Businesses over the world are harnessing the internet of things to better serve their customers, accelerate product innovation and achieve massive cost savings across their organization. No wonder experts are hailing this latest phenomenon a key driver of the next industrial revolution.
There are some technological developments with the potential to totally transform the world of business, and the internet of things (IoT) is one of them – a cloud-based ‘revolution’ that’s expected to generate a remarkable US$3.2 trillion in new economic value annually by 2020.
The world is never short of babble about the next ‘big thing’, but what’s different about IoT is that it’s the latest link in an evolutionary chain that began with our ability to ‘connect’, developing to the point where we can now use that connectedness to innovate and do business more efficiently.
Just look at where we stand. Connectivity has gone mobile through phones, tablets, watches and even clothes. Our cars feed data back to their owners, their dealers and their manufacturers. Smart homes, smart buildings and even smart towns are a reality. And that’s the least of it.
The thing to remember though is that the real value of IoT isn’t in the connected devices themselves, as those who are driving this ‘fourth industrial revolution’ point out.
The value lies in turning the mass of data generated by that world of connected devices into “tangible, actionable, business insight” – and that’s already happening with extraordinary results every single day, benefiting businesses from the world’s largest oil producers to the leading fast food chains.
To be able to mine that value, however, we need to be able to see IoT in the round, and not just as a function of its connectivity, and that’s crucial, says Enrique Andaluz, director of strategic business development, Worldwide Discrete Manufacturing, at Microsoft.
“Devices are connected through a network of things, but also through a network of people and services,” Andaluz explains. “So when we talk about IoT, the concept is incomplete unless we talk about the internet of things, the internet of people and the internet of services.”
That more holistic view of connected devices allows us to see not just their ‘industrial’ side – where they fit into the processes and systems of which they are part – but also their consumer side, how their owners interact with them. That’s where much of the innovation occurs and value is generated.
It can often seem simple, even effortless, so sophisticated and unobtrusive has this transformation of data-into-value become.
For example, it’s a sunny day and you’re out for a walk. Suddenly on your phone there’s an offer of a free ice-cream with every sandwich bought at your local McDonald’s, which, as it happens, is just a few hundred yards away. Well, why not! It’s a good deal. You’re pleased to receive it.
What’s happening here is that McDonald’s has been working with New Zealand-based mobile marketing experts, VMob, on ways to harness the data in its IoT, personalize its customer experience – and as a result, boost sales.
They’ve combined the standard features on the McDonald’s app – such as its restaurant locator – with more ‘contextual information’, such as weather data. So if the day is wet, the special offer may be for coffee. If you’re moving quickly, it may point helpfully to the nearest drive-through.
For those whose appetites are whetted mainly by return on investment, consider this: figures from January 2015, show that as a result of using the VMob platform, McDonald’s in the Netherlands alone – it’s also being piloted in Japan and Sweden – has seen a 700% increase in offer redemptions.
What’s more, Dutch customers using the modified app are returning to restaurants twice as often as before – and better still, in tight economic times are spending 47% more per person.
It comes as little surprise then that 60% of enterprises globally already view IoT as strategic to their businesses, according to the 2014 IoT Survey by global market intelligence analysts IDC.
And those sectors that haven’t been early adopters – such as traditional retailing, for instance – are already struggling desperately to catch up, shows the recent Deloitte report Global Powers of Retailing 2015: Embracing Innovation.
“IoT is very much economically motived and driven,” says Sam George, who is responsible for IoT within the Cloud and Enterprise Division at Microsoft. “Essentially, it’s a way of improving businesses by using additional signals and the data from those signals.
“But it’s important to see that in context. At Microsoft, we have a fundamental principle which we always convey to customers by telling them: it’s the internet of your things…
“By that we mean that you don’t need to deploy new things to take advantage of IoT. Our customers already have a lot of these signals. It’s about being able to harness them from disparate devices and sources, and using advanced analytics to find that ‘needle in a haystack’ that allows them to improve their products or provide exciting new services.”
While its core concepts are certainly complex, there’s been considerable internal focus at Microsoft, says George, on making advanced machine learning intuitive and easy for customers to use – “almost drag ‘n’ drop” – using the cloud computing platform and infrastructure Microsoft Azure.
“As a business, I want to take my data and have simple ways that allow me to extract operational insights. So we have simple but robust data warehousing and pipelining systems, such as Azure Data Factory. After that, it’s about operationalizing those insights, so we provide real-time capabilities, such as Azure Stream Analytics and Azure HDInsight Storm.”
Having extracted those valuable business insights from the data, the next stage is to plug them into the business. A good example, says George, is the German manufacturing company ThyssenKrupp Elevator, which uses Azure IoT services to power the next generation of elevator support, offering predictive maintenance and pre-emptive service for its customers.
“It’s not just enough to detect that an elevator needs service,” he explains. “You also need to do something about that in your businesses processes, such as starting a customer service ticket or scheduling a visit to the elevator by the maintenance team. So we provide a set of business connectivity capabilities as well, such as Notification Hubs, BizTalk services, and a range of platforms that allow you to integrate with your business processes in any way you see fit. That is where real efficiencies are found.”
The simple fact is that data – to quote Microsoft itself – is only ones and zeros until you turn it into business insight – and that potential can be found in the most surprising and unlikely places.
Take Lido Stone Works in New York, a producer of beautiful architectural stone products that needed to modernize its business and automate its production processes.
Realizing the potential of IoT, it created an intelligent system that connected the plant’s machines to the experts in Italy who built them and regularly flew to the US to maintain them – harnessing the flow of data via a secure cloud based connection.
That was just the start. IoT has transformed Lido’s business culture, increasing revenue by 70% and productivity by 30%. And it’s just beginning to realize the possibilities for product innovation and customer service.