By Vinnett Taylor, Head of IoT – Enterprise, O2
The rollout of 5G will result in the rapid growth of the internet of things, with as many as 20 billion connected devices by the end of 2020, according to Gartner. The report predicts that the IoT will have a great impact on the economy by “transforming many enterprises into digital businesses and facilitating new business models, improving efficiency and increasing employee and customer engagement.”
These are incredibly exciting times, but I am starting to wonder whether growth on this scale is justified, and if businesses are asking the right questions before making substantial IoT commitments. For me, the IoT should only be assessed or measured in terms of the value it delivers. Starting with a challenge you want to overcome, you need to identify the data you require, put the infrastructure in place to collect it, and ensure that you have the means to analyse and interpret the data you collect. Then, and only then, will you have a viable and profitable IoT application.
The IoT in action
Telematics is a great example of how the IoT can transform and disrupt a market. Until recently, car insurance has been a loss-leader for the wider insurance industry, despite premiums for new or young drivers often being beyond their means. It’s all to do with the risk the insurer takes. The fact is that young drivers are more likely to be involved in accidents – the statistics prove it – and insurance premiums are calculated to reflect that risk.
For example, the UK’s own statistics show that 22 per cent of road accidents involved at least one young driver aged 17-24, and accidents involving young drivers typically represent about a quarter of all deaths on the road.
But while the statistics may prove the risk, the result is that premiums have been based on assumption, rather than driving ability or actual behaviour on the road. With telematics, however, a simple connected “black box” can monitor a driver’s behaviour on the road and adjust insurance premiums accordingly. Put simply, the better you drive, the less you pay.
Sensors or strategy?
So why is telematics for car insurance such a good IoT example? Because it addresses a need. It solves a problem. And that’s where I believe a lot of businesses go wrong. The IoT has become the latest marketing buzzword. The next big thing. Something that every business must embrace or die. But I don’t believe that’s the right way of looking at it. What’s important is the strategy that underpins the IoT, rather than the technology itself. The report from Gartner puts it more eloquently:
“Do not be shortsighted. Start with a strategic perspective by aligning use case identification with the strategic levers that drive success for your organisation.” – Mark Hung, Gartner Research Vice President
I’ve sat on expert panels where even the definition of the IoT is debated fiercely. Some say it is all about the sensors or devices that collect data, while others argue that it’s the connectivity that matters and that delivers the value (when you work for a telecoms organisation, it’s not hard to see why!) Others still are certain that the IoT is all about the data itself, providing organisations with endless possibilities for analysis and interpretation.
But we are jumping the gun. The IoT may bring about an organisation’s digital transformation. But digital transformation doesn’t necessarily require the IoT. The questions every leader, of every organisation, needs to ask are these: What is our strategy for bringing about our digital transformation? What do we need to do to make sure that we will still be around in five years’ time? What technology do we need to deliver that strategy? What data would help us to make informed decisions along the way?
Profitability and the IoT
The answers to these questions will determine the extent to which a business needs to invest in IoT infrastructure and data analysis. In short, it must establish a need for connected devices to provide specific and useable data, in order for the business to see a return on its investment. I talk to many organisations who are investing in IoT solutions, and too many of them plan to collect as much data as they possibly can, in the hope that its value is bound to be proven at a later stage.
The IoT applications that will prove profitable are the ones that answer a question, address a challenge or solve a problem. We’ve considered the way that “black boxes” in cars can help young motorists reduce road traffic accidents and provide insurers with a fair means to assess risk. But what are some other examples?
At O2, we have developed O2 Smart Vehicle, which uses IoT sensors to provide fleet managers with real-time information on parameters such as vehicle mileage, engine diagnostics, driver behaviour, vehicle location, fuel and oil levels, tyre data, battery status and seatbelt engagement. This boosts business fleet efficiency, helps maintain vehicles in top condition and ensures that drivers stay safe.
What’s the common thread here? It’s the IoT providing valuable and insightful data that is put to immediate and profitable use. Every scrap of data that O2 Smart Vehicle collects has a purpose.
Where are we going?
Ultimately, I don’t believe we will be talking about the internet of things in ten years’ time. We won’t refer to “connected devices” because we will expect all devices to be connected. Instead, we will be talking about how data science allowed us to transform the way we live, work and play. From huge infrastructure in our smart cities, through industry operations, to the vehicles we drive, right down to the consumer products we rely on every day.
What do you think? I love talking about the IoT with organisations of all sizes, and hearing other people’s views. You can contact me via LinkedIn.
Vinnett Taylor is currently Head of IoT – Enterprise – at O2. She acts as the entrepreneurial and commercial lead of O2’s partnership opportunities, and has a successful track record of first to market launches. She is an industry expert on IOT and Autonomous Vehicles, and speaks regularly at Government policy and industry conferences. Vinnett is also a member of the Institution of Engineering and Technology’s Digital Panel.