August 2012
News Release

Innovations in Comfort, Efficiency, and Safety Solutions.

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New Relationships for a New Value Chain

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As the value-chain evolves, so too must our mindsets

The value-chains for non-networked devices have remained relatively consistent for hundreds of years.   From raw materials to components to finished products, the obligations of the manufacturer and their relationship with their customer essentially began and ended at the point of sale.

Peer-to-peer information and network integration are changing all of that.  Smart Systems technologies create new modes of collaboration and value creation which can change the entire structure of value delivery, and in doing so, threaten long-standing business models.  We now exist in a world where all companies are forced to consider how to participate in service delivery and build new creative relationships with their customers.

Enabled by intelligent devices allowing for real-time data analysis and service delivery, robust network resources will become portals into in which users will gain utility not only from the devices themselves but from a rapidly growing variety of adjacent value added service provider's.  These will not be a requirement from the edge or consider a luxury, but will be a hallmark of what all customers will expect.

––– For a longer discussion about the technology required to move the Internet of Things forward, read our last post at:

It will not be possible for very many single monolithic players to build entire smart services delivery chains on their own – this will only happen with many new and very diverse relationships and a few key players are already collaborating to tackle some key innovations for the market:

•    Automated systems development:  When telephones first came into existence, all calls were routed through switchboards and had to be connected by a live operator.  It was long ago forecast that if telephone traffic continued to grow in this way, soon everybody in the world would have to be a switchboard operator.  Of course that has not happened, because automation was built into the systems to handle common tasks like connecting calls.  We are quickly approaching analogous circumstances with the proliferation of smart connected devices.  Each new device requires too much customization and maintenance just to perform the same basic tasks.  We must develop software and methods to automate development and facilitate re-use, or risk constraining the growth of this market.   But here again this requires players from “different neighborhoods” such as embedded systems technologists convening with IT types – its like getting young children to learn to play together – it will not happen magically nor is it likely to happen naturally.  To get Big IT and OEMs to collaborate effectively, then we could truly grow the market.

•    Flexible, scalable systems:  IT professionals rarely talk these days about the need for ever-evolving information services that can be made available anywhere, anytime, for any kind of information. Instead, they talk about web services, enterprise apps and now cloud computing.  The Web stores information in one of two basic ways: utterly unstructured, or far too rigidly structured. The unstructured way gives us typical static Web pages, blog postings, etc., in which the basic unit of information is large, free-form, and lacking any fundamental identity.  The overly structured way involves the use of relational database tables that impose rigid, pre-ordained schemas on stored information. These schemas, designed by database administrators in advance, are not at all agile or easily extensible. Making even trivial changes to these schemas is a cumbersome, expensive process that affects all the data inside them.  Both of these approaches to data-structure enforce severe limitations on the functions you want most in a global, pervasive-era information system: scalability, interoperability and seamless integration of real-time or event-driven data.  Furthermore, most enterprise players are stuck in the traditional “command and control” mindset that places too much emphasis on short-term gains, and further undermines the future potential of the Smart Systems marketplace.

•    Collective smart systems intelligence: For all its sophistication, many of today’s M2M systems are a direct descendent of the traditional cellular telephony model where each device acts in a “hub and spoke” mode. The inability of today’s popular enterprise systems to interoperate and perform well with distributed heterogeneous device environments is a significant obstacle. The many “nodes” of a network may not be very “smart” in themselves, but if they are networked in a way that allows them to connect effortlessly and interoperate seamlessly, they begin to give rise to complex, system-wide behavior. This allows an entirely new order of intelligence to emerge from the system as a whole—an intelligence that could not have been predicted by looking at any of the nodes individually.  What’s required is to shift the focus from simple device monitoring to a model where device data is aggregated into new data fusion and data analytics applications.  This shift will require a diverse range of skills most certainly not resident in the M2M community today, but also not resident in any of the traditional segments of suppliers.

New relationships and capabilities will bend the traditional linear value chain into a mesh of new relationships and complex interdependencies.  This “webbed state” will demand a lot from it’s participants, but these creative alliances are the only way we can truly move this story forward in any tangible way.   As we can see across these innovations, a wide range of players’ success – regardless of industry or venue – will be directly dependent on their ability to generate and maintain a collaborative mindset that will foster a collaborative ecosystem of alliance partners. 

Glen Allmendinger
President and Founder, Harbor Research 


BACnet Institute
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