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Posted by Stefan Ried on February 5, 2014
Internet of Things is a hype - no question. But let's talk about the INTEGRATION Of Things.
It’s been a while since Bosch completed the acquisition of the Germany BPM and Integration vendor Inubit AG in October 2011. Two years later Inubit has not only well arrived in the Bosch Group, it became even the nucleus of Bosch’s allover software business and helps the traditional manufacturer of automotive parts and consumer electronics to embrace an additional business model of a software vendor.
Nevertheless calling the conference ConnectedWorld articulates the repositioning of the former general purpose BPM and Integration software into the internet of things. This is where Bosch with its dominant automotive footprint and their good market share of home appliance in Europe is strong. It is a natural move to focus Bosch Software Innovation’s in the areas of Bosch core business. In this context, it is no surprise that every second visitor of the show is a Bosch employee who likes to understand if and how their Bosch units can use the new software assets. Ideally this results not only in internal use, but in joint external products. Today the clear majority of Bosch's software revenues are external and not yet related to other Bosch products.
Bosch SI's new CEO, Dr. Rainer Kallenbach realized that today’s software business, both in the B2B world and in the consumer world, is a major disruption to their traditional strategy. Even more, he said that "every B2B business is at the end a consumer related business". While selling devices (from engine control units in cars down to washing machines) is a manufacturing business, the software business in the age of the customer is an ongoing services and live-cycle engagement. But, realizing the issues and delivering the change are two different steps and Forrester assumes the transformation into such a modern software business model is still critical for Bosch.
Here’s what makes me optimistic about the current setup:
- Bosch formed with ABB, Cisco, and LG the Smart Home Consortium. This is not just another attempt to define standards for the interoperability between sensors, smart devices, appliances, and Internet services. It is more fueled by the insight that standardization is difficult for example in a real home with devices from many vendors. Therefore, the four major players like to support existing standards on the level of protocols and interoperability, but instead of innovating through additional standards on all layers, Forrester assumes the consortium will form a joint business unit to operate a connected home platform. This may include an app store environment to push apps into devices connected based on the published software delivery approach. It might also become a platoform for others delivering cloud based services.
- Bosch’s Connected World conference is the start of an ecosystem play. The show is not only connecting devices to enterprise and consumer computing, it is also a good connection to partners in the ecosystem. For example Tech Mahindra had a booth and is eager to combine their industry expertise with Bosch’s software stack and devices.
- Bosch formed internally an “innovation cluster”. Various divisions of Bosch work on the joint goal to bring the Internet-Of-Things to the market. Here, the Bosch Software Innovation division joins forces with Bosch’s business divisions for Sensors, Security, Bosch/Siemens Home Appliances, Telecare and others.
In a nutshell, the external and internal ecosystem of Bosch's Software division is the unique proposition. However, with all these opportunities, Software under the roof of Bosch is still on a critical path. After listening to presentations and talking to many people at the Bosch Connected World, I have identified these key challenges that Bosch Software Innovation’s new CEO, Dr.-Ing. Rainer Kallenbach needs to address:
- Software is on all levels, Bosch needs to address them all. Bosch’s Software stack connects well to “things”, but it is still an typical enterprise style software systems. To stay competitive with middleware vendors delivering a strong IoT integration stack IBM, Mulesoft, or Redhat, Bosch needs to offer a lightweight component of their software for lightweight embedded devices as well. Based on the same meta data also running on the aggregated enterprise level, such as event pattern, already devices need to filter important data to be included in the upstream. At the same time, Bosch’s software stack need to become a PaaS environment to stimulate other such as an energy provider building their cloud apps such as a smart grid management on top of their middleware. Update: CEO Dr. Kallenberg just shared with me, that the upcoming release will actually include components running on controllers of small size (without operating systems such as Linux). Great news!
- Bosch's Internet Of Things need to attract developers. There is still a giant difference between today’s Bosch's Connected World conference and for example the upcoming Wearable Developer conference. If a car such as a BMW i3 wants to become an app platform such as the successful smartphones today, they need to combine both, the vendor lobby to guarantee security and safety in a driving vehicle AND the diversified developer creativity pushing consumerized apps into your car or your smart home control unit.
- Consumer marketing makes alliances successful. The android market is a great example. Many of today’s digital-native generation make their choice for their next smart phone based on a specific Android version. Functionality and compatibility to their friend’s smart phones matter more than the actual brand of HTC or Samsung for example. Bosch needs to leverage their consumer brand experience and create a major momentum around the upcoming Smart Home Consortium as well as around all cars using bosch’s innovation. At the end, my home and my connected car needs to deliver a joint smart consumer experience, not two separate ones. This is a ajor disruption to the car OEM paradigm, but if Bosch will not approach it, the telcos will do it.
- Privacy is not a philosophic discussion. The data that my car or home collects is owned by me, and any alliance of multiple vendors have to deliver transparency to gain my trust. Therefore Bosch as a European vendor needs to take the lead. My car needs to ask me proactively which data or aggregation or anonymized version of data is shared to whom – in the same way my house does. Once the experience is consistent, consumers trust it.
Finally, becoming a Software vendors is not enough, Bosch should not only become a software vendor, but directly a cloud provider. Cloud apps are finally more sticky than devices.
If you like to read more about the Integration Of Things, I recommend to read the Forrester Wave Hybird Integration to be published next week.
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