Business is the Only "Thing" - Business Semantics and the Internet of Things - V 2.1

Bell Telephone Switchboard Operators, 1943Bell Telephone Switchboard Operators, 1943, USA (Courtesy, Wikipedia and US National Archives)

Do you want to enter the business of selling telephone switches?

Probably not. The telephone switch business is super competitive and very low margin.

But the telephone switch business is a pretty good analogy to what your Internet of Things business could be, if you get it wrong.

And you can get your new Internet of Things business model wrong if you think that all you need to do is connect M2M ("machine-to-machine") edge devices to decision makers -- without providing any business value add in the middle.

Without applying your domain knowledge, captured through business analysis, you're at the mercy of a rapidly commoditizing business of selling sensors, wires, wireless and connectivity. And this warning applies to both vendors and business users. The real value of Internet of Things programs is achieved when hard-won domain knowledge enables the addition of value between edge device and centre. Without that "value-add-in-the-middle", again, you've just built a telephone switch.

Which is not to say that M2M and wireless connectivity is not complicated and challenging, both technically and business-wise. But just as with telecoms after monopolies, there won't be much profit margin in such a business.

Earlier this month, at the invitation of Chris Taylor ofSuccessfulWorkplace, I spoke at Interop NYC, on the "Internet of Things Summit" panel.

My talk concerned the importance of business semantics for any successful Internet of Things program.

I chose the topic of business semantics because business semantics is the language of value creation. Given the hype around the Internet of Things, a focus on the fundamentals of value creation is important, especially for any investment decision.

So, let's see how Internet of Things technology, investment decisions, business semantics, business analysis and value creation are related.

Hype As A "Positive IoT Market Investment Signal"

Gartner, Inc., via their Hype Cycle for Emerging Technologies, has identified that the Internet of Things is now at the peak of an emerging technology hype cycle.

And as might be expected with hype, much of the propaganda that we are seeing around the Internet of Things is in generalities, for example concerning the billions of devices that will soon be connected, or the trillions of dollars of revenue that will be up for grabs, or the amazing business models that will define the future.

Certainly momentum and hype are a nice train to ride - but hype doesn't specifically help any given business or executive decide what to do next. Or define a viable IoT-based business model.

Nevertheless, the Hype Cycle is a worthwhile and widely-used gauge of what constitutes today's hottest technologies. The Hype Cycle can be one input in a investment decision process concerning where investments should be made. Let's examine the "value of hype" in more detail.

Garter Hype Cycle for Emerging Technologies, August, 2014, w/Business Analysis Swoosh (Swoosh and call-out added; not part of original material)

The appearance of any given technology at the Peak of Inflated Expectations is really just an acknowledgement of the fact that this technology is now "on everyone's radar". And especially on the radar of innovators, or maybe early adopters. Promising work has likely started and visionaries are already imagining the implications of the new technologies. (A close reading of Gartner materials on the Hype Cycle suggests the possibility of the same positive interpretation.)

So an emerging technology at the peak of the Hype Cycle is being scrutinized as a potential investment candidate. Now is the time to get ready to do the work of business analysis and engineering. This is the work of productization.

Technologies (at least the ones that survive) don't move along the Hype Cyclemagically; the original development work has to continue, and added to that must be the work of embedding business semantics into the original technology innovation.

(To illustrate this point, I've added a business analysis swoosh to the Hype Cycle, to show the activity that can lead us forward.)

Beyond IoT Hype: Business Semantics & Technology Adoption

The idea of technology adoption and engineering becomes even more clear if we mash up the Gartner Hype Cycle with the Technology Adoption Lifecycle (credit for this mashup goes to the marketing people at Datameer, Inc.)

The Technology Adoption Life Cycle is well known from the work of Geoffrey Moore(of Crossing the Chasm fame, among other works), who in turn based his analysis on the earlier work of sociologist and communications theorist Everett M. Rogers.

As shown in the diagram above, it's almost uncanny how the Hype Cycle andTechnology Adoption Curves mash up so easily. But this matching pattern is not accidental -- because the two curves refer to the same underlying process, although from different angles.

Any given technology is adopted in society first by visionaries or innovators. And the decision to adopt is associated with a high level of awareness throughout particular communities. But as is well documented, only organizations and individuals whose business or personal models mandate that they be on the "bleeding edge" and which possess the appetite and skills for new development and tolerance for risk, only this small group will take any action during the hype phase.

Then, as business analysts and engineers build, and productization is achieved, the new technology becomes more and more palatable to groups and individuals with different business models. And the new technology is adopted by more risk-averse groups, until finally the technology is used by everyone for whom it makes sense.

Progress along both the Hype and Technology Adoption Curves occur for the same reason: domain knowledge is embedded in business semantics than can be understood by machines.

Business Analysis Is The Engine That Pushes You Forward

As strictly technical issues are addressed (i.e. sensor and actuator deployments, M2M client models, M2M interface models, low power edge networking protocols etc.) the most important questions for Internet of Things champions will no longer be "how to connect" but "how to add business value".

And "add business value" implies that we need to embed domain knowledge into our new Internet of Things project. This requirement was apparent from the Hypeand Technology Adoption Curves which apply to everyone, but now the question is very personal and specific.

Are you ready to define value chain requirements specific to your business domain, for an Internet of Things project?

You probably already have an intuitive understanding of what such a project might look like. And you understand where you fit on a Technology Adoption Curve in terms of "appetite for risk".

For example, you might believe that learning of business problems sooner would enable you to take corrective action faster - and save money at the same time as you increase customer satisfaction.

Or perhaps in your business it's important for you to "keep in front of the curve" -- so you're looking at how an Internet of Things-type project could enable your continued business leadership.

A good example of such an opportunity would be for building maintenance. There are many building systems that you might want to monitor remotely, in order to better control for energy consumption, tenant comfort -- and failure modes.

How will you implement an Internet of Things initiative for building maintenance?

You'll probably want to instrument your building, possibly deploying sensors on various systems and environments, including sensors for temperature, boiler control, HVAC control, electrical control etc.

At this point you'll have enormous streams of data available for business decisions -- or to drown in.

And the difference between deciding and drowning is the domain knowledge you need to make use of and to control those streams of data. This is the work of business analysis.

The work of business analysis likely means building and using models of asset and systems behaviour. And those models are implicitly deployed in business processes (BPM) and business rules (BRM) middleware systems.

If you have stepped up on business analysis and business semantics, you have gone beyond building "just a telephone switch" and you're ready to realize business value add from your project..

On the other hand, if you avoided business analysis, if you expect an Internet of Things project only involves "plugging in sensors to a dashboard", then you are failing in multiple dimensions to realize the your potential:

  1. TECHNICAL: You've built a telephone switch, basically connecting devices to a dashboard.

  2. COMPETITION: From a competitive perspective, you have no competitive edge when everyone else can do the same thing.

  3. MANAGMENT: You are short-changing your domain knowledge, which still remains outside the system.

  4. NEW OFFERINGS: It's hard to build new business service offerings when you can't model the core of what you do.

Let's assume you do want to build a value add Internet of Things project and that you want to build on your hard-won domain knowledge. What cadre of people are best suited to work on Internet of Things projects?

Can you get access to a group of people who have the training, skills and experience to developing and managing the domain knowledge and value chain analysis you need for your project?

Domain Knowledge Is Captured by Business Analysts

During our Internet of Things Interop NYC conference discussion I asked how many business analysts were in the room; it was only about 10%. I expect in future discussions that the percentage of business analysts in a discussion concerning Internet of Things technologies will likely begin to rise. And this increase will correspond to a movement along the Technology Adoption Curve.

As late as the 90's it was common to see personnel advertisements seeking "programmer/analysts". The reality for such a position was that the individual would be performing programming about 80% or 90% of the time, with only the balance of time on analysis. And yet it is only analysis where the real value of any technology project is defined.

Today we have the good fortune to have amazingly powerful software and systems environments. And technologies associated with the Internet of Things are among the most powerful of these technologies. In IT departments and beyond, a much higher percentage of time is now spent focused on business analysis, as opposed to "bit jockeying".

Every IT organization is different in terms of how responsibilities for technology and business analysis are divvied up. And there's always the "make or buy" decision; in many cases it makes sense to "buy your business analysis" from a consultancy or implicitly in software, for example an ERP system.

For your Internet of Things project however it is quite likely that you will want to"home grow" your business analysis, because many Internet of Things projects are so strategic. That means that you will want to execute your project your way -- and not end up on the level playing field that can be the consequence of buying someone else's analysis.

Somehow therefore, you'll need business analysts to help you put in place a viable project. Together with your business team, your business analysts will work to define the business semantics that are the basis of value add for an Internet of Things project.

Consider the question at the beginning of this post.

Do you want to create value, or just deploy an expensive telephone switch?

Business leaders make investment decisions. Business analysts are the professionals tasked with the work that defines value-rich investment possibilities and projects.

Don't turn your IoT project into a glorified switch. Build your value chain capabilities. Lever your domain knowledge. Focus on business semantics and business models. Learn and grow and adapt. And be profitable.

Bonus Insight: Business Semantics Versus Cheap Data

One pitfall that your business analysts can help you avoid is the pitfall of "cheap data".

With inexpensive M2M devices, it's easy to start spraying data at your staff. But spraying data at people can result in all sorts of problems, including "alarm fatigue". (For a specific example of how business analysis can help with Internet of Things projects, please see my earlier posting on this topic: "Alarm Fatigue".)


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