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The Internet of Things: How It Can Be Used to Strengthen Your ERP

Integration of Acronyms IoT and ERP

What is the Internet of Things?

There is a 6,500-word explanation of the Internet of Things (IoT) on Wikipedia, but I gave up after reading the first two sentences. The Internet of Things is not a complicated concept (it can be explained in a complicated way, though), so I want to put it in a simple way: it is a system in which everything can be connected to the Internet.

There are two key points in the definition: “Internet” and “Everything.” The foundation and the central idea of the Internet of Things is still the Internet itself. The Internet of Things was born and grows due to the development of the Internet recently and cannot function without the Internet. However, compared to the traditional Internet, whose end points are limited to PCs, tablets, or cell phones, the Internet of Things is an extension of the Internet, in that everything can be an end-point, to be connected to a network. This is the second key point of IoT—literally everything. Everything can be the cap of your medication bottle, which is connected to the hospital so it is able to remind you to take your medicine on time; it can be your shoes, in which a sensor is embedded to track your steps and weight that syncs the data back to your phone or laptop every day; it can be your alarm clock, which is connected to your coffee maker so every morning five minutes before you wake up, the machine brews your favorite dark roast; it can also be…anything you might think of. Overall, the Internet of Things is a scalable (usually big, though) network of connected “Things.”

Why should you and your business care?

The concept of the Internet of Things was first introduced in early 1980s. However, it finally got a chance to come into “real life” and start developing in recent years with the advent of broadband Internet and the decrease of technology cost. Although the Internet of Things can gather data from multiple perspectives and so substantially increase our quality of life (like the examples above), people were unable to afford a device which is required to connect to a network 24/7. Therefore, it was hard to bring the concept into reality at that time. However, the cost is now low and will continue to decrease in the future. The Internet of Things is not a fantasy anymore.

Businesses are eager for data as well. Think about this: When your company is still offering soda in a traditional 12-oz can, while your competitor can figure out the optimal amount of one-time consumption by gathering data of customers’ drinking habits through the technology of IoT and make a huge amount money from it, it is time for you to make some changes.

So the answer is simple. The nature of consumers is to strive for better quality of life, and the goal of business to generate more value. These two facts encourage the development and application of the Internet of Things.  

How can IoT be used in ERP?

The Internet of Things can be used to make ERP an even more powerful tool for business. Besides the fact that IoT can enable ERP to give users access to the system via multiple end points such as laptops, tablets, mobile devices, and even watches, IoT strengthens ERP because of its ability to assist with data gathering. For example, shelves which can detect the amount of inventory and send that data back to the ERP system strengthen the functionality of inventory management. Another example is that IoT enables products to send back the customer’s satisfaction level to the ERP.  

Are there any challenges with IoT in ERP?

There are always challenges with new technology. The first challenge is security. It cannot be denied that while it is more convenient to get into a house when more doors are available, it is also easier for someone to break in. The same is true with IoT—it makes it easier for someone to hack into a mobile device, for example, and gain access to your ERP system. .

Also, raw data is useless when it is not able to be analyzed. Admittedly, IoT is very strong at data gathering, but it is ONLY strong at collecting data so far. After the collection process, analysis of the data falls on the individual businesses to manage.

Last but not least, the cost of data gathering is low only after you already have IoT devices in place. Otherwise, the upfront investment can be high. For example, hardware is still required to enable WIFI capabilities or tracking the functionality of “things.” 

Why these challenges are not the fault of the IoT and can be overcome in the near future

Security and cost are concerns, but they can all be overcome in the future. Despite the fact that the development of technology will provide higher levels of security, it should be always be kept in mind that it is impossible to have zero risk regarding any security issue, and a higher level of security cannot be achieved without active participation from all users. As for cost, as with all technology, it will decrease, probably in the near future.

The IoT’s current weakness of data analysis can be overcome as well. The reason IoT is not strong in data analysis is not because of IoT itself, but due to the current state of technology, which actually hinders the complete fulfillment of the idea of IoT. A good example is the current market of wearable devices such as fitness trackers and smart watches.

Wearable devices can be divided primarily into two groups. The first group are the devices which have sensors embedded but do not have the capability of computing. They keep track of user’s daily physical movement, but the data can be computed, analyzed and presented only after it is synced back to a PC or cell phone. The tracker itself does not have any capability to analyze the data. The second group of devices consists of those which can both collect and analyze the data, such as the Apple Watch. The idea of the Apple Watch itself is great, but the current technology is not able to fulfill all the requirements and produce a product with high customer satisfaction. For example, the price is high, the battery cannot last long, and the computing ability is low. Also, the design and manufacturing of this kind of product requires a strong accumulation of knowledge both in hardware and software, which is why only companies like Apple, Motorola, and Samsung are able to produce them.

However, although the technology (especially the hardware) to support the IoT is not mature yet, it always develops faster than what we expect. Therefore, the future of the IoT is optimistic, and it won’t take long to see the benefits highly outweigh the challenges.

What‘s next?

Hopefully, we have you thinking about the potential opportunity to incorporate the IoT into your ERP. We are! We will be launching a blog series on the Internet of Things in ERP systems soon. Stay tuned for these upcoming blogs, and in the meantime, you’re more than welcome to leave your questions and join our discussion below.  

Contact ArcherPoint if you would like to learn innovative ways to put the Internet of Things to work in your business.

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