“We’re all looking at how to apply intelligent systems to business processes to make them more dynamic, agile, predictive and proactive,” said Morris, who pointed out that companies ranging from World Caribbean Cruise line and Walt Disney World to the mid-market UK restaurant supplier JJ Food Service are leveraging the capabilities of machine learning. “Disney theme park guests now wear its Magic Band, which is a way for visitors to get premium service as they walk around—but it also generates data on traffic flows and patterns so that Disney can manage the guest experience more effectively,” he notes. “Meanwhile, JJ Food is taking advantage of historical purchasing patterns and marrying that with the profiles of similar restaurants to make proactive suggestions on what its customers should be buying.”
At the heart of each of those examples lies the much-vaunted Internet of Things (IoT), or the networking of physical objects through the use of embedded sensors, actuators and other devices that can collect or transmit information via the Internet and Cloud services. Yet, it’s the next step of the process—analytics and application of those analytics—that truly offers potential. In fact, a recent McKinsey Global Institute report, The Internet of Things: Mapping the Value Beyond the Hype, put a value range of $3.9 trillion to $11.1 trillion per year in economic value by 2025 on that potential.
However, data must be amassed, sanitized and combined, then analyzed for useful patterns and anomalies in order to generate the kind of insights that can be integrated into real-time operations to gain efficiencies or provide market differentiation. While technology providers can be enablers and key partners in that process, companies themselves need to play a large part in finding and delivering on that value proposition—which is no easy feat, pointed out Jim McNerney, chairman of Boeing.
“The sensors have been put in place and we have data streaming off of airplanes—it’s the analytics part that remains the big challenge,” he notes. “Optimizing the use of an $800 million asset by improving performance, maintenance and predictability through data analytics is huge, but it’s a frontier that we’re really just beginning to dive into.”
That dive may ultimately be deeper than we imagine, noted Jay Walker, CEO of Walker Digital, who says that fueling business growth by collecting and analyzing data is just the beginning of technology’s potential impact on our future lives. “The big breakthrough, coming in the next decade or so, will be the movement of organics—the proteins and the bacteria in your body, for example—into the Internet of Things,” predicted Walker, who painted a picture of a future where the IoT expands into the IoT&L, or the Internet of Things and Lifeforms. “Fitbits and those kinds of sensors are really just the crudest Apple 2s of the modern age.”
But for the present, there remains a huge gap between technology’s potential benefits and what is actually being delivered, observed McNerney. “Our development costs continue to go up even though we have technology that should bring them down,” he pointed out.
Many companies are looking to 3D printing as offering the most immediate opportunity for businesses. “A lot of our investment in software has been on design software that takes maximum advantage of additive manufacturing,” said Dr. Helmuth Ludwig, EVP, Siemens Product Lifecycle Management Software.
Boeing, too, is looking for ways to leverage 3D printing to speed the product design process and pare down on the whopping $50 billion in inventory it carries. “There are 4.5 million parts that go into a 777, and you can take very complicated parts and print them with 3D technology,” said McNerney, who noted that additive manufacturing is increasingly enabling manufacturing to combine production, process and design. “There’s a huge opportunity to lower both design and physical inventory costs if you can free some meaningful percentage of that 4.5 million from the constraints of the manufacturing process. That’s probably the single most important technology for us to focus on.”
There is also a dark side to the promise that connectivity and data analytics represents, noted several roundtable participants, who pointed out several potential roadblocks. Cybersecurity
factored prominently among the concerns these CEOs expressed.
“Larger corporations are very sophisticated about how they secure their networks, but as you look down the size spectrum at companies deploying technology to try to transform business processes, some of them do not have the [proper] security,” says Dan McCarthy, CEO of Frontier Communications. “Cyber attacks are an everyday event, so when people are not careful about what they deploy, it leaves them very vulnerable to the extraction of IP and other horrible things. There are plenty of access systems that can be hacked, as well as a lot of unprotected devices.”
Privacy issues and data ownership represent related, but separate issues, noted Tom Rogers, CEO of TiVo. “All individuals and all businesses are sitting on a vast amount of data and information, some of which is mined and analyzed but much of which is not,” he pointed out. “As granular data becomes more and more valuable, the issue of privacy and who owns it will become huge.
You have a dynamic of a younger generation with very little concern about the data they throw out there and a business world that is driven more and more by the value of data.”
Finally, several CEOs expressed doubts about whether America’s workforce has the necessary skill sets for an increasingly technological world and about how a technologically focused future will impact employment.
Ethan Allen’s Farooq Kathwari suggested that all CEOs should be considering the social issues of our increasingly high-tech business world. “This is all great for the kids coming out of MIT and schools like it, but what about the rest of the people?” he asked. “What kind of social problems will this create?”
Ultimately, it will fall to businesses and the CEOs who lead them to address some of these issues, noted Walker. “We’re clearly going to have to reinvent what it means to have a job in the good sense of the word,” he said. “People will look to business people and say, ‘Okay, you’re the leaders. We’re willing to work; tell us where the jobs will be.’ And the answer can’t be, you’re all going to become software engineers. We’re going to have to answer that question because no one is going to figure it out for us.”