The future is in IoT, but why are Indian CIOs still waiting in the wings?

Indian corporates are still content with legacy IT over cloud infrastructure, making IoT the last thing on their mind to change business processes.

Key takeaways:

• Indians create IoT software for the globe but are slow in adopting it within the country
• Legacy architecture holds back Indian companies from providing real-time user data analytics
• CIOs are slowly waking up to the advantages of IoT and having their operations on the cloud, which promotes more ownership and accountability.

For those who remember the seminal 1973 science-fiction movie Westworld, where robots provided the entertainment to user, that future is not far away in India. The name of the game is artificial intelligence (AI) on Internet of Things (IoT), and one is convinced that the future is here.

The portents of a better life were showcased in Delhi at the Future Connected conclave where Bosch Ltd’s sensors powered cars to understand lunch preferences and kitchen grills to remind the user of cooking pot roast for Father’s Day.

The CIOs and CTOs from consumer industries were in a dilemma, whether to overhaul their IT infrastructure and invest in sensors that would redefine their approach towards business. They want to invest slowly on the real-time platforms that IOT can offer and very few are taking the early punch.

“The question is, 'will the customer pay for such real-time services, and how will we monetise such a service',” asks Anil Shankar, VP-Solutions and Technology in Shoppers Stop, who adds that they are investing in understanding the consumer on a real-time basis today.

For those who do not know what legacy IT means, the whole technology stack of RAM, disk, networks, and storage were an integral part of corporate building. The cloud redefines everything and removes the need for commodity hardware to store data. Today, virtual machines can be generated at an instance to provide for IOT devices, and data can be crunched through cloud networks.

But although we create the software, we in India are slow in the enterprise space.

On the other hand, according to research company Zinnov, the top five global technology companies have collectively spent over $20 billion in acquiring AI companies and have employed over 30,000 engineers working on AI platforms and applications.

“Google calls itself an AI-first company these days,” says Praveen Bhadada, partner and Global Head, Digital Transformation at Zinnov.

Microsoft recently created a group with 5,000 engineers who are going to work solely on AI products. Baidu recently made a $500-million investment in a 200-member AI R&D lab in Silicon Valley. Toyota has invested a similar amount in developing its own driver-less technology. “There will be tremendous opportunities for IT services companies to align with their customers’ focus around AI,” says Praveen.

Why CIOs need to invest in IOT

While corporates are able to capture the data shared by millennials on the go, the legacy architecture holds them back from performing real-time analytics and providing services. Even Amazon in India does not give you real-time location-specific offers.

Even apps like Runtastic only work when medical insurance companies use this data to understand the consumer’s fitness and health to generate customised policies. Data generated out of CarPlay and Android Auto work very well when retail destinations and entertainment providers throw in deals while the consumer is driving.

In India, we have our own IoT services companies or startups like GoQii, Trak N Tell, Cardiac Design Labs, and Forus using the cloud and sensor data to benefit consumers.

With billions of sensor data expected to be captured over the next decade, the incumbent ecosystem has to rethink its entire IT infrastructure before it embraces the world of IOT. Today, companies that are using software and sensors, like Bosch and Continental, are telling the world that consumers can be connected to a corporate on a real-time basis with meaningful services delivered over the cloud because of the capture of information at the source, at home or in the manufacturing plant.

Now here lies the problem. Moving to a zero-hardware office is not easy, because an organisation with 500 plus people invests considerable amount of money, running into crores, on legacy applications and hardware to maintain data internally. Traditional data, such as all enterprise data, and even consumer and trade data still sit on legacy applications.

“From this context, IT itself has to align with IOT, and that requires a mind set change in the future of any enterprise,” says Vijay Ratnaparkhe, MD of RBEI.

Before the implementation of IOT, an organisation’s IT infrastructure must be ready for the cloud and personalisation of shopping experience for the customer.

Flipkart was perhaps the only consumer internet company in India that built everything in house. It has more than 1,000 engineers which worked on modern horizontally scalable-versions of ERP from scratch. All this was made on their private cloud. However, only recently did Flipkart ink a partnership with Microsoft to operate on a public cloud platform. This deal comes after a decade of the e-commerce company being in operations.

Shoppers Stop is collecting data over the cloud on a dynamic basis as part of a pilot.

Mahindra & Mahindra is making efforts to geo-locate its cars and offer car owners recommended retail services and food and beverage outlets by working with analytics companies. The MySpin app for Mahindra car owners will be able to use such a service by next year. But the company does not give a timeline for this IoT-based service. The phone will receive the position of the car and make recommendations that can also be mirrored on the telematics unit of the car.

Mahindra's has made inroads in agriculture with Bosch Ltd, where 5,000 tractors equipped with intuitive software are being tracked on a real-time basis depending on their usage by farmers.

This predictive and prescriptive platform collects massive amounts of data and can extrapolate failures, thus changing the business models for dealer with accountability in terms of service. The OEM also gets to track their consumers too. “Today, we have platforms that have already ushered industry 4.0. Organisations should embrace IOT and business models will need to be studied with changing consumption habits,” says Soumitra Bhattacharya, MD of Bosch.

But, here is why IOT needs complete new infrastructure from the enterprise’s standpoint.

IOT will make CIOs rethink business models

All services are going to the cloud globally. At the IOT conclave in Delhi, the entire theme was structured around home, agriculture, the car, the city, shopping, and the environment where one could see sensors powered in the cloud, and take massive amounts of data to be analysed on the go and presented on common dashboards.

The businesses will be co-creative and services will be provided by appliance manufacturers, car companies, retailers and the government, in partnerships with telecom companies. Here is where the CTO or CIO is going to have a dilemma over the cloud.

“They are all victims of the sale by several product companies. A CIO is confused by so many sales pitches that several times the organisation is confused over what works best for them,” says a source in the industry, adding the implementation of technology, in the end, decides whether the business objectives are met.

There will be many enterprise application companies pitching their software and then there will be commoditised hardware companies that will also be trying to get a piece of the public cloud business.

From the operating system to the infrastructure layer, sales takes precedence over the implementation of software products and sensors that can generate data by capturing human machine interaction. In reality, we are a long way from IoT being implemented in a desired manner.

Yes, we may have the grille at home talking to the consumer, or the car may make recommendations on the road. Robots may talk to each other on one shop floor and help a consumer. The CIO will have to figure out by himself a standard for managing IOT, or individual entrepreneurs must figure out how they will use IOT data generated between enterprises and consumers.

“It is a multi-platform world that we have to get used to,” says V C Gopalaratnam CIO- International at Cisco. He adds that going forward, if IOT is implemented with business objectives in mind, there will be transparency and accountability, with data being used to understand the context.

“Today, edge analytics is possible thanks to retail companies sharing CRM data, which is used to understand consumers. Analytics has moved to the cloud,” says Satyam Darmora, founder of i2e1.

The real problem, though, is predicting at what stage IoT could become a main stay in Indian organisations. In the US and Europe, these sensors are gaining traction because services are built on top of the investments made on legacy. GE tracks all its jet engines on a real time basis. General Motors tracks all its customers with OnStar and offers services to customer. Tesla is already making its cars learn with every drive.

Machine learning and AI are a major part of IoT, but Indian corporates are still inconsistent with their commitment to it. “Looking at proven innovation in a very cost-centric model does not help startups,” says Mohandas Pai, Founder of Aarin Capital, adding that corporates today must work directly with startups that are innovating and give them long-term contracts.

In India, investments have just started coming in to this industry. Gartner says 8.4 billion people will be connected across the world in 2017, but there has not been a single announcement of a large-scale IOT partnership in the country with a corporate. It is time large corporates push towards meaningful partnerships where consumers can be served on a real-time basis.