Blockchain

IFS Labs Puts Creativity First in the Quest for Digital Transformation

Handling Disruption Successfully With the Help of Agile Technologies

Sometimes software companies must lead the charge in terms of innovation, inspiring customers and prospects to apply leading edge technologies in new and creative ways to create a competitive advantage. Without this push, many companies, particularly those in traditional industries like manufacturing, energy and service, can become complacent. If the software that runs the business isn’t broken, there’s no need to fix it. These are markets served by IFS, primarily select asset- intensive and product-centric industries. They are also the markets IFS Labs is looking to disrupt.

IFS Labs is a small development group within IFS. While the regional leadership concentrates on solving the problems customers face today, IFS Labs is focused on solving the problems of tomorrow – or perhaps the problems and opportunities customers just don’t (yet) know they have.

Putting creativity first, IFS Labs seeks to learn from early adopters. Using a relatively small core team, yet drawing from other development resources across the company, depending on the product expertise required, it tends to have 6 to 12 projects underway at any point in time. These endeavors are essentially “proof of concept” projects, often (but not always) conducted with real, live customers. IFS Labs keeps the projects small because, with the requisite license to fail, it must decide to pursue the concept and apply it universally, or fail fast in order to move on to the next potentially disruptive project.

With this approach, IFS Labs hopes to provide guidance and inspiration to influence customers to disrupt, rather than be disrupted, applying agile technologies to produce that competitive advantage.

Do Customers Need a Little Push?

Last fall Mint Jutras published a report, IFS Helps Customers Accelerate Out of the Curve of Digital Transformation. In it we acknowledged that asset intensive industries, such as those served by IFS, are also likely to be capital intensive, where cost of entry is steep and product lifespans tend to be measured in decades. Once you are an established player in this world, you are tempted to hit cruise control. Change comes slowly. But the digital economy has thrown you a curve, and riding the brakes never gives you a competitive edge. Which is why IFS has set out to help its customers accelerate out of the curve.

We also found asset intensive industries weren’t alone in needing a push in the digital direction. Eighty-two percent (82%) of manufacturers participating in the 2016 Mint Jutras Enterprise Solution Study agree that digital technologies of today (those that serve to connect operations, people and processes through the power of the Internet) have the potential to fundamentally change the way we all do business. Furthermore, 86% understand that embracing digital technologies is necessary for survival. And yet, we found the vast majority still coasting or riding the brakes when it comes to digital transformation.

Last year we discovered IFS had already taken some steps to help customers accelerate digital transformation, releasing two new products. IFS Enterprise Operational Intelligence (EOI) essentially creates a cockpit for navigating the business, and IFS IoT Business Connector is instrumental in collecting, discovering and operationalizing data. Together they bridge the gap between data collection and analysis and between analysis and action. Through plug and play connectivity with the Microsoft Azure IoT Suite, customers can identify actionable observations that can trigger user-defined, automated or semi-automated actions.

These steps are all worthwhile and help companies address the challenges of today, pushing them to add digital technologies to their current solutions, without the major disruption of a rip and replace. And yes, a push is still needed. Last year we found that while 67% of manufacturers felt they were well prepared for the digital economy, in peeling back the onion, we concluded that many were perhaps over-confident in their progress, often held back by old ways of thinking and a lack of understanding and appreciation of what is possible today. Indeed, IFS conducted its own research along these lines and found world-wide the greatest challenge faced in digital transformation was resistance to change and in North America in particular it was the absence of the right organizational and governance model.

So in our 2017 study we dug a little deeper to assess how well manufacturers understand these technologies, and the potential they hold for their businesses. We selected 14 different kinds of technology and asked respondents to assess their level of familiarity with each in terms of how they relate (or not) to their business. These technologies, shown in Table 1, are presented in no particular order.

Adoption rates today are quite low, but note that the two with the highest level of familiarity, and the most likely to be deployed, align with the products IFS introduced last year: IFS EOI for predictive analytics (21%) and IFS IoT Business Connector for IoT (18%). Those that understand these technologies far outnumber those who are not familiar or only somewhat familiar. This is not surprising in that predictive analytics has been around for quite some time, and after all, who doesn’t want to predict the future? The underpinnings of the Internet of Things (IoT) is also well-entrenched in manufacturing and related asset-intensive industries simply because these companies have been collecting data with sensors for decades. However, much of the value of this data has not been realized because it has remained disconnected from enterprise solutions used for decision-making. The Internet and products like IFS IoT Business Connector are needed to bridge that gap and realize the full potential.

Table 1: How familiar are you with these technologies as they relate (or not) to your business?

Source: Mint Jutras 2017 Enterprise Solution Study

So it would appear that IFS chose well last year in its first steps in helping customers accelerate out of the curve. Now what?

Now IFS Labs is beginning to attack these other technologies that are obviously far less well-understood. For technologies like Blockchain (distributed ledgers), digital twins, beacons and augmented reality, those who lack familiarity outnumber those who understand and perceive relevance to their businesses. The role IFS Labs plays is to research, experiment and prove the value – or not. To that end, we highlight some active projects.

Blockchain for Aviation “Through Life Asset Management”

Given almost half (47%) of the 2017 Mint Jutras Enterprise Solution Study participants are not familiar at all with Blockchain, a bit of explanation seems appropriate. Blockchain, the technology behind the Bitcoin, is most often associated with the transfer of money. While many of us take non-cash transactions for granted these days, the transfer of funds through checks, credit cards and electronic fund transfers (EFT) is actually quite a complicated process, typically left in the domain of banks and other financial institutions. These financial institutions serve as intermediaries between the transacting parties. Even though they might not understand what goes on behind the scenes, most intuitively understand the role these institutions play and more importantly trust that funds will be transferred and recorded securely and accurately. And yet there is always the risk of fraud.

Blockchain is meant to eliminate the need for these intermediaries, while also eliminating the risk of fraudulent activity. Blockchain is a distributed ledger that provides a way for information (data) to be recorded and shared by a community. Each member of the community maintains his or her own copy of the information and all members must validate any updates collectively. Each update is a “block” added permanently to the “chain” creating a complete and auditable system of record. Encryption and protocols replace third party intermediaries as keepers of the trust. The distributed ledger is a shared ledger where transactions are verified and stored on a network without a governing central authority.

But the transfer of monetary funds is not the only application possible with Blockchain technology. It might apply to any chain of activity or transfer of ownership. IFS has chosen the aviation industry for its proof of concept, primarily for two reasons. First of all, in its privately conducted survey, IFS found the aviation industry to have the highest level of digital maturity among those industries it targets. Secondly, because aviation can really use the help in terms of what IFS calls “through life asset management (TLAM).”

Think about it. A typical aircraft consists of two to three million parts. The provenance of those items (i.e. where they came from, who owns what and when ownership transfers) is critical. These parts must be tracked, not only through the manufacturing of the aircraft, but throughout its life. We’re talking potentially decades of supply chain, production and service transactions, which are today captured in all different systems. Records may be written and verbal, often incomplete, generating large volumes of paper storage. There are limited standards and limited traceability in a highly regulated industry, driving the costs of compliance literally and figuratively sky high.

What if instead the aviation industry could write transactions back to a connected permission-based ledger in addition to applications like ERP? IFS envisions developing a purpose-built aviation Blockchain, to provide a single picture of truth. There are many potential benefits like improved data quality, accurate maintenance history, lighter administrative loads and lower costs, all from a single traceable record with trust built in.

But as with any distributed (shared) ledger, this requires cooperation across the community, in this case including those manufacturing, servicing and maintaining the aircraft, software providers and regulators. A technology consortium to administer the Blockchain is required and there will be gradual adoption. There are still issues to be resolved, issues like transaction latency and compatibility with existing information technology (IT) systems. But none of these issues will ever be resolved without companies like IFS taking some bold first moves and being willing to fail at first attempts.

Working with forward-thinking early adopters will help shape the future. While adoption rates are still very low across all of the technologies listed in Table 1, we found those with World Class ERP implementations were two to five times as likely to have deployed or were in the process of deploying them. Those with World Class implementations were a full five times as likely to have taken first steps with Blockchain in particular. IFS Labs will start small in the aviation industry, developing proofs of concept, and then eventually look for other applications.

Wearable Devices and Augmented Reality

Augmented reality is another of those technologies where a large percentage of our survey participants lacked familiarity or saw little value. Augmented reality generally requires some sort of wearable device. While Google Glass was initially a flop in the consumer market, there are some very practical uses for this kind of technology in the industrial world.

In fact our 2016 Enterprise Solution Study found a high level of interest in wearable devices (Figure 1).

Figure 1: What level of interest do you have in using wearable devices?

Source: Mint Jutras 2016 Enterprise Solution Study

What makes wearable devices interesting to manufacturers? Seventy percent (70%) of manufacturers that expressed interest see the potential for hands free operations. In asset-intensive industries like those IFS serves, the potential is very real, particularly in terms of servicing and maintaining these assets. Think about the potential for overlaying a schematic over a piece of equipment in trouble-shooting, or providing a check list for diagnostics or routine maintenance.

We also found 36% of our survey respondents saw wearable devices as the “device of the future” and 39% view them as just another device that needed to be considered in the context of “bring your own device (BYOD).” Could a material handler’s personal Apple Watch replace those ruggedized RFID/bar code scanners so prevalent in warehouses and in the field today? In these cases, it will be important to connect back to ERP, either to retrieve data or to record transactions.

And yet despite last year’s apparent interest, this year we found very few making the connection between these wearable devices and augmented reality. We feel this is largely due to the current limitations of the wearable devices themselves. It is largely the head mounted device (similar in concept to the original Google Glass) that will bring the most value to asset intensive industries. And these devices are still quite new, feel a bit clumsy, and many don’t produce a completely hands-free experience. Plus software developers like IFS Labs are still experimenting with designing the user experience.

But there will come a time, in the not so distant future, when these devices will be no clumsier than a pair of standard safety glasses. When that time comes, in environments where eye protection is required, why not build additional functionality in? We believe it is important to be experimenting now with these use cases and design because there is still much to be learned.

Leveraging IoT in New and Creative Ways

While IoT is clearly a reality today, we have just begun to scratch the surface in terms of leveraging its full potential. And that is why IFS Labs is working directly with some early adopters of IFS IoT Business Connector, not only in collecting and analyzing the data collected by sensors, SCADA systems, PLCs and OLE (object linking and embedding) for Process Control (OPC), but perhaps even in creating new revenue sources?

But Can IoT Build a Better Mouse Trap?

Many business innovators set out to build a better mouse trap – figuratively speaking that is. But IFS customer Anticimex took on that challenge quite literally. Anticimex became an early adopter of the IFS IoT Business Connector once the product was added to the roadmap.  It is an example of an IFS customer that is benefitting from product innovation that came out of an IFS Labs proof of concept (POC) project several years ago.

Anticimex provides pest control services. Controlling pests like mice, rats and other small rodents means eliminating those pests. Eliminating them without damaging the structure in which they reside, means first catching them. Traditionally this has not been a high-tech business. It involves setting traps, checking the traps and getting rid of the trapped pests. That means sending service technicians on site for inspection and removal.

But what if you were to put sensors in those traps that allowed you to monitor them remotely? What if those sensors could not only tell you when you’ve caught a pest, but whether the trap is full? What if those sensors could also monitor the battery charge in the traps and tell you when that battery is near end of life?

If you were able to collect all this data and monitor it remotely, think about the technicians’ time you could save. If you could store and analyze this data, you could detect and even predict and avoid an infestation. Could you use this data to potentially sell your services to the neighboring businesses closest to your customer?

Figure 2: Anticimex IoT Solution Overview

Source: IFS Labs

This is how Anticimex, with the help of IFS Labs, is leveraging IoT, along with IFS applications, in a new and innovative way.

Wrap Up

Although IFS Labs is a relatively small group within IFS, it has a big job to do. Its job is to disrupt. Putting creativity first, the team is able to draw from resources corporate-wide in order to experiment and learn from forward-thinking early adopters. It is very important for a group like this to have a license to fail. By keeping proof of concept projects small, the team can be daring, failing fast in order to learn and move on to the next innovative concept.

But IFS Labs must do more than just disrupt. It must educate customers and prospects, provide guidance and inspiration, and influence them to leverage the disruptive digital technologies of today and of tomorrow.

We wish them lots of luck and hope to see these efforts continue.

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