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Three technologies to drive business
Emerging technologies such as 3D printers, the internet of things and APIs will deliver new business opportunities, and CIOs are in a position to drive forward these business strategies
A recent study by Gartner named consumer packaged goods firm Unilever as a supply chain leader, thanks in part to its use of data analytics, powered by SAP Hana, to design and optimise supply chain networks in emerging markets.
While data analytics may work for some businesses that want to harvest the data they already have, leading businesses are also gaining efficiencies by joining up disparate IT systems to provide a more seamless customer experience.
Greg Schott, president and CEO at MuleSoft, said the CIO at one of his firm's major customers – a large CPG company – did not think of himself as CIO but as chief integration officer.
Schott sees a fundamental shift taking place in IT. "In the past we had big bang, home-grown IT with thousands of applications to solve purposes across the enterprise," he says. "It was very disconnected, leading to IT sprawl and security vulnerabilities."
In Schott's opinion, organisations have the ability through cloud and APIs (application programming interfaces) to use many services that can be shared across the business.
Use APIs to integrate internally and externally
"There is a massive opportunity to decouple all the pieces," he said. For Schott, people no longer need big monolithic applications to power the business; point-to-point integration can often provide immediate benefit.
For instance, a consumer packaged goods firm could integrate with retailers' own systems, directly linking ordering, inventory and supply chain, IBM noted in a recent blog. "You may also make your product-related APIs available to partners who are writing their own mobile apps and want to include information on the products they offer – the products you are selling through them," it said.
In a Forbes article published last year, McKinsey consultants Pratap Ranade, Devin Scannell and Brian Stafford noted that US department store Sears used APIs to improve its online user experience, enabling developers to create apps for customers to search for products and find store locations.
"What is more, the next wave of applications will increasingly combine data and services from other companies, offering a direct channel to reach mobile consumers in new and engaging ways," the McKinsey consultants noted.
The use of networked sensors is helping some manufacturing firms link directly to their customers. Stan Aronow, research vice-president at Gartner, said: "Procter & Gamble has created a smart toothbrush to understand what is going on when you brush your teeth, which connects to the internet."
Inditex, which owns a number of retailers, including Zara, Pull&Bear and Bershka, came second in Gartner's supply chain rankings by making use of RFID tags to help customers track which of its stores hold garments of a particular size or colour.
According to Inditex, the RFID system codes each garment in the logistics centres, which means that when shipments reach the stores twice a week, the system immediately pinpoints which sizes and models need replenishing. The company says the system drives enhanced customer service by enabling immediate identification of size availability in-store, in nearby stores or online.
Another example is whisky brand Johnnie Walker. For this year's Mobile World Congress, it showcased a smart bottle for its Johnnie Walker Blue product. The prototype bottle uses extremely thin, electronic sensors that can tell whether or not the bottle has been opened and where it is in the supply chain.
The sensor, from Thinfilm, was developed in collaboration with Diageo Technology Ventures and is proprietary technology that makes use of smartphones' near field communication (NFC) capabilities. The technology allows Diageo, the parent company behind Johnnie Walker, to track bottle movements across the supply chain, in-store and to the point of consumption. The sensor tags remain readable even when the factory seal has been broken, providing an additional layer of security to protect the authenticity of the product.
According to Thinfilm chief executive Davor Sutija, as well as the anti-theft protection, the smart bottle offers Diageo a way to interact with customers. "Thinfilm enables the smart bottles to carry digital information that can be accessed via NFC smartphones," he says. "Diageo can reap the benefits of the intelligence gleaned from our smart sensors and create engaging experiences for its customers. This is how we will begin to build the real internet of everything."
Read more about CIO strategy
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Gartner’s Aronow says the smart whisky bottle and P&G’s smart toothbrush enable the customer to have a more collaborative experience with the manufacturer.
Such sensors are widely used in industrial manufacturing, he adds. "For example, BMW uses sensors to understand exactly what is happening on the production line to predict potential quality problems."
Global manufacturer GE held its Mind + Machine conference at the end of September. As Computer Weekly has reported previously, the company has built a software platform called Predix to process sensor data from the industrial internet. The platform has been used by electricity provider Irish Power to optimise electricity generation.
Shane Wall, CTO of HP Inc, says 3D transformation represents the next industrial revolution. "Over the last 150 years in manufacturing, we staged goods just in time, so we only had the right amount of raw materials, then ran them through low-cost manufacturing, figured out how to produce and distribute the product as cheaply as possible," he says. "Then we added some marketing and a salesforce and you have a process used by every manufacturer known to man."
According to Wall, over the next 15 to 20 years, this industrial manufacturing process will be turned on its head by 3D printing. "In the automotive industry today, the car manufacturer needs to keep 12 years' worth of parts available," he says. "With 3D printing, if a part is needed, it can be printed on demand."
That said, according to analyst Context, 13,000 3D printers were sold in the commercial space in 2014. But the market has taken a bit of a knock in the first half of this year, with demand dropping and growth rates now predicted to be under 10%, the analyst says.
A new study from analyst Freeform Dynamics for CA Technologies found that UK companies currently spend a relatively low 20% of their IT budget on digital, which is predicted to increase to 32% in the next three years. Experts agree that IT needs to break free from tradition and spend more on innovation by using APIs, IoT and 3D printing to drive fundamental shifts in the business.