When Philips’s Hue Bulbs Are Attacked, IoT Security Becomes Even Bigger Issue

OK, what will it take to make security (and privacy) job #1 for the IoT industry?

The recent Mirai DDoS attack should have been enough to get IoT device companies to increase their security and privacy efforts.

Now we hear that the Hue bulbs from Philips, a global electronics and IoT leader that DOES emphasize security and doesn’t cut corners, have been the focus of a potentially devastating attack (um, just wonderin’: how does triggering mass epileptic seizures through your light bulbs grab you?).

Since it’s abundantly clear that the US president-elect would rather cut regulations than add needed ones (just announcing that, for every new regulation, two must be cut), the burden of improving IoT security will lie squarely on the shoulders of the industry itself. BTW:kudos in parting to outgoing FTC Chair Edith Ramirez, who has made intelligent, workable IoT regulations in collaboration with self-help efforts by the industry a priority. Will we be up to the security challenge, or, as I’ve warned before, will security and privacy lapses totally undermine the IoT in its adolescence by losing the public and corporate confidence and trust that is so crucial in this particular industry?

Count me among the dubious.

Here’s what happened in this truly scary episode, which, for the first time, presages making the focus of an IoT hack an entire city, by exploiting what might otherwise be a smart city/smart grid virtue: a large installed base of smart bulbs, all within communication distance of each other. The weapons? An off-the-shelf drone and an USB stick (the same team found that a car will also do nicely as an attack vector). Fortunately, the perpetrators in this case were a group of white-hat hackers from the Weizmann Institute of Science in Israel and Dalhousie University in Canada, who reported it to Philips so they could implement additional protections, which the company did.

Here’s what they wrote about their plan of attack:

“In this paper we describe a new type of threat in which adjacent IoT devices will infect each other with a worm that will spread explosively over large areas in a kind of nuclear chain reaction (my emphasis), provided that the density of compatible IoT devices exceeds a certain critical mass. In particular, we developed and verified such an infection using the popular Philips Hue smart lamps as a platform.

“The worm spreads by jumping directly from one lamp to its neighbors, using only their built-in ZigBee wireless connectivity and their physical proximity. The attack can start by plugging in a single infected bulb anywhere in the city, and then catastrophically spread everywhere within minutes, enabling the attacker to turn all the city lights on or off, permanently brick them, or exploit them in a massive DDOS attack (my emphasis). To demonstrate the risks involved, we use results from percolation theory to estimate the critical mass of installed devices for a typical city such as Paris whose area is about 105 square kilometers: The chain reaction will fizzle if there are fewer than about 15,000 randomly located smart lights in the whole city, but will spread everywhere when the number exceeds this critical mass (which had almost certainly been surpassed already (my emphasis).

“To make such an attack possible, we had to find a way to remotely yank already installed lamps from their current networks, and to perform over-the-air firmware updates. We overcame the first problem by discovering and exploiting a major bug in the implementation of the Touchlink part of the ZigBee Light Link protocol, which is supposed to stop such attempts with a proximity test. To solve the second problem, we developed a new version of a side channel attack to extract the global AES-CCM key that Philips uses to encrypt and authenticate new firmware. We used only readily available equipment costing a few hundred dollars, and managed to find this key without seeing any actual updates. This demonstrates once again how difficult it is to get security right even for a large company that uses standard cryptographic techniques to protect a major product.”

Again, this wasn’t one of those fly-by-night Chinese manufacturers of low-end IoT devices, but Philips, a major, respected, and vigilant corporation.

As for the possible results? It could:

  •  jam WiFi connections
  • disturb the electric grid
  • brick devices making entire critical systems inoperable
  • and, as I mentioned before, cause mass epileptic seizures.

As for the specifics, according to TechHive, the researchers installed Hue bulbs in several offices in an office building in the Israeli city of Beer Sheva. In a nice flair for the ironic, the building housed several computer security firms and the Israeli Computer Emergency Response Team.  They attached the attack kit on the USB stick to a drone, and flew it toward the building from 350 meters away. When they got to the building they took over the bulbs and made them flash the SOS signal in Morse Code.

The researchers”were able to bypass any prohibitions against remote access of the networked light bulbs, and then install malicious firmware. At that point the researchers were able to block further wireless updates, which apparently made the infection irreversible. ‘There is no other method of reprogramming these [infected] devices without full disassemble (which is not feasible). Any old stock would also need to be recalled, as any devices with vulnerable firmware can be infected as soon as power is applied.’”

Worst of all, the attack was against Zigbee, one of the most robust and widely-used IoT protocols, an IoT favorite because Zigbee networks tend to be cheaper and simpler than WiFi or BlueTooth.

The attack points up one of the critical ambiguities about the IoT. On one hand, the fact that it allows networking of devices leads to “network effects,” where each device becomes more valuable because of the synergies with other IoT devices. On the other hand, that same networking and use of open standards means that penetrating one device can mean ultimately penetrating millions and compounding the damage.


I’m hoping against hope that when Trump’s team tries to implement cyber-warfare protections they’ll extend the scope to include the IoT because of this specific threat. If they do, they’ll realize that you can’t just say yes cyber-security and no, regulations. In the messy world of actually governing, rather than issuing categorical dictums, you sometimes have to embrace the messy world of ambiguity.  

What do you think?

 

2nd day liveblogging, Gartner ITxpo, Barcelona

Accelerating Digital Business Transformation With IoT Saptarshi Routh Angelo Marotta
(arrived late, mea culpa)

  • case study (didn’t mention name, but just moved headquarters to Boston. Hmmmmm).
  • you will be disrupted by IoT.
  • market fragmented now.

Toshiba: How is IoT Redefining Relationships Between Customers and Suppliers, Damien Jaume, president, Toshiba Client Solutions, Europe:

  • time of tremendous transformation
  • by end of ’17, will surpass PC, tabled & phone market combined
  • 30 billion connect  devices by 2020
  • health care IoT will be $117 billion by 2020
  • 38% of indiustry leaders disrupted by digitally-enabled competitors by 2018
  • certainty of customer-supplier relationship disruption will be greatest in manufacturing, but also every other market
    • farming: from product procurement to systems within systems. Smart, connected product will yield to integrated systems of systems.
  • not selling product, but how to feed into whole IoT ecosystem
  • security paramount on every level
  • risk to suppliers from new entrants w/ lean start-up costs.
  • transition from low engagement, low trust to high engagement, high trust.
  • Improving efficiencies
  • ELIMINATE MIDDLEMAN — NO LONGER RELEVANT
  • 4 critical success factors:
    • real-time performance pre-requisite
    • robustness — no downtime
    • scalability
    • security
  • case studies: energy & connected home, insurance & health & social care (Neil Bramley, business unit director for clients solutions
    • increase depth of engagement with customer. Tailored information
    • real-time performance is key, esp. in energy & health
    • 20 million smart homes underway in GB by 2020:
      • digitally empowering consumers
      • engaging consumers
      • Transforming relationships among all players
      • Transforming homes
      • Digital readiness
    • car insurance: real-time telematics.
      • real-time telematics data
      • fleet management: training to reduce accidents. Working  w/ Sompo Japan car insurance:
    • Birmingham NHS Trust for health (Ciaron Hoye, head of digital) :
      • move to health promotion paradigm
      • pro-actively treat patients
      • security first
      • asynchronous communications to “nudge” behavior.
      • avoiding hip fractures
      • changing relationship w/ the patient: making them stakeholders, involving in discussion, strategy
      • use game theory to change relationship

One-on-one w/ Christian Steenstrup, Gartner IoT analyst. ABSOLUTE VISIONARY — I’LL BE INTERVIEWING HIM AT LENGTH IN FUTURE:

  • industrial emphasis
  • applications more ROI driven, tangible benefits
  • case study: mining & heavy industry
    • mining in Australia, automating entire value train. Driverless. Driverless trains. Sensors. Caterpillar. Collateral benefits: 10% increase in productivity. Less payroll.  Lower maintenance. Less damage means less repairs.
    • he downplays AR in industrial setting: walking in industrial setting with lithium battery strapped to your head is dangerous.
    • big benefit: less capital expense when they build next mine. For example, building the town for the operators — so eliminate the town!
  • take existing processes & small improvements, but IoT-centric biz, eliminating people, might eliminate people. Such as a human-less warehouse. No more pumping huge amount of air underground. Huge reduction with new system.  Mine of future: smaller holes. Possibility  of under-sea mining.
  • mining has only had incremental change.
  • BHP mining’s railroad — Western Australia. No one else is involved. “Massive experiment.”
  • Sound sensing can be important in industrial maintenance.  All sorts of real-time info. 
  • Digital twins: must give complete info — 1 thing missing & it doesn’t work.
  • Future: 3rd party data brokers for equipment data.
  • Privacy rights of equipment.
  • “communism model” of info sharing — twist on Lenin.

 

Accelerating Digital Transformation with Microsoft Azure IoT Suite (Charlie Lagervik):

  • value networking approach
  • customer at center of everything: customer conversation
  • 4 imperatives:
    • engage customers
    • transform products
    • empower employees
    • optmize operations
  • their def. of IoT combines things/connectivity/data/analytics/action  Need feedback loop for change
  • they focus on B2B because of efficiency gains.
  • Problems: difficult to maintain security, time-consuming to launch, incompatible with current infrastructure, and hard to scale.
  • Azure built on cloud.
  • InternetofYourThings.com

 

Afternoon panel on “IoT of Moving Things” starts with all sorts of incredible factoids (“since Aug., Singapore residents have had access to self=driving taxis”/ “By 2030, owning a car will be an expensive self-indulgence and will no longer be legal.”

  • vehicles now have broader range of connectivity now
  • do we really want others to know where we are? — privacy again!
  • who owns the data?
  • what challenges do we need to overcome to turn data into information & valuable insight that will help network and city operators maximize efficiency & drive improvement across our transportation network?
  • think of evolution: now car will be software driven, then will become living room or office.
  • data is still just data, needs context & location gives context.
  • cities have to re-engineer streets to become intelligent streets.
  • must create trust among those who aren’t IT saavy.
  • do we need to invest in physical infrastructure, or will it all be digital?
  • case study: one car company w/ engine failures in 1 of 3 cars gave the consultants data to decide on what was the problem.

Circular Company: Will Internet of Things Spark Management Revolution?

Could the IoT’s most profound impact be on management and corporate organization, not just cool devices?

I’ve written before about my still-being-refined vision of the IoT — because it (for the first time!) allows everyone who needs instant access to real-time data to do their jobs and make better decisions to share that data instantly —  as the impetus for a management revolution.

My thoughts were provoked by Heppelmann & Porter’s observation that:

“For companies grappling with the transition (to the IoT), organizational issues are now center stage — and there is no playbook. We are just beginning the process of rewriting the organization chart that has been in place for decades.”

If I’m right, the IoT could let us switch from the linear and hierarchical forms that made sense in an era of serious limits to intelligence about things and how they were working at thaFor companies grappling with the transition, organizational issues are now center stage—and there is no playbook. We are just beginning the process of rewriting the organization chart that has been in place for decades.t moment, to circular forms that instead eliminate information “silos” and instead give are circular, with IoT data as the hub. 

This article expands on that vision. I’ve tried mightily to get management journals to publish it. Several of the most prestigious have given it a serious look but ultimately passed on it. That may be because it’s crazy, but I believe it is feasible today, and can lead to higher profits, lower operating costs, empowering our entire workforces, and, oh yeah, saving the planet.

Audacious, but, IMHO, valid.  Please feel free to share this, to comment on it, and, if you think it has merit, build on it.

Thanks,

W. David Stephenson


The IoT Allows a Radical, Profitable Transformation to Circular Company Structure

 

by

W. David Stephenson

Precision assembly lines and thermostats you can adjust while away from home are obvious benefits of the Internet of Things (IoT), but it might also trigger a far more sweeping change: swapping outmoded hierarchical and linear organizational forms for new circular ones.

New org charts will be dramatically different because of an important aspect of the IoT overlooked in the understandable fascination with cool devices. The IoT’s most transformational aspect is that, for the first time,

everyone who needs real-time data to do their jobs better or
make better decisions can instantly 
share it.

That changes everything.

Linear and hierarchical organizational structures were coping mechanisms for the severe limits gathering and sharing data in the past. It made sense then for management, on a top-down basis, to determine which departments got which data, and when.

The Internet of Things changes all of that because of huge volumes of real-time data), plus modern communications tools so all who need the data can share it instantly. 

This will allow a radical change in corporate structure and functions from hierarchy: make it cyclical, with real-time IoT data as the hub around which the organization revolves and makes decisions.

Perhaps the closest existing model is W.L. Gore & Associates. The company has always been organized on a “lattice” model, with “no traditional organizational charts, no chains of command, nor predetermined channels of communication.”  Instead, they use cross-disciplinary teams including all functions, communicating directly with each other. Teams self-0rganize and most leaders emerge spontaneously.

As Deloitte’s Cathy Benko and Molly Anderson wrote, “Continuing to invest in the future using yesteryear’s industrial blueprint is futile. The lattice redefines workplace suppositions, providing a framework for organizing and advancing a company’s existing incremental efforts into a comprehensive, strategic response to the changing world of work.”  Add in the circular form’s real-time data hub, and the benefits are even greater, because everyone on these self-organizing teams works from the same data, at the same time.

You can begin to build such a cyclical company with several incremental IoT-based steps.

One of the most promising is making the product design process cyclical. Designers used to work in a vacuum: no one really knew how the products functioned in the field, so it was hard to target upgrades and improvements. Now, GE has found it can radically alter not only the upgrade process, but also the initial design as well:

“G.E. is adopting practices like releasing stripped-down products quickly, monitoring usage and rapidly changing designs depending on how things are used by customers. ‘We’re getting these offerings done in three, six, nine months,’ (Vice-President of Global Software William Ruh said). ‘It used to take three years.’”

New IoT and data-analytics tools are coming on the market that could facilitate such a shift. GE’s new tool, “Digital Twins,” creates a wire-frame replica of a product in the field (or, for that matter, a human body!) back at the company. Coupled with real-time data on its status, it lets everyone who might need to analyze a product’s real-time status (product designers, maintenance staff, and marketers, for example) to do so simultaneously.

The second step toward a cyclical organization is breaking down information silos.

Since almost every department has some role in creation and sales of every product, doesn’t it make sense to bring them together around a common set of data, to explore how that data could trigger coordinated actions by several departments? 

Collaborative big-data analysis tools such as GE’s Predix, SAP’s HANA, and Tableau facilitate the kind of joint scrutiny and “what-if” discussions of real-time data that can make circular teamwork based on IoT-data sharing really achieve its full potential.

The benefits are even greater when you choose to really think in circular terms, sharing instant access to that real-time data not only companywide, but also with external partners, such as your supply chain and distribution network – and even customers – not just giving them some access later on a linear basis.  For example, SAP has created an IoT-enabled vending machine. If a customer opts in, s/he is greeted by name, and may be offered “your regular combination” based on past purchases, and/or a real-time discount. That alone would be neat from a marketing standpoint, but SAP also opened the resulting data to others, resulting in important logistics improvements. Real-time machine-to-machine (M2M) data about sales at the new vending machines automatically reroute resupply trucks to those machines currently experiencing the highest sales. 

With the IoT, sharing data can make your own product or service more valuable. With the Apple HomeKit, you can say “Siri, it’s time for bed,” and the Hue lights dim, Schlage lock closes, and Ecobee thermostat turns down. By sharing real-time IoT data, each of these companies’ devices become more valuable in combinations than they are by themselves.

Hierarchical and linear management is outmoded in the era of real-time data from smart devices. It is time to begin to replace it with a dynamic, circular model with IoT data as its hub.

Smart Infrastructure Logical Top Priority for IoT

The only issue Clinton and Trump can agree on is the need for massive improvements to the nation’s crumbling infrastructure, especially its roads and bridges. But, please, let’s make it more than concrete and steel.

Let’s make it smart, and let’s make it the top priority for the IoT because of the trickle-down effects it will have on everything else in our economy.

Global economist Jeffrey Sachs stated the case eloquently in a recent Boston Globe op-ed, “Sustainable infrastructure after the Automobile Age,” in which he argued that the infrastructure (including not only highways and bridges but also water systems, waste treatment, and the electric grid) shaped by the automotive age has run its course, and must be replaced by one “in line with new needs, especially climate safety, and new opportunities, especially ubiquitous online information and smart machines.”

I’m currently reading Carlo Ratti and Matthew Claudel’s The City of Tomorrow: Sensors, Networks, and the Future of Urban Life, which makes the same argument: “The answer to urban expansion and diffusion — and the host of social consequences that they bring — may be to optimize, rather than increase, transportation infrastructure.”

The IoT is perfectly suited to the needs of a new information-based infrastructure, especially one which must balance promoting the economy and mobility with drastic reductions in greenhouse gasses (transportation produces approximately a third of the U.S.’s  emissions). It can both improve maintenance (especially for bridges) through built-in sensors that constantly monitor conditions and can give advance warning in time to do less-costly and less-disruptive predictive maintenance, and reduce congestion by providing real-time information on current congestion so that real-time alterations to signals, etc., can be made rather than depending on outmoded fixed-interval stoplights, etc.

Sachs points out that infrastructure spending as a percentage of GDP has fallen since the Reagan years, and that it will require much more spending to bring it up to date.

A good place to look for a model is China.  The country already sports the largest concentration of M2M connections in the world: “74 million connections at the end of 2014, representing almost a third of the global base,” much of that in the form of smart bridges, smart rails, and smart grid, and critical because of the country’s rapid economic growth (Ratti cites a Beijing traffic jam that immobilized cars for an astounding 12 days!). Similarly, the government aims to have 95% of homes equipt with smart meters by next year.The country has used its investment in smart infrastructure to build its overall IoT industry’s ability to compete globally.

Sachs argues for a long-term smart infrastructure initiative:

“I propose that we envision the kind of built environment we want for the next 60 years. With a shared vision of America’s infrastructure goals, actually designing and building the new transport, energy, communications, and water systems will surely require at least a generation, just as the Interstate Highway System did a half-century ago.”

He says we need a plan based on three priorities to cope with our current national and global challenges:

“We should seek an infrastructure that abides by the triple bottom line of sustainable development. That is, the networks of roads, power, water, and communications should support economic prosperity, social fairness, and environmental sustainability. The triple bottom line will in turn push us to adopt three guiding principles.

First, the infrastructure should be “smart,” deploying state-of-the-art information and communications technologies and new nanotechnologies to achieve a high efficiency of resource use.

Second, the infrastructure should be shared and accessible to all, whether as shared vehicles, open-access broadband in public areas, or shared green spaces in cities.

Third, transport infrastructure should promote public health and environmental safety. The new transport systems should not only shift to electrical vehicles and other zero-emission vehicles, but should also promote much more walking, bicycling, and public transport use. Power generation should shift decisively to zero-carbon primary energy sources such as wind, solar, hydro, and nuclear power. The built environment should be resilient to rising ocean levels, higher temperatures, more intense heat waves, and more extreme storms.”

The IoT, particularly because of its ability to let us share real-time data that in turn can regulate the infrastructure, is ideally suited to this challenge. It’s time for Congress to not only spend on infrastructure but to do so wisely.

The result will be not only the infrastructure we need, but also a more robust IoT industry in general.

 

I’ll be on live Thursday morning talking the IoT and Smart Cities

Cities are the future of global civilization and the economy, and smart cities are the only way they’ll survive and prosper!

Join me and two SAP experts on the subject, Dina Dayal (global vice president for Digital Enterprise Platform Group) and Saj Kumar (vice president of Digital Transformation and Internet of Things) as we guest on Bonnie D. Graham’s always-enjoyable Coffee Break With Game Changers, 11 AM EDT, 8 AM PDT (it will be archived at the site if you can’t listen live.

Bonnie likes us to start with a provocative (and relevant) quote, and mine will be from Jane Jacobs’ great Death and Life of American Cities:

Cities have the capability of providing something for everybody, only because,
and only when, they are created by everybody.”

… with the emphasis on everybody: I’ll explain that there really is an important role in smart cities for city government, the private sector, and — often ignored — grassroots innovators.

A critical key is the global Things Network, created by Wienke Gieseman and his Gang of Ten in Amsterdam,  who created a free LoRaWAN city-wide data network for $12,000 and in less than a month, and then went on to create a global network and a crowdsourced campaign to bring the cost of LoRaWAN hubs down to $200.

I like to think I was there at the beginning, working with Vivek Kundra, then the DC’s CTO (before his accomplishments there led Obama to name him the first US CIO). Vivek and Mayor Fenty took the bold move of releasing more than 40 major city data bases on a real-time basis, then held a contest to get smart developers to create new-fangled “apps” (remember, this was 2008!) to capitalize on them. Because the apps were open-source, they’ve been constantly copied and improved in the years since then.

And that’s only the beginning:

  • creative startups such as Alicia Asin’s Libelium, working with an enlightened city government, have made Barcelona a massive testlab for the Iot, and arguably THE smart city of the day
  • Columbus OH won the Obama Administration’s Smart City competition for its all-inclusive transportation scheme (and I do mean all-inclusive: who ever thought a better transportation network could be used to cut infant mortality???)
  • Smart Cities organizations have been formed in cities worldwide to share ideas — we’re all in this together!

And, of course, I’m going to bring the discussion down to earth by really getting down and dirty — yessiree, we’re gonna talk trash cans.

Be there or be square!

 

Live Blogging from SAP’s SCM CRM IoT 2016

I’m back in Sodom and Gomorrah in the desert, AKA Las Vegas, to speak at another SAP IoT conference: SCM CRM IoT 2016, and to live blog again!

Keynoters: Hans Thalbauer, sr. vp of extended supply chain solutions at SAP, and Dr. Volker G. Hildebrand, global vp or customer engagement & commerce for SAP Hybris:
Hildebrand:

  • theme: move beyond traditional CRM: look at entire customer journey
  • you have to meet customer expectations for convenience, relevance, reliability, and in real-time.
  • real lesson from Uber: customers upend markets, not companies; carry power of internet in their pocket; if you’re fighting alone, you have no chance of success;
  • when London cabbies went on strike, Uber membership went up 850% in 3 days.
  • “74% of execs. believe digital transformation is improving value for customers”
  • must thinking beyond CRM: 2 of 3 companies don’t think their CRM doesn’t support their future needs for customer engagement.
  • blend marketing & commerce.
  • personalization is key to digital commerce.
  • beyond service: customer served before, during & after buy; flawless field service. 53% abandon online purchase if they don’t be quick answers to questions.
  • why no app from cable provider allowing you to get assistance Uber-style? Instead, hold on phone.
  • One-to-one future is here.
  • Omnichannel selling
  • By 2020: 1 million fewer B2B sales reps (@Forrester)
  • EY: enabled collaboration with 15,000 client partners
  • “Engage your customers like never before:” commerce, marketing, service & sales.

Bob Porter, Pregis (protective packaging):

  • liked ease of use with Hybris (vs. Salesforce)

Thalbauer (digital transformation of supply chain):

  • end-consumer driven economy
  • very related to IoT
  • tech adoption accelerating
  • biz model transformation
  • instant notification if the equipment malfunctions
  • change of business transformation
  • disruption in every aspect of business:
    • customer-centric (demand sensing, omni-channel sales, same-day delivery)
    • individualized products (configured products, digitalized inventory, lot size of one)
    • resource scarcity (talent, sustainability, natural resources)
    • sharing economy (social networks, business networks, asset networks)
  • sweet: combo of 3-D printing at warehouse & Uber-based model for final delivery.
  • extended supply chain demo: sweet (literally): 3-D printing of chocolates at high-end stores! — wonderful example of IoT data-centric enterprise
  • SAP increasing pace of innovation
    • fastest-growing planning solution in history
    • only live logistics platform in the market
    • product innovation platform re-defined
    • demand-driven manufacturing
    • digital assets.

Next up: Sacha Westermann, Port of Hamburg, on how it uses IoT to streamline operations, improve efficiency & reduce accidents through “smartPORT”:

  • it’s very big (largest port in Germany), and very complex! Ships, rail (largest rail hub in Europe), trucking. 24/7.
  • big emphasis on environment: need to reduce emissions, improve sustainability.
  • can’t expand area, but must be able to handle more volume.
  • key factor is connectivity between all parties.
  • smartPORT includes energy & logistics.
  • smart maintenance: use mobile to call up SAP order & create messages, take photos. Example of malfunction with a drawbridge. Technician got new button from stock, installed it, customers didn’t even know there was a problem.
  • port monitor: digital map with all info to operate the harbor. Mobile version on iPad.
  • SmartSwitch for rail: sensors on the switches to measure conditions. Automated data flow to maintenance company.
  • dynamic info on traffic volumes: combines all real-time data on traffic. Detects available parking spaces. Created “PrePort Parking” as holding area for trucks that are early or late. Trucks park bumper-to-bumper for maximum efficiency.
  • special traffic lights: cycle changes based on real-time traffic flow. Warning messages if pedestrians cross.
  • smartROAD: smart sensing of the bridge-structural load — identifies interdependencies and to do predictive maintenance.
  • Take aways:
    • good application requires lot of data
    • must share data
    • data privacy critical for confidence
    • everyone gets just info they need
    • more participants, higher the benefit for each
    • open interfaces basic
    • application must be self-explanatory

Next up: me!, on 4 Essential Truths of IoT & how that translates into strategy.


 

Mike Lackey, IoT Extended Supply Chain, SAP explaining their IoT strategy & direction, with emphasis on “driving customer value”:

  • he’s using universe of 75 billion connected devices by 2022.
  • case study: STILL, the smart lift truck from Germany. Forklift sold as service, based on weight of materials carried. They will communicate among themselves, M2M.
  • “It is not about Things, it is about what the Things can do to radically transform business processes!”
  • oil & gas: reducing spills. They worked with the company that made the platform that failed in Deep Horizon — hadn’t been maintained in years.
  • Burbury: want to know exactly what you looked at, share the info among their stores. Creepy: invasion of privacy??
  • UnderArmour: why do you have to wear a band — build sensors right into clothes.
  • Hagleitner (I reported about them at last SAP event) provides supplies for corporate washrooms, etc. Paradigm shift: sensors let them know which dispensers need new materials. “big washroom data
  • applications: drive adoption with a few killer applications. Differentiate with “Thing to Outcome”
  • cloud: leading cloud experience for customers and partners at lowest TCO
  • platform: open big data platform. high-value services for SAP, customer & partner
  • Kaeser Compressors also made paradigm shift: no longer sell air compressors, but air — must guarantee it works constantly. Million data points per compressor daily. Differentiates them from competitors.
  • one tractor company now can recommend to farmers what they should plant based on data from sensors on the plows.
  • Asset Intelligence Network: great example of data sharing for mutual advantage. To be released soon.
  • Enables connected driving experience.
  • SAP IoT Starter Kit can get you started.

The Internet of Things Enables Precision Logistics (& Could Save Planet!)

A degree of precision in every aspect of the economy impossible before the IoT is one of my fav memes, in part because it should encourage companies that have held back from IoT strategies to get involved now (because they can realize immediate benefits in lower operating costs, greater efficiency, etc.), and because it brings with it so many ancillary benefits, such as reduced environmental impacts (remember: waste creation = inefficiency!).

       Zero Marginal Cost Society

Zero Marginal Cost       Society

I’m reminded of that while reading Jeremy Rifkin’s fascinating Zero Marginal Cost Economy which I got months ago for research in writing my own book proposal and didn’t get around to until recently.  I’d always heard he was something of an eccentric, but, IMHO, this one’s brilliant.  Rifkin’s thesis is that:

“The coming together of the Communications Internet with the fledgling Energy Internet and Logistics Internet in a seamless twenty-first-century intelligent infrastructure, “the Internet of Things (IoT),” is giving rise to a Third Industrial Revolution. The Internet of Things is already boosting productivity to the point where the marginal cost of producing many goods and services is nearly zero, making them practically free.”

Tip: when the marginal cost of producing things is nearly zero, you’re gonna need a new business model, so get this book!

At any rate, one of the three revolutions he mentioned was the “Logistics Internet.”

I’m a nut about logistics, especially as it relates to supply chain and distribution networks, which I see as crucial to the radically new “circular enterprise” rotating around a real-time IoT data hub. Just think how efficient your company could be if your suppliers — miles away rather than on the other side of the world, knew instantly via M2M data sharing, what you needed and when, and delivered it at precisely the right time, or if the SAP prototype vending machine notified the dispatcher, again on a M2M basis, so that delivery trucks were automatically re-routed to machine that was most likely  to run out first!

I wasn’t quite sure what Rifkin meant about a Logistics Internet until I read his reference to the work of Benoit Montreuil, “Coca-Cola Material Handling & Distribution Chair and Professor” at Georgia Tech, who, as Rifkin puts it, closes the loop nicely in terms of imagery:

“.. just as the digital world took up the superhighway metaphor, now the logistics industry ought to take up the open-architecture metaphor of distributed Internet communication to remodel global logistics.”

Montreuil elaborates on the analogy (and, incidentally, places this in the context of global sustainability, saying that the current logistics paradigm is unsustainable), and paraphrases my fav Einstein saying:

“The global logistics sustainability grand challenge cannot be addressed through the same lenses that created the situation. The current logististics paradigm must be replaced by a new paradigm enabling outside-the-box paradigm enabling meta-systemic creative thinking.”

wooo: meta-systemic creative thinking! Count me in!

Montreuil’s answer is a “physical Internet” for logistics, which he says is a necessity not only because of the environmental impacts of the current, inefficient system (such as 14% of all greenhouse gas emissions in France), but also its ridiculous costs, accounting for 10% of the US GDP according to a 2009 Department of Transportation report!  That kind of waste brings out my inner Scotsman!

Rifkin cites a variety of examples of the current system’s inefficiency based on Montreuil’s research:

  • trucks in the US are, on average, only 60% full, and globally the efficiency is only 10%!
  • in the US, they were empty 20% of miles driven
  • US business inventories were $1.6 trillion as of March, 2013 — so much for “just-in-time.”
  • time-sensitive products such as food, clothes and medical supplies are unsold because they can’t be delivered on time.

Montreuil’s “physical Internet” has striking parallels to the electronic one:

  • cargo (like packets) must be packaged in standardized module containers
  • like the internet, the cargo must be structured independently of the equipment, so it can be processed seamlessly through a wide range of networks, with smart tags and sensors for identification and sorting (one of the first examples of the IoT I wrote about was FedEx’s great SenseAware containers for high-value cargo!)

With the Logistics Internet, we’d move from the old point-to-point and hub-and-spoke systems to ones that are “distributed, multi-segment, intermodal.” A single, exhausted, over-worked (and more accident-prone) driver would be replaced by several. It’s a  little counter-intuitive, but Montreuil says that while it would take a driver 240 hours to get from Quebec to LA under the current system, instead 17 drivers in a distributed one would each drive about 3 hours, and the cargo would get there in only 60 hours.

Under the new system, the current fractionated, isolated warehouse and distribution mess would be replaced by a fully-integrated one involving all of the 535,000 facilities nationwide, cutting time and dramatically reducing environmental impacts and fuel consumption.

Most important for companies, and looping back to my precision meme, “Montreuil points out that an open supply network allows firms to reduce their lead time to near zero if their stock is distributed among some of the hundreds of distribution centers that are located near their final buyer market.” And, was we have more 3-D printing, the product might actually be printed out near the destination. How cool is that?

Trucking is such an emblematic aspect of the 20th-century economy, yet, as with the neat things that Union Pacific and other lines are doing with the 19th-century’s emblematic railroads, they can be transformed into a key part of the 21-st century “precision economy” (but only if we couple IoT technology with “IoT thinking.”

Now let’s pick up our iPads & head to the loading dock!


 

PS: I’ll be addressing this subject in one of my two speeches at the SCM2016 Conference later this month. Hope to see you there! 

 

FedEx package…

Digital Twins: the Ultimate in Internet of Things Real-Time Monitoring

Get ready for the age when every product will have a “digital twin” back at the manufacturer, a perfect copy of not just the product as it left the factory floor, but as it is functioning in the field right now. That will be yet another IoT game-changer in terms of my 4th IoT Essential Truth, “rethink products.”

Oh, and did I forget to mention that we’ll each have a personal body twin from birth, to improve our health?

For the first time we’ll really understand products, how they work, what’s needed to improve them, and even how they may be tweaked once they’re thousands of miles from the factory, to add new features, fix problems, and/or optimize efficiency.

Key to circular organizations

Even better, the twin can play a critical role in accomplishing my vision of new circular organizations (replacing obsolete hierarchies and linear processes), in which all relevant departments and functions (and even supply chain members, distribution networks and customers, where relevant) form a continuous circle with real-time IoT data as the hub).  Think of the twin as one of those manifestations of the real-time data to which all departments will have simultaneous access.

GE Digital Twin visualization

               GE Digital Twin visualization

I’ve often remarked how incredible it was that companies (especially manufacturers) were able to function as well as they did and produce products as functional as they were despite the inability to peek inside them and really understand their operations and/or problems. Bravo, industrial pioneers!

However, that’s no longer good enough, and that’s where digital twins come in.  In a WSJ blog post this week, General Electric’s William Ruh, my fav IoT visionary/pragmatist, talked about how the company, as part of its “Industrial Internet” transformation, is making digital twins a key tool:

“Every product out there will have one, and there will be an ability to connect a system, or systems of digital twins, easily. The digital twin is a model of an asset, a product such as a jet engine or a model of the blades in a jet engine. Sensors on those blades pull the data off and feed them into the digital twin. The digital twin is kept current with the data that is run off the sensors. It is in sync with the reality of the blade. Now we can ask what is the best time to change the blade, how the blade performs, options to get greater efficiency.”

Proof of the pudding?

Ruh says they’ve created a wind turbine and twin they call the “Digital Windfarm,” which generates 20% more electricity than a nearby conventional turbine.

PTC is also working on digital twins. According to the company’s Executive VP for Digital Twin, Mike Campbell,:  “It’s a model that uniquely represents a physical occurrence in the real world. This one-­to­one mapping is important. You create a relationship between the digital data and a unique product occurrence from a variety of sources: sensors, enterprise data on how it was made, what its configuration was, its geometry, how it is being used, and how it is being serviced.”

Predix

The key to digital twins is GE’s “Predix” predictive analytics software platform, which the company is extending across its entire product line. As always, the key is a constant stream of real-time data:

“weather, component messages, service reports, performance of similar models in GE’s fleets—a predictive model is built and the data collected is turned into actionable insights. This model can perform advanced planning, such as forecasting a ‘plan of the day’ for turbine operation, determining a highly efficient strategy to execute planned maintenance activities, and providing warnings about upcoming unplanned maintenance events, all of which ultimately generates more output and revenue for the customer.”

Digital doppelgängers

Here’s where the really sci-fi part kicks in: Ruh also predicts (Predix??, LOL) that GE’s medical division will soon create digital twins for you and me — at birth!

“I believe we will have a digital twin at birth, and it will take data off of the sensors everybody is running, and that digital twin will predict things for us about disease and cancer and other things. I believe we will end up with health care being the ultimate digital twin. Without it, I believe we will have data but with no outcome, or value.”

And, frankly, there’s also a spooky aspect to what GE’s doing, working with retailers to create psychographic models of customers based on their buying preferences. I’m dubious on that account: I do appreciate some suggestion about what might interest me, especially books, based on my past purchases. On the other hand, a couple of weeks I shopped for — but didn’t buy — biz cards online. Now, I get AdSense ads for these cards everywhere — even on this homepage (sorry for stuff that isn’t IoT, dear reader) Get over it, OK? Count me out when it get’s down to really granular psychographic profiles — too many risks with privacy and security.

I suspect digital twins will become a staple of the IoT, yielding critical real-time info on product status that will enable predictive maintenance and, as Ruh has written elsewhere, speeding the product upgrade process because, for the first time, designers will know exactly how the products are functioning in the field, as opposed to the total lack of information that used to be the norm. Stay tuned.

Internet of Things Can Pay Off for Small & Medium Businesses Too

Think again, if you’re a small and medium-sized business (SMB) that is holding back on Internet of Things projects until the price of software and components such as sensors came down and the technology is more robust!

INEX Advisors’ IoT Impact LABS, an accelerator program in New Bedford, MA brings together IoT startups, top technology and industrial suppliers such as Analog Devices, Dell, and PTC/ ThingWORX, plus legal and policy experts to use the IoT help innovative, sustainable small and medium-sized businesses in the region in fields such as “smart cities,” food and agriculture, water and maritime, and energy and transportation.

One is particularly noteworthy because it is bringing fishing into the 21st century.

Island Creek Oysters of Duxbury MA, was plagued by the need to do a five-step, paper-based food safety inspection reporting on variables such as water temperature and pH, that had to be recorded precisely during the two-hour window after low tide when it had to harvest the oysters.  It’s difficult to do both.

The Mass. Department of Fisheries Management brought together INEX and Island Creek to develop a real-time digital program to both monitor the oysters and do the data collection. Chris Rezendes, partner at Inex Advisors, said the department contacted IoT Impact Labs to figure out a digital traceability program for shellfish farmers in Massachusetts, which includes Island Creek’s farm in Duxbury Mass., just a half-hour south of Boston.

IoT Impact Labs put together a solution to enable monitoring of conditions in real time, wirelessly.

“There are just dozens of instrumentation opportunities. That means dozens of opportunities for sensors, and firmware, and connectivity, and analytics vendors,” Rezendes told CRN.

The project included replacing time-consuming human monitoring of more than 60 water pumps with wireless sensors.

The LABS will release more information about the other projects in coming months, and will host one of our Boston/New England IoT Meetups on February 29 in New Bedford (6 PM, 1213 Purchase Street), with speakers including:

  • Dave Wiley, PhD. NOAA, Research Director, Stellwagon National Marine Sanctuary. He has led the development and deployment of sensor buoys and marine mammal tracking, including supporting a recreational marine application based on his team’s work.
  • Dave Duquette, Founder and CEO, Littoral Power Systems which recently closed its Seed Round, including a prestigious ARPA-E grant. Their kinetic energy harvesting systems are breaking ground in tidal energy capture.
  • Brian Coffey, environmental sensing and instrumentation lead at Analog Devices.

 

Day 2, Live Blogging from SAP’s IoT2016 Internet of Things Event

I’m up first this morning, & hope to lift attendees’ vision of what can be achieved with the Internet of Things: sure, cool devices and greater efficiency are great, but there’s so much more: how about total transformation of businesses and the economy, to make them more creative, precise, and even environmentally sustainable?

I’ve just revised my 4 IoT Essential Truths, the heart of my presentation, bumping make privacy and security the highest priority from number 4 to number 1 because of the factors I cited last week. I’ll draw on my background in crisis management to explain to the engineers in attendance, who I’ve found have a problem with accepting fear because it isn’t fact-based, how losing public trust could kill the IoT Golden Goose.

I’ll go on to explain the three other Essential Truths:

  • Share Data (instead of hoarding it, as in the past)
  • Close the Loop (feed that data back so there are no loose ends, and devices become self-regulating
  • Rethink Products so they will contain sensors to feed back data about the products’ real-time status, and/or can now be marketed not as products that are simply sold, but services that both provide additional benefits to customers while also creating new revenue streams for the manufacturer.

I’ll stress that these aren’t just truisms, but really difficult paradigm shifts to accomplish. They’re worth it, however, because making these changes a reality will allow us to leave behind old hierarchical and linear organizational structures that made sense in an age of limited and hard-t0-share data. Instead, we can follow the lead of W.L. Gore and its cyclical “lattice management,” in which — for the first time — everyone can get the real-time data they need to do their jobs better and make better decisions. Equally important, everyone can share this data in real time, breaking down information silos and encouraging collaboration, both within a company and with its supply chain and distribution network — and even with customers.

Amen.


Back with Michael Lynch of SAP!

  • we can change the world and enhance our understanding greater than ever.
  • can help us solve global warming.
  • great case study on heavy truck predictive maintenance in GoldCorp Canadian gold mines.
  • IoT maturity curve:
  • Critical question: who are you in a connected future?  Can lead to re-imaginging your corporate role.
  • UnderArmour is now embedding monitors into clothing.
  • Tennant makes cleaning equipment. Big problem with lost machines, now can find them quickly.
  • Asset Intelligence Network — Facebook for heavy equipment — SAP will launch soon.
  • example of a tractor company that’s moving to a “solutions-based enterprise.” What is the smallest increment of what you do that you could charge customer. Like the turbine companies charging for thrust.

SAP strategy:

  • “Our solution strategy is to grow by IoT-enabling core industry, and providing next generation solutions for millions of human users, while expanding our platform market by adding devices.”
  • they have an amazing next-gen. digital platform. More data flow through there than Alibaba & Amazon!
  • CenterPoint Energy — correlating all sorts of data such as smart meter & weather. Better forecasting.
  • Doing a new home-based diabetes monitoring system with Roche.
  • Doing a lot of predictive maintenance.
  • Connected mining.
  • Building blocks:
    • Connect (SAP IoT Starter Kit)
    • Transform
    • Re-imagine

Ending the day with my presentation on first steps for companies to take in beginning an IoT strategy, with special emphasis on applying analytical tools such as HANA to your current operations, and building “precision operations” by giving everyone who needs it real-time data to improve their job performance and decision-making. Much of the presentation will focus on GE, with its “Brilliant Factories” initiative!

http://www.stephensonstrategies.com/">Stephenson blogs on Internet of Things Internet of Things strategy, breakthroughs and management