März 12, 2018

IoT & XaaS

We all know that technology is driving rapid change in the world of business, but it’s often difficult to get the measure of that change or its direction.

We expect to see 20 billion internet-connected things by 2020. These “things” are not general-purpose devices, such as smartphones and PCs but dedicated-function objects, such as vending machines, jet engines, connected cars and a myriad of other examples.

The IoT will have a great impact on the economy by transforming many enterprises into digital businesses and facilitating new business models, improving efficiency and increasing employee and customer engagement.

The biggest barrier to the IoT is that most enterprises do not know what to do with the technology. And if they do have plans for the IoT, there is concern over who will be leading these initiatives.

In a July McKinsey survey, 98 percent of respondents said most companies in their industry are planning enterprise IoT initiatives. And the two main areas where those companies plan to use IoT are in optimizing service operations and improving visibility into operations.

The generality of the term IoT and the wide variety of delivery forms and back-end services can make it difficult to identify how to capture business value. The first step is to move the conversation from talking about the IoT in general to talking about what it can do, or be, specific to your organization. The IoT can deliver business benefits ranging from operational improvements, such as predictive maintenance, to digital business transformation, such as selling product usage as a service.

A strategic perspective

By aligning use case identification with the strategic levers that drive success for your organization, you have to be sure to balance pragmatism (what is proven to deliver now) with vision (how the IoT can enable transformational business moments).

It is essential before architecting and implementing any IoT solution that some time be spent to describe the IoT use case and value that your IoT pilot or project will deliver to your enterprise.

Clearly identified business goals and objectives

It is essential before architecting and implementing any IoT solution that some time be spent to describe the IoT use case and value that your IoT pilot or project will deliver to your enterprise. Certain use cases are more likely to create compelling financial payback than others.

This step is critical, as it describes what new functionality, capabilities or differentiation your IoT project will deliver. It links these to the impact on customers, validates what basic benefits you can expect and establishes the metrics by which your IoT project’s success will be measured.

Use cases within asset-intensive businesses or “heavy” industries. Here, industrial mechanical devices with high cost and complexity, critical asset value and remote geographic location realize IoT benefits such as remote asset monitoring and predictive maintenance that maximize asset utilization and minimize critical failure unplanned downtime.

SaaS – a game changer

The information-technology sector of the S&P 500 Index surged 37% last year, almost double the advance of the benchmark index. A huge sub-sector contributing to the increase was Cloud based software as a service (SaaS) where companies like Salesforce and Zendesk generate subscription gross margins of around 80%.

Software as a Service (SaaS) is simply a method of delivering software on demand, via the cloud. It is a subscription model where you’re effectively renting access to software rather than outright buying it. It is a “one-to-many” model which helps even small organisations to have access to the same computing power as a large enterprise – which helps to level the playing field when it comes to global competition.

Deploying a business-wide software application was historically something of a huge task, where your IT teams might once have needed specialist training just to understand the intricacies of a complex application in order to install it effectively and ensuring there was enough server space and memory.When introducing a cloud application however, there’s hardly any need to bother the IT department. As long as the user can access the internet, they can tap into Cloud-based solutions instantly. It’s usually just a matter of hours to get the initial system access for the business, but thereafter each additional user can be added practically instantly. This can mean serious savings in terms of both hardware and manpower. Not to mention scalability.

Many organisations have multiple teams of remote staff, who require access to enterprise applications anywhere. Setting up the necessary connectivity and access points for mobile users can be difficult for traditional on-premise software. With SaaS applications, the user can typically execute the same functions on their mobile device as they can on a PC. A SaaS application also offers the same efficiency regardless of date or time.

On-premise and local installations of software can run a risk of being copied illegally or being used – sometimes inadvertently – in a non-compliant way. By not having the software assets in your physical possession there is no danger of anyone copying them or your business being penalised for breaching the licence terms.

Uptake of XaaS rises

XaaS has frequently been used as an umbrella term to encompass SaaS (Software-as-a-Service), PaaS (Platform-as-a-Service), and IaaS (Infrastructure-as-a-Service).

XaaS is more than just bolting on services, and goes beyond simply repackaging products for sale on subscription. When the R&D team at energy management and industrial automation giant Schneider Electric embarked on a proof-of-concept for connected products, it found it also had to connect into product management, field service management and CRM systems. This meant a lot of work on converging the data and the taxonomy so that field engineers and product designers are both talking about the same things when they communicate.

Electronics and healthcare giant Philips has made a huge investment in building a converged repository for health data as a first step in shifting the healthcare industry towards delivering continuous care and well-being, instead of the traditional model of simply responding when people become unwell. The converged data provides the foundation for delivering better outcomes. Philips Lighting, now a separate business after spinning out from its parent last year, has transformed the humble lightbulb by making it part of a connected infrastructure.

As another example, companies run their business operations on Microsoft Azure, AWS or Google Cloud not only because it’s scalable and cheaper than using their own servers, but also because the cloud provider can analyze usage patterns across its thousands of users, and leverage that data to give recommendations to its customers on how to run operations more efficiently.

As companies move to XaaS, they should invest in collecting data and providing analytics. Key to that is becoming addicted to data; you should use it to run your own business more efficiently, and bring more value to your customers. You’ll be able to share trends you’re seeing before something breaks, develop trust by giving your customers expertise that influences their business, and provide them with recommendations on how to run their business in a way that will drive better loyalty.