Disruption from the Internet of Things: Are you ready?

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Some estimates suggest that the number of connected objects will be more than 50 billion by 2020. Each of us will own between six and 10 connected objects. But what exactly is the Internet of Things (IoT)? Wikipedia describes it as “the network of physical objects — devices, vehicles, buildings and other items — embedded with electronics, software, sensors, and network connectivity that enables these objects to collect and exchange data."

From product to service: a paradigm shift?

The numbers show that the industrial sector is very much an early adopter when it comes to seeing the added value of connected objects.

The IoT, or Internet 4.0, has given industry a new way to organize production. This Internet of smart factory objects is characterized by continuous and immediate communication between the various tools and workstations integrated into production lines and supply. The objective is to make a smart factory, capable of greater flexibility in production and more efficient allocation of resources.

81754359But above all, the manufacturing industry has been among the first to see that the Internet of Things is a fantastic opportunity. In particular, it has enthusiastically adopted the ability to monitor machines remotely to avoid or reduce downtime by anticipating wear. This change has enabled the sector to reinvent itself by offering its customers a ‘service and a solution,’ rather than ‘machine and product.’ In other words, companies no longer sell compressors, they sell compressed air; not drills, but holes.

Connected objects speak. But will they speak in your best interests?

A connected object has three parts:

  • A sensor in the object to collect information
  • A system that collects and manages the information received
  • A network to connect them together

But it’s important to remember that in a machine-to-machine (M2M) model, objects can communicate and make decisions to help you get the best outcomes.

My thermostat, for example, receives information that all the house lights are off and it can therefore reduce the temperature. Or it gets the message that my garage door is open, and knows I’ve returned and it must warm up the house. Even simpler, my washing machine will recognize the QR code on my favourite shirt and set itself to the right temperature.

But in reality, which objects will communicate? And will all brands speak to each other? Have we really thought about this? And are you ready? Because things are already talking, and soon they may start to retain information and even adapt.

The Internet of Things could shake up distribution business models

Twenty years ago, barcodes enabled retailers to find out what customers were buying through loyalty cards. Retailers quickly realised the power of transactional data and how it could be used. And there is no reason for them to change.

Retailers (whether pure players or bricks & mortar) do not want to run the risk of being by passed by the IoT. And there’s plenty of potential for that.

Your connected printer, for example, may be set up to go straight to the brand to organize new ink cartridges, avoiding any intermediaries.

Amazon saw this threat before many of its competitors. In April 2015, in Seattle, the company launched its Dash button, a barcode reader connected to the Wi Fi home network. It can scan products or use voice recognition to order from a list of products that will be delivered by Amazon.

Now Amazon has unveiled Amazon Dash Replenishment. This allows a directly-connected device to place an order for consumables. No need for any button this time. Now the machine automatically places the order when it decides it is necessary. Printer cartridges, reams of paper, softener salt ... the list of available consumables is pretty extensive.

By managing direct communication to these connected objects, Amazon has managed to make itself indispensable to consumers and manufacturers, and so maintain its position in the value chain. Other retailers will have to follow suit if they want to remain competitive.

As Harold Grondel, of Productize, the first agency for the IoT, says, “Once upon a time, someone noticed that some devices had a battery, and how much value that added. Before long, the same thing will happen with connectivity: More and more devices will be connected, and our lives will change again.”

It’s becoming increasingly apparent that some of the biggest disruption from the IoT will happen with streaming data. Given customers’ expectations for real-time engagement and the accelerating speed of business, being able to make fact-based automated decisions are what will determine organizations’ readiness.

This paper, Understanding Data Streams in IoT, does a great job exploring the opportunities with streaming data using SAS Event Stream Processing. I hope you find it helpful for getting ready for the IoT disruption!

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About Author

Albert Derasse

Sr Business Solutions Manager

Albert Derasse is a true multitasker: beside his job as Senior Business Solutions Manager Customer Intelligence at SAS South West Europe, he is also lector in Belgian Management Schools, teaching students the art of marketing strategy. Albert is a customer-driven marketeer with a great capacity to listen first and then turn the input into strategy and results. On the blog Albert will share stories based on his experience in helping companies find more profitable growth opportunities and amplify marketing initiatives.

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