Business Gets a Nervous System
By Om Malik

(Business 2.0) – It's 2008, and a tattooed barista is sitting in the back room at Starbucks tapping on her laptop. Live video feeds from high-res webcams spread around the store are carried on a secure Wi-Fi network, but the barista doesn't need to monitor them. Custom software scans the feeds looking for problems: There's a line of customers snaking around the tables. Soy lattes are getting mixed up with Frappuccinos.

The software does a few quick calculations, and up pops a dialog box telling the barista which tables to move to get the line straight and which cappuccino jerkers need to work faster. The sensors also report that the French roast in pot 15 is getting stale. She taps a few keys, slashing the price of java from $2 to 50 cents. A price alert appears on the store's plasma TV. Rather than being poured down the drain, the French roast is sold out in minutes.

This is the next revolution in information technology: a field-level nervous system for every business. Commoditized technologies, wired employees, cheap storage and processing power--all married to ubiquitous RFID sensors--will unleash a new wave of productivity gains.

From 1985 to 2005, U.S. corporations spent nearly $5 trillion on computers, enterprise resource systems, giant databases, and local area networks to make office workspaces as efficient as possible. But all this spending left blue-collar workers--truck drivers, salesclerks, warehouse guys--behind. "With the advent of mobility, technology is moving into the blue-collar domain, where products are made, distributed, and sold," says Todd Hewlin, senior VP at New York-based Symbol Technologies.

Hewlin and his archrival, Intermec president Tom Miller, are in agreement. For five years Miller has been preaching the mantra of blue-collar revolution. Intermec makes machines like credit card swipers, bar-code scanners, and cash registers. They won't appear on the covers of gadget magazines anytime soon, but such devices and the infrastructure to support them will garner $6 billion in revenue this year--and that figure is growing by more than 20 percent annually.

Until recently only major delivery services like FedEx and UPS enjoyed the benefits of an automated work chain. Now the entire logistics industry--truckers and bike messengers, for instance--is adopting technology en masse. On their most-wanted list: handheld computers, wireless networking gear, cellular devices, and applications that tie it all together.

"Blue-collar automation is one of the fastest-growing areas of computing," Miller says. "When IBM gets interested"--Big Blue recently bought Trigo Technologies, a maker of retail management software--"you know the boom is coming." Larry Ellison is interested too. In recent months Oracle has spent more than $600 million buying up software companies such as ProfitLogic and Retek that specialize in retail and warehouse management.

The trend is powered by major opportunities to cut costs. One Symbol Technologies customer shaved an hour of labor off every workday for each of its 800 blue-collar employees--saving $20 million a year. Standard platforms--like Windows Mobile and Intel's XScale chips--are making handheld computers cheap enough to distribute to large numbers of employees. Cell-phone data networks based on GPRS or CDMA are deployed widely enough to connect offsite workers. Chipmakers, including Broadcom and Texas Instruments, turned Wi-Fi from a laptop-only luxury into cheap, off-the-shelf silicon chips that can be placed inside every conceivable device. Wi-Fi chip sales alone are expected to grow by 150 percent in the next four years, to $3 billion.

To make sense of all this incoming information, data management tools that can sift through terabytes of information are a vital building block of the new business nervous system. With storage prices down to pennies per megabyte, collecting the data generated by all these devices becomes affordable. That, in turn, makes real-time marketing a possibility. With inexpensive RFID tags installed on both loyalty cards and merchandise, a store's retail system could detect that you're in the soap aisle, check out your brand preferences, and look up your cell-phone number. Then it might send you an SMS message informing you that Lever 2000 just went on sale.

Inexpensive networked sensors will also revolutionize back-office tasks like inventory management. These days, for example, many soda truck drivers still carry stacks of paper that tell how much soda each local retailer needs. In the future, assisted by a wirelessly connected palmtop, a driver will walk into a store and take real-time inventory by scanning the RFID chips embedded in the soda cans. The driver might then tell the owner that he's running low on root beer and sell him more on the spot. "It'll soon be possible to get an up-to-the-minute view of your entire operation--right to the inventory on the store shelves," Hewlin says.

Cheap digital cameras and software that tracks customer movement are the final pieces of the puzzle. New cameras can capture high-definition video and send it across a Wi-Fi network. Software that can track patterns of movement in a physical space--by triangulating multiple video feeds--is useful for homeland security, and scores of companies, such as IBM and Raytheon, are already working to make it happen. It's not hard to envision how the same software used to defend ports and power stations could filter down to your local Starbucks. Tipping your server may soon take on a whole new meaning. -- OM MALIK