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Business applications embrace IoT, blockchain to face future

Next-generation ERP systems could intersect with IoT, blockchain and smart contracts to drive a new wave of automation aimed at operational efficiency

Global organisations do not replace enterprise applications often. The pain of re-engineering processes, together with the technical challenges, mean it is common to find systems that have been running a business for 10 to 15 years.

But, at the same time, technology does not stand still. The internet of things (IoT) promises businesses timely data about physical and environmental conditions in remote locations. It offers information about the condition of things companies buy, make, manage or sell.

Meanwhile, advocates of smart contracts say they offer automation of business transactions to speed up processes, while reducing cost and risk.

To fully exploit these technologies, IT managers will have to share the data they produce across the existing, perhaps ageing, enterprise applications stack. The question is whether the software is up to the task.

Getting to grips with IoT data

“ERP [enterprise resource planning] systems are designed to last 10 to 20 years. But these older systems are not designed [to handle the volume of data generated by] the IoT. Most systems are not ready for that much data today,” says Stephen Tatton, director of business systems and new technology at JBT AeroTech.

Because the manufacturer of airport equipment – including air-conditioning units, mobile gangways and de-icers – installs its products over disparate geographies, it has been remotely monitoring them for more than 20 years, starting out using dial-up modems.

In recent years the IoT has created an explosion of data, so-called big data, but there is a limit to what companies can monitor and how frequently, says Tatton. As such, JBT AeroTech has built an IoT infrastructure to monitor its own equipment and third-party equipment used by its customers.

“The availability of the data drives new thinking in the way we can do maintenance. It is also a value-added proposition for our customers. We can manage maintenance in a way we could not before. The data comes into our ERP and asset management electronically, not manually, speeding up processes,” he says. 

For example, engineers once checked the performance of air-conditioning units in an airport by visiting each one to take a temperature reading. It would take hours, if not days, in a large airport. Now, they only visit units that are not performing well and require maintenance. It means the engineers make fewer journeys and have the right tools and spare parts with them, greatly improving overall efficiency, says Tatton.

“The availability of the IoT data drives new thinking in the way we can do maintenance. It is also a value-added proposition for our customers”
Stephen Tatton, JBT AeroTech

JBT AeroTech’s IoT platform was built in the cloud to manage the IoT data flowing into enterprise applications. “We record data in the IoT platform every time it changes. If a reading goes up by one degree, that goes into the database,” says Tatton.

“But in the enterprise asset management system, we don’t care about each reading, we care about thresholds. For example, if an air-conditioning performs outside its target temperature for three continuous minutes, the event is then recorded in the asset management system,” he adds.

JBT Aerospace uses Infor’s Enterprise Asset Management system and a mixture of Oracle and JD Edwards for ERP and other enterprise applications. Its IoT platform publishes an HTML front end, and uses a Microsoft SQL database, as well as storing data in Hadoop and Cassandra NoSQL data stores. The company has developed its own analytics tools to make sense of the data. The resulting insight not only helps in maintenance, it also feeds into future product development, he says.  

IoT data management adds complexity

Businesses looking to exploit IoT data are likely to tread a similar path to JBT Aerospace, by using an intermediate layer or platform, says Claudio di Nella, managing director of technology strategy at consultancy firm Accenture. But the approach could be storing up difficulties for the future.

“In the medium term, businesses will have to add to the existing software estates. But in many cases that estate is under pressure and businesses are struggling to deal with the cost of running the legacy enterprise applications,” he says.

“As we shift into being truly digital, with sensing technologies across organisations, complexity is going to mushroom. Meanwhile, corporate IT must do the day job: keeping the lights on and coping with regulation – all these things continue to take investment and effort. Most organisations are ill prepared for onboarding additional layers of technology. It places a huge burden on integration, skills and architecture,” says di Nella. 

Some enterprise software suppliers are stepping up to offer systems to cope with the deluge of IoT data. For example, SAP is positioning its in-memory database, Hana, as apt for these kinds of application (see Trenitalia case study, below).

But according to Mark Darbyshire, vice-president of integration at SAP, ultimately, it will be the speed of business processes that will put a limit on responding to IoT data. “The problem is not the speed of the technology, but of the people in the business,” he says.

Enter blockchain

Yet plans to speed up business processes could lead to another hornet’s nest of challenges for those responsible for planning the future of enterprise application portfolios.

The quest to automate business processes with smart contracts dates back to the early years of this century, but the advent of blockchain, the tamper-proof distributed database behind cryptocurrency bitcoin, is giving the field new impetus, says Ron Hirson, chief product officer of DocuSign, an electronic signature and transaction management software supplier. 

Blockchain is an opportunity. It creates a distributed ledger that increases trust. It provides a protocol for independent entities to talk to each other. It could be an important part of how smart contracts work,” says Hirson.

“Blockchain is an opportunity. It creates a distributed ledger that increases trust. It provides a protocol for independent entities to talk to each other”
Ron Hirson, DocuSign

Smart contracts promise to automate business decision-making according to pre-existing rules, both between companies and within them. Combined with the IoT, they could help orchestrate delivery and payment for goods and services, all recorded in blockchain (see “Blockchain needs agreed standards”, below).  

But that does not remove the question of whether existing enterprise applications, which businesses are reluctant to rip and replace, can cope with these new technologies.

“All of the use cases are powerful, and the beauty of blockchain is its integrity,” says Accenture’s di Nella. “But most companies at this stage are only dipping their toes in the water and experimenting with smart contracts. We are a few years away from seeing them rolled out in a live production environment, but it will happen.

“When you combine blockchain, smart contracts and the IoT, you can drive the next wave of operational efficiency, eliminating manual processes.”

To do so, business will need to adopt a new approach to enterprise applications in the form of blockchain and in-memory computing. Both present eye-watering challenges in technology and business change. Sooner or later, businesses will need to ask themselves whether they can they afford it or afford to be left behind.

Case study: Trenitalia IoT system’s light touch with enterprise application

Braking systems, toilets, batteries and sliding doors: since 2014, Trenitalia has fitted all of these, and more, with hundreds of sensors to collect data in real time.

Italy’s national rail company is working with SAP, inputting data into the supplier’s cloud system, which is based on its in-memory Hana technology, every 10 minutes. Further analysis of this data allows Trenitalia to build predictive models for machine learning. It also triggers maintenance and other actions.  

Trenitalia CIO Danilo Gismondi says the system is fully integrated with the national train company’s application landscape. It imports data about its trains and services, as well as the availability of spare parts and maintenance resources. It also exports maintenance notifications and scheduling instructions to the ERP and train operations systems in charge of execution.

The system was designed from the beginning to reduce, as much as possible, the impact on the connected existing systems, but that may change in the future, he says.

“We created a number of interfaces, but we didn’t change much on the existing systems themselves. Progressively, we believe that some functionalities [of enterprise applications] will be migrated to the Dynamic Management Maintenance System, which can perform more effectively because of the higher level of intelligence it can deploy, and slowly discontinue the existing systems.”

Blockchain needs agreed standards before it can transform business applications

The combination of smart contracts and blockchain, the tamper-proof distributed database, could have powerful implications for business applications – if it can overcome divergent standards and organisational inertia.

Smart contracts should be thought of as a container that can store both data and code, says Peter Bidewell, chief marketing officer of Applied Blockchain, which counts Siemens among its clients. This way, the container can store code to process data in other smart contracts, a form of self-executing process.

For example, the smart contract could initiate a payment process to a supplier once its goods have passed through a geo-fence at the buyer’s operations, he says. 

Applied Blockchain has built an agnostic application and privacy framework that sits on top of any underlying blockchain to avoid the difficulty of picking winners among competing platforms, including Ethereum, Hyperledger, IPFS and BigchainDB.

“We’ve seen trying to place bets is very dangerous. There needs to be a TCP/IP for blockchain, but we are not there yet,” says Bidewell.

Guy Halford-Thompson, CEO and co-founder of BTL Group, a blockchain specialist, says the technology has the potential to vastly simplify corporate IT, because solutions to problems such as access control and data provenance are built in from the outset.

“If you want to share data with a counterparty, that is built in by design – you don’t have the firewall and other security around data,” he says.

However, Halford-Thompson recognises that expecting businesses to remodel processes on entirely new technology and replace applications that have been trusted for years is too much to ask.

“We don’t want to disrupt our clients. The approach we take is to pick the smallest project which can demonstrate real value. It will be the least disruptive, not necessarily the problem areas where we can offer the most financial benefit in the long run. If we can demonstrate the savings, we might be allowed to tackle bigger problems,” he says.

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