FWD. What the Internet of Things will mean for business

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1 Article 6: September 2014 Internet of Things This year the focus of business has shifted to the Internet of Things (IoT), the connection and sharing of information between objects, machines, people and businesses through the internet. FWD What the Internet of Things will mean for business

2 With over 50 billion things predicted to be communicating and even transacting by 2020, every sector will be part of the connected world. Here we look at why the IoT creates better value for your customers and your own business. Digital Services have evolved from machineto-machine (M2M) technologies that use a device (such as a sensor or meter) to capture an event and transmit it over a network to an application that translates it into meaningful information The IoT provides organisations with the opportunity to build products and services that can simplify and reduce the cost of fulfilling customer needs, and also deliver new digital services that provide the convenience, choice and control customers increasingly expect. That simple interaction has progressed to a network of uniquely identifiable things that communicate without human interaction, often over a wireless network. TOTAL ECONOMIC VALUE FOR THE In addition to a range of multimedia devices, such as computers, electronics and smartphones, these things include enterprise assets such as field equipment and factory machines, and consumer items such as cars, televisions, heat pumps, lighting systems, door locks, washing machines, health monitors, toothbrushes, golf clubs and on the list goes. Several critical trends have come together in the last few years to fuel this explosion in IoT activity, including the proliferation of smartphones and low-cost sensors, availability of high-speed mobile networks, advanced data analytics and accessible cloud infrastructure. WILL BE $1.9T IN 2020 Today the IoT is big and it s growing fast. Frost & Sullivan predicts that more data will be generated by machines or things this year than by human beings. Gartner adds that the total economic value for the IoT will be $1.9 trillion dollars in 2020, and warns that with more than seven billion people and businesses and at least 35 billion devices, communicating, transacting, and even negotiating with each other, a business that does not consider how to put all of this together is putting itself at risk. Internet of Things page 2

3 Early adopters of the IoT Smart companies are using the IoT to develop new services that create better value for their customers and their own business. According to Gartner, the verticals leading its adoption are manufacturing (15 percent), healthcare (15 percent) and insurance (11 percent). Other industries leading the charge to exploit the IoT include transportation, agribusiness, pharmaceuticals, energy management, facility management, security and surveillance, utilities, telecommunications and finance. Engine failure Call mechanic Driver s risk profile / driving style Oil needs changing Accident Call emergency services Tyre pressure is low The automotive industry was one of the first sectors to be impacted. When a vehicle connects to the IoT, it becomes a conduit for a wide range of additional services from the manufacturer, such as alerts if the oil needs changing or tyre pressure is low, or sending a mechanic to repair an engine failure or even emergency services if there s an accident or theft. The insurance sector has also contributed to the IoT ecosystem, installing sensors in vehicles that provide a pay-as-you-drive insurance that links the insurance premium to the individual s driving style and risk profile. The transportation and logistics sector is leading the way here in New Zealand. The deployment of low-cost sensors within things that move products around - and within the actual products - opens vast opportunities far beyond just supply chain optimisation. For example, telematics company International Telematics provides vehicle fleet managers with detailed, real-time information on the location of their fleet, the condition of the loads the vehicles are carrying and the performance of the drivers for each and every truck, van, refrigerated trailer or unit. New Zealand s rural sector is also an early adopter of the IoT. Farmers and agribusinesses are participating in traceability solutions that eliminate food wastage, ensure food quality and optimise inventories. A bunch of smart new healthcare start-ups are using the IoT to develop products and services that reduce costs, improve efficiencies and empower consumers to take control of their own health. One example is Vigil, set up by Sir Ray Avery to develop an intelligent medical alarm using a bracelet and base station that will automatically raise an alarm if an adverse event is detected, such as a fall or change in heart rate. Internet of Things page 3

4 Navigate the risks Along with great opportunity comes great responsibility. According to a Forrester survey, the challenges companies face begin with security concerns (37 percent), followed by costs (32 percent), technology immaturity (25 percent), integration challenges, migration and/or installation risks and regulatory issues. While manual processes might work today, this approach won t scale to handle the huge proliferation of devices expected in the future It can take a sizeable effort and investment to protect your business from data privacy concerns and security threats targeting devices, applications, networks and data. It s your applications and the intelligence from all the data being gathered that will drive innovation and competitive advantage. However, there s a global shortage of analysts who can unlock the information being captured and make decisions about how best to leverage it. You ll also need people and partners with a deep understanding of your industry to develop relevant applications and solutions. Another barrier to entry is the cost and complexity of creating a platform to bring together the devices and applications and networks to run a service business. There are many networks, devices, applications and IT systems across different industries and geographies. Without a single common standard, it s a real challenge to bring together numerous sensors and devices into a single solution. Many businesses that have introduced the IoT currently use manual processes to launch, test and monitor their connected devices and haven t calculated the true cost to their business in time, resources and risk mitigation. While manual processes might work today, this approach won t scale to handle the huge proliferation of devices expected in the future. Protect your business from data privacy concerns and security threats With fragmentation and a lack of standards, the IT industry will also need to develop standard protocols and a common approach to connectivity protocols, infrastructure and platforms to avoid an internet of silos that prevents businesses, people and things from communicating with each other. Internet of Things page 4

5 How to become an IoT business Just about every business will be impacted by the IoT, so now s the time to look at the potential for the IoT to connect with your customers and transform your business. What the earliest adopters realise is that the IoT isn t about things, it is about providing a service. The things are just a means to an end - the tools that help your business establish a direct, always-on connection between you and the rest of the world. You ll need to start with the basics around launching devices, including network coverage, SIM provisioning, rate plan management, usage reporting and network connectivity costs. LAUNCH Become an IoT business MANAGE MONETISE Once connected, you can look at streamlining the management of your connected devices and deploying applications that allow you to do things in new ways. By analysing and gathering intelligence from all the data you re now collecting, you can create new services and revenue streams by optimising processes, building new products and improving existing ones. Success depends on making services a priority to streamline operations, improve the bottom line and offer significant advantages over the competition. To become an IoT business, you need to focus on three distinct aspects which Jasper, the pioneer in cloud-based platforms for the IoT, describes as launch, manage and monetise. The connected washing machine is a model for IoT One example of how the IoT is enabling businesses to create new connected services is the connected washing machine. A new breed of washing machine is emerging that lets you use a smartphone app to remotely select wash options and, ingeniously, schedule loads not by start time, but end time. By eliminating the guesswork typically involved in transferring things to the dryer or clothes line, you ll never again find yourself waiting for a cycle to end. These machines will monitor levels of washing powder and replenish stocks via online retailers and offer washing pre-sets to give people one-touch access to the washing programmes they use most often. But it won t stop there. By applying analytics, real-time management alerts and smart reporting, manufacturers will be able to connect all elements of the service chain over the lifetime of the appliance. Internet of Things page 5

6 The future machine The future machine will alert the manufacturer when it needs attention, such as a service or repair. The manufacturer will automatically pre-order the parts and equipment required and notify an approved service agent. Armed with this knowledge, the agent can act in a timely way, preventing any major breakdowns. Technicians sent to fix problems will have details on the fault, the parts and tools required for the job, as well as the full maintenance and repair history of the machine. The manufacturer could also book the service agent s visit automatically via your electronic calendar. By linking all the elements of the service chain from the initial sale to delivery, customer call to technician response, breakdown to repair connectivity helps manufacturers and service providers monitor and react faster so that deliveries, maintenance and repairs are more timely and efficient, customers are happier and machines are humming longer. THE FUTURE MACHINE Monitor washing powder levels and replenish stocks via online retailers Use Smartphone app to remotely select wash options and schedule loads Offer washing pre-sets for one touch access to commonly used wash programmes Provide analytics, real time management alerts and smart reporting to manufacturers and service providers Internet of Things page 6

7 Prepare your business The connected washing machine is a great example of how the IoT will create new ecosystems spanning the entire service chain, from manufacturers and retailers, through to installers and service agents. Businesses that don t recognise the new opportunity and forge partnerships with complementary businesses, could find themselves cut out of the connected service chain and left waiting for the phone to ring. Service providers (like Spark Digital) are developing partnerships and building ecosystems to provide all the software and systems required to launch, manage and monetise a successful connected service business. MAKE IoT CENTRAL TO YOUR BUSINESS By making the IoT central to your business and recognising that all things become a service, you can optimise your assets, differentiate your products and services and transform your customer relationships. Internet of Things page 7

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