History & Context
Peter Lewis coined the term “Internet of Things” (IoT) in 1985 to describe how a ubiquitous network of sensors connected to the Internet can deliver information about the physical world directly to enterprise systems without human intervention. Now, IoT is flourishing from the advent of alternate power sources, improved bandwidth technologies and scalable digital addresses, like IPv6, to more economic factors where the low cost of semiconductors and embedded computing have made IoT more accessible to the masses.
Social and cultural factors have expedited the popularity of IoT devices in recent years where an increased demand for internet accessibility has arisen. This is demand is due to the desire to connect with peers on social media, to consume online content and to be able to access products and brands 24/7, has led to an expansion of cloud-based apps, big data and data science.
IoT is a dynamic part of the digital movement. Digitisation itself has been changing the way services are being offered and managed and increasing focus on Customer Experience Management (CEM), whether in a retail, telecoms or a banking environment. Consumers want hyperpersonalised experiences and online and businesses should be proactive, guided by data and technology, to maintain a high level of service availability, continuity and quality.
Using IoT as an advantage
Essentially IoT is making devices smart, devices are now able to undertake two-way communication, control other devices and react or advise humans with ‘intelligence’. These devices can be used by businesses to leverage the variety and amount of information which otherwise were either inaccessible or time consuming to collect. Companies are now using this information to change the landscape of services offered, with technology start-ups such as Uber, TrackR and WhatsApp leveraging the development of smart phones.
The pace, variety and depth of information gathered by IoT provides detailed insight into customer behaviour ranging from service consumption to product engagement, which itself will be the master data for determining how to offer and personalise new services. In certain industries where offerings are not directly related to the average daily routine, the information collected by IoT devices contributes to automation and optimisation of services, for example with auto transport in mining.
When analytics and artificial intelligence are added to the data collected the traditional service offerings will transform. As a result, it’s no longer just enough to find ways to adapt to customer experience trends and demands, but to predict and deliver accurate customer experiences proactively.
One thing companies must be aware of is that with the increased amount of data available to an organisation now, technology must be in place to anonymise the data and protect customer privacy. As more regulations such as EU GDPR and Know Your Customer (KYC) are enforced, companies need to be very clear on how they store and move Personally Identifiable Information (PII) which could be stored on IoT devices.
What organisations need to do internally to become digital
The logical first step is to audit existing service offerings and how they can be optimised to use the data gathered from IoT to improve current offers. With IoT enabled, companies will have more insights on service consumption, patterns, behavioural factors and operational aspects. From this, companies can engage customers into complete actions via push notifications or nudges, and control the service provided by implementing accurate real-time change, helping customers save on unnecessary costs. Utilities providers are the best exponents of this.
Digital transformations normally take a considerable amount of resources and time to be successful, but the process will be significantly improved if a customer-centric strategy is in place beforehand. Prior to implementation, senior management needs to have a view of the risk-based system and application architecture map, highlighting specific impacts to the business and technology. The value of the project must be communicated throughout the organisation that is embarking on IoT to gain buy-in. Adapting corporate culture to modern demands is often the most difficult aspect of transformation.However, if employees understand the value of the project, this makes it easier to sell to their customers.
Another issue is that crucial data for service transformation is often trapped in legacy systems. A large scale rip and replace approach for digitisation is not viable, the best path in some instances is to adapt a technological layer which can connect the dots on data collection, correlation, process automation, service moulding, offering, provisioning and monetisation. This is where organisations can commercialise IoT and establish a new revenue stream.
Become digital through partnerships
Customers are fickle and organisations should try harder to be front and centre of the customer’s mind. As companies become more aware that digitisation is helping increase revenue inflow and reducing CAPEX/OPEX, increased cross-industry consolidation and partnerships is occurring, seen by an increase of acquisitions in the technology, media and telecommunication sectors, where nearly $700 billion dollars’ worth of deals were completed last year. These acquisitions could increase the variety of new offerings, which is more likely to prove to a consumer that an organisation is customer focused and not product focused.
Whether completed through acquisitions or not, the aim of these partnerships is to provide the customer with one single interface to cater for many of their needs with cross bundling and services being connected across various industries, such as Uber partnering with Spotify to bring favourite soundtracks to every ride or retail chain House of Fraser partnering with Challenger Banks to make its image more appealing to younger generations. One key contributor to a successful partnership is that the participating entities should be agile to market demand, open to sharing data and have a common goal of customer-centricity.
The need to digitise has introduced different partnership models compared with traditional ones. In the past partnerships were more like mergers where one company owns the roadmap, whereas now partnerships are more collaboration based such as Orange and Viasat’s deal. IoT has changed how a partnership contributes to the bottom line and how this contribution is measuring customer behaviour more accurately. The learnings from IoT data could increase revenue from existing services, by creating new revenue streams and providing a personalised, converged service offering.
IoT is becoming a leveler
The Internet of Things has unified innovations across several industries and brought them closer, meaning from now on one industry segment will not take all the economics. IoT has enabled collaboration and organisations will have to plan for the future based on the ecosystem they want to be involved with rather than going solo.
IoT has flattened the competitive market, as more companies are working together to offer bundled packages to prevent brand stagnation and customer churn. When the data privacy aspect is handled appropriately, customer service offerings and products will become more precise. The more data companies obtain, the better they can develop to meet their customer’s desires. IoT is a win-win for consumers, now organisations must make it a win-win for themselves.
