The Internet of Things: What Business am I In?
Harvard strategy and competition guru, Michael Porter, has weighed into the world of the Internet of Things (IoT) with an article entitled: How Smart, Connected Products Are Transforming Competition. He has great insight on the future of business with the advent of IoT, and his insight may lead to interesting possibilities for infrastructure performance management that were probably outside of his initial consideration.
Porter describes smart, connected products as the third wave of IT. The first wave was the 1960s and ‘70s automation of individual activities in the value chain – such as order processing and computer-aided design. The second wave of IT, in the 1980s and 1990s, was the rise of the Internet and inexpensive, universal access. Regarding this third wave and IoT, Porter says:
“Another leap in productivity in the economy will be unleashed by these new and better products. In addition, producing them will reshape the value chain yet again, by changing product design, marketing, manufacturing, and after-sale service and by creating the need for new activities such as product data analytics and security.”
This leap in productivity with the Internet of Things leads Porter to make this stunning statement:
These new types of products alter industry structure and the nature of competition… In many companies, smart, connected products will force the fundamental question: "What business am I in?"
The Internet of Things alters industry structure and holds the potential to force many companies to question what business they are in! Why?
"Smart, connected products require companies to build and support an entirely new technology infrastructure. This "technology stack" is made up of multiple layers, including new product hardware, embedded software, connectivity, a product cloud consisting of software running on remote servers, a suite of security tools, a gateway for external information sources, and integration with enterprise business systems."
“In heavy machinery, Schindler’s PORT Technology reduces elevator wait times by as much as 50% by predicting elevator demand patterns, calculating the fastest time to destination, and assigning the appropriate elevator to move passengers quickly.”
Managing smart elevators in the enterprise is not the same thing as ensuring enough bandwidth for employees to connect their smart phones to the Internet via WiFi.
We think of the Internet of Things as devices connected to the Internet. In reality, Porter is saying that they are devices integrated into the Internet, including integration with enterprise business systems.
“Real-time monitoring data on product condition and product control capability enables firms to optimize service by performing preventative maintenance when failure is imminent and accomplishing repairs remotely, thereby reducing product downtime and the need to dispatch repair personnel. Even when on-site repair is required, advance information about what is broken, what parts are needed, and how to accomplish the fix reduces service costs and improves first-time fix rates.”
Does this sound familiar, IT managers? It looks a lot like infrastructure performance monitoring.
Smart, connected devices are going to be much more than nuisance devices that must be monitored so that they do not steal too much bandwidth from “real business activities.” IoT devices will be an integral part of business infrastructure, having their own value to the enterprise or service provider and requiring proactive monitoring just like servers and routers.
Porter implies that smart connected product manufacturers will be the managers of the data and providers of services related to their products. Perhaps it will be. But to think so would ignore present-day infrastructure performance monitoring. Enterprises no longer use one platform to monitor Cisco devices, another to monitor Juniper and another for Dell. Consolidated, integrated platforms are used to monitor everything.
Bring on the Internet of Things. We know what business we are in.
Read Michael Porter’s article here.