Once you start looking for things that affect their experience, you can’t help doing it. You walk around the office and say, “That doesn’t look right, they don’t look happy. Maybe we should change that around.”

Fawn Fitter is a freelance writer specializing in business and technology. 

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

Download the PDF (1.2MB)

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Creating A New Employee Experience: Is HR Turning The Corner?

Estelle Lagorce

Businesses and workforces in every industry continue to face major disruption. HR has sometimes struggled to keep up with the accelerating pace of change, yet 2016 could mark a turning point. Although there’s still a long way to go, Deloitte’s new Global Human Capital Trends report shows that HR is now making impressive strides in innovation, reskilling, and adapting to changing workforce and business demands.

So how can HR take the lead in this exciting digital business world? Where are the best opportunities to drive business growth? What capabilities and skills will be needed in the future? In the first of a series of blogs, we focus on one of the key trends driving HR transformation: the growing importance of design thinking in crafting the employee experience.

Focus on the person, not the process

Today’s employees are already inundated with a flood of e-mails, messages, and meetings – so the last thing they want are HR processes that add to the burden. And with the huge growth in mobile devices, they’re also accustomed to interacting with technology in a way that is simple, intuitive, and pleasurable. So it’s not surprising that 79% of executives in this year’s Global Human Capital Trends survey rated design thinking – which puts the employee experience at the center – an “important” or “very important” issue (see figure 1).

Transform HR Figure1 People Analytics

Figure 1: Design thinking: Percentage of respondents rating this trend “important” or “very important”  

In simple terms, design thinking means focusing on the person and the experience, not the process. The key question that HR needs to ask is: “what does a great employee experience look like from end to end?” That means studying people at work and creating “personas” and “profiles” to understand their demographics, environment, and challenges. This implicitly drives a more thoughtful and human approach to business that makes the workplace more attractive to existing and future employees. “Design thinking really is about reevaluating the way HR is being done in the context of the employee experience,” explains Erica Volini, leader of Deloitte Consulting LLP’s HR Transformation Practice.

But does it work? The data from this year’s survey certainly points that way. Companies growing by 10% or more a year are more than twice as likely to report that they are ready to incorporate design thinking, compared to their counterparts who are reporting stagnant levels of growth. Design thinking can also make a huge difference in how companies are perceived, which is crucial in recruiting and retaining the right people. Done well, design thinking promotes a virtuous cycle: generating higher levels of employee satisfaction, greater engagement, and higher productivity for the company.

Learn more

Deloitte’s Global Human Capital Trends 2016 is one of the largest global surveys of its kind, with 7,000 HR and non-HR respondents covering a wide range of industries across 130 countries. “Every single industry is being disrupted; that’s the theme that resonates through the report,” says Erica Volini. “There’s a real opportunity for HR to use this report to change the dialog and make it about what’s happening in the business and ideas to move forward.”

To find out more about HR transformation trends, priorities, and practices:

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Estelle Lagorce

About Estelle Lagorce

Estelle Lagorce is the Director, Global Partner Marketing, at SAP. She leads the global planning, successful implementation and business impact of integrated marketing programs with top global Strategic Partner across priority regions and countries (demand generation, thought leadership).