Frank Wammes, CTO, Application Services - Continental Europe at Capgemini discusses how Customer Experience can be improved with the help of the Internet of Things (IoT).
SMART AND PERVASIVE TECHNOLOGIES
Welcome to our next edition of BTB. This month we look at the way technology has gained intelligence, and has reached all areas of our lives, cars, retail stores, and even our home appliances—the Internet of Things. If handled correctly, smart and pervasive technology can be a huge game-changer, bringing new services and intimacy to our connected world.
Capgemini has broad expertise and knowledge around these new imbedded, “always-on” technologies that gather data and help to predict actions, or provide the insights to better serve customers. Managing and taming the burgeoning data created by IoT will be a challenge that we are looking forward to.
Lanny Cohen, Chief Technology Officer, Capgemini
The Internet of Things (IoT) has the potential to fundamentally change how businesses and consumers operate, and there has been a lot said and heard about the value created by digital technologies and IoT implementation for the operational benefit. But what this might look like in practice?
Take the example of Panera Bread, the bakery–café chain that has enhanced its already successful business model of allowing customers to tailor their salads and sandwiches. Using the latest digital technologies – and embedding the Internet of Things (IoT) throughout their operations and supply chain – Panera’s customers can now build their orders online, pre-order favorite meals with an app, and pay quickly at in-store kiosks.
It’s a great example of what Gartner describes as a “business moment” – when a business spots an opportunity to blend the physical and digital worlds to drive growth. For Panera, having the ability to engage and serve their customers in new ways has made their business more relevant in the digital age.
This new focus on customer-centric experiences shows just how far the Internet of Things has come from its B2B beginnings. Whereas IoT was once just basic sensors collecting business data to inform operational tasks (fleet maintenance, for example), it is now making all types of connections between consumers, suppliers and businesses that really enhance the overall experience.
As Scott Nelson of the Harvard Business Review puts it, “the next wave [of IoT] will be led by companies who will achieve mass-market success by changing the way they develop IoT offerings, which in turn will change the way they do business.”
I think this evolution towards IoT2.0 will have implications in three key areas: people, brand, and security.
Reimagining the role of people
The impact that advanced IoT is having on business models is hugely significant. Whereas IoT1.0 still required human processing to make use of the data being collected, IoT2.0 is seeing a lot more machine-to-machine connections. You could call it the Internet of Things-to-Things. So if your smart fridge detects that you’re running low on groceries, it can place an order that is fulfilled by an automated warehouse, which is then delivered by an automated drone.
The role of people is therefore greatly changing as technology improves. It is creating both pressures and opportunities across workforces and HR departments – and it will inevitably reshape modern societies around a new understanding of what it means to “work”. In the case of Panera, the work environment has improved. Instead of a reduction in jobs due to automation, the Panera 2.0 digital strategy has led to an increase in jobs, where employees are focused on enhancing the customer experience by offering table service.
Managing brand reputation
IoT2.0 will also impact on how organizations go about building and maintaining their brand. As the buying process shifts further from physical interactions to digital and social channels – and as digital enterprises emerge that have only ever existed online – brand reputation will increasingly be in the hands of machines.
We’ve seen precisely this in retail banking, where reputation was once built on having a familiar high street presence, but now consumers are happy to switch providers to get the latest and best offerings online. Having a clear view of this new type of value chain, and understanding the speed at which reputational damage can spread over digital channels, will have increasing importance.
Balancing security with convenience
Another impact from the rapid maturity of IoT2.0 is on security. With so much personal data being created around our buying patterns, businesses need to ensure their systems can be properly trusted by customers. Yet security mustn’t get in the way of the customer experience either. Customers want “frictionless commerce”, which 451 Research describes as “removing the step of the end user approving each specific purchase.” The security aspect must be handled behind the scenes to deliver the right experience.
My colleague, Edwin Steenvoorden, recently examined the security impacts of IoT in more depth, specifically in relation to the insurance industry, although the principles he discusses apply across all sectors.
The Internet-of-Things (IoT) is profoundly changing the way companies interact with their customers in that it is enabling a post-purchase relationship that did not previously exist. By connecting devices to the internet, companies can gain insights into product performance and, more importantly, individual customer behavior with products.
Nobody doubts the promise a connected world can bring. We will connect an increasing and varied number of objects by equipping them with more sensors. Some examples include the advancements we see in technologies for automation and payments systems (such as Blockchain), which will allow us to extract more value from the connected ecosystem.
Sensors alone will not help you gain insights and drive business value. It is the ability to connect value chains and derive insights from analyzing the data generated by the use of these objects that brings sustained value. I recently saw an interview where someone stated that his company was at the forefront of their business sector after having incorporated a large set of sensors in their machines!
The value is realized when the IoT system communicates with the client various deviations from the norm, in near real time and offers alternatives. For instance, when you see a glitch in the beginning of the supply chain that will affect the delivery to the end consumer you can adjust accordingly. That is the real value: connecting the connected world.
But where does one begin in such a complex world with so many opportunities? Here are five guidelines to help you get started.
1. Use Your Imagination
Don’t go after the obvious applications, but take time to create an environment where you can “dream” of new value propositions. It is not always the first idea that delivers the best value or the most competitive advantage. Disney has even created a course for this known as “Imagineering.” What if you could inspire your organization with some Imagineering capabilities?
2. Sweat Your Assets
During my MBA, I learned this valuable lesson: sweat your assets, leverage what you have, and use them to the max.
Yes, there is value if you have a lot of sensors attached to your assets and perhaps you can get even more from them than you originally thought. Make a list of all the connectivity in your organization, whether in your production facility, in your products, etc. These are all potential sources of value and getting an overview will help you to come up with new value propositions.
3. Create New Insights
As I mentioned earlier, it is not the data from sensors that will bring new value, it is the insights from this data. Inject your organization with data science which will enable you to create new insights from the data you gather off the sensors. And not from the stand-alone sensors, but from the sometimes-hidden “connections” that exist between the different sensors. Enter with an open mind and be surprised.
4. Platforms Matter
Yes, platforms matter. Which platform can you use to drive your IoT initiatives? With the cloud revolution, there are plenty of platforms that can serve your needs, connect your sensors, and capture your data…some even with analytics bundled in. But don’t use the platform as an excuse not to start. Don’t go into extensive platform evaluations; rather, choose one and acknowledge the fact that in the future you might switch.
With the open connectivity offered today, switching has become a standard option, not a hindrance.
5. Fail Fast, Learn Faster
You can test your hypothesis based on the scenarios you dream up during the Imagineering process. Yes, you will find out that many scenarios will not deliver the required results or will not be easy to implement. This is not failure; failure only occurs if you don’t learn from it. Consider it an iterative process where the goal is to learn, not to have an immediate hit. What will this mean for your organization and how can you install this within your existing structures and culture are questions that must always be on your mind.
We are just at the beginning of the IoT wave, but we can apply what we have learned from other technology waves to explore and exploit new opportunities even faster. We cannot even imagine where this journey will take us.
Creating a Useful Internet of Only Some Things
When Kevin Ashton coined the term Internet of Things in 1999, prophesying interconnected smart objects running the world, he was really ahead of the times.
In 1999, large parts of US, not to mention other geographies, still used dial up Internet. There were no smartphones or tablets - in fact the Personal Digital Assistant, which were nothing more than digital diaries, were a rage. Online brokers used to charge up to $20 for a single transaction executed via Internet on a stock exchange. India had just seen 2G mobile phone network launched. World over, one way pagers were still the most reliable way to reach the IT engineer on the night application support shift. And yet, Ashton peeked into the future.
Nearing two decades from the time the term was coined; Internet of Things has variously been called Internet of Everything, Internet of Things, or Connected Devices. While we see several manifestations of the phenomenon today in our day to day life - some visible, and some hidden - we also face a start reality. The world hasn’t yet become Internet of Everything; in fact it would not be far from truth to say that we are nowhere close to connecting all objects around us in near future.
So while every digital disruption makes waves, why has Internet of Things still traveling on the upward slope of the hype cycle? The answer lies in one key characteristic of any platform concept - abundance. While all multisided platforms thrive on abundance of participation from those who deliver value and those who seek it by matching them together, too much abundance is actually confusing. If the delivery agents and the seekers cannot be matched efficiently or are unable to discover right value, the platform loses its charm and with it, the economic utility.
Today it not uncommon to find senior executives eager to reinvest themselves digitally, trying to push ideas about connecting everything from machines to consumer devices to CRM software. But ask them what they intend to do with data emanating from a shop floor in conjunction with the data from a television, and they will not have a firm view. However, in the age of FOMO - fear of missing out - most of them refuse to acknowledge the seemingly obvious possibility - the two data sets aren’t related in a way which can help the firm make any immediate strategic or economic gain. And hence it is completely alright to either not link them or not even link physical objects from all parts of their business value chain.
When Internet proliferated on desktops and later on laptops, multilayered security evolved rapidly and in step with the connectivity. From the traditional n-tier architecture to the user side vulnerability protection, a whole industry worked to ensure that gains from connectivity was not compromised by downsides of risking machine interaction. When Internet moved to mobile devices, leading hardware vendors worked to bring the same level of protection to the end users on these devices. We still have security and data breaches, but in the larger context of the enormity of Internet, these are blips. Also our security systems continue to evolve, learn and self-adjust to newer dangers of hyper-connectivity.
Now think along these lines with respect to say a connected home. Let’s say we have all devices in a home talking to each other. These devices may be manufactured by any number of vendors. Presumably a living room can have devices ready to connect with each other manufactured in multiple continents by dozens of firms, who have no idea, how the others have implemented connectivity features. A service provider can create a platform which sits on top of all devices to orchestrate their communication. But every configuration of the device talking to the platform is still bespoke. For device manufacturers, connectivity features are add-on, a new way to dazzle the user - hey look, I can switch on this fan in my living room through my phone when I am in the office! But there is very limited standardization for how you switch on a fan versus how you switch off a smart television.
Now this does not imply that device connectivity has no useful purpose. Firms like General Electric have created an industrial Internet, where their machines can be monitored and adjusted remotely because they are ‘fully visible’ hooked on to a network. A mining company operator can adjust how trucks are moving several hundred feet underground, sitting in a plus air-conditioned office. But each of these scenarios is predicated over a common theme - limiting abundance.
Successful and implementable Internet of Things is characterized by a limited set of things talking to each other for a well-defined, limited purpose, with tight boundaries around the nature of communication and data being collected from these things. Each use case result is tied to a pre-determined set of physical world outcome. And while experimentation is completely kosher, the starting point of a workable Internet of Things is a limited central theme - there is no spray and pray approach.
And in this sense, what is working well is to create an Internet of Some Things, not Internet of Everything. When the scope is limited, a firm can provide the right standardization of infrastructure and communication protocol and the right level of security ring-fencing working against any attempts to sneak in the connected devices network. There can still be platforms which aggregate dissimilar things, but each platform has a known, defined utility and boundary.
As we move from solving the infrastructure and data challenges of Internet of Things, global standards will have to evolve and will have to be implemented by truly forward looking device manufacturers. Only when connected cars from factories in Seoul and Detroit understand each other can the aspect of community or commerce evolve between objects. Until then, the focus should be on plumbing rather than marketing.
The grandness of the vision Kevin Ashton put forward will indeed be realized in future. The grandness of marketing presentations from vendors offering third order connectivity-driven use cases may however have to wait for the time being.