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ERP Journal Authors: Amy Eager, Jason Bloomberg, Mat Mathews, Louis Nauges, Steve Mordue

Related Topics: ERP Journal on Ulitzer, Internet of Things Journal

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Internet of Things Smart Products | @ThingsExpo [#IoT]

The Third Era of Competitive Advantage

Michael Porter, author of the most highly regarded of all business strategy theories, Competitive Advantage, describes how there are now three distinct eras of how technology can be defined to impact upon the ability to achieve this advantage.

smart-products-hbrMichael makes two very important points. The first point is that there has previously been two eras and now there is a third – the first being when corporations started to use IT for automation purposes, described in this 1985 article, followed then by when all of this IT became interconnected via the Internet, described in this 2001 article. Then in this 2014 article Smart Connected Products he describes a third era, the Internet of Things.

The second point he makes is that he defines this third era because now, unlike before, technology is now an integral part of products. Previously technology was only used to automate their surrounding operations like sales and distribution. Now, through embedded sensors, processors, software and connectivity, technology is becoming part of products directly, and from this new opportunities for competitive advantage emerge, with Michael describing the scope of just how large this opportunity is:

“The third wave of IT-driven transformation thus has the potential to be the biggest yet, triggering even more innovation, productivity gains, and economic growth than the previous two.”

He goes on to describe how the use of embedded technology enables maturing product capabilities of monitoring, control, optimization and autonomy, functions that are core to the value creation of the product. He gives an example of healthcare where monitoring blood glucose levels is central to the value of new IoT wearable devices. Another is how insurance companies fit cars with telematics devices and tailor insurance premiums based on knowing exactly how you drive.

IoT Product Systems – Harnessing Big Data Cloud Computing
Michael goes on to describe that not only can products be described in increasing maturity terms by becoming smarter, through being Internet connected, but also that they can participate in ‘Product Systems’, referring to a collaborating supply chain of companies.

He provides an example of Joy Global who shifted from optimizing the performance of individual pieces of mining equipment to the entire fleet deployed in the mine, or farming equipment that is part of a larger ecosystem of a farm automation industry, one that also interconnects not only farm machinery but also irrigation systems, information feeds for crop prices, weather and soil nutrients and so forth. Others would include the grouping of suppliers involved in delivering smart homes, smart buildings or smart cities.

He also makes the critical point that these innovations require skills rarely found in manufacturing organizations, and therefore we can start to identify the enabling role Cloud services will play, offering the capabilities via On Demand services that organizations can rent without requiring the in-house skills. ZDNet provides an introduction to what these impacts and new capabilities will be.

iot-product-cloud

IoT Product Cloud Services
Michael outlines a ‘Product Cloud’ specification, the combination of big data analytics and other key features that will enable these IoT Product Systems:

“This includes modified hardware, software applications, and an operating system embedded in the product itself; network communications to support connectivity; and a product cloud (software running on the manufacturer’s or a third-party server) containing the product-data database, a platform for building software applications, a rules engine and analytics platform, and smart product applications that are not embedded in the product. Cutting across all the layers is an identity and security structure, a gateway for accessing external data, and tools that connect the data from smart, connected products to other business systems (for example, ERP and CRM systems).

Cutting across all the layers is an identity and security structure, a gateway for accessing external data, and tools that connect the data from smart, connected products to other business systems (for example, ERP and CRM systems).”

Our white paper guide will document vendors and technology models that can implement these IoT Product Systems.

The post IoT Smart Products – The Third Era of Competitive Advantage appeared first on CBPN.

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