The key to monetising IoT and getting true value out of data
It is hard to find any piece of equipment that can’t be hooked up to the all-consuming IoT. The problem is that while these devices are low cost, they are also low value unless organisations find a way to capture and leverage the created data. And these devices, by their sheer number, are generating huge volumes of data.How many organisations will have the required in house infrastructure to store or analyse this information? Or the people with the skills to determine how best to leverage this data to drive real business value? This IoT enabled data revolution is not just about finding ways to drive business efficiency or improve customer service; it is about creating data streams that underpin new collaborative business models and can be actionably monetised.
There is a very real chance that SMEs in particular will miss out on the IoT gold rush simply due to a lack of infrastructure and skills.
Of course, many organisations have been capturing machine data for years. Petrol stations, for example, have pump event logs that track every time a pump is picked up and how much fuel is used. Fuel, however, is just one part of the overall customer basket and represents a fraction of profitable revenue. It is the complete customer journey that is key – and linking pump activity to the rest of the customer basket can provide a chance to gain far more customer understanding and hence drive incremental sales.
With more insight, from the timing of visits to detailed customer segmentation, petrol retailers will be able to improve the way in which customers are attracted to forecourts. Taken to its logical extreme, retailers could combine number plate records already captured for security purposes with the purchasing habits of opted in loyal customers to deliver targeted offers and promotions in real time to mobile devices as they enter the forecourt store.
These new data sources are not all about the customer: petrol retailers can also use IoT connected sensors to track issues such as tank temperature which affects fuel volume – a temperature shift of one degree can result in under filling by several thousand litres over a year, representing a huge potential loss of revenue.
But this is just the start – it is the collaborative model that will drive the real incremental business value. This customer data is interesting not only to the petrol retailer but also to third parties. Selling this data back to petrol suppliers, for example, offers a new revenue stream. Or consider a car park company using sensors to determine how many spaces are free – selling this information to retailers would enable the retailer to update customers coming in store for click and collect with the latest information on parking availability, an amazing extension of the customer experience.
Of course with so much potential IoT driven information and so many different areas to explore, it is tough for companies to prioritise and understand how best to driven value from this data. IoT is not a magic bullet; nor is big data analytics. And only a tiny minority of the very largest companies can justify a multi-million pound investment in the infrastructure, tools and analytics skills required to understand and prioritise the new business opportunities.
And it is this understanding that is key: while it is simple to determine that Volvo would gain more value from monitoring the performance of individual components in order to suggest preventative maintenance rather than tracking a customer’s music habits, what about external data? Combining the fuel sensor with an external data feed from petrol forecourts will enable the manufacturer to alert the driver not only when fuel is due but the availability – or not – of fuel and distance to nearest forecourts. Add in loyalty schemes and offers that can be linked not just to individuals but also specific car manufacturers and marques, and the entire collaborative data model is both complex and exciting.
This is why the cloud analytics model is so compelling – from the investment in secure cloud infrastructure globally to the creation of dedicated analytics tools designed specifically to handle and drive value from vast data volumes. Organisations now have the chance to embrace IoT and explore these new data resources with minimal investment – opting for a monthly fee model to gain access to both the technology and data experts required to help prioritise activity and identify new data driven data streams.
IoT is revolutionary, but not in the way perceived by many organisations today. According to Gartner, growing numbers of businesses will be able to use IoT analytics to drive significant revenue streams. Organisations that have never considered the chance to monetise their data now have the opportunity to mine these rich new data seems. Indeed, many of what have traditionally been core business processes could soon be superseded in value by the monetisation of IoT provided information.
The challenge for organisations is not simply slap sensors on every piece of equipment but to actively look at the new data streams that could be created and their potential value both within the business and to third parties. It is those companies that explore cloud analytics, which begin to think differently about the way data is used and actively embrace the new collaborative world that will gain huge potential value of IoT, from new business processes to entire new data driven revenue streams.
Originally published on IoT Tech News. Author: Peter Ruffley.