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Business Transformation V6
Dr. Tan Guan Hong has extensive experience in industrial automation, IoT, and data analytics from roles at various organizations. He is currently a vice president at the Singapore Industrial Automation Association and a consultant/advisor for several technology companies. His presentation discusses using megatrends to transform businesses by leveraging IoT and data analytics. He outlines several global trends including the growth of IoT devices, aging populations, and the rise of generations with different characteristics. Dr. Tan also discusses challenges for businesses from these trends and opportunities to innovate new business models.
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Business Transformation V6
- 1. Using Megatrends totransform businesses leveraging on IoT and Data Analytics Dr Tan Guan Hong Worked @ GovTech, A*STAR, Tritech Group, SysEng, Philips Electronics (Experiences from TRL 3 to TRL 9) Vice President @ Singapore Industrial Automation Association Consultant @ Singapore Technology Land System & Electronics Technology Partner @ RekaNext Capital Technology Partner @ Pestech Holding (S) Pte Ltd RekaNext‘s Director @ XjeraLabs Pte Ltd A*STAR’s Director @ Sentient.io Business Advisor @ ACKCIO Business Advisor @ WisQo
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- 3. https://en.wikipedia.org/wiki/Moore%27s_law Moore’s Law Number of transistors ina dense integrated circuit doubles about every two years Technology Trends
- 4. Moore’s Second Lawor Rock’s Law Cost of electronics and computer power to the consumer will keep falling ! Technology Trends
- 5. Telephone Camera ComputerSmart phone Mechanical Car & Combustion Engine Electric Car & Autonomous Vehicles Cathode Ray Tubes TVs LCD TVs Aeroplane Passenger Drone These will follow Moore’s Law Moore’s Law moves Mechanical to Electronic Products Technology Trends
- 6. Modular Hardware Design •Need to understand Circuit layout beyond inter-connectivity between ICs • Need to understand component characteristics • Shielded from the need to understand layout level Moore’s Law Modular Software Design • Module Embedded Software and need to understand component characteristics • At higher level, nearer to application level Transistors Integrated Circuit Module
- 7. Module Level With clearProduct requirements, comes Miniaturization and Modularization functional Blocks Drives consumer electronic products towards commodity Leading to lowering of cost and increase in demand
- 8. Film Camera Digital Camera SmartPhone & Cloud In consumerproducts, innovation can disrupt entire industry Moore’s Law Disruption evolution
- 9. Food & Water Needs After WW2 LuxuryWants Today Needs Food & Water Back to Basic Human needs for Personal Safety, Safe Food, Clean Water, On Demand Transport, Health
- 10. System Level System Application •Understand Final Product Application • Use Commercial off the Shelf (COTS) Modules • Shield from the need to understand individual sub-system level Moore’s Law Module Sub-Systems Functional System Standardization on Hardware modules & sub-systems Flexibility of Software functionality and User interface for Touch-Feel Human interactions
- 11. 11 Toyota Model ProductCreation Process (PCP)
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- 15. Grows up usingEyes and Fingers to interact Human to Human Network supported by IoT Network to interact with the Physical world via Sensors Global Trends
- 16. https://www.bloomberg.com/news/articles/2018-08-20/gen-z-to-outnumber-millennials-within-a-year-demographic-trends Gen Z (Bornafter 2001) comprises 32% of the global population of 7.7B in 2019, ahead of 31.5% Millennials (born 1980-2000) Self-Awareness vs Self-Centeredness," “Rise of Gen Z: New Challenge for Retailers” Millennials were more focused on what was in it for them, looked to others, such as the companies for solutions. The “i” Generation ! Gen Z are younger people, sought to create their own solutions, only know Digital World (IoT), Expose to “War on Terror“, “Cyber Security” and “Global Recession" https://www.huffingtonpost.com/george-beall/8-key-differences-between_b_12814200.html Global Trends
- 17. The population grewup from the computer generation using eyes and fingers to interact This is the “i” Generation of iWatch, iPhone and iPad The self centric world of “i” or me, me, me … Everything revolves round “i” , that individual Knowing this, how do we grow business in future ? Gen Z & iGeneration i i i
- 18. IoT demand willaccelerate as the kids become more IT savvy, Individualistic and Social connected. Next when they enter the work force with increasing spending power, they will use technologies which are familiar and read in the Internet for knowledge. IoT will reach a Tipping Point Once it tips over, the IoT applications, services and devices will grow exponentially. Data is the Key Driver Young ICT educated Citizens entering work force IoT Demand Gen Z & iGeneration
- 19. Smartphones are forcingBusinesses to come up with new Biz models Global Trends Smartphone Apps
- 20. Major Megatrends for2015 i and Global Trends
- 21. https://www.cnbc.com/2017/08/17/when-youll-earn-the-most-in-your-career.html https://www.statista.com/statistics/824464/mean-disposable-income-per-household-by-age-uk/ Global Trends Earning power& Disposal Income by age groups Targeting 30 - 50 age groups
- 22. Working Population supporting Elderly ! 4 Homes& Cars / Family Need only 1 Home & 1 Car / Family What to do with the extra 3 Homes & Cars ? Empty ? Sell ? Value drop ? Who holds Asset ? Aging Population
- 23. 23 Singapore Trends Aging Population will change spendingpatterns By % can skew statistical thinking. 5% of 10,000 is different from 5% of 1,000,000
- 24. WORLD Elderly • 2014:605 M • 2050: 2,000 M • AGEING IS NOT A PROBLEM, ITS OPPORTUNITY! 0 2 4 6 8 10 12 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 ELDERLY PERCENRAGE YEAR SOURCE: DEPARTMENT OF STATISTICS SINGAPORE SINGAPORE • YEAR 2015: 430,000 Elderly • YEAR 2030: 900,000 Elderly Elderly Person > 60 years old Aging Population
- 25. The total fertilityrate was 1.2 in 2014, compared to 1.3 in 2013, the Dragon Year. This is below the replacement rate of 2.1 . Replacement rate is 2.1 ! Manpower Shortage
- 26. Only Singapore, HongKong and Moldova have a fertility rate (the number of children per woman) as low as South Korea's. All are on 1.2, while the replacement rate - the number needed for a population to remain level - is 2.1. https://www.bbc.com/news/stories-45201725
- 27. Copyright of GovTech© Not to be reproduced unless with explicit consent by GovTech. https://www.statista.com/statistics/804307/gross-domestic-product-gdp-per-capita-in-the-asean-countries/ https://asia.nikkei.com/Economy/Southeast-Asia-trying-to-improve-birthrates US$ https://www.channelnewsasia.com/news/singapore/singapore-total-fertility-rate-new-low-1-16-10002558a
- 28. 28 eCommerce is growingvery fast Global Trends
- 29. Reducing overhead costs isa Win-Win-Win for Consumers, Retailers and Manufacturers High Cost to Consumer v.s. Total Manufacturing Cost Threat is NOT the next Shopping Mall but Global eCommerce Global Trends Materials & Finishing $3.69 65.1% Freight/Insurance/Duties $1.03 18.2% Factory Margin $0.58 10.2% Agent $0.18 3.2% Labour $0.12 2.1% Factory Overhead $0.07 1.2% Cost to Retailer $5.67 40.5% Retailer Margin $8.33 59.5% Consumer Buying Price $14.00 http://www.macleans.ca/economy/business/what-does-that-14-shirt-really-cost/ http://reinventingprosperity.blogspot.sg/2015/10/the-truth-behind-your-14-shirt.html
- 30. Cost Breakdown PhysicalStore eCommerce Materials & Finishing $3.69 65% Freight/Insurance/Duties $1.03 18% Factory Margin $0.58 10% Agent $0.18 3% Labour $0.12 2% Factory Overhead $0.07 1% Cost to Retail $5.67 41% $5.67 68% Retail Labour $3.00 21% Retail Rental $2.66 19% Retail/Seller Margin $2.67 19% $2.67 32% Consumer Buying Price $14.00 $8.34 eCommerce/Physical Ratio 60% Less expensive to consumer Seller makes better % margin for same outlay Consumer pays less for same product Rental will drop & replace by services, which cannot do through Internet Retail property prices will drop as service depends on no. of people & tourists
- 31. Singapore Biz CostStructure Retail Costs in Labour is 36% & Rental 32% Retail Margin $8.33 Retail Labour $3.00 36.0% Retail Rental $2.66 32.0% Actual Margin $2.67 32.0% Actual Margin for Retailer: Sell Price is $2.67 / $14 = 19 % Singapore Trends $14 shirt
- 32. • Growing IoTdevices • Data Insights from Mobile Apps • i-Generation citizens • Aging population / Demographics • Shortage of younger citizen and raising salaries • Increasing Rental space • SMEs employ 70% of residents, translating to voting power Business Challenges
- 33. Source : http://www.singstat.gov.sg/statistics/visualising_data/Singapore-Economy20052014.pdf SMEs Makeup 99% of enterprises Employ 7 in 10 employees Singapore Trends 33
- 34. Consumer IoT IIoT orIndustrie 4.0 Structured Work Process with SOPs Paid to provide Service Unstructured Process as dealing with individuals Pays for Service Focus on Efficient and Outcomes Conflicting individual goals for self interest & benefit Highly fragmented, flexible and change over time fast Inflexible and Large Organisations, no single individual ownership IoT Influence by stake holders and KPIs Influenced by individuals, social behaviour and friends Consumer facing Process Driven B2B IoT , Enterprise IIoT or Industrie 4.0 (Reliable Focus) B2C IoT , Consumer IoT (Cost Focus) Business Challenges
- 35. Confidential Cloud Platform IoT(B–C) Milk - To C - RFID SuperMart Milk - To C - RFID IIoT (B-B) Milking Milk - To C - Volume - RFID Milk Processing Milk - To C - RFID MILK Cold Chain Households Security Trade Secrets Confidentiality Individual Privacy Grass - Moisture - pH Levels Farm A Grazing Consumers Cheese Fly Milk Structured Data Unstructured Data IIoT works with Structured Data to forecast and manufacture for consumers IoT organises the Unstructured Data into Structured information for IIoT system to work IIoT and IoT Food Chain for Food Traceability and Security Milk - To C - RFID Milk - To C - RFID Business Challenges
- 36. 36 Today Ideal Situation Time Opportunities Identify Top Constraints hindering Stake Holders agreedMid-Goal Process of Innovations
- 37. 37 Business Environment ischanging very fast with Digitization & Mobility • Step by step, competition is taking your “Cheese” away • Options: Transform, Compete head on, Get out, Do Nothing & Wait until obsolete
- 38. 38 Tech# 1 Tech# 2 Tec h#3 Tec h#4 System Level forHeart to Function ? ? ? ? We need to Design a Functional Heart There are Tech#1 to Tech#4 Who will cover the ???? Design must cover all the missing gaps in between Sometimes the Tech#3 wants to cover Technologies outside the Heart for its own interest
- 39. First Mover Advantage GoldIngots behind the hill !! Do I want to Tell Them ? Where is the $$? Some People Make Things Happen Some People Watch Things Happen Some People Wonder What Happen Business Innovation
- 40. 90% 80% 95% Maturity Maturity Maturity Time` Time Time Technology#1 Technology#2 Technology#3 X X X ✔ ✔ ✔ New BusinessInnovation New Development Evolution of New Business 80% Matured When Technologies matures to 80% and above, there is no more technology competitive edge but rather a cost reduction strategy which is doing more of the same to increase operational efficiencies Now we leverage on these matured cost effective technologies by adding new innovations to create new market segments by integrating stable technologies to solve new challenges 20% New Business Innovation
- 41. Do the same, Don’t expect different results Business Innovation
- 42. Thank you foryour attention Have a great Day ahead
- 43. Rolls Royce “Power bythe Hour” Business Model started in 1962 ! Only the Manufacturer knows the Engine best. They don’t sell you only Engine Hardware but Engine Usage based business http://www.rolls-royce.com/media/press-releases/yr-2012/121030-the-hour.aspx Disruptive Business Model 43 Business Innovation
- 44. IoT Business Modelof shifting CAPEX and OPEX to reduce risks for various stake holders in the Eco-system 44 Business Innovation
- 45. Value for Customer •Don’t Work, Don’t Pay • Customer is King as he $pays for Quality Data Only & Service Value to Service Provider • Customer Centric Business Model • Supports Innovation Projects for longer contract • Customer pays only by $ Z x (Days Working/Days in that month) by making failure expensive for Service Provider • Failure surfaces every month for Improvements Move Customer’s Budget from CAPEX to OPEX 45 Business Innovation
- 46. "A Customer isthe most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work - he is the purpose of it. We are not doing him a favour by serving him. He is doing us a favour by giving us the opportunity to serve him.” Mahatma Gandhi 46 Business Advice
- 47. “You cannot Manage Whatyou cannot Measure” Edwards Deming 47 Business Advice
- 48. Construction IoT Approach Data Generationto Digital Formats: Sensors Horizontal Technologies •Mobile •Internet •Cloud Data Collection, Analysis, Management & Alert Environmental Supply Chain Management Facility Management Retail Food & Beverage Security
- 49. IoT Value-Chain Growth Sensors/Input Devices/data loggers Wired & Wireless Networks Application Developers Telcos Data Centers/ SANS Providers System Integrators Automation Consultants Business Intelligence Standards& Data Security Awareness & Skills Training Productivity Improvements Every chain link have many companies servicing that link in Value-Chain + + + + +
- 50. IoT also meansA lot of Things The Business Disruption is the Better Customer Experience rather than Technology Advantage The Software/Internet Connectivity/User Interface inside the Devices makes them into Social Objects to link other people as a Tool IoT Needs Volume Adoption and standard Process to be Efficient so that prices will drop for higher volume. Cost reduction driven IoT will starts from B2B as B2B is usually Cost Reduction driven. It has clearer added value and smaller market to grow B2C is Sales Growth Driven, hence the end product added value so not so clear Service Business is not scalable Localized Business difficult to export See what Big Company don’t do. If they do it, you are already too late. Invest Early before others see opportunity Brand, Size matters to negotiate for Discounts Bulk Buying, Rental. Young staff joins Big Brands and Company. Common training of staff for economy of scale
- 51. Globalization Effect Big MNCs ManySMEs Global Trends Size matters now for Global Branding Gen Y & Talent Recruitment Business Continuity Succession by Professionals Negotiation for Economy of Scale Purchasing Discounts Rental Space Marketing SME working alone to protect their turf
- 52. The Business 3domain blocks to be align Cars Drivers Awareness For business to work, all 3 blocks must work Each block has 2 states, “0” Not-working Logic and “1” Working Logic This business has 2 x 2 x 2 possible combinations (23) to work or fail Opportunity Business Innovation of aligning 3 available blocks
- 53. 53 The business has3 Technology blocks 0 0 0 0 0 1 0 1 1 0 1 0 1 0 0 1 1 0 1 0 1 1 1 1 For business to work, the probability is 1 / 23 = 1/8 = 12% The possibility of unit not working is 7/8=88% ! When getting it to work, can you assume that the person has the skills to troubleshoot any of the 7/8 ? Unlikely If we already have 2 Blocks proven to work already, our risk is only in 1 Block risk which is ½ = 50% only
- 54. IC Component Level •IC Layout & Software • Need to understand component characteristics and interconnect
- 55. Module Level Module Design •Module Embedded Software and need to understand component characteristics • Need to understand PCB Circuit layout beyond inter-connectivity between ICs • Shielded from the need to understand IC layout level
- 56. Having all workingICs Module Design • All ICs working according to its individual specifications • When all the components are mounted, it cannot be assumed that the Module can work according to Module level specifications • There is an interaction between component ICs to make the module work as a module… This is a System Integration Function
- 57. Module Application Level ApplicationSoftware • Need to understand Application needs and Module characteristics • Need to understand Module interfacing protocol and timings • Shield from the need to understand individual component level
- 58. System Level System ApplicationSoftware • Understand Final Product Application • Use off the shelf Modules and well documented • Need to understand Individual Module characteristics and their interactions • Shield from the need to understand individual component level
- 59. Innovation Strategy :-Chose your Battle ground to your advantage 300 100,000 100 Spartans Width & 3 Rows Mountain 1,000 Rows of 100 Persians System Thinking The Narrowest passage controls the battle ground ! Critical Path determines System Performance Sea
- 60. Know your targetedfinal system Computing Resources Server Note Book Embedded Systems Number of Codes
- 61. Rolls Royce “Power bythe Hour” Business Model started in 1962 ! Only the Manufacturer knows the Engine best. They don’t sell you Engine Hardware but Engine Usage based business http://www.rolls-royce.com/media/press-releases/yr-2012/121030-the-hour.aspx
- 62. IoT Business Modelof shifting CAPEX and OPEX to reduce risks for various stake holders in the Eco-system IoT Business Model
- 63. Value for Customer •Don’t Work, Don’t Pay • Customer is King as he $pays for Quality Data Only & Service IoT Business Model Value to Service Provider • Customer Centric Business Model • Supports Innovation Projects for longer contract • Customer pays only by $ Z x (Days Working/Days in that month) by making failure expensive for Service Provider • Failure surfaces every month for Improvements Move Customer’s Budget From CAPEX to OPEX
- 64. OPEX End Usercost advantage 0 100 200 300 400 500 600 700 2005 2006 2007 2008 2009 2010 2011 Monthly Fee S$ Year OPEX vs CAPEX Model OPEX CAPEX Average Flood Monitoring Station per month 2014 Supply of Water Level Data @ Waterways (Fourth Contract in 2014) Business Model OPEX Service Provider Advantage - End User gains confidence to contract larger scale value tenders - Service Provider build capabilities to Design & Supply more robust system before expanding overseas - Minimize End User Risks while Provides Service Provider with continuous feedback about its Innovation