The Divine Comedy of the IoT: from the POCs Hell to the Heaven of Digital Transformation

Recently I had the opportunity to attend a seminar organized by Gartner regarding an overview of the IoT Market, result of data and experiences gathered at global level.

The part that aroused most interest was the one that confirmed the common thought of all the IoT professionals: we are living the POCs Hell.

1. 80% of IoT projects today are POCs;
2. 80% of POCs do not translate into any substantial revenue generating work (maybe «yet»);
3. Often so diverse that learnings are not transferrable and therefore work is not scalable;
4. Free consulting for companies without the necessary wherewithal to implement properly

The last point reveals the target audience of the seminar: IoT solution providers.

However, personal experience leads me to think that he POCs' theme is experienced with a certain discomfort by the customer too.

Imagine for example an Industrial Plant Manager who sees his industrial plant transformed into a sort of playground where different suppliers enter and leave, each time with different technologies and ideas that they want to apply to "his" industrial machines ...

As always I like to do, let's start from the basics, sharing a common glossary.

Definition of a Proof of Concept (POC)

Evidence that demonstrates that a business model or idea is feasible (InvestorWorld)

I like this so concise definition because it allows us to make a functional drill down to the articulation of our thinking.

We break the sentence as follows:

1. POC as an evidence that demonstrates that a business model is feasible;
2. POC as an evidence that demonstrates that an idea is feasible;

Let's start our reasoning from the first sentence.

POC as an evidence that demonstrates that a business model is feasible

One of the biggest expectations that customers place in the IoT are those of improving their productivity or creating new business models that can help them make money. This expectation reveals the most classic decision-making leverage: the economic one.

The question we have to ask ourselves is whether, in the specific case of the IoT, the POCs really serve to validate a potential new business model or to evaluate the ROI with respect to a process, service or product innovation.

An organization considering the adoption of IoT, should be able to assess whether the availability of new informations, better integration between processes and "devices" could lead to a business improvement, starting an innovation program that is far more complex than a sequence of POCs. POCs should be done only at the end of a well-structured feasibility plan.

If we remember the era of ERP advent and diffusion (more than 60% of the Fortune 1000 companies have installed or are in the process of implementing packaged ERP systems to support their back-end business activities (Kraft, 2001)), we hardly can remember POCs conducted in that case. Companies took the time to understand the benefits of introducing ERP, began to study, asked system integrators demos of their products, collected references on their specific market, drew up "short lists", and when project started they started with "blueprints". The ERP adoption was indeed a long and difficult journey, but there were no POCs. ( that times it was simply too complicated to set up the environment for a POC ... ). Today, ERP is being adopted also by smaller companies, and it is not a coincidence that,unfortunately, we are talking about POCs also for ERP systems too...

So why does the IoT market for large enterprises, feel the need for POCs?

So we arrive at the second sentence

POC as an evidence that demonstrates that an idea is feasible

Probably the maker culture has a great responsibility in this. The maker culture has been and is fantastic, inspiring, has created a cultural humus that has helped the big companies to be leaner in their approach to innovation. However it is not applicable to the industrial domain. The maker culture has created a new mindset, but it is not enough to drive the IoT exploit.

To clarify my concept, I ask few questions:

Do manufacturing companies that are used with technologies much more complex and often advanced than those that are applied by system integrators during the POC IoT, do they really need these simple integration exercises?

Do we really hope to wow our potential customer when we demonstrate the ability to extract some data from production lines and display them in near real time from the other side of the world?

A button that is pressed in Rome and turns on a light in Palo Alto sending a tweet to notify the event ... is it really so amazing today?

What I always say during my speech, is that if a private, Elon Musk, succeeded in sending a rocket into space, (and YES! he wowed the whole world ) , we can absolutely agree that these kind of IoT experiments are feasible. Full stop.

So why, especially IT managers, are so interested in seeing such POCs applied in their plants?

Surely there is some confusion between POC, demo and trial ... and this statement brings us back to the system integrator's point of view, and to spot who is the culprit of the POCs Hell...

The real guilty is the ”seller” of the IoT, not the customer

The IoT market is still an immature market, no doubts, because it is over-populated in terms of:

• IoT Platforms (more than 700!)

On the contrary, here follows what is still missing:

• Models
• Algorithms

Unfortunately, the missing ones are what the customers are actually interested in.

Moreover, system integrators see in the IoT a huge market opportunity, something very close in terms of confidence of easy success to a new year 2K (who does not regret the Millennium Bug?), and therefore they struggle to sell IoT integration projects. At all costs.

However, their proposal is very poor and can be summarized as follows:

We are gold partner of the IoT Platform X (or we have made our own IoT Platform!). How about integrating all your processes, your production lines, your devices and collecting all your data in a single IoT platform? This way we will discover hidden patterns, deliver new models and algorithms, thanks to Machine Learning and AI...this will allow you to improve your business! (maybe)

Facing a market where there are thousands of device manufacturers and over 700 IoT Platforms (it is an absolutely clear indicators of a market that is not yet mature), how could our potential customers be able to make the right choice?

And above all, what does it mean to make a right choice?

One truth is that surely a confusion has been created in the minds of our potential customers.

We have led them to confuse ends and means by diverting their attention from their real goal: the digital transformation.

And they now are taking their revenge by letting us enter the POCs Hell! (😉)

A more balanced vision of the IoT

In all my presentations about IoT, there is always a phrase inspired by a saying of the Buddha (please forgive me…).

IoT Platforms are just fingers pointing at the IoT. Do not look at them, look at the IoT!

Likewise, the IoT is "only" a wonderful opportunity to enable Digital Transformation, but it is not the Digital Transformation itself.

Digital Transformation is a very complex process that impacts the whole organization. Digital Transformation is the greatest exercise of innovation that future-proof companies today are called to do.

Applying the Venn Diagram to the topic of Innovation, we are aware of the complexity of this process ictu oculi:

The first takeaway is therefore that the IoT cannot be sold as Digital Transformation itself, the IoT (mean) enables the Digital Transformation (end)

Now we are ready to come back to the topic of this article, the reason why we all live the POCs Hell.

The top three reasons are:

1. POCs are often proposed, or requested, when the target organization has not started a real Digital transformation process;
2. The POCs are proposed by the vendors as a substitute for demos or trials that are the true need of the customer: it happens because many who propose IoT do not have a clear positioning or an effective business proposal that fit the customers’ expectations and needs;
3. The POCs are conducted as an excessive simplification of a true innovation process, without at least being reinforced by a preliminary feasibility study that has collected the C-levels approval (this means actual budget -> actual customer commitment - actual willingness to sponsor an IoT project)

The Divine Comedy of the IoT

I am very confident that the customers themselves will pull us out of the POCs Hell.

They know their business and often know exactly what needs to be improved. That's why they expect from us tools, technologies and competences to help them in their digital transformation.

They want to have full control and ownerships of this very delicate phase and perceive the risk and treats of the vendor lock-in, hidden behind the choice of an IoT Platform done without having a clear vision of the expected results of their digital transformation process.

And soon, very soon, they will be aware of what they really want: they want to create an IoT Domain populated by the Digital Twins of their assets.

The first breed of Digital Twins will arise soon as the inhabitants of the IoT Domain. When we will be able to enrich the Digital Twins with innovative models and algorithms, we will give birth to the second generation of Digital Twins.

This is a little preview of the next article on the concept of Digital Twin and IoT Domain ... for the moment I greet you this way:

Hey folks, we are just leaving the POCs Hell and entering the" Purgatory of Demos and Trials!

Considerate la vostra semenza: fatti non foste a viver come bruti ma per seguir virtute e canoscenza (cit. Dante)

Extraordinary Dante, wonderful Divine Comedy!