Road Ahead for 2012


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Several factors will affect innovation in the manufacturing industry across processes, product development, outsourcing engagements and even IT services. Among these factors are digital consumers in the automotive industry; and decision-making using Business Intelligence (BI). This list is in no way complete. But it certainly is a good starting point to explore further.

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Road Ahead for 2012

  1. 1. View Point Road Ahead for 2012 Trends and Idea factories from the Manufacturing industry - Arindam Banerji Abstract Key trends are reshaping how a user thinks of products and services for the Manufacturing industry. Innovations in the auto industry, the next generation of revolutionary products, product pricing, decision-making- are all reaching significant inflection points. In turn, this will drive further innovation in how Manufacturers improve their processes, product development, product and services outsourcing and even IT services deployment. While some inflection points of past years have become main-stream, such as Mobility, Cloud and Digital Marketing techniques – others are still in an early stage in the adoption cycle. Below, are some of the trends in innovation that are changing the manufacturing landscape. The pointers that follow delve into some of the specific innovation themes that the Manufacturing unit at Infosys is beginning to take to its customers.
  2. 2. The science of Business Intelligence (BI) has For example, in recent discussions, a particular OEM wanted to move 20% of their suppliers from a USD 50 Million resiliencychanged – democratization of BI is on us bracket to a sub USD 30 Million resiliency bracket; thus reshapingBI used to be just for analysis and some amount of technical their costs in the case of an unpredicted disruption. Severaldecision support – but, as several people have pointed out, technologies are shaping this possibility – data consolidationexecutives now want BI tools to make (or help make) the decisions from unstructured sources, to industry and geography specific riskthat they used gut-feel for. Executives need BI to help them predict prediction models that are being put in place.the future, as opposed to just analyze the past – gut feel decisions Manufacturers are also looking at organizational and processsimply are not effective in market conditions of great volatility. This changes to transform how they handle various risk the largest catalyst for business analytics. Most importantly, at least some are re-considering theirFor example, a sales VP may want to see the best way to reduce procurement models and product designs.the gap between the product list price and pocket price, without But, this is not the only sea shift affecting supply chains. Evenaffecting cash-flow. This is not just a simple analysis of past data, optimization and the way service is provided is also changing. Mostbut involves consolidating fragmented data models, predicting manufacturers realize that their service revenues can be enhanced,through multiple scenarios and strategies – thus, shaping not only however controlling and managing their customer satisfactionproduct pricing strategy, but also how the product is sold and built. levels while minimizing unnecessary repairs is still difficult to do.A somewhat different trend is the consumerizations of BI - Larger companies find that third-party service vendors often candepending upon who you ask, only about 5% to at most 20% provide dedicated and optimal service at cost-points with greaterof the people for whom BI tools are meant for, actually do use agility than they can, thus losing service dollars in the process.them. The resulting fix, is through technologies like self-service BI, Thus, innovations in service lifecycle management are slowlydecision making on your favorite hand-held and vastly improved coming to the fore, over and above simple asset management.visualization. Larger numbers of people are beginning to look atoptimizing production schedules, mapping Engineering ChangeNotice (ECN) schedules to expected cash flow or fine-tuning Trust the Cloud – but, Cyber Warfare is hereoptimal SLA management. The result is better run manufacturing to staybusinesses. The tipping point in cloud business growth is Trust - it decides howFinally, most people realize the potential of using large amounts of far companies are willing to go beyond data center consolidationdata in better forms to reach better and more informed decisions and simple e-mail on the cloud. Trust in the cloud – especially– thus Big Data (including Hadoop, Pregel), seamless use of public clouds is expected to increase in 2012-2013, to cause a rushunstructured data have become key technologies that enterprises of tier-1 application movement to cloud environments. Salesforce’shave begun to use. However, there are key problems that need to success is a testament to this trend. However, this current lack ofbe solved – companies run into issues such as “which data do you trust cannot be seen in isolation – other factors affect it.put into Hadoop and which do you put into traditional BI tools”, Cybercrime and cyber attacks have become a business and in“how do you map these newer technologies to solve the specific some cases a national priority. Hacking has moved to well-fundeddecision making issues of YOUR enterprise,” “how do you train consistent threats .Deploying select products is not good enoughyour ETL and OLAP folks to deal with distributed graph theory.” when RSA can get hacked into and trade secrets stolen. This isThe essence is that the science of BI has changed and so has its understandable, since according to Ponemon institute’s report, thecapability. average organizational cost of each data breach was around USD 7.2 Million (in 2010). 6-% of the respondents in the same reportNo longer your traditional Supply Chain had 2 or more documented break-ins in the last 12 months. No surprises, then that end-to-end cyber protection is a key growth area, often not publicized. “Supply chain disruption can cost 10% drop in stock price and takes two years or more for companies to But, the problem has become worse, with cyber warfare and well fully recover from disruption.” funded attempts at break-ins. Kevin Hendricks, Vinod Singhal At least 48 chemical and defense companies were victims 1aThanks to the impact on one of the largest auto companies in the of a co-ordinated cyber attack that has been traced to aworld, due to the recent earthquake or take the instance of the man in China according to a new report by a large well-crunch on clothing manufacturers, due to the turmoil in Egypt, known security firm, Symantec Corp.1amost manufacturers of any significant size are waking up to theneed for a deeper transformation of their risk profiles.2 | Infosys – View Point
  3. 3. Stuxnet like sophisticated technologies are well understood Collaboration – truly immersivenow, and some security experts expect blowback from copycatswho replicate such technologies to attacking other nations, by Online collaboration technologies like web2.0 and socialdamaging digital controllers for example. The number of cyber- media have existed for a while – while facebook like enterpriseswarfare attacks has increased significantly, so the question is how have reaped the benefits, enterprises have struggled to reachenterprises protect themselves from it. measurable commercial benefits. There’s a whole new kind of collaboration coming into play, which is changing how we runCompanies like Narus provide the next generation of cyber- operations, design our products and interact with our through technologies such as deep analytics, well beyondmonitoring and hardening. However, most manufacturers should The shift is to move beyond blogs and wikis into 2 differentexpect to spend significant amounts in protecting their operations, directions.not just their data. Innovations in this area are just beginning. a) Immersive seamless environments, move beyond online collaboration to physical collaboration. These environments create a same room effect through the use of technologiesThe Steve Jobs Effect such as telepresence and remote control. The coreThe effect of Apple’s product design and approach has been technologies have existed for a few years now and tele-healthpermeating through multiple industries. The introduction of and remote operations of machines have become possible.revolutionary products that marry different hitherto fragmented Now immersive technologies are being applied to a broadertechnologies into a cohesive whole not only open up new markets, set of processes within an enterprise, such collaborative testbut also new problems of service, support, supply chains and environments for global quality teams. Customer servicemanufacturing. A few interesting examples are given here: and incident management is also beginning to change, as enterprises look at immersive technologies to improve efficiencies. 1 Former Apple exec markets a thermostat for the b) Functional applications that depend upon collaboration iPhone generation – the Nest thermostat is designed to are rapidly moving beyond CRM. Social-CRM is already learn homeowner’s schedules and surroundings and quite developed, but in areas such as global design and keep them comfortable, while saving them money and engineering, tools specific to such tasks are improving energy bills1 efficiencies of global design teams and increasing capabilities. The presence of collaborative platforms, 2 Lytro is developing a new type of camera that such as Microsoft’s Sharepoint or Salesforce’s Chatter dramatically changes photography for the first time is facilitating the development of vertical specific since the 1800s. Rather than just capturing one plane of collaborative applications much easier – examples include, light, it captures the entire light field around a picture, the use of collaboration to improve buying efficiencies for all in one shot taken on a single device. A light field procurement departments. includes every beam of light in every direction at every point in time. Experimentation in this field started in the The Food and Farming Revolution mid-1990s at Stanford with 100 cameras in one room. Lytro’s innovation is making it small enough to fit in • 1 billion people worldwide struggle to afford food, according your pocket.2 to a large international survey conducted in 201176 million illnesses are caused by food contamination every year in the United States 3 Emotiv System’s only current product is the Emotiv EPOC, • Food Riots in Jordan, Algeria, Egypt, Haiti, Yemen, Tunisia – a USD 300 peripheral for gaming on Windows PCs… Source: Media publications quoted around 2011 Global Food Emotiv Systems claims the headset will make it possible Crisis Response Program (GFRP) has approved USD1,238.2 for games to be controlled and influenced by the player’s million in 35 countries as of 09 September 2010- Source: GFRP mind, and facial expressions)3 response list , 2010 • China may be compelled to tap some of their USD 2.85 trillion inInnovations in these products opens up doors for similar products foreign exchange reserves to import wheat to feed their hungryin related sub-verticals, and also the customer expectations people - Source: The Huffington Post, 2011have changed. More importantly, as companies design the next Farming equipment can remotely manage and can accessgeneration of products, the bar has been set much higher. historical data to decide optimal geography specific soil additives or help seed planting distances are here. Smart plants that can3 | Infosys – View Point
  4. 4. be managed for diseases based on the last 50 years of historical patterns will forever change shopping – for example, it coulddata are also here. Every manufacturer in the ecosystem of agri- dramatically increase impulse buying. How would paymentproducts – from equipment makers to farm franchisees to seed gateways change to accommodate this?manufacturers is gearing up to meet this critical transformation. b. Stripe is a new, full-stack payment processor that helpsFood safety norms and regulations are fast changing in many developers add credit card processing to a website verycountries, thanks to disease outbreaks and resulting deaths. quickly and without worrying about most Payment CardProducts already exist that allow a buyer to trace the farm to fork Industry (PCI) requirements. Launched just a few monthspath of super-market produce. Store-houses, processing plants, ago, Stripe could be the most important new ecommerce-sensor systems and our own hand-helds are driving this change related start-up since PayPal. 4ain how we buy, sell, process, and store food; thus, affecting many c. Behavioral Pricing - According to The Daily Mail, Alexdiscrete manufacturers, and not just agri-companies. Gannett, founder of CampusSplash, says this will be “the year of behavioral pricing.” That means companies could startE-commerce on your phone – and other using Twitter and Facebook to analyze how people would be willing to pay for their product, sort of like customizedchanges that are reshaping e-commerce Internet cookies. In other words, you could inadvertently raise the price of something by ‘liking’ it on Facebook.5 There are 92 Million smartphones in the US and 90% of the owners, use them on a regular basis – in fact, smartphones Chris Simpson, Chief Marketing Officer at price comparison have become our true sidekicks. Many younger buyers do website Kelkoo, warns that it could have even darker most of their shopping, including ordering dinner from implications, like different price adjustments for different their smartphones, so it’s not a surprise that e-commerce people. He explains, “There are many pricing policies already especially directed towards mobile use models, is the bulls used by retailers that most consumers are completely eye for much of innovation now-a-days. unaware of. These include things like regional pricing variations in the same stores across the country, not to mention retailers using different pricing structures for theBelow, I have simply listed three trends that are changing our same products in stores and online.”e-commerce use in different ways – from pricing to how we actuallybuy things. a. NFC is here – a leading business research and consulting firm thinks that in 2 years, the transactions carried through NFC in the US will be USD 150 Billion. Such simplicity in buyingWhere have our laptops gone ?Walt Mossberg reported immediately after the ipad-4G launch, that the most amazing piece of data announced at the launch was thecomparison ofipad ships for last quarter, with PC shipments from other major companies. Apple shipped 15.4 Million iPads, while HP shipped15.1 Million PCs, Lenovo 13 Million, Dell 11.9 Million and Acer 9.8 Million and so on and one has not even seen the beginning of Windows 8tablets yet – so, the writing on the wall is clear. But, how does it affect manufacturers?Simply put, a couple of changes are to be expected. First, our employees will interact through different technologies introducing newapplications, new models of deployment of IT services. Next, the confluence of audio, video, Big Data, Cloud, Mobility, LTE communicationand billing in our tablets allows our sales folks to interact with their customers in entirely different ways – changing how manufacturers reachcustomers and tell their product storyboards.4 | Infosys – View Point
  5. 5. Auto Industry- the driving experience has b) Safety and driver assistance – As government safety mandates for automobiles increase, advanced driver assistchanged systems (ADAS) are beginning to grow rapidly. For some data: Over the last year or more, there has been a remarkable resurgence of the auto industry. Hence, its no surprise, 8 Revenue in 2011 from the three major ADAS technologies of that Intel Capital just announced the USD 100 Million adaptive cruise control (ACC), lane departure warning (LDW) Connected Car Investment Fund, to “accelerate innovation and side object detection (SOD) collectively will reach USD and adoption of new technologies and services in the 1.65 billion, up a ro¬bust 57 percent from USD 1.05 billion in automotive industry”. Bill Ford recently remarked on 2010. Growth will be even stronger next year at 63 percent, the need for connected car technologies to overcome with combined revenue from the three sectors climbing to “crippling congestion” as the number of cars on global USD 2.69 billion. By 2015, the ADAS market from the three roads grow by a factor of 4 over the next few decades. systems (ONLY) will be worth USD 6.21 billion.8 according to the automotive research wing of a Automotive research firm’s information and analysis provider a) 6Autonomous technologies – The potential for avoiding c) Cloud and app-stores – 4 Toyota announced that it would crashes, improving roadway and parking capacity and start rolling out its next generation telematics service for overcoming driver distraction, has made Nevada and now emerging markets starting with Thailand in March 2012. California consider legislation to legalize such vehicles. But, The platform would be based on a global cloud platform some adoption of these technologies is already under way.6 built in collaboration with Microsoft..4 [But, the role model Autonomous vehicles may well represent the new wave setup by Apple’s app store for the back-end support needed of driving in the future, but the market for vehicle sensors by telematics services has been mentioned before. Several offering such engineering marvels is already available today companies seem to be headed in the direction of rolling and will keep expanding by leaps and bounds during the out service-app-stores specifically designed for telematics next few years, according to the automotive research wing services. of a Automotive research firm’s information and analysis d) The importance of analytics: Predictive analytics in the field of provider. auto insurance is already opening up models of pay-as-you- 7 Park-assist cameras and lane departure warning cameras, go and close monitoring of driver behavior to model future just two of the sensors that will figure in autonomous warranty pricing schemes. Fleet and asset management driving applications are expected to post significant growth have already seen analytics being used for fuel optimization every year for the next five years. Shipments in 2012 of such and even diagnostics. We expect that autonomous cars sensors will reach 3.4 million units, double the 1.7 million and ADAS technologies will become more prevalent, and units of last year, on their way to some 18.0 million units by analytics will redirect traffic and avoid congestions and this 2015, a remarkable expansion almost 20 times the sensors’ will become key areas of innovation. 2010 level of just 939,200 units.75 | Infosys – View Point
  6. 6. Summary The list of trends and innovations is by no means complete – but, suffice to say that inflection points exist that will fundamentally change the space for manufacturers and all the players within their ecosystem. There are other drivers such as the changing globalized customer – who do you target if you have to design the next generation smartphone – the college student in India/China or the sales executive in the U.S.? Buying patterns, customer decision processes, how we pay for what we buy and whom we get advice from before we buy, have all changed and perhaps this is going to be the biggest driver in how manufacturers innovate in their products, business processes and sales models. REFERENCES 1. 2. in-venture-funds-tctv/ 3. Wikipedia 4. TeelmaticsNewInfo 4. practical E-commerce blog 5. Sodahead 6,7,8. iSupply Market Research firm6 | Infosys – View Point
  7. 7. About the Authors Arindam Banerji Unit Technology Officer, Manufacturing, Infosys Limited For the last 18 years, Arindam has been a technologist of some visibility within the industry. As one of the visionaries and chief technologist behind E-speak at HP, Arindam in the late- nineties laid the foundation for the next generation of computing, now broadly known as web services and Service-Oriented Architectures (SOA). He was also one of the early pioneers of semantic search. In the past, he has been the Global R&D head for Hewlett Packard’s Web-Services (then called E–Services) product lines, Principal Scientist and Head of Strategy Research Organization for HP’s Services business, Architect at Sun Microsystems and the CTO for several tech. startups in the Manufacturing space. At Infosys, his group focuses on providing technology strategy and advisory services to Manufacturing customers globally, while providing intellectual property driven solutions in the supply chain and engineering collaboration spaces. He has a PhD from the University of Notre Dame, over 30 publications and 6 patents. Arindam can be reached at Arindam_Banerji@infosys.com7 | Infosys – View Point
  8. 8. About InfosysMany of the worlds most successful organizations rely on Infosys todeliver measurable business value. Infosys provides business consulting,technology, engineering and outsourcing services to help clients in over30 countries build tomorrows enterprise.For more information, contact© 2012 Infosys Limited, Bangalore, India. Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledgesthe proprietary rights of the trademarks and product names of other companies mentioned in this document.