Pilgrim
6th February 2015

Introduction

No-one knows your business as well as you do: How to deploy sensors to capture data and how to “add value” to that raw data, turning it into information valuable to your customers. You’re now considering taking the next step, turning your product into an online service. This has substantial advantages but it’s also a significant step with associated risks and complexities.
Let’s define “connected” as meaning “persistently online i.e. connected to the Internet”, in other words taking a stand-alone product and making it permanently accessible from anywhere in the world using the Internet, either via direct connection or via a gateway. This connectivity then opens up the possibility of leveraging other Internet technologies such as the Cloud, the Web and smartphone apps, and of connecting your product into a wider ecosystem of products and services.
We now consider first the principle benefits of connecting a product and then the key risks which need to be addressed.

Benefits

Any one of these benefits may be the driving reason for you to connect your product, but it’s worth considering other benefits that you or your customers might also want one day, since choices made today can widen or limit future options.

  • Remote control: Your customers can now monitor and control your product from anywhere in the world. Check on those lab results during the weekend and set off a new experiment. Turn up the heating in the hotel room before guests arrive. Activate sluice gates. Change the dosing regimen for farm animals.
  • Alerting: Sometimes you need to know urgently if things aren’t right, and a connected product can signal for help. Receive a text message when the river level rises. Schedule maintenance for a failed streetlight. Detect and remotely diagnose a failing pump. Preventative maintenance – fixing a problem before the end-customer is even aware of the problem – is excellent customer service.
  • Upgrading: In today’s world of Continuous Integration and Continuous Delivery it is increasingly useful to be able to bug-fix and add features to products once they are deployed in the field. The ability to do so automatically over the internet, possibly wirelessly, possibly without the end-customer even knowing, can be a great boon in delivering up-to-date features and preventing product going “stale” in the supply chain.
  • User-interface: A tablet or smart phone has a beautiful touch-screen interface that most products cannot afford. Once a product is online you have access to the $100’s of usability that a tablet or smartphone bring, allowing an online interface which can be rich, intuitive and engaging – and works anywhere from right next to the product to the other side of the world.
    • A valuable side-effect is that this can now give you understanding of exactly how your customers are using your product, and how often. The same kind of analysis techniques used to optimise Web pages (e.g. Google Analytics and A/B testing) can now be applied to your product, allowing you to make it better and better.
  • Data Storage: Everything gets cheaper at scale and that’s especially true of data storage. The Cloud provides effectively unlimited storage for data collected from your product.
  • Analytics:  Using online tools you can mine data for insights about customers, and to diagnose product and user behaviour. The Internet can bring enormous computing resources to bear, on a pay-as-you-go basis, allowing complex analyses to be conducted almost instantly. This can give you and your customers a level of insight into their business never seen before – and it’s always up to date.
  • Connectivity to others: No company is an island. By exporting your data to others, they can help add value using their specialist skills, or perhaps even pay you for it. And you can import data from others too, mashing it up with your own data to provide unique value. This can significantly reduce your product costs and improve features. Need a live outside temperature reading? No need to install a sensor, just pull the figures from a weather service. This allows you to be part of a growing ecosystem, saving you from having to do everything and reaping the benefits of a growing base of customers and partners.
  • Lower human costs: Web technology is getting increasingly-good at “scaling”, meaning that you can create automated processes to help you grow from a thousand customers to a million customers without having to hire a large team. Connecting your product can bring operational benefits to you and your customers too, such as avoiding the need to travel out into the field to collect data.
  • Upsell: Selling a Product can be a one-off, but a Service provides an on-going relationship, giving opportunities for repeat sales and upsell other propositions to the customer, particularly if you use the data to help you target and understand their requirements better.
  • As-a-Service: Measuring product use remotely allows you to change your business model, offering attractive new payment schemes to your customers based on Opex rather than Capex, helping their cash-flow and making their business (and profits) more predictable. The classic example of this is Rolls Royce who now offer their engines “by-the-mile” instead of as a high up-front product cost. The same logic can be applied to any resource – light by the day, heating by the degree-day, feed by the animal-meal etc.

Risks

The power of connectivity brings not only benefits but also new potential risks too, so since “forewarned is forearmed” here we outline the key areas of risk to consider when connecting your product for the first time – and some views on how to mitigate them.
Security:  Security is often the first risk cited by users but the last considered (or implemented) by the designers of connected systems. Putting a product online without proper security will open up your business to malefactors (just Google “Shadow Internet”). Luckily all the tools and techniques to address these problems are available – they just need to be used. Risks include:

    • Data theft: Data being accessed from your product, or servers, or intercepted in transit
    • Control: If your products have power over something valuable (e.g. a flood-gate motor) then you need to make extremely sure that only authenticated users can send control commands.
    • Bot-nets: It’s not only your data that you need to protect – you need to control the code that runs on your products too, to prevent your products being taken-over by an adversary for unwanted purposes.
  • Privacy: Addressing security means you can control who sees what. So who does see what? The privacy question can sometimes be non-trivial. In the UK for example, personal data must be treated in a particular way according to the Data Protection Act.
  • Giving your data away: Today the two prevalent business models for connected products are a) Totally closed – don’t allow any data out or b) Totally open – give all your data away for free. If you give away (or even sell) your raw data, then all the value that can be added to that data can be captured by others, not you. And if you never show it to anyone else, no-one can help you or your customers to monetise it. So most businesses need to find an intermediate position between the above two extremes where money can be made. This usually requires digesting data into information, so that instead of giving-away all the potential value in the raw data, you sell individual pieces of information.
  • Scaling costs (or “getting the wrong side of the growth curve”). Cloud technology has enormous power to move, copy and analyse data, at a continuously-falling cost. But it still takes some human involvement to support customers, products in the field and any online service, and customers will generally expect 24/7 functionality. If this is not planned carefully, the human costs can rise in proportion to the number of customers, leading to a margin which is low or even negative, meaning that the more customers you have, the more money you lose. Implementation and Change: It is certainly possible to build a complete service yourself, end-to-end, and ten years ago it was necessary. But this “re-inventing the wheel” approach is needlessly expensive and slow, and in a world where the pace of change is only increasing, it is important to spend your time on the things that only you know how to do, rather than on engineering generic services. These factors make the “buy vs. build” decision a particularly critical one.
  • Standards support: Standards allow us to focus on what we’re good at, leaving others to do what they are good at, forming a growing ecosystem from which everyone benefits. But Internet of Things standards are changing very fast and there are many to choose from, so it’s easy to get stuck with old standards that are not delivering an ecosystem.

Conclusion

As with any powerful technology, connecting a product can deliver transformative benefits but also expose your organisation to significant risk. In this white paper we have made the case for the benefits of Connected Products as they increasingly find themselves part of a growing Internet of Things ecosystem, whilst remaining pragmatic about the risks and how to take them properly into account.

About DevicePilot

DevicePilot is the software of choice for locating, monitoring and managing connected devices at scale. DevicePilot is completely agnostic, allowing the user to connect any device across any platform, with simple and easy integration. The company draws on the significant experience of its founders who successfully scaled their previous connected-device businesses to 1 million+ end-customers in areas as diverse as mobile phones, IPTV set-top-boxes and the connected home. Contact us for further information