The Internet of things (IOT), and Important Factors in Costs for the Consumer
By: Tim Blischke
This Weblog or “BLOG” explores the varying cost relationships facing the Internet of Things “IOT” connected world that consumers will eventually encounter. It characterizes several factors that are beyond the control of the buyer or average person and is designed as a thought provoking tool that can help people understand what the possible future costs of IOT would be – and how they are influenced it’s almost inevitable that there will be a connected device in our domiciles in the immediate future (Curry, 2017). This should be of interest to you as it will change the economic future of you and your family (and it’s not necessarily because we are choosing that option). It’s more likely that the driving factor is a perceived cost reduction from your appliance manufacturer that will be forcing your hand.
Soon your typical Maytag or GE or Whirlpool dishwasher or refrigerator is going to check the internet for updates… your television will self-diagnose if it does not already and your trash can will report when it is full and maybe even what it is full of (Schiller, 2013). The time is here and we should ready ourselves for the inevitable. Our home and the contents within will recognize our patterns, our behavior and monitor how we live (Bogost, 2016). We may want this situation… or we may have some trepidation.
Why? because this change is both
good and bad – it’s a perplexing mix of connected devices that watch or listen
in our environment, our home, there are some factors that allow you to benefit
from this change:
Firstly, Consumers will have a built-in validation for purchasing consumables like gas, water and electricity. This will come from their smart appliances checking consumption in real time and comparing it to their prior averages and make changes that could save us all from billing mistakes and overcharges (John, 2017).
Secondly, if you don’t know how to do a task the IoT appliance will be able to make suggestions. For example: You ask “How do I make a béarnaise sauce” – and you get an enhanced experience with a real expert… typical consumer activities such as cooking and shopping could be enhanced by IoT technology linking a grocery list and ingredients to recipe suggestions, or suggesting bake times in an interactive and fun way (Woody, 2009).
Thirdly, Remote control. We see this in use today with garage doors, and many single out this example somewhere in the back of their mind as a typical scenario – the ability to exert control over our home or other appliances while not physically there by checking security systems, turning on and off lights or granting access to a garage or the front door for family or contractors.
IOT has some possible disadvantages to the home. One could argue that the efficiencies that the manufactures would receive from the aggregation of this data –and this is truly big data – would drive the costs down and that this would make an IoT connected device cheaper than those that are not connected when comparing total aggregate costs year to year (Vargas, 2016). However, if history holds true the end consumer will not see these savings. Companies that are squeezed by the inflating costs of raw materials and transportation may be tempted to keep this new-found revenue stream for themselves. If your data has value, by now its collected and analyzed by one company or another, like Google (Glikman, 2015). It is likely that the manufacturer will keep those dollars to justify the jumpstart into the IOT powered world. The consumer household may not find a win on this playing field.
What is the common denominator, the
foundation, the underpinning of these products?
It is connectivity. Connectivity is fast becoming a battle ground. Many people take connectivity for granted, but there are elements to the connected world that can cause heated debates between the best of friends or the people and their government. Due to the increasing role that IOT plays in our day-to-day lives, the introduction of several ideas centered around connectivity has started a debate among both the providers, the government and the consumer, and there are several factors (Leetaru, 2016).
There are three factors to consider
as we move into the IOT economy – the first one, and it’s a heated discussion,
is the right to be connected and what is the responsibility of the government
to provide such a service? In addition, should that connection be neutral?
Lastly, should it be taxed and who would regulate those taxes? Let’s begin by
talking about taxing the internet. A general statement applies here “There are
2 things you can’t avoid – death and taxes” (Benjamin Franklin) probably true,
but should you be taxed on a service like data usage? Many people would argue
against such taxes… it’s not a physical object and it is hard to quantify yet
taxation is probably inevitable regardless of our efforts to slow or reduce
The trick of taxation is that it’s pretty much already built into our IOT world. Its reflected in the costs of the product, and the speed at which it connects and in other fees that are embedded into the costs. The internet has become a public utility that has desires to evolve into a monopoly (Grover Norquist, 2015). And it does not stop with taxation, because layered on top of that is the idea of “Internet Neutrality”
Net neutrality has gotten a lot of
press time lately. Its definition is somewhat diluted by its continued use by
lawyers who position it as the next logical step in connectivity and this will
have a significant impact to the connected home. Essentially, providers want to
charge more taxes if you view certain types of sites or if you use a certain
data type (think Netflix). However, if the net is neutral – a service provider
can’t charge additional fees for your latest YouTube posts (Skorup, 2016). This has implications in the world
of IOT, and those implications are increasing costs.
Although we may not mind paying AT&T or Verizon or the service provider of our choice a little more here and there for our consumer products to get an update or two as needed… eventually these costs will add up as it becomes more of a normal function than not and with net neutrality, those costs will be put under the control of the Federal Communications Commission. Government who could have a large say in what you do online and how much it costs (Skorup, 2016).
Another battle being fought is one
in which people have the right to be connected – is the right for information
and knowledge (Internet Society, 2015). Thank you to Sir
Francis Bacon for identifying the relationship between knowledge and power. He
said, “Knowledge itself is power” and it is the most forward looking statement
of the 1500s. For people without connected devices like phones and computers –
the world can be a bit more difficult to navigate. Today many companies, and
public facilities only post their schedules and functions in the online world.
Most colleges have an online faculty that relies exclusively on the internet
and this connectedness has led to more and more consumers and students alike
becoming accustomed to doing work online in what is generically known as a
“self-service” environment. Without a right to that connection, how will those
without it succeed?
The right to be connected is a fragile right – its fraught with factors like physical lines and equipment, costs and accessibility and government oversight. Is it like the right to health care or an education? Perhaps. certainly, the days of access rights and the IOT days are coming, and taxation will probably fund this change (Grover Norquist, 2015).
In summary in the IOT world, costs go up from the pressure of these factors, acting together or alone. With the consumer household paying for the expansion, manufacturers will increase the costs of appliances and use more data without passing the savings to the consumer, and those that want government restrictions have to find a way to pay for that oversight with taxes and internet providers will increase their service costs due to burgeoning demand.
It appears to be a cycle that the consumers will be on for the foreseeable future – IOT will be an expensive proposition that will not be easy to justify but there is still value to be found in the IOT world if the benefits outweigh the costs, if consumers are careful about how they purchase and time the purchase so that they benefit from the technology but don’t pay for the development costs in the same bill and if net neutrality does not come with government oversight and the typical inefficiencies and ineffectiveness.
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Is the Wait-State Closing in for Analytics?
By: Kevin Fugate
In a computer, a wait-state occurs when a particular process is placed on hold while it waits for the completion of other events. Only after memory is available, the data arrives, and a processor slice is again made available, can a processor do it’s magic. Analytics itself has been in a wait-state, but advances in processing power, communications, storage, and programming languages have now converged, closing the wait-state for analytics to tackle the current data demands.
When I started my career in computer technology nearly 30 years ago, our goal was to keep our systems running so they could do calculations faster than an engineer with a slide rule. Later, desktops were interconnected, and we began the battle for storage space. In the early 2000’s, processing power prices dropped out and pizza-box sized servers filled our datacenters. We soon accumulated gigabytes, then terabytes, and eventually petabytes of data. We pushed this data from one location to another with high-speed processors and complex networks, but we weren’t really using the data. Then came data mining. We knew there was value in the data; we just needed the tools to analyze it.
Today, the term “Analytics” is on the minds of everyone in business, whether they understand the term or not. However, large businesses are beginning to learn that analytics can be a corporate, or monetization strategy, understanding it’s the data which will eventually feed AI; but is the complexity of analytics leaving small businesses behind? Is the successful extrapolation of information from the quantum of existing data going to create barriers between SMB’s and corporate giants? Most likely not, as SMB’s are more agile and accepting of newer Open Source technologies.
Open Source may place the “Big Data” game on a level playing field for all size businesses, providing the tools needed to crunch and analyze data. As the technical landscape is radically changing directions, the need for new and adaptive software has never been more in demand. Open Source programming languages such as Julia, Python, R, and Scala are at the forefront for developers analyzing data, and each can provide incomes over $100k, proving there is money in this data top to bottom. Open Source solutions go beyond the languages and into the core of Big Data as well. New database technologies are being created around unstructured data, NoSQL being a good example. The platforms they are running on are adapting as well. Linux is the operating system of choice for massaging Big Data; I love it when I hear the name “Watson” thrown around as the definition of analytics; it’s not the machine, it’s the agility of the software behind it. “Watson” may be the giant for Big Data and analytics, and it’s most likely going to be difficult for SMB’s to gain access to it, but it’s not the only platform which eats data. The Open Source technology for clustering those pizza box servers spoke of earlier are the key components for Docker Containers or Oracle’s OVM technology, both of which are big players in the “Cloud” we hear so much about in relation to analytics.
Hardware is also contributing to the field of analytics. Major players such as Intel and Cisco are developing hardware solutions specifically designed for analytical operations. Intel unveiled it’s new solid –state drive technology this last March, designed specifically for heavy database loads, and one of the leading analytics company SAS, has partnered with Cisco to deliver an IoT analytical platform.
Charles Baggage created the first mechanical computer in 1837, but we had to wait for the vacuum tube to get to the ENIAC, then we waited for integrated transistors to get us to today. In 1937, Claude Shannon developed digital circuit design and bandwidth limitations before we were using digital circuits and digital communication lines. They were all in a wait-state before the technologies could converge and produce the computing systems we have today. The same type of cycle is happening today as we are on the verge of technology opening a world of information through analytics.
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How Management Accounting Can Benefit from Using Business Analytics
By: Greg Parrish
Management accounting has been around almost since the dawn of business itself. Many successful endeavors have become so with the help of advice from companies specializing in this field. It is not until recently, however, that the popularity of analytics has come to the forefront. By popularity, I don’t mean that it is the latest rage on the big screen or the topic of Twitter conversation. But in its own realm, identifying trends and helping to plan for the future, analytics is a very big deal.
To fully understand how analytics can help within the management accounting architecture, we first must appreciate what management accounting is and what it entails. By definition, it is the process and procedures that create documents and reports to aid management in the decision-making processes of running the company. While that seems like a lot of words to explain something that seems rather simple, management accounting is often far from a set of simple processes. To further complicate the situation, many companies today are seeking to gain a better understanding of the people with whom they are dealing; their customers, clients, audience or whatever term might fit for their specific venue. That, in and of itself, is a challenge among challenges since most believe people are individually unique; or are they?
Analytics would propose that people are much more similar than we were once made to believe. Of course, everyone has their own unique qualities but when it comes to identifying purchasing habits or types of food we like, computational analysis works great in telling us what we need to know to make well informed decisions. One very big reasons analytics is important is because Big Data has the potential to cause a paradigm shift allowing economic activities to be traced and measured earlier and deeper. This theory has proven effective in many other areas where analytics have been employed to identify potential new customers or to improve the capabilities provided to an existing audience. Based on those results, why would we not think that management accounting could also profit from the same type of data examination?
The truth is, organizations would be wise to take advantage of the data available at their fingertips. By transforming from their current manually acquired and updated spreadsheet data to a more automated process providing almost every metric imaginable from which they can obtain more valuable information, companies can not only make the data more interesting but have more information about their operation that will lead them in the right direction. The process, overall, is not terribly difficult. It begins with an organization defining their goals; upon whom do they want to focus their attention, what do they wish to accomplish, when do they expect to meet their goals and how do they know what their success will look like as well as how they plan to achieve it.
Once their goal or goals is/are defined, they can then identify the information within their operation that will best identify with each of their expectations and use the data available to turn data analytics into actionable business intelligence. After all, the objective of any endeavor should be to improve the bottom line in conjunction with providing better service to the customer, both of which go hand in hand. If one cannot identify the needs of those for whom they are providing a product, they will never be successful.
Business Analytics have become an important aspect of a company’s ability to better manage their operation. Management Accounting needs to embrace the advantages provided as well. By doing so, they can and will be able to better plan and project future needs which will, in turn, provide them with a better, more efficient business model for growth and opportunity.
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