A lot has been written about the Internet of Things, but little to help the senior executive or product manager who is trying to decipher what it all means for their business.
We asked Bill McBeath, Chief Research Officer at ChainLink Research, to add some perspective.
Briefly introduce your company
At ChainLink, we focus on supply chain and IoT technology. We have an operational industry background, which means we’re not just theorists. We’ve been there done that.
Who, in terms of industry and role, is the IoT impacting?
The IoT is impacting the broad economy, starting with manufacturers who are embedding more intelligence into their products and then implementing new types of services based on the data they collect. All manner of solution providers are impacted, and a wide range of service providers—especially those providing services that have a physical component such as logistics or field service. Also, systems integrators.
How should companies get started with the IoT?
Asking ‘What problems can I solve with IoT?’ is usually the wrong question to begin with. The right question is ‘How can I improve my business?’ It’s education, and understanding what technology is out there and available. It’s opening up your mind to the possibility of new business models and services that are enabled by this technology.
What do you mean when you say the IoT is about more than adding features to a product?
There are many things you can do with the intelligence you gather, and it impacts your business model and your service operation. You’ll need to bring a whole bunch of diverse stakeholders together from around the company, as well as partner organizations. This is often called the ‘charrette’ model, as used in city planning. This allows you to understand all the potential impacts and possibilities of your IoT technology.
What are some of the questions, advantages, and challenges around cloud technology as it relates to the IoT?
The main challenge is ordering all the pieces and putting them together. Companies need to ask where is the smartest place to put intelligence – that’s usually figured out on a case by case basis. Related to that is who’s going to provide each of those pieces? That’s an ecosystem of partnerships.
Security is huge, and something that people often don’t take a deep enough look at during the initial architecture design. Cloud security is reasonably well understood, but device-level security is less well understood because the original systems or products were not necessarily connected to the Internet.
In your research, security was cited as the biggest issue for IoT adoption. In terms of security, what is the best way forward? Is it up to individual companies? Federal regulation? A common consensus?
Manufacturers may not be building all the parts, they may be partnering with software companies, and that makes it more complex. Say you are building a self-driving mining truck. It’s in the manufacturer’s interests to make sure that’s a very secure system. They need to not only take care of their pieces but also do due diligence with their partners. Identity relationship management will be essential so you know who the owner of the device is, and it’s likely more encryption will be added where needed.
What is a data broker? And why do we need them?
Data is being generated by a machine that’s owned by one party, but there may be many other parties interested in the data. An over-the-road truck can generate data about its engine and its location. The manufacturer has an interest in that data, as well as the service company, the transportation carriers, and the customers themselves. A data broker acts as a central hub and gives access to that information to multiple parties. Security becomes a big issue here. Having the right access controls and authorization in place is very important.
What do you mean when you say manufacturers will move from “selling things” to “selling outcomes” and in what ways will this change the relationship between the customer and the manufacturer?
This is a trend we’ve been seeing for a couple of decades now, but it seems to have accelerated in the last five years. In this new model, the manufacturer retains ownership of the product and service and this changes the relationship to the customer. Whereas before, if a machine broke, the manufacturer would make money selling a new part, now they are on the hook for the fix and might lose money. This aligns the manufacturer much more with the customer, and the relationship becomes much longer term.
How will the IoT change partner relationships?
Nobody can do it all themselves. Companies looking to get into the IoT will find partnerships become very important, and this can be complex, involving multiple partners from multiple companies.
Why should companies look to build an open rather than a closed system?
It’s not necessarily one or the other. What happens is that there may be a closed system at one level and an open system at another. If you’re a builder of smart washing machines, maybe you want to do detergent replenishment and your own service network. You’ll make sure that the machine is always running and the consumer always has detergent. That could be a closed system.
But now if you hook that up to a smart home, you have to open up the interface to integrate. Some people will choose to be a platform, like Boston-based Bigbelly, which started by supplying smart trash cans for the city but then realized the bigger potential of cellular and public Wi-Fi. It’s now starting to think of itself as more of a platform.
In an open system, how do companies decide who owns the data?
This is a big question that we are still in the process of answering. Take the truck example again. Who owns that data? The leaser? The shipper? It’s not a simple question, but it’s something that should be addressed upfront otherwise you could be locked out of some very valuable information or end up fighting with your customer over data, which nobody wants.
Read more about how to define your role in the new smart connected world. Download the full research paper from ChainLink.