Five years ago it was difficult to foresee that the well-established IT vendors would find themselves competing for the Enterprise Technology expenditure against a group of similar sized Global Industrial Technology companies. This was the time when conventional IT expenditure was threatened by ‘Digital’ marketing expenditure under the control of Chief Digital Officers. What do the buyers want out of this new competitive landscape in 2017?
What Technology an Enterprise requires, the method by which it is purchased and operated has been subtly changing over that five-year period. Business models are slowly, but relentlessly moving from being assisted by technology, through being enabled by Technology into a combined and fused entity of Digital Business.
Increasing exposure to Digital Business and Markets is driving a shift towards Line of Business, LoB, management assuming the role of defining how Digital Technology will deliver their part of the operations. A combination of factors has made this possible, from the generic familiarity with Digital Technology, through to simplification in delivery from the mix of Clouds and Services.
Note the use of the term Digital Technology in connection with LoB managed operations, and not the usual terminology of IT. The difference is crucial; IT departments have a range of technologies, integrated and operated to deliver a myriad of Applications requiring a huge amount of specialized knowledge. Though CIOs and IT departments have worked hard to reduce the cost/complexity by adopting Clouds and Services where possible Enterprise IT operation will remain a specialized task within the Enterprise for the foreseeable future.
Digital Technology places the emphasis on knowing how to gain innovative business deployment with the technology element greatly simplified and delivered as a ‘Service’. To compete in the Digital Economy means creating Services around the Enterprise’s traditional products; to gain the elusive ‘agility’ to win, requires the LoB managers to follow the same course of action in their acquisition of their technology element.
Digital Services using Cloud Service providers doesn’t seem to add anything new, or disruptive, as this has been the premise for the appointment of CDOs. Nor explain why Industrial Technology vendors are now competing for Enterprise expenditure.
The first three of the following statements concerning the role of IOT are universally applicable to any Enterprise competing in the Digital Economy based on Services. The Fourth statement defines the reason why Industrial Technology companies are competing to sell their products into Industrial Enterprise.
- IoT is a key enabler in the creation of the Digital Services economy as it connects, integrates and supports huge Business to Business, or Business to Consumer networks with few limitations as to the richness of the Services that it makes possible.
- IoT Sensors and Sensing turn the ‘Analogue’ world of machines and events into the ‘Digital’ world to provide the necessary data inputs for the new generation of dynamically optimized of Business Services.
- The resulting dynamic Digital Economy Business model built of competitively optimized Services requires Operational Expenditure, OpEx driven accounting. This in turn uses IoT Sensors and Sensing to provide ‘real time’ inputs of the utilization, and costs, of Enterprise Assets.
- The USA driven Industrial Internet of Things, IIoT and the German driven Industrie 4.0 initiatives both recognize the above, and the need to adopt IoT on existing and new build Industrial Machinery.
NB; For more detail on the Digital Services manufacturing company and its use of IoT see the blog ‘The Middle Office – example Manufacturing Enterprise’. To understand how new industrial machinery will be built incorporating IoT see the blog ‘Digital Twins bring the physical and digital together’
Deploying Industrial Automation to gain operational improvement in manufacturing has a long history, the addition of IoT capabilities adds new dimensions in connectivity and analytics. The Industrial Technology vendors bring to the market their experience in manufacturing and machinery, whilst the IT vendors have data and analytics experience. Both sides have global installed customer bases supported by strong sales and service teams.
Will the result be a new top tier of market place winners drawn from both sides, or will the result be stronger collaboration and partnering? The most likely answer as to who will be the winners lies in which companies manage to change their own operating model towards supporting the new generation of LoB Managers by making their own products and expertise available as easy to consume Digital Technology Services.
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Appendix;
List of Enterprise members of the Industrial Internet Consortium
Alphabetical listing of a selection of major Industrial Technology IoT vendors, together with a similar listing for major IT Technology vendors for comparison;
GE IoT Industrial Cloud Platform
Honeywell IoT Analytics Platform
Schneider Electric IoT Platform
Siemens Mindsphere IoT Platform
Footnote; Constellation Research is not making a recommendation for any of the listed vendors whose inclusion is purely illustrative of the point being made in the blog;- 2017; Industrial Technology vendors v the IT Technology vendors in the competition for the Enterprise IoT Market
