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Take the initiative on digitisation

We look at what is available to help businesses further digitise their operations to improve service, efficiency and profit

Despite rhetoric to the contrary, even in the fast-moving IT industry, most change is gradual rather than revolutionary. The internet did not appear overnight in the early 1990s (it dates backs to the 1960s) and cloud computing was an evolution enabled by the repurposing of virtualisation, which itself was originally developed to enable timesharing on mainframes decades ago.

The same is true of so-called digital transformation – how can digital be new when it sits at the heart of most computing concepts? The reality is a relentless digital creep into every corner of business and consumer life, and the links between the two.

The challenge for all businesses is to at least keep moving with the tide and, with planning, to get ahead by capitalising on new digital initiatives more quickly than competitors. That is the essence of improving operational IT: what is available to enable your business to further digitise its operations in the interests of customer service, efficiency and, of course, profit?

Better understand customers

When it comes to customer service, digitisation enables a business to better understand its customers, whether these are other businesses or consumers. The concepts behind the internet of things (IoT) enable manufacturers to build connectivity at low cost into new products, from kettles to cars, and to monitor them post-sale and offer pre-emptive services.

Retailers can provide ever more personalised consumer experiences as they record buying habits and preferences over time. Such initiatives should provide incremental revenue.

Behind the scenes, customers are better served if digitisation leads to improved operational efficiently, for example by monitoring plant equipment for faults, traffic flow through transport systems or goods through supply chains. There is little new about these concepts, but technology advances mean granularity and timeliness can be improved.

The low cost of new supporting platforms makes digital advances available to businesses of any size and the scale of data that can be collected and processed has increased hugely.

Drivers of profitability

Better customer service and efficiency are primary drivers of profitability through increased loyalty and productivity, respectively. However, there is a secondary opportunity based on the data that is collected in the process. Not only does it form part of a feedback loop for continuous improvement, but it can also be a new revenue stream, sold as a resource to third parties.

Read more about operational IT

Vertical-specific cloud services are going further down the stack as companies such as GE try to get in the door with the industrial internet.

The tools and techniques IT departments have mastered to manage diverse technological infrastructure are now being applied to manage machines, in what some experts refer to as Industry 4.0.

For example, a car manufacturer may monitor windscreen wipers for malfunction. Most of the time they will be operating normally, but the fact that they are operating at all can, along with geolocation data, provide a real-time indicator of driving conditions, which is of value to transport advisory services.

Anonymised patient medical data may be sold to pharmaceutical companies, and in the UK, there is a debate about offering NHS patient data in this way. Conversely, your organisation’s own digitisation processes may be enriched by data from other sources – some free, some paid for.

All great stuff, but how do you actually get such projects going? If you manage livestock, how can your animals be digitised to improve their welfare? How can you take advantage of wearable technology to improve the efficiency of employees on the move? How do you make use of the data flowing from road sensors in real time to keep drivers informed about the traffic conditions ahead?

Geared up for digitisation

Some organisations are already well geared up for digitisation to support such initiatives across their business. Quocirca research carried out in July 2016 shows that about 25% of businesses in the UK and Germany are building organisation-wide platforms; in manufacturing, this rises to 50%. For the other 75%, digitisation is being addressed on a project-by-project basis.

Enterprise-wide initiatives will often require integration of new assets with old. Here, tried-and-tested technologies come into play from suppliers such as Tibco, which now sees itself as a “digitisation strategy partner”, bringing into play products that link new IoT-style deployments with legacy back-office systems; interconnectivity augmented with intelligence, as Tibco puts it.

IBM, Software AG and others have similar capabilities. Red Hat says its open source middleware is being used in this way too, to build intelligent gateways, for example. Red Hat is also working with new partners to extend the range of IoT-specific offerings that are available, for example the just-announced Eclipse Kapua project based on Eurotech’s Everyware Cloud.

Digitisation is affordable because of the ever-lower cost of enabling technology. For IoT projects, sensors and probes may already be in place and just need connecting and collectively managing. In other cases, smartphones can act as sensors, for example reporting the location of employees working in the field. Wearables will also play a growing role.

Where purpose-built devices are required, there are suppliers of kits based on cheap commodity components such as Seeed Studio, Dragonboard, Qualcomm, Renesas, MediaTek and Marvell.

Any digitisation project requires a central platform to gather and analyse data and to understand the rules that need to be applied. In Quocirca’s July 2016 research, the central IT platform was seen as the most important place to build intelligence into IoT applications. Intelligence in the sensors, probes, wearable technologies and so on was seen as less important.

More intelligence means more power

This is partly because the main role of the latter is just to make measurements and gather data, but also because more intelligence means more power, which means more cost. If you are dealing with thousands of devices, that is often not practical.

That is not to say there should be no distributed intelligence; gateways are fundamental to the efficient functioning of many such applications. For example, an insurance company may put telemetry boxes into thousands of cars that draw on various sensors, as part of a deal for cheaper insurance cover. The on-board controller need only transmit back to the core platform when drivers deviate from agreed behaviour.

In a single passenger aircraft that can produce as much a terabyte of data per flight, ground controllers have no immediate interest in much of this and an intelligent gateway can decide what is transmitted and what is simply stored on board.

Purpose-built cloud platforms

There are now many purpose-built cloud platforms to support digitisation, IoT in particular. Amazon Web Services (AWS) says its customers have been using its infrastructure for digitisation projects for some time. For example, agricultural equipment company John Deere monitors and manages 200,000 autonomous vehicles, collecting telemetry data via AWS.

AWS IoT builds on this experience and extends such capabilities to a broad customer base. It includes a device registry, a device gateway, support for the MQTT protocol (a low-power alternative to the HTTP web protocol that help to extends the life of device batteries) and encrypted data transmission – essential when transmitting personal data.

Other features include Device Shadows, a virtual “shadow” of a device that can be synched intermittently with the actual device. This further reduces network traffic and allows devices to be updated virtually, even when offline.

In a similar vein, Microsoft has its Azure IoT suite, citing customers such as ThyssenKrupp Elevators and Rockwell Automation. Google has its own IoT initiatives, including Brillo, with core controls and device developer kits. AWS, Microsoft and Google all talk about the unlimited scalability of their platforms, which is part of the core proposition for public cloud service in general.

However, just as important is the ability for any small company to sign up and build a test application and roll out a first project with minimal upfront investment.

An interesting aspect of the digitisation initiative is that it is changing the competitive landscape of the IT industry. AWS is an example of this, a spin-off from an online retailer that capitalised on its ability to build highly scalable IT platforms.

Autonomous car race

IT companies are also in a race with traditional automotive manufacturers to build self-driven (autonomous) cars. What is at stake here is the car as an IT platform. The value from future sales will not be in the bare metal of the car, but in the digital services sold directly or as subscriptions around it.

In reality, all companies are now IT service providers to a greater or lesser extent, as was shown in a 2013 Quocirca research report, In demand: the culture of online service provision.

However, as the IT world encroaches on traditional manufacturing, there is also movement in the other direction. General Electric’s (GE) CEO once said: “If you go to bed as an industrial company, you’re going to wake up as a software company.”

He added that digitisation of GE has been the most important initiative for the company in the last three decades – so it is actually a long-term incremental process. This has led to the development of the cloud-based GE Predix industrial IoT platform, which supports heterogeneous data acquisition and analytics.

Predix is based on Cloud Foundry, an open source platform-as-a-service (PaaS) offering originally developed by VMware and now owned by Pivotal Software (a joint venture by EMC, VMware and GE). IBM and Hewlett Packard Enterprise have their own Cloud Foundry deployments. Alternative industrial IT platforms are available from providers such as Apprenda and Morpheus.

Missing opportunities

No business can ignore the need for operational IT. All organisations will already be doing it to some extent, but most will certainly be missing opportunities to improve efficiency and customer service, and finding new sources of revenue from the data involved.

Cloud-based platforms make it even easier to innovate and try new ideas. Nothing ventured, nothing gained. 

Bob Tarzey is an analyst at Quocirca.

This was last published in August 2016

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