Innovation and Technology Management

Information Systems for Management Assignment

INTRODUCTION

The Internet of Things (IoT) is emerging as the third wave in the development of the Internet. The five key verticals of this technology adoption comprise: connected wearable smart devices, connected homes, connected cars, connected cities, and the industrial internet.
IoT platforms complement the mesh app and service architecture. The management, security, integration and other technologies and standards of the IoT platform are the base set of capabilities for building, managing and securing elements in the IoT. IoT platforms constitute the work IT does behind the scenes from an architectural and a technology standpoint to make the IoT a reality. The IoT is an integral part of the digital mesh and ambient user experience and the emerging and dynamic world of IoT platforms is what makes them possible.
Smart, connected products provide a plethora of opportunities for added functionality, higher product utilization, greater reliability and capabilities that span traditional product boundaries. The shift in technology is also disrupting value chains, forcing companies to retool and rethink nearly the entire internal infrastructure. This new range of devices change the industry structure and the competitive landscape, exposing organizations to new business opportunities and threats. They are reshaping industry boundaries and creating entirely new industries (“product-as-a-service” model).

CHANGING INDUSTRIAL LANDSCAPE

Smart, connected products will transform the industry structure. Porter’s five forces that define industry competition provide the necessary framework for demonstrating the significance of these changes.
•    Bargaining power of buyers: This factor goes down as the IoT provides huge opportunities for product differentiation and buyers’ cost of switching goes up due to high customer relationships.
•    Bargaining power of suppliers: This factor becomes high as new suppliers equipped with innovative technologies creep into the industry with new capabilities.
•    The threat of new entrants: Due to high fixed costs the entry barrier becomes high and the threat of new entrants goes down. On the contrary, agile technology companies may come up with innovations and gain the first-mover advantage in which case the threat of new entrants goes up.
•    The threat of substitutes: New business models conceptualized by industry players can provide ample threat of substitutes in terms of product ownership, cutting down the demand of a product.
•    Incumbent rivalry: Migration towards the lower variable cost and higher fixed cost increases the cost structure as well as compel organizations to innovate. As smart devices become part of the broader product system, the incumbent rivalry goes up. 
Smart, connected products demand organizations to build and maintain completely new technology infrastructure. The new technology stack is made of several layers – embedded software, product hardware, product cloud, connectivity, external information sources and integration with business systems (Porter & Heppelmann, 2014). 

VARIOUS IOT PLATFORMS

Presently, there are many IoT platforms available in the market that differ in terms of device management capability, integration (salesforce, Heroku etc.), security (SSL, ISO 27001 standards etc.), protocols for data collection (MQTT, CoAP etc.), types of analytics used (Real time analytics, batch analytics etc.) and support for visualizations (Dayarathna, 2016).
Some of the popular IoT platforms are –
  • IBM IoT Foundation Device Cloud
  • ParStream IoT Analytics Platform (acquired by CISCO)
  • Ericsson Device Connection Platform
  • ThingWorx MDM IoT Platform 
  • Appcelerator 

KEY BUSINESS DRIVERS OF INTEGRATED TECHNOLOGIES LIMITED

Integrated Technologies Limited is a leading manufacturer of medical devices in the UK. Its portfolio of products includes –
•    Product design
•    Product development
•    Medical device manufacturing
There are primarily 4 major business drivers in the company’s value chain and operating model that can be radically transformed through IoT –
•    Cost Management: This involves the challenge of shrinking margins, the need to reduce manufacturing costs and the need to make a lean manufacturing model.
•    Improved Productivity: This feature includes a need for economy of scale and the need for improved workforce collaboration.
•    Time-to-Market: This involves addressing shrinking product life cycles and an overall increase in market demand.
•    Customer Focus: This involves a need for fulfilling customers’ desires and addressing the need for customer involvement in product specification design.

IOT BENEFITS

Integrated Technology Limited can be benefitted in the following ways from IoT implementation: 
•    Cost Implication: Decreased field visits, increase in first-time fix rate, shortened support calls, reduced technology update costs, identification of design flaws, reduced customer call time with integrated Customer Relationship Management (CRM) tools, reduced warranty claims, customer empowerment, and increased customer self-service can decrease the overall cost factors.
•    Revenue Implication: Reduced churn rate, increased customer satisfaction, reduced downtime and mean time between failure, increased market share through efficient product design, enabling pay-per-use billing and product registration to promote cross-selling can improve revenue and market share of ITL.
•    Key Performance Indicators: Mean time to market a new product, number of maintenance visits and new customer acquisitions can be key performance indicators for the company.
I can use digital tactics such as simulation testing to identify and preempt design flaws and advanced analytics tools to understand and real end-user behavior and usage patterns. The simulated software and prototyping techniques can help to refine the product design and features so that defect in the product, if any, can be detected and removed before the product reaches the market. The collaborative channels would help to integrate customer feedback into the manufacturing value chain so that the Customers' expectations are closely met. IoT can also provide agile supply chain management by automating processes and reducing the downtime of the machine through predictive maintenance. In terms of business process, ITL can gain business operational transparency and trace quality of the product in real-time.

IOT IMPLEMENTATION AND ROADMAP 

As per the report published by TCS (Tata Consultancy Services, 2015), the key success factors governing IoT implementation in the manufacturing industry are –
•    Identifying and pursuing new business opportunities (Strategic)
•    Determining the data captured from IoT (Strategic)
•    Bringing in rapid changes to company products and processes (Business process)
•    Based on customer insights on how they use the products, change the thought process of managers and staffs (Cultural)
•    Accelerating the decision-making process on how to innovate and serve customers effectively
In order to implement IoT platforms, Integrated Technologies Limited needs to achieve a certain degree of digitization in their business model, organization structure i.e. how they are organized, people, processes, IT capability, products and services offered and the process of engagement with key stakeholders.
Product monitoring technologies should be the biggest chunk of IoT spend (40%), followed by premises, customer, and supply chain monitoring applications as seen in the industry projection (Tata Consultancy Services, 2015). I can also benefit from greater insight into product quality than ever before along with digital sensors that will send back data on product performance. Supply chain monitoring through sensors, digital video, software, and other IoT technologies will help Integrated Technology Limited to construct a much more precise understanding of quality and throughput issues on assembly lines.
Successful IoT transformation requires a top-down driver. It does not happen bottom-up. Mostly, the digital transformation is led by the CIOs and the top management of Integrated Technologies Limited needs to ensure the change management happens successfully.
Timeline: Acquiring IoT platform and reap the complete set of benefits may require 5 years for Integrated technology Limited. 
In 5 years, the company may expect a 10% reduction in working hours in every year of operation. Also each year the company may come up with new product concepts and innovations at a higher rate (assuming a 10% increase in concept development) as well as reduce the failure rate.

KEY CHALLENGES TO IOT IMPLEMENTATION

•    Risk vs. Benefits: The management at Integrated Technologies Limited may seem skeptical about the benefits of digital technologies and tend to think that the risks involved outweigh the benefits. 
Response: One of the best approaches is to thoroughly analyze how well digital technology will fit ‘in’ with the enterprise’s processes and operations. The key determinants of enterprise-technology alignment are reliability, performance, and compatibility with the existing IT infrastructure. The implementation of digital technologies should be based on cost-benefit analysis, value to the business, and the potential return on investment.
•    Infrastructure issues: ITL’s digital capabilities depend on its IT infrastructure. The lack of IT infrastructure and capabilities can be a disadvantage in relation to digital technology adoption.
Response: Digital transformation will be easier if there is a strong bond between IT infrastructure and business functionality. Consolidating operations and IT infrastructure can help achieve this bond and enable the execution of process changes that are facilitated by technology.
•    Integration issues:  The integration of various processes and operations is crucial to successful digital adoption. The value derived from digitalization can be lost if integration fails.
Response: The integration of multiple processes should be effectively handled, and managed. Channel conflict arises due to coordination issues between new and traditional processes. The new processes need to complement and work seamlessly with existing processes.

COMPANY OVERVIEW

Integrated Technology Limited is the leading manufacturing and design partner for innovative life-saving medical technology, analytical instruments and diagnostic devices (Integrated Technology Limited, 2016). The company provides full-service solutions to regulatory product development consultancy, manufacturing, and after-sales services in the medical devices industry.
The company partners with spin-offs, start-ups, and major companies at the various stages in the product development cycle. Its operations are extended in the USA, China, and the UK. The ITL group includes –
•    ITL UK
•    Integrated Electronic Systems Ltd. (IES) – ITL China
•    ITL Virginia Inc.
•    Vitl Life Science Solutions 
 

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REFERENCES

1.    Dayarathna, M., 2016. Comparing 11 IoT Development Platforms. [Online] 
Available at: https://dzone.com/articles/iot-software-platform-comparison
[Accessed 28 April 2016].
2.    Integrated Technology Limited, 2016. About Integrated Technologies Limited. [Online] 
Available at: http://www.itl.co.uk/about
[Accessed 28 April 2016].
3.    Porter, M. E. & Heppelmann, J. E., 2014. How Smart, Connected Products Are Transforming Competition, s.l.: Harvard Business School.
4.    Tata Consultancy Services, 2015. The Internet of Things: TCS Global Trend Study 2015 - A Manufacturing Industry Perspective, s.l.: Tata Consultancy Services.

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