DIGITAL TRANSFORMATION SUPPLEMENT 2018 - … Now Digital Transformation Supplement Q1 2018 S3...

Q1 2018 • VOLUME 8 • ISSUE 1

PLUS: Can IoT flourish under the weight of great expectations? • How predictive analytics and IoTtechnologies are revolutionising vehicle fleet management • Inside an IoT-enabled SAP rail maintenancedeployment • Why now isn’t the time to hesitate as we enter the era of digital twins • News at www.iot-now.com

DIGITAL TRANSFORMATION SUPPLEMENT 2018SAP's Nils Herzbergsays IoT successmeans focusing on thebusiness outcomes

IoT Now: ISSN 2397-2793

IoT Now Digital Transformation Supplement Q1 2018S2

CONTENTS

IN THIS ISSUES3 INTERVIEW SAP's leader of go-to-market for IoT, Nils Herzberg, says that the maturing of the Internet of Things means that greater understanding is aligning with increased automation and lower costs for solutions. These factors are enabling a wider range of business outcomes to be achieved

S6 IoT MONETISATION IoT investments must achieve value for organisations if they are to double-down and invest in the next stage of IoT, writes George Malim

S8 CASE STUDY How the largest privately held fleet management company turned to SAP to achieve value-driven results for its customers

S9 CASE STUDY How SAP reimagined rail maintenance and improved travellers' experiences at a European train operator

S10 SERVITISATION Annie Turner explores the extent to which IoT is enabling digital transformation and how IoT capabilities are disrupting traditional business

Supplement sponsor: As the cloud company powered by SAP HANA, SAP is market leader in enterpriseapplication software, helping companies of all sizes and industries run better. From back office to boardroom,warehouse to storefront, desktop or mobile device to the cloud – SAP empowers people and organisations towork together more efficiently and use business insight more effectively to stay ahead of the competition.SAP applications and services enable more than 335,000 customers to operate profitably, adapt

continuously and grow sustainably. SAP helps simplify technology for companies of all sizes so they can consume our software theway they want – and without disruption. With an extensive global network of customers, partners, employees and thought leadersaround the world, SAP helps the world run better and improve people’s lives. For more information, visit www.sap.com

IoT NowDIGITAL TRANSFORMATIONSUPPLEMENT 2018

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S3INTERVIEW

S6IoT

MONETISATION

S8CASE STUDY

S10SERVITISATION

S3IoT Now Digital Transformation Supplement Q1 2018

INTERVIEW

The maturing of the Internet of Things (IoT) means that greater understanding is aligning withincreased automation and lower costs for solutions. Nils Herzberg, SAP’s leader of go-to-marketfor IoT, tells George Malim these factors are opening the door to smarter sensors that areenabling a wider range of business outcomes to be achieved

George Malim: To what extent do you thinkenterprises are struggling to find business valuefrom IoT?

Nils Herzberg: Those who had the valueproposition for the early and expensive M2M havebeen doing it for a long time and have extractedvalue successfully to varying degrees. Thoseindustries taking advantage of the newer andmore flexible IoT are being confronted with thisquestion of value as they deploy early prototypes.

In the technology sector, for example, what Applehas done involves a huge amount of IoT. Apple’sbusiness model couldn’t work without smartdevices, affordable connectivity and real-timedata processing. Apple has taken all of thosecapabilities and it’s reaping the benefits.

I disagree when people speak of IoT as if it’s anew thing because many companies were doingIoT activity before we could even spell IoT. Ipreviously worked in the aero industry and wehad telemetry coming off helicopters 20 yearsago so it’s nothing new. However, thecharacteristic of the old IoT was that it wasincredibly expensive and therefore the privilegeof a few organisations.

It was expensive because solutions were hand-carved for a specific purpose but the inflectionpoint we’re at now is that the era of hand-carvingis ending.

Companies that have experience of M2M are nowdetermining how to more closely integrate thisfamiliar capability for more business impact. Atthe same time, the industries and organisationsthat are newer to implementing IoT are not onlyhaving to justify the investment against the valueit can create, but are also looking frequently atthe potentially transformative impact it can haveon the business.

For both groups, that’s why SAP is in the IoTmarket – we believe the challenges can be solved

with standardised offerings and that IoT is nowaffordable to the mass market and anyone cando it.

The focus on the customer is leading companiestowards hyper-personalisation, addressing amarket segment of one and their unique desiresfor the product. This, in turn, enablesorganisations to generate value either in the formof earning new revenues from more tightlytargeted services or in the form of increasedloyalty, likeliness to recommend, improvedsatisfaction or enhanced productivity andefficiency.

George Malim: Are enterprises looking beyondmonetisation opportunities to the value IoT cancreate in terms of operational efficiency andproductivity and, ultimately, to enabling digitaltransformation and adoption of new businessmodels?

NH: These are the areas where the businessoutcomes are. These could be topline businessoutcomes such as transforming to a pay-as-you-use model rather than buying a product. Forexample, the enterprise printer industry is nowbased on a charge per page rather than requiringenterprises to buy a printer. Other industries wantto have similar transformations.

The other business outcomes affect the bottomline and don’t necessarily involve dollars andcents but quality, timing and precision ofresponse. Many initiatives start with the idea ofdeploying IoT but end in business processes thatresult in better customer loyalty or improvedcustomer care and these are the kinds ofoutcomes our customers are looking for.

The starting point might be a thing-to-dashboardbut very soon it becomes about much more.Remember that it’s the business outcomes thatmake IoT attractive to enterprises.

For example, a customer can save €100m

▲

I disagree whenpeople speak ofIoT as if it’s anew thingbecause manycompanies weredoing IoT activitybefore we couldeven spell IoT

Monetising IoT means harnessingsmart technologies to achievebusiness outcomes


INTERVIEW

annually on a €1.3bn maintenance cost by doingrelatively mundane things. A train operator inItaly has discovered that the doors on its trains incities in Northern Italy open every few minutesbut in rural Southern Italy train doors open onaverage every 20 minutes. In spite of this the trainoperator had the same train door maintenancecycle in place.

With IoT it can count the number of times doorsopen and maintain them as needed, therebysaving unnecessary door maintenance costs.There are numerous examples like this is inenterprises which all add up to the total businessoutcome of IoT for an organisation.

George Malim: How important is it that a co-operative ecosystem is emerging so companiesdon’t have to build their own relationships andsector-specific requirements can be addressed?

NH: Customers now understand the opportunityand there are a lot of journeys already beingimplemented and these journeys will mature andbring forth significant benefit. In some industriesstandards are missing but that doesn’t mean it’simpossible to do IoT, it’s just harder work.

For example, in the aero industry the definition ofa part number is standardised so you can identifyevery thing as unique. That doesn’t exist in the carindustry where no numbering system has beenagreed. The same is true in the technology marketwhere the length of a serial number hasn’t beenagreed. However, this will change and the arrivalof true plug and play capability is just a questionof time so issues like these will go away over time.

When you look at IoT it can be quite challengingand complex because you need an object with

software embedded, security, connectivity, devicemanagement, storage, analytics, big data andblockchain. No company can offer all of thesecapabilities so we are partnering with strongcompanies. However, it’s important from thecustomer’s perspective that the cost becomesmore and more affordable and the deploymentmore manageable. That, to an extent, depends onthe number of cooks in the kitchen – you want asfew as possible, not as many.

This is why we partner with companies likeDeutsche Telekom, Vodafone and Accenture. Wehave a huge ecosystem which we trust to bringchoice to our customers. We don’t believe wehave to do everything ourselves.

One mechanism we offer is our IoT Accelerators.Instead of customers looking at a list of solutionsproviders, we say forget about that and let uscreate a productive prototype which, within eightweeks at a fixed cost, will make a solution thatworks for you.

This is how we initiate a lot of the journeys thatcustomers are on. We’re now spreading out thiscapability to our partner ecosystem.

George Malim: The challenges are no longersimply technical. How are organisationsapproaching the non-technical aspects ofachieving success in their IoT deployments?

NH: The next step is to move beyond the initialdeployments and uncover business outcomesfrom across the organisation. We have severalmechanisms to help customers with this. In somecases, the full value of the data they’re sitting onisn’t known so we do design sessions where webrainstorm to identify specific opportunities.

SPONSORED INTERVIEW

▲

Nils Herzberg, SAP


This might involve working with a company suchas forklift truck maker to explore the value oftelematics data. That could uncover thepossibility of a new business model based oncustomers paying per lift performed by a forklift.However, other benefits are present such as thosein customer safety. Three of the top ten warehouserisks involve forklifts. These include forkliftspuncturing goods, damage to the inside of thewarehouse and forklift injuring or killing people.

Reducing those three risks is a good businesscase but the opportunities go further. Forexample, would the data make it possible toadvise an operator of 400 forklifts how theycould get the job done with 350? If you can helpwith the routes forklifts are travelling andoptimise that you can create huge value.

However, in this transformation it’s not onlytechnology that makes the outcomes a reality.The borderlines between owners and the edge oftheir industries don’t work anymore. For example,if your company was used to selling forklifts, itcould send out a bill in the post for the cost of theforklift but, by offering a monthly bill for theservice, the cost of the stamp could break thebusiness model. Certainly, for a service that costs€10 per month, a €1 stamp could be too much.

Similarly, for a large purchase, the cost of manualcredit checking is sustainable but for manyservices that won’t be possible and anautomated, cheaper form of credit checking willbe required. IoT success isn’t just about reliableconnections, resilient IT and robust security.

George Malim: As IoT matures it is becomingsmarter. How can organisations prepare forsmarter IoT at this stage of the market?

NH: At the same time as organisations areembracing IoT, it’s becoming smarter and smarter.The more smart sensors that are deployed, themore we are going to understand and the morewe will be able to do. I’m seeing a huge amountof investment going into this and it will makeenterprises smarter.

However, IoT is still very unequally distributed andsome areas are still battling with what I call stupidIoT where humans have to describe thecharacteristics of the connected things. Smart IoTis where the things describe themselves to IoT. I’dtherefore advise every enterprise to make surethey deploy smart things as opposed to stupidthings because those things could live for 30years and that means opportunities are lost everyday for the next three decades. For example, onecity in the Nordic region upgraded its streetlightsto LEDs but didn’t include smart sensors in thesystem so it has lost the opportunity to have astreet sensor network for the next 20 years.

Monetisation of data from sensors is still an emergingopportunity and it’s not present everywhere. Ibelieve we will see a market for data streamsbecause sharing data makes sense and helps bridgethe gap between those who make machines andthose who operate them. However, it’s not assimple as just providing a data stream. Issuessuch as security and privacy must be addressedand solid infrastructure is a prerequisite fordriving data across company boundaries.

I’m extremely excited to see the potential this hascome to fruition as new business models, ways ofoperation and business outcomes become clearand businesses and their customers across theworld start to achieve substantial transformationsand advancements. www.sap.com

I believe we will see a market for datastreams because sharing data makes senseand helps bridge the gap between those whomake machines and those who operate them

S6 IoT Now Digital Transformation Supplement Q1 2018

While early Internet of Things (IoT) deployments focus on achieving specificbusiness outcomes, the real challenge is for companies to specify devices,connections and supporting technologies based on business cases that willonly be uncovered once foundational IoT technologies and resources aredeployed. George Malim assesses the extent to which organisations arewilling to commit investment before the outcomes are apparent

Almost universally, businesses see IoT as asubstantial new opportunity to transform theiroperations and ultimately their business models.However, achieving the full promise of IoT is along journey and the full fruits remain a distantprospect. What’s needed is the means to maintainmomentum from early pilot projects, through tolarger deployments and ultimately a full IoTstrategy.

“Businesses at various levels of maturity aregetting switched-on to the benefits promised byIoT, however they struggle to build a strongbusiness-case to get the ball rolling,” says SteveLewis, the chief technology officer for the UK andIreland at Hitachi Vantara. “The plethora ofdifferent IoT technologies, devices and platformscrowding the marketplace often makes it hard toknow where to start. As a result, companies haveto tentatively test the water and we often seebusinesses jumping on the bandwagon by simplyconnecting their physical assets for basic trackingpurposes – however this isn’t the best way toderive real value from IoT.”

Others agree: “The industry is just starting toexplore the business cases for IoT and how therevenues will be shared between the variouscontributors within the IoT value chain,” says

Tiago Rodrigues, the senior director for theproject management office and membershipservices at the Wireless Broadband Alliance.“With certain IoT applications sending only a fewbytes of data per day, there will likely be novelapproaches to the evolution of access chargingand associated impact on established roamingcapabilities. Hence, it is likely that IoTdeployments will drive monetisation by non-traditional approaches based on big datacapabilities, new advertising models and others.”

Organisations like to see the business value interms of cost and efficiency that the IoT solutioncan bring before going head first into an IoTdeployment, says Hitesh Pandya, the assistant vicepresident of technology in the IoT practice atAricent. “Simply connecting devices to theinternet is not enough – unfortunately, there arestill some businesses that are still doing this,” hesays. “IoT’s real business value can be realisedwhen that collected data from those devices helpsto make informed business decisions. Thereforemost organisations are not willing to make theleap before the outcomes are apparent and thebusiness value it brings is much clearer.”

The challenge lies in reconciling the traditionalcycle of investing and then generating profit from

Can IoT flourishunder the weight

of great expectations?

IoT MONETISATION▲

“Businesses atvarious levels of

maturity aregetting switched-on to the benefits

promised by IoT,however struggleto build a strongbusiness-case to

get the ballrolling”


that investment with the non-linear nature of IoT.This requires organisations to invest infundamental infrastructure but the returns andopportunities only become clear once thisinvestment has been made.

"When you invest in infrastructure, you expect tosee an immediate effect on revenues but, evenwhen adopting cutting edge technology, thisoften isn't the case,” says Damien D’Souza, thecommercial director at IoT company xelba. "WhatIoT can do is change the entire trajectory of abusiness. Over time, a company can becomemuch more efficient, which reduces operating andfixed costs, ultimately having the power to deliverbigger profit margins.”

“As an IoT programme develops, it can revealopportunities for new revenue streams that werepreviously unachievable,” he adds. “The businessleaders who have the patience to invest time andenergy in IoT over the long-term will be the oneswho are rewarded. The knowledge that you'refuture-proofing your business, and offering yourcurrent customers more value should be the realaim of any IoT implementation."

Much of the challenge of extracting value anddemonstrating a successful return on investmentcan be addressed if organisations can readilyidentify the next best thing to do after asuccessful pilot deployment. Having a clear planand pathway to roll-out another service andgenerate value immediately makes sense of theoriginal investment and maintains momentumbehind future IoT investment plans.

“The issue is that companies are excited aboutIoT, but reluctant to make the leap without a clearbusiness outcome in sight,” explains Lewis. “Pilotdeployments need to provide proven value on amicro-scale before they can be rolled-out to fullproduction. That way, additional value can beincrementally drip-fed further down the line. Forexample, moving from monitoring physical assetsto predictive maintenance to workplaceoptimisation scenarios.”

This is very much a learning phase but theexperiences of others are being used to informorganisations of the potential capabilities of theinfrastructure they have already put in place.“Typically organisations that have had successfulpilot deployments follow a natural path with thenext phase of their IoT implementation journey,”says Phil Beecher, the president of Wi-SUNAlliance. “[The Danish city of] Copenhagen is aperfect example of this. The City Council hastaken a long-term view, initially deploying smartstreet lighting and now adding other applicationssuch as traffic management and pedestrian safetyto its multi-service ecosystem. Using a multi-service capable communications infrastructurehas made it both straightforward and costeffective to integrate new applications.”

Pandya also sees this apparently organicdevelopment from an initial business case to aportfolio fo new services. “Once the pilot issuccessful, generally a partial rollout is carriedout,” he says. “During this phase all theperformance metrics including scalability andperformance are captured and the rollout auditreports are created and reviewed to fine tune thesolution. More work is needed during this phase, ifthe pilot architecture is not designed to bescalable. It is only after this that the fullcommercial launch is initiated along with themarketing campaign.”

Even so, few organisations are jumping from pilotprojects to full commercialisation withoutcarefully assessing the prospects. “Given the ever-changing IoT technology landscape and evolvingecosystem, most organisations take a measuredapproach of progressing from proof of concept(PoC) to pilot stage to full-scale deployment,”confirms Sukamal Banerjee, the corporate vicepresident and head of IoT WoRKS at HCLTechnologies. “PoCs allows them to test thetechnology stack and formulate business cases,while the pilot stage enables real-worlddeployment, although, at small scale to analyseimpact on business processes, people practicesand business outcomes. These combine to allowenterprises to map to business value expectations.”

Damien D’Souza,xelba

Sukamal Banerjee,HCL Technologies

Phil Beecher,Wi-SUN Alliance

"When you investin infrastructure,you expect to seean immediateeffect on revenuesbut, even whenadopting cuttingedge technology,this often isn't thecase”

S8 IoT Now Digital Transformation Supplement Q1 2018

The largest privately held fleet management company in the world is committed to helpingcustomers manage vehicle fleets more efficiently and lower operating costs. It uses IoTtechnology, telematics and predictive analytics to let customers track and report on everydetail of vehicle fleet operations

From driver activity to fuel data, repairs and more,companies can see where time and money arewasted, then adjust business strategy accordingly.The key to doing this is strong investment intechnology. Using the Internet of Things (IoT) andtelematics combined with predictive analytics,the technologies bring data on vehicles, drivers,movement, maintenance and more together intoone source – enabling customers to use thatinformation to influence business decisions todayand fleet strategy in the future.

From transit to telecommunications to cleaningand maintenance services – the company set outto revolutionise the way you can do business ifyou rely on cost-effective and efficient fleetoperations. Just ten years ago there was a lack oftransparency into fleet operations and questionssuch as the following remained unanswered: Howlong is a driver taking on service stops? Where isthe best place to refuel given the driver’s location?Which repair facility should be used and why?

To help its customers answer those questions inreal-time, the fleet management company turnedto SAP. With the SAP HANA platform as thebackbone of its IT infrastructure, the companyuses IoT, geospatial analysis and telematicscombined with SAP Predictive Analytics software,powered by SAP Leonardo, as the foundation forits fleet management application used in its callcentres. New innovations in machine learningusing the SAP Leonardo Machine Learningcapabilities are just on the horizon. With sensor-based data gathering and real-time analytics, thecompany can offer new products, services, andcompelling analysis to its customers, so they canbetter understand how their fleets are operatingand where they can cut waste – helping them runbetter and reduce costs for their own end customers.

Before: challenges and opportunities• Use innovation as a key to adapt to a changing market and to move forward in spite of increasing in size • Collect data on every aspect of operations – from car ordering to remarketing to driver behaviour – to control total cost of ownership for customers and improve driver safety • Bring more value to customers by moving from a reactive to a proactive state

Why SAP? • The backbone of the company’s IT system, including its complete data warehouse, is built on SAP HANA • SAP offers cutting-edge technology to translate data into business strategy and build tailor-made solutions for clients• The IoT, analytics and machine learning capabilities of SAP Leonardo

After: value-driven results• Real-time data on driver safety, driver behaviour, repairs, fuel and more – helping customers make faster decisions, run more efficiently and keep drivers safer• Predictive analysis of data on maintenance, engines, tires, transmissions and more using SAP HANA – helping better-inform customers and stay ahead of their needs• IoT and telematics technology to connect assets, drivers and vendors, providing deep operational insight• Geocoding that can determine when a driver is within 400 feet of a required stop – helping determine how much time was spent before getting back on the road• Less manual contact across processes for greater efficiency, increased value, and lower costs• Ability to help customers understand how they spend and why, and how to avoid overspending and downtime

How IoT and predictive analytics arerevolutionising vehicle fleet management

CASE STUDY

SPONSORED CASE STUDY

www.sap.com

▲


One of the main reasons for late trains is unplanned maintenance, which consumes significantcosts, time and labour. Serving more than two million passengers every day, one of theworld’s largest train operators decided to rethink how it manages train maintenance. Ratherthan fixing failures when they occur, the company favoured a maintenance model with a moredynamic approach

By gathering information from sensors embeddedin various areas of each train such as doors,motors, batteries and brakes, the maintenanceshop gathers and analyses a huge amount of datato avoid downtime and predict train-machinefailure before it happens. With SAP LeonardoInternet of Things (IoT) capabilities, the trainoperator lowered maintenance errors, increasedtrain availability, improved customer service andreduced expected maintenance costs by 8% to 10%.

As the primary train operator in Europe and theoperator of one of the fastest trains in the world,the company is committed to providing excellentservice to its customers. After all, two millionpassengers rely on regional, national andinternational transportation services from its fleetof 7,000 trains, carriages and locomotives to getthem from A to B every day. With such a high-speed system and so many people depending onit, it’s crucial that maintenance processes arequick, efficient and able to react rapidly tooperational stressors. That’s why the companycreated a dynamic asset management system forevery train component.

In order to stay predictive rather than reactive, sothat it can improve customer service, thecompany has shifted from standard maintenanceschedules based on distance and time to dynamicplans that reflect the specific status of each andevery component of the trains. Using the SAPPredictive Maintenance and Service solution, therail operator is able to extract large amounts ofdata on a daily basis through onboard sensors that

are then transmitted over the ground networkand analysed by the information processingsystems that run on the SAP HANA platform. Thisenables them to meet both customer needs andthe highest technology standards.

Before: challenges and opportunities • Need to significantly increase maintenance efficiency and reduce operational costs by avoiding unnecessary maintenance activities • Ability to systematically plan in advance for any intervention, ensuring availability of spare parts, facilities, tools, and resources • Prevention of breakdowns while trains are in operation• Avoiding downtime due to unforeseen activities

Why SAP• Innovative solutions and technology to improve maintenance processes based on the SAP HANA platform and big data analysis• Implemented the SAP Predictive Maintenance and Service solution to support real-time monitoring of the train fleet• Use of algorithmic predictions and indicators for dynamic planning

After: value-driven results• Scaled large quantities of data in SAP IQ, reducing required in-memory storage• Gained insight into real-time diagnostics to make better decisions• Improved asset reliability and service, thanks to predictions and error forecasting• Reduced maintenance costs

Reimagining rail maintenance andimproving the traveller’s experience

SPONSORED CASE STUDY

www.sap.com

CASE STUDY

The Internet of Things (IoT) and digitaltransformation are already largely inherent in eachother, across the spectrum of industries andaround the world. Increasingly, each drives andenables the other, yet the global adoption rate forIoT has slowed in the last two years, so what’sgoing on?

Paul Gudonis, the president, Inmarsat Enterprise,has said: “IoT acts as the eyes and ears oforganisations and its value comes from how thedata it collects is used to improve effectivenessacross an organisation. As such, it is unsurprisingthat so many organisations are deploying IoT topropel their digital transformation initiatives.”

He was commenting on research published inJune 2017 by the Inmarsat Research Programme,based on a survey of 500 executives fromagritech, energy production, transportation andmining companies around the world with morethan 1,000 employees. It found enterprise IoTapplications have become the leading technologyfor digital transformation and are also the toppriority for 92% of the organisations surveyed.

Some 97% of respondents said their organisationsenjoy or expect significant benefits from IoT-based solutions. Better service deliverycapabilities took the top spot with 47%; closelyfollowed by better health and safety acrossorganisations with 46%; and greater productivityfrom the workforce at 45%. It’s interesting howclose together these three are in terms ofimportance and also there is no specific mention

of new business models and revenue streams.Rather they are about doing what you already domore efficiently, cheaper, faster and with less risk.

This is borne out by the Vodafone IoT Barometer2017/18 shown in the graph below. Its findings aredrawn from interviews with 1,278 respondentsfrom 13 countries across retail, manufacturing,energy and utilities, healthcare, transport andlogistics, automotive, consumer electronics andthe public sector.

Source: Vodafone IoT Barometer 2017/18To guarantee entry, register now for your invitation. E Mail: Sarah Bulford: [email protected]


Annie Turner looks at the extent to which IoT is enabling digitaltransformation and how IoT capabilities are disrupting traditional business,driving companies to become digital. Where are we now?

Entering the era of digital twins– transformation and IoT

SERVITISATION

▲

John Deere started its transformation to a services platform in 2012

(Pho

to: D

eere

& C

o)

To Increaseefficiency

Why adopters are using IoT

55%

49% 49% 49%

To Increaserevenue

To managerisk

To reducecosts

“IoT acts as theeyes and ears of

organisations andits value comes

from how the datait collects is used

to improveeffectiveness

across anorganisation”


Where’s the buzz?Efficiency is always good, but this feels a longway from the buzz about transformingestablished, product-orientated companies intodata-driven, platform-based enterprises with agrowing portion of revenue from services thatspan multiple industries.

There high profile examples of this in action. GEhas had ambitious digital transformation in placeever since its former CEO, Jeff Immelt, realisedother firms were amassing data from GE’sproducts and gaining a better understanding ofthem than GE or its customers. His ambition rosefrom fear of disintermediation and disruption.

Now GE builds digital twins for its physicalproducts, modelled on data extracted from them.The insight into their performance has allowed thecompany, for example, to move from simplyselling jet engines to also selling customers timeon the wing. This is the jet engine as a service – aradically different business model.

In 2016, GE Digital gained US$730m throughbetter productivity including the Predix scalablesoftware platform, which is used by the wholeconglomerate. GE was scheduled to gain US$1bnin productivity in 2017 and by 2020 plans to be atop ten software house, delivering US$15bn inrevenue.

As GE progresses, the new CEO, John Flannery,has stressed the company’s commitment todigital transformation, but also to “a much morefocused strategy”.

Focus is exactly what John Deere is striving for,right down to the yield of individual plants incrops. The agriculture machinery maker startedthe transformation from product to a servicesplatform in 2012. Its machines are becoming evermore sophisticated, measuring weatherconditions, ground moisture, soil composition andmore, taking information from sensors below andsatellites above.

Yet that’s only the part of the story, according toMIT Professor and platform expert GeoffreyParker. He said at a workshop: “[John Deere] arecollecting the best data on planet Earth: If youmarry that data with the output, you can makethe primary activity much more productive, butthat’s just the start. Seed producers like Monsantowill want access to it because then every farmbecomes a test farm. Then you can add incardinals…for those who would want access to thedata – in commodity markets, it’s going to behard to make much money if you haven’t gotaccess to this when your competitors have. Nowyou have a must-buy data feed.”

Be preciseMaybe precision – figuring out exactly what youwant to achieve through the combination ofdigital transformation and IoT – has, in part,caused the apparent global pause in IoT’sadoption. The IoT Barometer 2017/18, found 29%of businesses around the world have adopted IoT,but the global adoption rate has only risen by 2%in the last two years.

It also found that most IoT adopters are reapingbenefits and broadening their use of it, and thatthe greater the scale of deployment, the biggerthe tangible benefits.

But what of the majority of companies that areyet to adopt IoT? Possibly the uncertainties createdby the Brexit vote and election of presidentTrump caused some businesses in some parts ofthe world to take a wait-and-see approach.

Or perhaps it’s because IoT and digitaltransformation are integral to each other and thescope of digital transformation just keepsexpanding. Some 82% of Barometer intervieweesagreed that IoT “is not a standalone technology,it’s intrinsically linked to analytics, artificialintelligence (AI) and other critical digitalinitiatives.” As AI on its own opens so many cans ofworms, no wonder many companies are hesitating,even though inaction could well be disastrous.

The jet engine as-a-service is becoming a reality

(Pho

to: G

E)

In 2016, GE Digitalgained US$730mthrough betterproductivityincluding the Predixscalable softwareplatform, whichused by the wholeconglomerate

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