Drawing on our experience of deploying mass-market IoT systems in the millions of units, here we explore five ways that IoT can make or break your business. We also cover what to expect as you start to roll out IoT, examine the daily tribulations of an IoT Operations team, and ask whether it’s time for the IoT industry to adopt the term “Service Assurance” from the telco industry.
The Five Ways
1. MAKE - Differentiation
Probably the most immediate reason for connecting a product to the Internet is to differentiate it from its competitors, increasing its adoption rates and/or value to customers. Whilst this does create new features for your product – for example remote control or remote diagnosis – it is a mistake to think of IoT as “just another feature”, as it’s much more profound than that. IoT marks the beginning of your company’s shift from product vendor to service provider – a shift which is likely ultimately to transform every part of your company.
2. MAKE - Recurring revenue
If you’re an established company with revenues from selling product, your shareholders will be very interested in the potential of IoT to create a new stream of recurring revenue for you. Rather than just selling a product once, you can receive ongoing revenue for its IoT functionality and the result is often a sharp increase in your company valuation. However as we’ll explore later, this is just one side of an equation.
3. MAKE - Closer to customers
Although less obvious initially, this reason can be the most significant in the long term. Connecting your product allows you to collect information about how it is used – and about the customer themselves:
- With a connected product you can actually see how each and every one of your customers is using your product – each customer, every day – and you can use this information continuously to improve the product based on this large amount of quantitative data. Tesla’s nightly software upgrades are a great example of this. There’s an analogy here with Web development – Google Analytics or similar tools show how many users your website has, which parts of the site they are using, whether they are bouncing or converting. Now with IoT you can make these kinds of measurements on your product too.
- A connected product can tell you a lot about the customers themselves too – how they go about their business, their lifestyles etc. You can use this to offer them extension products or related products. Again, there is are good parallel with the Web. E-commerce has allowed companies like Google or Amazon to make individual offerings to each user, based on what they know specifically about them, which (if done sensitively and with regard to privacy) can be a win-win.
4. BREAK - Financial loss
Most companies understand that getting into IoT is a significant investment and it’s tempting to assume that the biggest hurdle is the initial R&D investment and then it’ll all be plain sailing. But in fact there is plenty of evidence that once you’re over this hurdle this is when the challenges really begin. It is the day-to-day operations required to support a connected service which can end up costing the big money over time, and thus ultimately make the difference between profit and loss.
5. BREAK - Reputation
Here are three ways that moving into IoT could potentially damage the reputation of an established product brand, and there have been plenty of examples of each in recent years:
- “Internet of Shit” – a phrase increasingly used to describe propositions that just don’t make sense for the user, however well they’re executed. In the domestic world an example would be the Connected Kettle – why would you want one? Because IoT is new we’re still in the innovative phase reminiscent of early apps when the iPhone was launched, many of which don’t really make sense.
- Security – whether it’s accidentally releasing your customers’ data, or allowing your devices to become a botnet, there are lots of ways to drop the Security ball. The good news, if you judge you have sufficient brand value to lose for it to be worth investing properly in this area, is that there is plenty of expertise around to solve this problem. Just remember that you will ship with security holes, in your stack if not your application, and so you absolutely need a plan to be able to upgrade your devices in the field.
- Poor User Experience (UX) – this is what happens when a product works technically, and in principle does a useful job, but it does it in such a way as to be a massive pain for the user, negating its value. IoT exacerbates this because the number of devices is growing so fast. Devices that are hard to install, constantly need resetting, or repairing, or are hard to remember how to use if you only engage with them occasionally, will quickly end-up being abandoned curtailing your recurring revenue.
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