Early adopters say Internet of Things resets software, business models

In a panel session at SapphireNow 2013, SAP users and a telecom company say sensors are the easy part of making machines talk to each other -- and us.

The “Internet of Things” is becoming a reality, but a worldwide network of embedded sensors won’t reach its potential without monetized software ecosystems and wireless networks that can easily cross national borders, according to panelists at this week’s SAP Sapphire conference in Orlando, Fla.

In a discussion titled “The Internet of Things is Now,” SAP sought to showcase customers who are implementing the technology. Often referenced in the same breath as machine to machine (M2M), it typically involves giving machines and sensors unique identifiers so they can communicate with each other to automate processes without human intervention, while producing petabytes of big data that can be harnessed by control systems or crunched by analytics software.

“It has been limited to very high-value assets and specific verticals like oil and gas,” said panel moderator Suhas Uliyar, SAP’s vice president and general manager of Internet of Things/M2M. “But we are reaching an inflection point right now.” Uliyar said Moore’s Law is driving down the cost of sensors and communications, while telecom companies are starting to focus on building the necessary wireless networks.

One such telecom manufacturer is Ericsson, based in Stockholm, Sweden. “Many of the pieces of the puzzle are coming into place,” said Jonas Bengtsson, Ericsson’s director for new business development and innovation. Several years ago, Ericsson predicted there would be 50 billion connected devices in the world, and rapid growth in the last 12-18 months has made that goal achievable, Bengtsson said.  “M2M represents, to us, the start of what we call the third wave of connectivity,” with the first wave connecting places, and the second wave, people.

Two panelists said they have started putting sensors on equipment but are struggling to figure out what kind of software and business processes are required for analyzing the data and, ultimately, generating revenue.

“We’ve found the engineering not that complicated,” said Paul Wellman, CIO of Tennant Co., a Minneapolis-based manufacturer of commercial cleaning equipment. “It’s manageable.”

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Tennant has attached “black boxes” that gather data on temperature, usage, and other variables from approximately 300 pieces of equipment in the United States and Canada. “The infrastructure and the engineering of the M2M solutions is proven. It’s now become an issue of business intelligence and analytics.” Tennant’s marketing department is leading the charge, he said, because the top priority is deciding how to turn equipment service into a strategic value and price it properly.

Mikkel Sorensen, business developer for Grundfos Connect, a division of the Danish pump manufacturer, Grundfos, said his company also realized it needed a software ecosystem to take advantage of the sensors it has installed. “It’s about connecting all the dots,” he said.

Sorensen said the system will allow Grundfos to offer servicing for competing brands, which also presents new sales opportunities. “It’s a complete mindset change,” he said.

Bengtsson called attention to another hurdle that is partly driven by software. “Telecom licenses are national at best,” he said, and in the U.S., they can be state by state. Ericsson is beginning to tackle such issues, he said. Uliyar later noted that standards bodies have begun to coordinate their efforts, which could help with cross-border interoperability.

Things aren’t so simple

Uliyar asked the panel if there were potential downsides to the Internet of Things.  Sorensen warned that issues of security and privacy will arise in connection with data coming from devices.  Hackers could see when water flowing into a home has been shut down for conservation reasons and deduce that no one is home. “If you’re monitoring the water data at a Coca-Cola plant, you could actually predict their output,” he said, and from that information, possibly surmise financial performance.

An audience member pointed out that having more control over pumps could give Grundfos a level of control that might make some customers uncomfortable. Sorensen responded that the same metering capability would allow the company to offer service level agreements (SLAs) like network service providers.

In an interview after the panel, Wellman said he has been asking SAP whether the sensor data can be integrated to SAP’s enterprise asset management (EAM) module, where maintenance is often managed. “We use the service-order management in SAP ECC [ERP], he said.

Making equipment data accessible to an EAM system is a typical scenario, according to Henry Morris, senior vice president of worldwide software and services research at analyst firm IDC, based in Framingham, Mass. “The EAM system is going to be the hub of what you’re going to do with these capital assets,” Morris said. “That’s what SAP has to do with this.”

Morris, who was in the audience for the panel discussion, said IDC surveys indicate that companies are recognizing that sensors are a bigger opportunity in big data than personal data from credit cards and social media. IDC is also starting to see real applications of the technology, Morris said. “They’re predicting not how people will behave, but how objects will perform.”

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