From Harbor Research on the Interconnectedness of All Things

Oct. 31, 2005
From a recent Harbor Research newsletter: Here is a brief summary of some key observations and viewpoints from our discussion: Increasing connectedness of owned and non-owned assets, combined with technology openness, is creating massive new opportunities in global business"”but also driving the need for new strategies and corporate cultures. All participants agreed that the future of their businesses will be shaped by connected devices. The opp...
From a recent Harbor Research newsletter: Here is a brief summary of some key observations and viewpoints from our discussion: Increasing connectedness of owned and non-owned assets, combined with technology openness, is creating massive new opportunities in global business"”but also driving the need for new strategies and corporate cultures. All participants agreed that the future of their businesses will be shaped by connected devices. The opportunity lies essentially in a new realm of services based upon ubiquitous device information. The deliberately simple, scaleable Internet (which, importantly, is not the same thing as the World Wide Web) is ultimately the proper way to network intelligent devices of all types on a global scale. Networked devices will ultimately live in a peer-to-peer (P2P) model of device interaction, not a client/server model. Every device is a full network citizen"”a "peer" in a vast, globally distributed computer whose networked nodes interact and share data with each other directly, without requiring hubs or appeals to any centralized authorities. Data security and privacy remain large concerns, but all participants felt confident that the push towards openness will move forward in spite of these challenges and that these hurdles will not hinder (or hold back) market acceptance. Rather, technical processes and cultural solutions will emerge to address these challenges. The creative use of formal partnerships, as well as strategic alliances, will result in a re-organization of the existing alliance networks. New kinds of partnerships will be formed, leading to dramatically different alliance networks than we see today. Increasing connectedness and openness means great opportunity but also great risk. Risks include the possibility of commoditization, the possible dilution of identity and leverage, and the possible loss of customer account control. It is vital to find ways to share risks and rewards as companies move toward greater asset-connectedness and openness. Some ways to share risk include joint ventures, joint-investing, and leveraging of infrastructure. Not surprisingly, the executives we were talking to indicated that their business concerns were more complex than their purely technological worries. In the existing culture of most enterprises, competitive advantage is usually perceived"”to one degree or another"”to lie in ownership, secrecy, and sometimes adversarial relationships with suppliers. It goes without saying that such a culture does not blend well with the notion of "openness." One participant summed it up this way: "Over the last several decades, the role of digital information technology in business has evolved from being first a luxury, then a mainstay, and finally what it is today"”nothing less than the core value in the evolution of business itself. We are presently undergoing an historic paradigm-shift from human-centric to device-centric use of global networking. The infosphere of digital data generated by connected devices will soon become the very air that business breathes. Enterprises that do not find ways to live in this global information-atmosphere, and to share it with partners and alliances, will simply not survive." A critical question we discussed in our forum: How do businesses become more open and connected, change their underlying concepts of "ownership," and yet remain distinct and profitable entities? Our discussion with these industry thought leaders suggests that an answer lies in the evolution of Open Source software. Less than a decade ago, Open Source was widely viewed as the province of hacker kooks who were somehow "against profit" and wanted to "give everything away." That was, of course, a gross misunderstanding. Early Open Source advocates simply understood that core digital technologies would quickly become as fundamental to life and business as electricity itself, and that monopoly-enforced standards would be as bad as the market-fragmentation that results from no standards. Today, Open Source has transformed the policies of the largest software companies in the world, and will continue to do so because it represents a fundamental evolutionary force. The Open Source concept caught on and evolved so rapidly in part because it had a great "demo""”the Internet itself. Every time you send email or visit a Web site, you are using open technology developed and maintained by a global collaboration of software designers and network engineers. Even though it was originally private and closed, developed with military funding, the Internet is now a decentralized and open network. The Internet and successive Open Source developments"”e.g., the Linux OS, the middleware engine PHP, the MySQL database manager"”have demonstrated that ownership of core enabling technologies is not a requirement for maintaining competitive advantage. In fact, seen in the proper light, forgoing ownership at the core level is a great liberation. Why? Because it's hard to maintain a profitable business trying to sell people core technologies. Those technologies"”the network itself, access to the network, operating systems, code languages, database managers, and so on "” quickly become part of the taken-for-granted fabric of reality, i.e., commodities with steadily declining profit. The real irony is that the dot-com mantra was both right and wrong. It was wrong partly because it didn't really mean what it said. "The Internet changes everything" contained a crucial misnomer. It referred not to the Internet itself, but rather to an application of the Internet called the World Wide Web. The Web changed many things, but hardly everything. The Internet itself, if newly understood, really could change everything, yet to this day, most people still use the terms "the Internet" and "the Web" interchangeably. That's a mistake because the Internet represents a design suitable for the indefinite future, while the Web does not. For years we have lived with the casual repetition of phrases like "the network is the computer," but the nature and behavior of a truly distributed global information system are concerns that have yet to take center stage"”not only in business communities, but in most technology communities, too. Pervasive computing means networking. This should go without saying. Yet the focus is usually on objects and gadgetry, while the techniques and implications of networking intelligent devices and assets (of whatever kind, and however simple) arise as an afterthought, if at all. "Pervasive computing" should automatically be understood as "networked pervasive information," but it often is not. In Harbor's view, "the network is the computer" is not a phrase alluding to some hypothetical future; it's a fundamental design principle upon which the entire pervasive opportunity should be based right now.

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