How Technology Is Modernizing Companies’ Business Models

How Technology Is Modernizing Companies’ Business Models

Companies are discovering how new options can strengthen and modernize their business models.

Suddenly it seems as though several digital technologies have converged. And that convergence is offering businesses of all types and sizes opportunities to make major changes in how they operate.

Jeff Liebl, chief marketing officer for Minnetonka-based Digi International, has been in the device or machine networking business for 30 years, developing sensors and other systems that allow companies to monitor equipment. During the last 10 years, Liebl says, Digi has seen a shift in its business to wireless technologies and the cloud. “That’s now about half or $100 million of our business,” Liebl says. “If anything, we see that accelerating.”

The reasons: Liebl cites the maturation and ubiquity of lower-cost wireless-connecting technologies such as Wi-Fi and Bluetooth. Cloud services allow companies to capture a lot of data about their businesses and their customers and then store that information cost-effectively. That information also has become easier to access. “You can integrate it into your customer service organization, your field support organization, your logistics, your supply chain,” Liebl says. “It can become pervasive throughout the whole company.”

The availability of abundant information can help companies create better products and improve efficiencies. “The more you understand, the more you can develop products that make sense for your customers,” notes Dan Mallin, managing partner of St. Louis Park-based IT services firm Magnet 360. Inventory sensors could inform a manufacturer when to order more parts. That order could occur automatically with the vendor; a delivery would then be scheduled and even “a slot time at your dock” could be assigned, he says.

Key technology trends—online video conferencing, the internet of things, cloud services and big data—quickly have become business tools and strategies that most companies can access. These connecting technologies are themselves inter- connected: The cloud’s capabilities, for instance, have powered big data and made video interaction more widely available.

Ryan Carlson, technology evangelist for the Nerdery, a Bloomington-based IT services and engineering firm, argues that one of the advantages of these technologies is the capability of “frictionless interactions,” freeing people “to have more human interactions.” Case in point: Online video conferencing can result in more satisfactory customer service. Virtual face-to-face communication and data sharing between machines and computers (and mobile devices) could create, as Carlson puts it, “a Jetsons-level of convenience.”

These trends bring some friction of their own. Big data can overwhelm. And keeping sensitive information safe and secure remains a huge challenge, given recent retail, health care and other industry breaches. Still, these technologies can boost efficiency, help create a competitive advantage and allow companies to better know and act upon their customers’ needs.

Can You See Me Now?

Online Video Conferencing

If your idea of video conferencing involves a big room and an expensive computer system, that still exists. But in the past few years, video conferencing has become more democratic.

“We’re moving away in some cases from high-cost hardware deployments to lower-cost, cloud-based or hosted services to support the video conferencing needs of those customers,” says Dustin Artwohl, video collaboration specialist at Marco, a St. Cloud-based technology services company. In early 2014, Artwohl’s company introduced Marco Managed Video, which provides conference-room and web-driven video conferencing capabilities.

Artwohl notes that small and midsize companies that want inexpensive video connections have relied on consumer tools like Skype or Google Chat—technologies that he says “aren’t scalable or manageable.” With Marco’s system, laptops or desktops are the audio and video engines, as Artwohl describes it. Using video connections, he adds, means that employees need not be “chained to the conference room” for meetings. They can communicate with each other regardless of location—which can be convenient and cost-effective for reaching road warriors, telecommuters and far-flung customers, partners and vendors. Marco’s managed video service also integrates video with other communication tools, including phones, email and calendaring systems.

It’s not solely small and midsize businesses accessing online video conferencing, Artwohl says. Larger enterprises that he works with are often using a hybrid solution—maintaining some equipment in-house such as high-end microphones and cameras, while using cloud-based services for recording and streaming.

The appeal of video conferencing, Artwohl maintains, is being able to see the person you’re talking to, which makes for more efficient information exchange and better mutual understandings. “Depending upon what study you look at, nonverbal communication makes up anywhere from 70 to 90 percent of human communication,” he says. “If companies can provide that kind of [customer] support via video, the experience would be so much better.”

But Artwohl also notes that there has been a “limiting factor” in using interactive online video, particularly for customer service. People have to download software so the video interaction can take place. Marco’s managed service does allow people to join a video conference over their web browsers; without such a download, though, they might have to update Java. Artwohl has high hopes that WebRTC, a new open-source standard of browser-based video under development, will allow easier access to online video regardless of platform or device. WebRTC, he says, would require “nothing more than clicking on a link, and boom—you’re in a video conference with someone. No plug-ins, no downloads.” As this web-based video becomes more available, he says it will open more doors for customer service delivered by video.

Marco’s managed video service isn’t the only option. To power its online video conferencing capabilities, Bloomington-based video conferencing services company Video Guidance uses Acano, an audio-video-web integration system introduced to the market in January 2014. The Acano platform can help bring together “islands of technology,” according to Video Guidance president Mike Werch. For instance, the Apple iPhone’s FaceTime video app “works great, but a FaceTime user can’t call a Skype user,” he notes. Acano is “middleware” that can allow multiple platforms—FaceTime and Microsoft Link, for instance—to interconnect.

Werch says that the verticals his company serves include health care, such as telehealth connections in rural areas, and manufacturing, which includes sharing design work and other visual information between a company’s U.S. headquarters and vendors in Asia. Businesses that need people in several locations to communicate simultaneously will be increasingly able to turn to a virtual face-to-face option.

People are migrating away from traditional travel and audio to conferring via video links “seamlessly from their desktop, their phone, their iPhone or their computer in the hotel,” Werch says. “That’s now a reality.”

Everything Is Connected

The Internet of Things

The internet of things (IoT) refers to a system of sensors that allows you to monitor machines from a distance over the internet. The best known are thermostats Nest, from Google, and Lyric, from Honeywell, which allow homeowners to manage their home heating from wherever they are. Utilities have been using similar sensor systems for some time. But what are the business possibilities of IoT? There could be many, and those applications are evolving now.

Amy Drury, vice president of global sales for St. Louis Park-based IT firm Coherent Solutions, notes that manufacturers are looking at incorporating IoT technologies to improve efficiency and lower costs. For instance, combining sensors and internet connections to monitor a facility’s HVAC system can help a company diagnose energy-use issues and fix them remotely over the internet. Now companies can look at data online and conduct preventive service modeling, she says.

Ravi Bapna, professor of information and decision sciences at the University of Minnesota’s Carlson School of Management, says machine-to-machine (M2M) communication, enabled via the internet, could have numerous business applications. He cites making logistics and supply chains more efficient by filling what he calls “information gaps.” The early version of this approach was RFID, short for radio frequency identification. “I think the sensor networks that will come in the next couple of years will be richer than what RFID can do,” he says. Advanced M2M systems are still under development. But in a few years, he predicts that M2M will bring about a “bigger transformation” to RFID.

Digi International CMO Jeff Liebl says that M2M is rooted in industrial controls, which have been around for years. With more of that control linked to wireless cellular networks, “you can think of M2M as a kind of B2B subset of the internet of things,” he says. M2M technology, he says, can capture data on the production line and inform managers “when they need to get raw materials.” This web-driven inventory management can help manufacturers fine-tune the just-in-time supply of raw material, Liebl says.

In time, inventory sensors in a company warehouse could automatically and directly, via the internet, order more items from suppliers as they’re needed. Indeed, Liebl contends that companies will be able to “let the data make more of the decisions, as opposed to doing it in a more manual way.” He also foresees M2M technology allowing for more sophisticated analytics, which will help businesses sort through the abundance of data. The net effect is that the information they collect will be more predictive and help businesses take timely actions based on the quality of the data.

Head for the Cloud

Cloud Services

The “cloud”—tapping servers via the internet to store data and access software programs—allows businesses to use the internet as a conduit, which means employees can access information wherever they are. The cloud also easily can expand along with businesses’ data. Companies can use outside cloud services—Google, Amazon and Rackspace are among the most common options—to manage their IT. Cloud services can store and protect company data while updating applications and operating systems.

The Carlson School’s Ravi Bapna describes the cloud as “an enabler” that has allowed technology trends including IoT and widespread web conferencing to happen. Given the volume of data available to businesses, the cloud offers small to midsize businesses the scale and flexibility to expand their IT capabilities as needed. With data centers continuing to spring up across the country and around the world, cloud services will continue to make it easier for businesses of all kinds to access ever-increasing computing power.

If a company is in the plumbing products business, “you are not incented to devote a lot of your company’s expense to IT, especially in areas like security backup and disaster recovery,” says Brad Rubin, associate professor with the University of St. Thomas’s graduate programs in software. “You would actually be making a smarter move to keep your data more private, more secure and with better integrity by outsourcing it to the cloud.”

There are businesses that may prefer to build their own “private cloud.” For some companies, particularly larger companies that have a lot of highly sensitive customer information, “you are more likely to do the opposite and keep it in-house,” Rubin notes. Companies involved in financial services and health care prefer to manage their own data, since doing so offers more security and data privacy.

“Organizations will take that data and leverage cloud services for scalability, cost and accessibility to better use these recording tools or make the data more accessible to more people, including customers and vendors,” says Chad Boeckmann, CEO and founder of Secure Digital Solutions in St. Louis Park. Boeckmann says that when working on security issues with business clients, his firm will look at their cloud vendor and vendor’s service level agreement to ascertain its security and back-up capabilities.

But it also will examine other issues—for instance, will the data be stored within the borders of the United States or offshore? “That can have implications for the regulatory compliance requirements, based on the type of data that is being stored in a cloud environment,” he says.

Like any complex issue, businesses have to protect their sensitive company information on several fronts, in several ways. Brian Stevenson, vice president of sales and marketing for Minnetonka-based network security provider Milestone Systems, offers these tips:

Educate your employees. This should include a documented policy on internet usage. Employees shouldn’t download attachments or click on links from emails sent by unfamiliar sources. These can potentially create a “breach scenario,” Stevenson says. This policy should also teach staff not to share personal and business data on the internet. (Social networking sites such as LinkedIn can tempt employees to do this.)

Don’t think firewalls and anti-virus software are all you need. Hackers can use the data they find online—email addresses, most notably—to disguise themselves as trusted sources. This is called phishing. The emails they send could contain links to malware that could damage or compromise a company network and its data. Stevenson notes that “victims of malware attacks known today had firewalls or up-to-date anti-virus software.” Even up-to-date firewalls can be breached by technically sophisticated hackers. Companies should perform regular risk assessments of their networks and websites.

Have a response plan in place to handle a breach. “For businesses, it’s not a question of if, but when, they’ll be compromised,” Stevenson says.

A documented response plan will identify who in the company will determine what allowed the breach to occur and how it can be repaired.

If there is no one on staff qualified to do this, a specialized incident responder should be listed who can be contacted to handle the forensics and make sure company data is secure going forward.

A business also should list a go-to executive and have a protocol in place for when and how customers and vendors should be informed if a breach occurs, he says.

Never Too Much Information

Big Data

 

 

One of the cloud’s benefits is its ability to store large amounts of data—big data. These days, “companies can pull data in from a lot of sources, from a lot of different social media,” Coherent Solutions’ Amy Drury notes. “With all the analytic tools that are out there now, and [all the ways] to store this, it allows them to do a lot more analytics off of larger data sets.”

Perhaps the most pervasive use of big data is in marketing. More data about customers means companies can develop better-targeted products and marketing messages across multiple channels. “You can apply weather patterns on top of the sales patterns, then apply the gender and the ages of the people who made the purchase compared to the ones you know saw the message but didn’t make the purchase. Compare that to people you know who came to the store because their phones were registering their presence, but they didn’t purchase,” says Dan Mandle, analytics director for Minneapolis-based marketing agency Colle & McVoy. “There is all this extra information now that a person could have compiled in the past, but it was just too cumbersome to do.”

Before a company can use big data, it first must deal with the challenges of gathering it. Particularly at larger companies, useful information can be spread all over the company. “Often, these different functions have different leaders and maybe they don’t want to share their data sets or information with the IT department or they don’t want to share it with finance, or sales,” notes Jason Hayman, market research manager for Maryland-based IT staffing and services firm TEKsystems, which has an office in Bloomington. Departments that don’t want to share data aren’t necessarily being overprotective. Often, Hayman says, “small errors in the data section can render it basically useless, and [departments are] afraid somebody is going to mess up the data.” There also might be regulatory reasons for the data to stay under wraps—companies are naturally skittish about sharing private information about employees or customers (or health care patients).

“Any business with a clear plan for what they are trying to accomplish on behalf of which audience members and for which business goals can benefit from big data,” Mandle says. “Otherwise, they could get lost in the numbers and potentially launch products and services that aren’t useful.”

Keeping companies from getting bogged down with megabytes has given rise to a new cadre of professionals. The Carlson School’s Ravi Bapna describes the spectrum of big data managers as ranging from the chief data officer “who’s thinking strategically about data as an asset for the company and how it can create new products and services” to data scientists who manage and analyze the data to business analysts “who can ask the right business questions.” In addition, Bapna says, “you’ll be seeing data scientists with specialties, such as marketing and supply chain.”

The advantage of big data is that it puts lots of data in one place, St. Thomas’ Brad Rubin says. “That is an advantage to a business. But it is also an advantage to an attacker.” Going after the big data systems, he adds, “would be your first target.” Even as it becomes more abundant, data has become more valuable.

Gene Rebeck is a Duluth-based freelance journalist who writes monthly for Twin Cities Business.