Deloitte Debates

Asset Intelligence: A Tactical Tool or a Strategic Opportunity?

Whats the right way to approach new sources of information generated by an organizations assets? More and more companies are using signals and sensors to drive operational performance and shorten the cycle between information and day-to-day business decisions. Theyre also driving productivity improvements by squeezing costs out of many kinds of transactions. Is this just another technology fad or can organizations achieve higher-level strategic advantages by redefining assets as engines for intelligence? Heres the debate. Point Stay focused on tactical applications The jurys still out on asset intelligence The most you can expect from asset intelligence is a reduction of latency which is a significant benefit for driving productivity and quality improvements. Sounds like another IT dream? Dont we have to walk before we run? Counterpoint Productivity and quality improvements are great, but why not go beyond that and use asset intelligence to drive strategic innovation and competitive advantage?

That may be true, but you dont have to walk before you fly. Transforming your organization into a predictive and automated enterprise isnt about incremental improvements with sensors, its a whole new way of doing business. Early adopters are already making the shift using existing technologies. Thats the easy part. The hard part is making the mental shift of redefining assets and using them as strategic weapons in your drive for innovation.

The technology needed to upgrade from tactical applications to full asset intelligence is complicated and unproven.

Point Step up to strategy Labor arbitrage and traditional process improvements are important for reducing costs, but asset intelligence goes far beyond those levers to drive whole new ways of doing business. The demand economy is real, with old businesses now being displaced by demand-design companies. Asset intelligence is an essential capability for thriving in this new environment.

Counterpoint We have a proven and mature business model and innovation isnt our strong suit. Better to let pioneers work out the kinks. Besides, we dont even have a CTO.

The ability to capitalize on asset intelligence is essential for high performing companies

Thats nothing but business jargon. There has always been a demand economy. We develop a forecast and build the inventory. This is nothing new.

Early adopter advantages are significant and sustainable. Not only do you get cost and profitability benefits, you get real opportunities for business model transformation.

No advantage is ever sustainable. A fast follower strategy works well for our business. We can accelerate from there.

My take
Doug Standley, Principal, Deloitte Consulting LLP, Technology Innovation Service Line Leader Information today is flooding into organizations, presenting new opportunities to take faster, smarter actions using real-time signals that produce real-time alerts and real-time responses from real-time organizations. But until you create capabilities for asset intelligence, you wont be able to take advantage of those opportunities. Without asset intelligence, information can pile up into mountains that people decide whether or not to opt-in. In many cases, they simply cant manage or process the ever-increasing volumes. Assets dont add intelligence simply by creating more raw data. Intelligence hinges on interpretation and insight taking context and relationships into account. Its the signals that assets produce, not the sensors, which can drive value. When you establish trust in those signals, you can empower a fundamental shift that changes the customer value proposition, the competitive landscape and perhaps even your business model. Asset intelligence thrives on early signals woven together into systems that can anticipate and act. Instead of waiting for people to conduct physical inspections of a distribution center, asset intelligence taps into the things themselves that fill that facility, enabling machine-to-machine interactions that bypass human intervention. Some call this the predictive enterprise, but whatever you call it, the benefits are compelling. Being able to detect signals earlier and extract more value from them faster is a new front in the battle for customer intimacy and competitive advantage. Companies that sit and wait while others exploit the benefits of asset intelligence run the risk of getting left behind. To get a sense of where asset intelligence might apply in your business, focus on these eight questions: What is an asset? It need not be on the balance sheet or within a depreciation schedule. Which assets play a significant role in business processes youve targeted for improvement? What information would be valuable to extract from each asset? What signals do you already capture and how? What actions can each asset potentially undertake?
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 What are the critical interactions or relationships between assets? What improvements or innovations could occur with better visibility or automation? Where is the latency in your value chain? The analysis should be done across a companys operations from receiving dock to shipping dock to customer delivery, from shop floor to accounting to the CEOs office. Some scenarios will be obvious like the importance of understanding location, movement, temperature and contents of an item in transit. But others could be more subtle. Take your time to think through the possibilities. Explore the intangibles to the fullest. Once opportunities are identified, advancements in sensor hardware, networking and automated data capture can make the next step signal generation relatively easy. Building in the intelligence is where the complexity lies: That means allowing proprietary technologies to work together, defining the business rules and implementing workflow and security to allow trusted, automated decision-making. While many IT organizations have already begun investing in these disciplines, its important to fit asset intelligence into an overarching information strategy tied directly to the business strategy. If you approach asset intelligence focused on cost, infrastructure and sensors, the real potential will not likely be realized.

A view from the consumer products sector

David Rader, Executive Vice President, Frito-Lay (Retired) Any debate around the tactical versus strategic benefits of asset intelligence has to be framed within an organizations expectations for return on investment. Short term that means understanding the potential costs of the investment, as well as opportunities to generate quick returns from speeding up decisions, reducing down time and recognizing problems faster. These benefits should be distinguished from longer-term strategic advantages, such as the ability to see consumer shifts prior to demand changes, to provide insights into Lean Six Sigma analysis, or to enable management to dissect the business and costs at new and deeper levels. Many executives hope these strategic advantages will come from their enterprise information systems, a promise worth pursuing, but hard to realize. Asset Intelligence has the power to leverage enterprise technology, bringing the capabilities of business intelligence to bear in most decisions and areas of opportunity. A good Asset Intelligence system can give views of the business that allow both executive leadership and front-line management to make more effective choices. And while it wont alleviate the ever-increasing pressures for speed, Asset Intelligence does give leaders the ability to leverage speed with the strategic focus needed in todays business environment. Executives want more information and more analysis faster. Asset Intelligence is a smart way to do that. When it comes to adoption of new technologies, I have always been a believer in being early, but not first. Watch and learn from first movers, but dont wait so long that you have to play catch up. While you sort this out, prepare your assets and your organization for the inevitable. Make sure the technology you do develop supports an Asset Intelligence future. Think through which assets are critical to the business and be ready to move quickly when the time is right for your company and your team.

A view from the public sector

Peter Cuviello, Director, Deloitte Consulting LLP When it comes to government, defense and security, Asset Intelligence has determined to be highly strategic and will soon be indispensable. The only question is whether policy makers can refine our procurement processes and contracting requirements to align with the strategic vision most people in government intuitively understand. Today, most of the energy and angst around things in government involves design, development and production. Matters of sustainment things like inventory management, maintenance and supply chain integration are largely an afterthought. That has to change and some improvements are already underway.

Deloitte Debate

For example, a new aircraft has been designed with an autonomic logistics system on board. That means the plane has the ability to communicate its unique systems status requirements to central command without the need for human intervention. Machines talking to machines. Unfortunately, however, the back end systems to support those requirements arent nearly as advanced as the technology on the aircraft itself. To make matters even more challenging, the systems for different aircraft are independent and dont talk to one another. Whats needed is a strategic solution for managing all critical assets in our defense environment from weapons systems to maintenance personnel to spare parts integrated across a flexible, neutral integrated operating platform. Thats the holy grail, and until it happens, the benefits of Asset Intelligence in defense and security will likely be sub-optimized.

A view on global adoption

Glen Allmendinger, President of Harbor Research Virtually all products that use electricity from toys and coffee makers to cars and medical diagnostics possess inherent data-processing capability. These electronic and electro-mechanical products contain a potential wealth of information about their status, usage and performance. If a machine, a consumer product, or a building is not presently monitoring every detail that its creator might wish to extract, it can be modified to do so. With more and more microcontrollers and sensors embedded, everyday objects have the ability to create unique information signatures. Seen this way, a printed bar code, a DVD disc, a house key, or even the pages of a book can have the status of an information signature on a network. This is already the case for many products on the supermarket shelf, cars on a dealers lot, pallets on loading docks and more. In many cases, these information signatures are linked with their real world analogs by unique identifiers: an ISBN or ASIN, or a part number. Until recently, this kind of information has gone largely un-leveraged, even though it can offer extraordinary business advantage. As I see it, networked asset intelligence will bend the traditional linear value chain into a feedback loop through which the heartbeats of assets and devices will continually flow back through complex business alliances that create, distribute, service and use those objects. As it evolves, this infrastructure for living intelligence will cause organizations to re-think the whole relationship of people and assets to business systems. In a true asset-intelligent infrastructure, reliable and blindingly fast microprocessors do what they are very good at doing and what people are very bad at doing: digesting billions of data points, talking to each other about the data, controlling each other based upon the state of the data all in a matter of nanoseconds. Human beings cannot do this, nor should they; this incessant stream of ongoing business information should be invisible to people. At the same time, all this invisible machine activity makes information about a businesss assets, costs and liabilities vastly more visible to managers and to the decision-making process. Asset intelligence implies a total paradigm-shift in IT. The depth of this shift has begun to suggest itself, but it is by no means accomplished. Its a shift from knowing what happened to knowing what is happening and then automatically controlling systems with that knowledge. Obviously, this is not what IT is today. To accomplish genuine enterprise automation and asset intelligence, new technologies must create a living digital nervous system for business intelligence of all kinds. That means nothing less than turning the enterprise into a living information organism a self-aware, self-regulating, self-optimizing creature.

For further information, please visit: http://www.deloitte.com/us/debates/intelligencetooloropportunity.

Deloitte Debate

For further information about this debate, please contact: Doug Standley Principal Deloitte Consulting LLP Technology Innovation Service Line Leader dstandley@deloitte.com David Rader Executive Vice President Frito-Lay (Retired) Peter Cuviello Director Deloitte Consulting LLP pcuviello@deloitte.com

Glen Allmendinger President of Harbor Research

Related Insight: Signal Strength Deloitte Review article about the rise and promise of asset intelligence. Asset Intelligence: Wake-Up Your Value Chain On Your Terms Listen to the Dbriefs Webcast replay. Depth Percetion: Asset Intelligence Do you have depth perception? Get our take on Asset Intelligence, 1 of 12 technology trends shaping business and IT today. Technology Innovation: Top Down or Bottom Up? Explore the Debate.

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