An Oracle blog about Internet Of Things

  • January 17, 2017

Pitching for IoT

Supreet Oberoi
Vice President, IoT and Big Data Applications

Have you read “The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail”? If not, just parsing the core concepts may suffice (for now). To quote from Wikipedia:

Improving a product takes time and many iterations. The first of these iterations provide minimal value to the customer but in time the base is created and the value increases exponentially. Once the base is created then each iteration is drastically better than the last. At some point the most valuable improvements are complete and the value per iteration is minimal again. So in the middle is the most value, at the beginning and end the value is minimal

For IOT adoption, I believe that we are at the beginning of the middle – for many verticals. As I discussed in my previous blog, with the exception of a few (albeit important) verticals such as aerospace & defense, high-frequency trading, enterprises are realizing minimal value by simply connecting the devices to the cloud, as tough as the technical challenges in integrating the devices may have been. But, by connecting the devices, we created the “base” (borrowing the book's terminology) and are creating a foundation for creating exponential value.

… another segue… 

In 2007, Steve Jobs introduced three new offerings – first, a wide-screened music-listening device (like an iPod) that could be controlled by touch. Second, a phone, and third, an Internet device. We know how that talk went. It turned out that Steve was talking about the same product! The device made amazing innovations in LCD, battery, networking, memory, storage, sensor technologies. Yes, iPhone – the device-- was a resounding success. Apple did not just make record-breaking profits from the sales of the device, but it expanded its revenues by providing new services on iPhone. By 2016, Apple was making over $24 billion in software and services from iTunes alone.

I think there is a lesson in that for all of us making a living from IoT.

There are now multiple examples of how traditional manufacturers have used IoT technology to create new revenue channels. BMW’s partnership with Sixt to provide a car rental service is an oft-quoted example. What is important to understand is that IoT provides an opportunity for manufacturers to move from an asset-centric transactional sales model to a relationship-oriented services model.

Recently, we at Oracle (for one of the largest car dealership in the US) provided an IoT implementation that lets the car dealership maintain its relationship with the automobile owner after the sales event. By providing new real-time insights into the automobile after the sale of the car, the dealer was able to provide timelyefficient and relevant add-on services for their car. This, in turn, led to them significantly increasing their revenue for servicing. In addition, due to superior customer service, the dealer expects more recurring revenue – these car buyers will promote the dealership to their friends and family, and will be more likely to purchase cars from them in the future.

We view a successful IoT deployment as one that is not only technically successful but also is on track to meet its ROI goals. In that regard, I have also found that simply improving the efficiency of an asset does not easily justify an ROI for your IoT implementation.

Some may even argue that most modern enterprises already run efficiently (I disagree... see upcoming posts on “dark spots in supply chain”). Yes, there still exist paper processes, siloed information management systems that can be improved by tighter integration, but there are fewer opportunities to fund IoT projects if we focus on efficiency alone.

To understand how to improve the top line with IoT, it is important to understand that IoT provides enterprises an ability to connect not with their devices, but with their customers.

What this means is that the IoT engagement for your company has to start from the leadership, and it requires a pragmatic vision to stay competitive by enhancing your customer experiences by making it easier to purchase, easier to service, easier to use your product. We have seen examples where the same motor can be tuned to different needs via software, leading to lower ownership costs, eventually leading to enhanced revenue by capturing the long tail in the market.

While developing services such as iTunes may seem revolutionary and ambitious, we still can take small steps to offer new services to build new revenue channels. Your manufacturing plant may sit on rich data set that (currently) never reaches the IT systems. What if you could provide real-time access to such data sets? What if you could provide historical data sets on your machine usage and breakdowns? What if you can automate certain alerts and feed them upstream to your customers (“We just finished manufacturing your product in San Antonio. We thought you may want to know”) or feed them downstream in real time (eg, due to an untimely large order, we need to order more Zinc)

Another such example was the case for smart parking that we recently implemented at Oracle. Previously, the customer only had one product – the parking stall. By putting sensors in every stall, tracking its availability in real-time, and doing historical analysis, the customer was able to:

·     Use historical occupancy data to promote offers via its loyalty programs

·     Plan capacity for new parking lots

·     Provide real-time availability on electronic billboards on highways

·     Identify user in a parking lot to give relevant offers for food and showers

In another one of our implementations, we are integrating a smart helmet and are using augmented reality for construction managers to share the progress of their project with owners. By using augmented reality with smart glasses and smart helmets, the construction company plans to improve its ratio of winning bids for new projects. Now, that is cool IoT!

What is the takeaway? Sure, IoT is about device monitoring. Sure, we can take the data from the sensors, put it in the cloud and develop new metrics and alerts. Sure, that will improve operational efficiency, and it is important. What is also important is executing to provide customer intimacy in new and different ways, … which is what IoT is also about. 

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