The Internet of Things: Reality or Hype?

Last week I had the privilege to attend SAP Research’s International Research Forum (IRF) in Dresden. The IRF, which took place for the fourth time, is an annual  global brain-storming event where SAP bring together industrial and academic partners from all over the world to discuss and debate (in a friendly way) topics of interest to SAP (Research) and their clients (which pretty much are all businesses big enough to care about automating their back- and
front-office).

This years event was dedicated to the Internet of Things (IoT). We were asked to define what this might mean, when and if it would happen, who needs to do what to make it happen and how we knew it had happened :-).

We tried to identify potential “killer applications” – I hate that word – that would justify the investments and make somebody really rich. I don’t believe we came up with a single answer here, however we agreed that the energy business (and environment) would be first be impacted by IoT as government and private enterprise are most likely to invest there.

We learned from Prof. Dr. Janet Wesson, Nelson Mandela Metropolitan University. that the utilities in South Africa have started to equip homes with smart meters to turn off geysers (boilers for those of us who speak US English) when the load in the grid is getting too high. She explained that the utilities for more than ten years had not invested in maintenance of power plants and construction of new power plants, therefore this idea was born out of sheer necessity to deal quickly with the energy crisis.

A lot of technology for IoT already exists, however when it comes to wireless sensors and actuators scalability, reliability and energy consumption are still largely unsolved problems. When you think of an sensor solution with thousands of sensors, some of these are bound to be faulty and will either return wrong readings or no information. Do we understand how to deal with such faults at the application level?

Prof. Dr. Hubert Österle, Institute of Information Management, University of St. Gallen  gave a simple example of his home alarm system that had had numerous mal-functions because of faulty sensors. It became clear that IoT solutions needed to work and provide a good user experience otherwise they might never become adopted or used. Here in my opinion lies a huge challenge. For example, low power reliable wireless communication is still not solved. Just think of the difficulty of pairing two bluetooth devices. My car has one of those bluetooth enabled systems to allow hands-free phone calls. In 20% of the cases it seems to forget that it had paired with my phone and I need to redo that step once more.  Scalable Zig-Bee communication also has not been solved, I hear of cases where with systems of more than 60 sensors, the communication just breaks down. We have a research project on that topic, Mote Runner – I’ll be curious to see how far we can push the technology.

Another observation was that IoT solutions are mostly very interdisciplinary and more often than not have complex business cases as a lot more stake holders are involved.

A simple example is to optimize production at a chemical plant while also minimizing its energy consumption. There is an obvious business case that has an immediate ROI. However as the electricity is being paid for by a different organization in the enterprise from that running the plant, such a project would need to be sold as a strategic change project to the CEO rather than the production or real-estate manager. IBM observes the same when we talk about energy aware computing, the level at which this needs to be presented is significantly different from where we would sell a new piece of hardware.

Claudia Funke,  global ICT services practice leader at McKinsey & Company, challenged our industry (SAP and IBM) to adopt a more consultative sales approach and collaborate with strategy consultants (like those at McKinsey – I suppose :-)) to develop specific IoT solutions with our clients.

As every year, the IRF was a most interesting event – also the side program, which included a visit to Schloss Wackerbarth the Saxonian winery and to Volkswagen’s Gläserne Manufaktur where they produce their version of a luxury car, the Phaeton.