How to Harness M2M Technology to Build Smarter Business Models
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1 How to Harness M2M Technology to Build Smarter Business Models By Brian Vezza, Director M2M Solutions, Wind River INNOVATORS START HERE.
2 EXECUTIVE SUMMARY Much has been written about machine-to-machine (M2M) communication from a technical perspective: enabling technologies, connectivity requirements, compatibility considerations, security issues, and so on. However, much less has been written about M2M from a business perspective. That s partly because M2M is a complex and multidimensional topic and partly because the role of M2M in the commercial arena is still emerging. But it s a situation that is changing quickly as business leaders begin to see M2M for what it truly is: a unique opportunity for transformation. The astonishing capabilities created by M2M open the door not only to smarter devices but also to more efficient business models, new products and services, and new sources of revenue. This paper provides a brief overview of M2M capabilities and describes the economic and technical trends that are driving the adoption of M2M technology. The discussion then focuses on the keys to transforming the promise and potential of M2M into real-world business results, with industry-specific examples of the possibilities. TABLE OF CONTENTS Executive Summary Making Sense of Data to Make Systems Smarter What s Driving the Adoption of M2M Getting Started: Challenges and Requirements Foundational Capabilities: Harnessing the Full Value of M2M Software Requirements: Top 10 Considerations The Next-Generation M2M Approach in Action... 4 M2M Examples: Business Transformation in Select Vertical Markets Smart Energy Industrial Medical Importance of the M2M Ecosystem Conclusion Learn More White Paper
3 Making Sense of Data to Make Systems Smarter The machines that we depend upon to make our lives easier, more productive, and longer are getting smarter. Recent advances in multi-core processing, mobile and wireless networks, sensor technologies, and M2M communication are shattering conventional notions about what a business can deliver for its customers. To understand M2M, you first have to grasp a key concept: The Internet is no longer a network of computers. It has evolved into a network of devices of all types and sizes, all connected, all communicating and sharing information all the time: cars, refrigerators, smartphones, toys, cameras, medical instruments, industrial systems, even trees embedded with sensors. In this Internet of things, devices, systems, and machines don t only communicate with humans, they also communicate with each other. And they can generate an enormous volume of data about all kinds of things: temperature, GPS position, speed, humidity, vibration, altitude, and so on. This data can be used in all kinds of smart ways when it is collected, analyzed, and applied to products, systems, and services. It can be used to optimize performance, maximize efficiency, and minimize cost and resource usage. M2M and related smart systems can even use data to infer decisions that need to be made to meet business goals (e.g., improved service delivery, increased responsiveness, lower prices, new or enhanced service offerings, etc.) and they can often do so faster and more efficiently than people. In the medical arena, for example, M2M devices can now provide heartbeat-to-heartbeat monitoring and give doctors the data they need to diagnose and treat people with chronic heart conditions. On the highways, M2M systems can provide dynamic traffic control to help prevent accidents and optimize traffic flow so that more people can reach their destinations sooner. On the factory floor, automation systems can use M2M data to more quickly and flexibly respond to changing tastes and preferences of consumers. The essence of M2M is situational awareness. M2M devices can sense, monitor, and control their environments, resources, and other objects and respond intelligently to fast-changing conditions. The lifeblood of situational awareness is data, and the key to the business potential of M2M technology is its ability to transform data into actionable intelligence. Businesses, consumers, and governments can use M2M to make smarter, faster, and more effective decisions and take appropriate actions to accomplish business objectives. What s Driving the Adoption of M2M M2M devices will comprise more than 33% of all connected devices by 2015, according to market intelligence firm IDC. There are already more than a billion M2M devices at work in sensors, smart meters, industrial control systems, SCADA devices, video surveillance, point-of-sale (POS) systems, smart buildings, and so on. The rapid adoption of M2M is occurring despite the fact that M2M technology is not clearly understood by consumers. Except for those who have used more human devices such as a Kindle reader or an Xbox game system that we can see, touch, and interact with or those who have worked with telematics, industrial controls, the smart grid, embedded computing, or related areas, most people have not been exposed to M2M technology. But ever broader understanding and adoption of M2M is clearly underway. Ericsson, Cisco, IBM, McKinsey, and other leading companies forecast that there will be 20 billion, 50 billion, or even 1 trillion connected devices by And according to online business journal McKinsey Quarterly (June 2010), More than twothirds of new products feature some form of smart technology. McKinsey estimates that at least $3 trillion in current spending could be impacted by M2M. The momentum behind M2M devices is being driven by macroeconomic trends and trends that impact specific industries or groups of adopters. The following are among the most impactful: There is a permanent need to increase productivity year after year: For the past 200 years, per-capita GDP growth has averaged 2% per year; however, it is slowing due to aging demographics and fewer workers. A handful of top-tier breakthroughs have accounted for much of the growth in previous years, including the microprocessor, PC, Internet, and wireless connectivity. M2M combines each of these and has the potential to increase productivity for the next decade or more. 2 White Paper
4 High labor costs are creating demand for solutions that reduce OPEX: It typically costs at least three times as much for a human to perform a task as a machine. M2M devices can now perform many tasks that require intelligence and situational awareness, such as utility meter reading, smart building monitoring, power management, and so on. Eco considerations are driving the need for smarter use of resources/energy: Machines can perform power management tasks with finer precision and faster response times than manual, human-dependent systems saving energy, prioritizing usage, setting policies for response to outages, and so on. The move to outsourced managed services promotes M2M devices: Businesses want to focus on their core competencies, not routine, labor-intensive tasks that add little value to their operations. M2M devices help support the move to outsourced services that save money and improve efficiency. There is a pressing need to meet customer expectations immediately: The demand for instant gratification shows no signs of abating. Whether it s just-in-time servicing, real-time order fulfillment, or immediate answers to complex questions, businesses and consumers want it now. M2M systems can accelerate many services and in the process accelerate revenue generation and ROI. Getting Started: Challenges and Requirements Many business leaders have recognized the potential of M2M technology and decided to undertake an initial M2M project. Usually the plan is to improve a specific area of the business (increasing service value or reducing expenses) via a pilot program, then expand the pilot to full-site or multisite deployment, and then repeat the success within another area of the business. Typically, companies want to do as much of the M2M project themselves as possible to save time and maintain control. And all too often, they learn the hard way that there are many hidden pitfalls in the do-it-yourself approach. Take something as seemingly straightforward as how to connect M2M devices to the network. Should you use cellular, , , WiMAX, or satellite? If cellular, should you use 2G, 3G, or 4G? With 2G, you may have wider coverage globally and lower costs, but will it be around for the life of your device or service? With 4G you have much higher bandwidth, but it costs more. Where will you source the needed components? How much memory, which processor, and which operating system are best suited to your project? What coverage and technologies are supported by wireless service providers in your area? At scale, any poor choices you make now can cause huge issues operationally and financially. Outsourcing is another alternative and has the advantage of allowing you to focus on your core competencies while M2M specialists implement and deploy your solution. This approach, however, can leave you dependent on a third party, which sometimes can lead to a sacrifice of control over solution elements and delivery time frames; and cost can become an issue both for the initial deployment and for ongoing operations over time. A better option for many companies is a mixture of the in-house and outsourcing models. This hybrid approach enables you to choose among the products of a key vendor and its partner ecosystem and implement solution components your way, with your staff without losing focus on your own value-add and differentiating functionality. There are two basic steps involved in implementing this model: first, understanding the foundational requirements of M2M technologies and how each prospective vendor delivers them; and second, mapping the software requirements of your solution to the prospective vendor s offerings. Foundational Capabilities: Harnessing the Full Value of M2M Often people take only a passing glance at the M2M software foundation the protocols, the security mechanisms, the management aspects and skip ahead to making sense of the data. This can set up companies for issues down the road. Many devices that were not connected in the past are quite connected today. For instance, there used to just be a utility meter, now there is a smart meter. There used to just be a personal health monitoring device, now there is a connected personal health monitoring device. This increasing connectivity triggers a number of follow-on changes that are often poorly understood when starting an M2M project and can turn into any number of pitfalls if the M2M software foundation is not in place and solid. 3 White Paper
5 The M2M software foundation has two primary functions: The ability to connect and manage M2M devices securely while ensuring that they perform at expected levels. These capabilities need to be built into the devices from day one. The ability to minimize operational expenses and headaches. This can be a real challenge because many businesses start small, with a limited number of M2M devices and types in a pilot. Once this is proven out, it is often expanded to other sites and other M2M devices. This is where it can get extremely tricky because each system can have vastly different capabilities and not work well with others unless it has a solid M2M software foundation. By making smart choices now, future problems can be greatly reduced. Software Requirements: Top 10 Considerations It may seem at first glance that specifying M2M software requirements is almost impossible, given the multitudes of hardware options, features, and deployment scenarios that must be considered. However, our experience at Wind River shows that while there is a broad range of M2M devices, there is a relatively small set of common software requirements. In fact, the requirements typically boil down to the following 10 key considerations (and your vendor selection process should account for each prospective vendor s ability to deliver on these core tenets): 1. Devices must be secure, reliable, and have acceptable performance. 2. Connectivity options should include wired and wireless, WAN, LAN, and PAN, and into the cloud. 3. Devices must be manageable beyond just seeing if the device is working. 4. Deployments must scale to large numbers unattended. 5. M2M experience must be simplified: easy to understand, order, buy, install, build, use, operate, manage, fix, and so forth. 6. Solutions must be flexible. A wide range of customer needs, components, and global requirements exist. 7. Many devices will be mobile and may transition from one domain to another. 8. Location determination will be important for many devices and applications. 9. The smarter the device, data, and application, the more valuable the solution. 10. Industry standards must be identified and supported. The Next-Generation M2M Approach in Action A growing number of partners, including Kontron, Intel, Wind River, Eurotech, and ILS Technologies (among others) have built a next-generation M2M development kit targeted at M2M gateways and higher-performance M2M devices. The following are the primary components: Manufacturing and overall physical design: Kontron Common, simplified M2M hardware based on off-the-shelf industry standard boards: Intel and Kontron Integrated communications platform for wireless and wired connectivity: Intel Embedded operating system and tools: Wind River M2M software including cloud: Eurotech s ESF platform and ILS Technologies This M2M development kit has transformational potential for the M2M market. Today, most M2M devices are designed and built using a wide range of approaches, and every day, companies repeat the same steps of hardware, computing, connectivity, OS, and M2M software development in a thousand different ways. By creating a standardized approach where a large number of the do-it-yourself M2M pitfalls are eliminated, companies can focus on their specific differentiators while speeding time-to-market. Over time, this approach will expand and provide a platform for accelerating M2M adoption. Through the next-generation M2M development approach where companies make use of standard-based M2M platforms for computing, connectivity, and software while focusing on their core differentiators large business benefits can be achieved. Simply put, why recreate the wheel for these capabilities on every M2M project when the platform can be reused? The benefits fit into two main categories: initial device development, and operations. Overall, multiple man-years and hundreds of thousands of dollars can be saved even for a relatively simple product. Of course, this depends on the specifics, complexity, knowledge, implementation, and so on. 4 White Paper
6 M2M Benefits Initial Device Development Speed time-to-market while reducing risk and more effectively leveraging development resources and dollars by making use of the following: Common hardware platforms Connectivity packages using a wide range of common interfaces Wireless certification to fit into cellular wireless networks Board support packages (BSPs) Operating system and tools including updates, support, and roadmaps Independent software vendor (ISV) partners, integration, and testing Security Operations Limit operational headaches and expenditures year after year as your implementations grow and increase in complexity: Deployment Management Security of data and devices Operating system and ISV updates Integration and testing Wireless service provider integration and management Bug fixes Support M2M Examples: Business Transformation in Select Vertical Markets M2M devices, applications, and services are a part of almost every vertical market. The following are a few examples of how M2M can be a catalyst for business transformation. Smart Energy M2M is an enabler for smart energy in several areas: exploration and production; power generation including renewable energy; smart distribution networks; smart meters; electric vehicle charging; and home and building energy management systems. As distributed energy sources such as solar and wind power approach 10% of total generated power, maintaining quality power becomes incredibly difficult without a smarter distribution network. Increasing distribution effectiveness, improving power quality and reliability, and enabling a wide range of end user applications are key drivers and can each be addressed by M2M technology. M2M monitoring and control enables the smart grid to adjust to changing conditions with higher reliability, security, and performance than ever before. Industrial Industrial markets have used machines, robots, and other forms of M2M control devices and systems for many years, but new advancements are creating new opportunities. For example, M2M technology can be used for predictive maintenance. Predictive maintenance uses one or more criteria from monitoring data and runs it through analytics and historical patterns to determine when a component may be nearing failure. By acting on this knowledge, downtime can be minimized. In a specific example, Intel fabs use vibration data collected by M2M devices and sent wirelessly to a vibration analysis subsystem. Since there are thousands of points to measure, it is impractical and ineffective to monitor these points using a person. By acting before a problem occurs, major issues potentially costing millions of dollars can be reduced. Predictive maintenance is just one example based on M2M data. Location-based services is another that can be used for many different verticals. Medical Approximately 75% to 80% of all U.S. health care spending is related to one or more chronic conditions (e.g., heart, kidney, lung, other serious illnesses or disabilities). Smart M2M devices, services, and applications enable people and health-care professionals to understand their conditions and make accurate, timely, and realistic recommendations. In some cases, actions can be taken (e.g., insulin for diabetes) or a caregiver can be alerted who can assist a loved one who needs help. There are hundreds of M2M-based health-care services, from the hospital, to doctors offices, to the home, and mobile applications as well. 5 White Paper
7 Why Wind River for M2M? More than 30 years enabling embedded devices No. 1 embedded real-time operating system (RTOS) and Linux distribution Faster time-to-market and revenue Reduction in capital expenditures and operating expenses through M2M software foundation Less man-years of development time and expense Substantially reduced risk ( do-it-yourself M2M isn t easy) Ability to focus on differentiating capabilities, not underlying operating system and platform basics Ability to connect devices to the cloud/it systems in minutes (with trusted ISV partners) Deep relationships with top software and hardware partners Superior tools, roadmaps, and support Importance of the M2M Ecosystem Building device-centric M2M solutions combines silicon, hardware, middleware, and tools and application design, testing, and release. No single vendor has core competency and expertise in all of these areas; no single vendor can deliver a compelling enabling solution working in isolation. Therefore, Wind River, Intel, Kontron, and Eurotech have concluded that a strategic collaboration focused on removing the complexity between the hardware and the software, in the form of a verified and validated platform solution would best address the challenges of M2M device development. Our collaboration, and our approach of welcoming added value and innovation from multiple sources, has enabled us to further reduce time-to-market and expand our service offerings by providing a richer out-of-the-box experience with a comprehensive set of industry-leading tools and operating system options. This ecosystem-based approach allows our joint customers to focus their efforts and investments around key market/business initiatives. Conclusion Wind River has significant experience with a partnership-oriented model and is uniquely capable of applying it to the M2M world to benefit customers. Back in 2009, we envisioned a thriving, rapidly expanding M2M marketplace and began collaborating with key partners as a strategic investment for all parties and our customers. That investment is already paying off as we build the core foundation, allowing us to deliver comprehensive solutions such as the M2M development kit. The benefit is a much faster time-to-market, which results in better return on investment and faster monetization. Learn More For additional information about Wind River and partner products, services, and solutions for M2M, visit the following websites: Wind River is a world leader in embedded and mobile software. We enable companies to develop, run, and manage device software faster, better, at lower cost, and more reliably Wind River Systems, Inc. The Wind River logo is a trademark of Wind River Systems,Inc., and Wind River and VxWorks are registered trademarks of Wind River Systems, Inc. Rev 01/2012
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