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IBM’s IOT Push: It’s All about Business Transformation

"When we think of the Internet of things, we don’t just think about data in the cloud, we think about how to build devices, organise their information flows and operate the devices around assets and the management life cycles of the assets”

Christopher O'Connor, General Manager, Internet of Things, IBM

Interview by Abraham Joseph, Editorial Director, IOT Insights

What is IBM’s position on IOT?

We have been around this space – which has had a variety of names – for many years. We have a strong presence in IT data centres and for many years we’ve been providing a range of solutions that take a set of physical devices, convert their outputs to digital data, analyse this data and provide information for business decisions.

In 2005/2006 we started our “Smarter Planet” programme. This was an articulation of the concept of analysing the environment and using the results to modify business processes. We delivered number of major projects under this programme, including a new traffic management system for the City of Stockholm that reduced congestion significantly and a video analytics system for Lower Manhattan that improved safety and security for citizens.

What is your team’s mandate?
My team is responsible for growing client interaction with IBM regarding how the Internet of things is changing their businesses. I see myself as a business leader, bringing technology from the engineering life cycle, the operations life cycle and the business transformation life cycle together to help customers solve problems in any of the latter domains or across all domains combined.

How has IOT changed in recent years and why is everyone so excited about it now?
In the early days the amount of work that had to be done was much greater and it involved a lot of heavy lifting. You had to pick devices, deploy them, figure out how to connect them, and then figure out how to analyse the data to extract meaningful information. Although this was only 8 or 9 years ago, there have been major advances on many fronts during that time. Think of the advancements in cell phones and cell phone connectivity, for example. Today devices are much more capable, significantly cheaper and much easier to connect.

When we think of the Internet of things, we don’t just think about data in the cloud. We think about the how to build devices, organise their information flows and operate the devices around assets and the management life cycles of the assets.  Essentially, what we gain out of this approach is the ability to do business transformation.

Today we have a range of products that many thousands of customers are using to design, build and operate solutions around asset management life cycles in order to get maximum value from their assets. If a customer is able to take data, either from on-premises or from the cloud and use it to transform their business, they can beat their completion.

Can you give an example of the business transformation IBM is able to deliver?
One of our customers, Airbus, offers a fleet management service based on these capabilities. Airbus uses the internet of things to predict problems and schedule maintenance of the fleet. The fleet management service enables Airbus’s customers to reduce capital expenditure as well as warranty and training costs. Not only do customers get better planes, they also get better operation of the planes.

Does IBM have preferred partners with which it delivers its solutions?
We think that building the ecosystem is key. We partner to focus on this data-cloud aspect of the marketplace as well as with the ecosystem of ‘everyone making everything’.

We work closely with the people who build the chips that go into the devices and systems. By working with them, we are in effect working with the brains of the devices and systems. We have partnerships with ARM and Intel and recently we announced a partnership with Texas Instruments to work on end-to-end security.

We work closely with device vendors to ensure we can connect, communicate securely and ensure that the device we are communicating with is the one we think. Then we can collect information and do what IBM does so well: run analytics. We can collect information via our world-wide cloud and use it to create business models for customers to drive change.

The reason we are forming these partnerships is that we don’t believe any company can go it alone. Our ecosystem partners have access to our open marketplace of cloud capabilities.

Is IBM focused primarily on serving large businesses?
We are focused on large customers with large business model changes. The Airbus case is an example of this. We are also focused on building a programing ecosystem that anyone can use to quickly attach IOT devices and deliver value. An example of this is SilverHook, a power boat racing team that uses our IOT cloud platform to analyse vast streams of data data in real time and predict potential problems.

How easy is it for businesses to undergo the type of transformation you describe?
An enterprise that is going to undergo the type of transformation I am referring to needs much more than Internet of things devices and software. Typically, those that have undergone successful transformation have sponsored a new role like chief innovation officer or chief digital officer –  a new addition to their senior staff, whose job it is to challenge the status quo.

An example of an organisation we have worked with in this way is Daimler. We’ve helped them develop an offering called “Car2Go”. The traditional route to market for a car manufacturer is via a dealership network. The customer buys the car and then enters a break-fix relationship with the dealership.

With Car2Go, the car is provided as a service, with maintenance and possibly even fuel and insurance included. This disintermediates car rental companies, the dealer network and the insurance industry. We see people making changes like this across every industry: switching from a make-sell to an innovate-operate model.

There appears to be an ever growing number of platforms and ecosystems. For how long will this confusion in the market continue?
We think there will be a lot of consolidation. We believe that this will happen around the very traditional consolidation points of openness, marketplace standards and speed of innovation.

We think cloud is going to be a huge differentiator as people try to scale their offerings. How else will an organisation be able to run its internet of things devices in South America the same way as in North America and in Europe? Are they going to build their own data centre to achieve this or is someone that offers a cloud service a natural partner to make their business model work more easily?

Which are the highest priority industry verticals for the IBM IOT group?
We are following the market. Indications are that discrete manufacturing is the largest opportunity at present. In this category I include electronics, automotive, aerospace, energy and utilities, oil and gas and transportation. These are the industries that are undergoing some of the biggest changes. In oil and gas for example, we are one of the largest providers of IOT asset management systems.

How are you going to go about achieving your stated objectives?
We announced a $3bn investment over 4 years. We are pulling the right assets from IBM together as well as building the organisation organically and inorganically. We are working with clients in three broad segments: people that make devices, people that operate devices and people that are interested in or involved with business transformation.

What advice would you offer an organisation that is thinking of exploiting IOT but does not know where or how to begin?
I’d advise them to follow the lead of some of the most successful players by starting with the appointment of a chief innovation officer, and empowering him or her to genuinely challenge current business models.  I’d also advise them to find an experienced partner to help them develop new business models and guide them through the change process.