Is IoT a Bubble?
Empowers philosophy and approach to digitalization and digital based business development has and will be very humble, our feet steadily on the ground. Everything we do shall serve a purpose for our customers. We do not fall into the trap to use buzzwords such as AI, IoT, Machine Learning etc without clearly understanding how the concepts and technologies serves us and if they are usable at all.
Saying this does not mean we are not very active in the fore mentioned domain. On the contrary. We are systematically transforming the whole company to become a forerunner in developing and delivering modern digital based solutions (products and services) to our current customers (beyond digital twin solutions) as well as opening up new markets and industry segments. We will use our deep domain knowledge in several industry verticals and naturally explore the spin off innovations that will follow. This is our innovation dna.
As concrete evidence of the transformation is our recently published new group wide strategy and organization that clearly outlines the focus and strategic intent towards digital based business. The new strategy shall enable growth of current Empower services with the help of digital technologies (flow optimization, diminishing waste, using SW robotics, analytics etc) as well as creation of new services and products.
One thing that has troubled my mind for a long time is the “questionable” promise of huge business based on e.g IoT and digitalization. What I refer to is the multitude of articles outlining “billions of €” business in the domain. And yes it’s probably true that for technology vendors and providers this is the case. But from a value flow perspective there must be a source for the value creation. And this is not the technology vendors. It must be sustainable and new business based on new opportunities and value adding initiatives. How many concrete examples are there outlining these? I claim, not so many.
Empower is working closely with a high number of companies representing traditional industry segments. These guys are and should be very proud of their core and domain expertise. Building a digital offering to them must hence be a problem solving or value adding solution. No BS allowed!
So far what I have learned is that in order to create a positive margin and business for Empower based on these solutions a few “laws” applies.
- Insource with great care. By this I mean sometimes it’s smart to buy instead of making. But be careful with what is “core”, especially considering what will be your greatest innovation assets in the future.
- Identify and define the “layers” in the technology stack where you want to profile your offering, i.e where do you create value to your customer.
- If you need to buy IPR (not patents) it is unfortunately very likely that your business case will be destroyed. Unless you are really lucky and have found a business segment or opportunity with super good margins.
So what does all this mean?
The answer is very simple. I question the grand value of the so called IoT / digi based business opportunities if the solution requires or is based on a number of big players IPR (in the technology stack) e.g Amazon, Microsoft, IBM, Nokia, Ericsson etc.
The formula is simple: Their needs for margins minus the total value in the valuestream = very little left for the actual service provider facing the end customer!
In most cases the digital “cake” isn’t simply big enough to share for all those parties involved.
And this I reckon is the “IoT bubble”.
And last but not least my newest favorite slogan for Empower Digital:
We are big enough to deliver and small enough to care!
I have deliberately not used certain technology buzzwords like AI (Artificial Intelligence). Reason is that I’m totally fed up with how that term is being used currently, globally. For me true AI (technology) is not yet available for commercial applications. However, it seems that the current definition in the “street” for AI is: Any algorithm or function capable of taking in multiple data points and then process it can be called AI. Well, if this is the case then Empower has had AI built in (our advanced energy management systems) for roughly 20 years or so. And how about complex systems consisting of thousands of processors working together like mobile networks. I would rather prefer the definition where AI needs to be able to evolve the base algorithms by itself based on learning. Then AI would be interesting. 🙂
Empower Group CTO