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Internet of things could make ERP flexible, intelligent and real-time

To profit from all the data collected from the internet of things, future ERP has to be flexible, intelligent and give real-time information

Years ago, Pirelli just made and sold tyres. Nowadays it is a service provider, helping business customers to optimise fuel consumption and maximise the lifespan of each tyre. Pirelli does this by collecting analysing data from smart tyres – tyres with sensors.

This is an example of the new opportunities opened up by the internet of things (IoT), a world where things talk to things, and processes have two-way connectivity. Research firm IDC estimates that by 2020, 40% of all data will be machine-generated, with 20 to 50 billion devices fuelling that growth.

By collecting, analysing and processing all the data from sensors, companies can offer their customers new services. “IT becomes part of the unique selling point of a product – it brings IT into the boardroom,” says Oracle solution architect Joost Maliepaard. 

A product is not lost after it has been bought by the customer, he says. Manufacturers can keep track of the product, advise the customer and offer extra services.

The ERP system is essential for connecting unstructured data from devices with structured data in the business, says Mark Raben, head of customer innovation at SAP Netherlands. “The ERP system must be able to process, analyse and show all this data in real time,” he says. “Before, that was not an option – organisations did one data run a day, during the night.”

Hana brings the worlds of structured and unstructured data together, says Raben. It offers real-time analyses and is flexible. “The internet of things offers new business opportunities, positively and negatively,” he says. “Today, an organisation can offer value; tomorrow, the customer can find the information himself. Organisations have to be flexible; so does the ERP system.”

Maliepaard adds: “IoT enables the ERP system of the future to connect people, processes, data and things in an intelligent way to enable new business models and make better decisions. It will be more event-driven and intelligent. It will process more data. Our systems are scalable; we can process big amounts of data.” 

Oracle, he says, offers an IoT cloud platform that collects data from devices, analyses and decides which data goes to the ERP system.

Microsoft offers a cloud platform, too: the Azure IoT platform.

Philip Schalla, senior consultant at Pierre Audoin Consultants (PAC), thinks the changes to the ERP landscape are more disruptive than suppliers expect. Schalla analyses the impact of the IoT on ERP systems and services among PAC’s clients and predicts two scenarios. 

In the first scenario, a chip in the product will contain the software, which will collect, analyse and manage the value generation of the product. “And that probably means organisations need to spend less space and money on running large-scale ERP applications in the back end,” says Schalla. “It will be easier to implement the system, and companies are more flexible to adapt to new processes.” 

In the second scenario, the different layers of software merge. “Customer-centric applications such as web portals or CRM systems will be directly connected to manufacturing systems such as PLM (product lifecycle management) or MES (manufacturing execution system)," says Schalla. In this way software will be more intelligent and processes will be more efficient. This will result in an autonomous, smart factory.”

Companies are still at the beginning of profiting from the Internet of Things,” says Schalla. “Companies are thinking about how to benefit from the internet of things. Next up is changing the business model and putting the processes in place. Then they will start to think about their IT systems. ERP is at the heart of the business of most companies, so probably a change of processes will mean a change of the underlying business applications as well. But most companies are not there yet.”

Case 1: Eneco's Toon smart meter

The biggest challenge when connecting the smart thermostat Toon to the ERP system of power company Eneco was sending data from Eneco to a secure cloud. Arjen Noorbergen, CTO at Quby, the company that develops the software and hardware for Toon, says: “At that time, Eneco did not have a service-oriented architecture. Data was sent by a file transfer once a night. At that point, it wasn’t really a real-time connection.”

Quby developed its own cloud, to which Toon connects via the customer’s Wi-Fi connection. Eneco’s ERP connects with web services to this cloud, and Toon uses the OpenTherm protocol to communicate with the customer’s boiler.

The connection from the secure cloud to the ERP system is made twice – first when the thermostat is being installed. “That’s an important moment, because the customer has to see the right data, not the data from another customer,” says Noorbergen. The second time is when the estimated year use is pushed to the thermostat. After that, Toon does the calculations, so the customer knows whether they are using more power and gas than estimated.

Quby has one main reason for building the architecture like this, says Noorbergen. “We wanted a really secure connection privacy-wise. Eneco brings the data to Toon. The customer always keeps their own data.”

Case 2: London Underground

Repairing and maintaining the London Underground is a complex operation. Transport for London teamed up with Microsoft, Telent and CGI to install network-enabled sensors in its CCTV (security camera) systems, escalators, PA loudspeakers, air conditioning systems and subway tunnels that enable central systems to manage, monitor and automate individual tasks. The smart devices run on a Microsoft Azure Intelligent Systems Services back end.

Steve Pears, managing director of Telent, says: “Many manual monitoring processes can now be streamlined. Disconnected systems can be securely integrated and automated with the use of IoT and, most importantly, equipment degradation can be spotted in real time based on live data and with new insights driven by data.”

In an interview with TheAge.com, Telent says the technology is expected to improve customer service levels on the London Underground by 30% and save 30% on the cost of running the rail support network.

This was last published in March 2015

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