What does the Internet Of Things mean for ERP and CRM?

Unless you’ve been as out of touch as the recently-found Beagle 2 Mars space probe, it’s hard to escape the buzz surrounding the ERP Internet of Things. Not so long ago, the Internet of Things meant nothing to most people—and now, the sense is dawning that it’s a genuine game-changer. Simply put, the Internet of Things extends Internet connectivity to devices, and not just desktop computers and smartphones. Billions of devices, anywhere.

Why would you want to do that? Certainly, the example scenarios being bandied about in a consumer context don’t always illustrate the power of the Internet of Things, it’s true.

Yes, it might be nice to remotely use your smartphone to turn up a thermostat in your living room. Or see what’s in your fridge. And doubtless, such consumer-centric applications will come. But for the time being, the real buzz surrounding the Internet of Things is in the world of business.

Why? Because the Internet of Things makes it easier than ever to serve customers, sell to customers, and better understand customer behaviour.

And that has important implications both for ERP, and CRM. So let’s take a look.

The Internet of Things: serving customers better.

In manufacturing, the concept of Vendor Managed Inventories underpins many lean initiatives. So to, of course, do kanbans—more recently, in the form of ‘electronic’ kanbans. And both concepts, of course, are commonly built into ERP systems.

The problem is getting the data, in order to trigger a replenishment.

Take Vendor Managed Inventories: these days, few staffing budgets permit the sort of ‘hands on’, people-intensive approach to Vendor Managed Inventories that was common in the 1980s and 1990s. Likewise, the best sort of electronic kanban is one that goes direct from the factory floor to the supplier—bypassing corporate procurement systems altogether.

Enter the Internet of Things. By coupling sensors and similar devices to the Internet, it’s very easy for re-order points and kanbans to be instantly transmitted to suppliers’ ERP and CRM systems. Efficiently, securely, and without human intervention.

Internet of Things: enabling new sales models.

Just as the Internet of Things has burst onto the scene, so too has the notion of ‘servitization’. Simply put, servitization is about providing customers with services, as well as products—and sometimes, instead of products.

During the last recession, for instance, many manufacturers of large pieces of equipment and expensive machine tools saw their order books dry up. Customers still wanted the manufacturing capabilities that those machine tools and pieces of equipment represented, of course. But they were unwilling—or unable—to commit to the upfront capital investment needed to purchase them.

Various rental and leasing models emerged. But that often meant financial intermediaries taking a slice of the pie. A better option would have been a ‘pay for use’ business model, just as—say—Rolls-Royce does with its aero engines.

The problem: getting reliable, accurate, and timely usage data, in order to bill the customer. Yet it’s a problem for which the Internet of Things provides a handy solution.

Simply put, the machinery and equipment in question simply ‘calls home’, via the Internet of Things, to report usage figures directly into the respective manufacturers’ ERP and CRM systems.

Internet of Things: better insights into customer behaviour.

How do customers actually use your products? How extensively do customers use them? When do they use them? And why do they use them? In an attempt to find the answers, it’s easy to spend a small fortune on marketing surveys and customer focus groups.

Enter—once again—the Internet of Things, which can provide just those insights.

Nor need concerns over privacy be a barrier. Intelligently packaged, such connectivity can be seen as a boon for both parties—supplier and customer.

Equipment at customer premises, for instance, can report back to ERP and CRM systems if consumables are running low, or if maintenance might be required. More extensive data can be linked to proactive maintenance or fault-finding programmes.

Radical? No more so than supermarkets sharing real-time Point Of Sale data with consumer goods manufacturers. Once regarded as heresy, it’s now routine.

The Internet of Things: a brave new world.

Of course, none of this will happen overnight. As with any disruptive new technology, adoption will be gradual at first, while businesses explore the art of the possible.

But forewarned is forearmed—and if the Internet of Things isn’t currently in your technology road map, then here at eBECS we’d certainly argue that it ought to be.

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Stephen Wilson is one of the founding directors at eBECS, focused on delivering business value through the effective use of Microsoft Business Solutions. @eBECS_S_Wilson  swilson@ebecs.com