The potential of the Internet of Things is only now being realised in business – and there’s a lot more to come, says Tony Judd.
The Internet of Things (IoT) is being fueled by a mix of technological, political and social factors which are driving more organizations to adopt IoT-enabled solutions.
For example, the use of social media and mobile technology has transformed consumer and citizen expectations. Also, the declining costs of sensors, connectivity and processing power has made IoT a more viable proposition to a broader set of organizations. Changing regulatory requirements across a number of industries are also making an impact.
Research commissioned by Verizon from ABI Research forecasts massive growth broadly, with the number of business-to-business IoT connections — more than quadrupling between 2014 and 2020 — rising to an estimated 5.4 billion connections globally.
When you look across the spectrum, IoT covers a multitude of solutions, from wearable devices, to remote monitoring of energy management devices to industrial transportation to improve safety and efficiency. After years of focusing on cost-cutting, many industries — from financial services to manufacturing — are looking for new ways to differentiate themselves and boost share prices. Many organisations are starting to use IoT as a roadmap to improve their customer’s experiences, accelerate growth and create new business models that are driving societal innovation.
We examine this impact of IoT below in three specific verticals, where uptake has been most significant:
IoT is not a new concept for the insurance industry; it was originally implemented in the Property and Casualty (P&C) segment using a concept known as usage-based insurance (UBI) for vehicles. The automation of once-manual tracking allows underwriters to improve pricing and insurers can close claims more quickly and improve loss adjustment ratios. The end result of this process improvement is a positive customer experience.
Insurance companies can improve all aspects of their business processes by using modern data analytics captured using connected IoT solutions. For example, interactions with existing products — when combined with demographic information and retail spending habits — help insurance companies understand who to better target with their products and improve market timing.
Life and annuity companies are also beginning to reap the benefits of IoT for underwriting profitability. Group and individual life providers are looking for ways to measure their customers’ adherence to proven healthy outcomes. Some companies are now even improving their group life and health premiums by outfitting their employees with IoT sensors, like Fitbit, that offer a more holistic view of the outcomes of exercise and health programs.
The factory of the future, with the aid of IoT, will be more capital efficient and flexible. Updates from product design teams will be introduced more quickly, and customizations incorporated more easily. Schedules will reflect changes in demand within hours, not days.
IoT gives manufacturers the ability to anticipate and correct product faults more quickly – experiencing less downtime; maintenance visits can be triggered automatically as needed by an impending fault instead of happening every quarter or every month. Managers will also be able to see what stock and raw materials are on hand, and exactly where they are, from their tablet. IoT-enabled asset tracking not only provides manufacturers with better control of their logistics, but using the data can also enable them to offer their customers near real-time tracking of shipments, an appealing differentiator.
With IoT manufacturers are increasingly moving towards “servitization”, where instead of selling products they contract to deliver outcomes.
Fleet management was one of the earliest uses of IoT, and remains one of the most widely deployed today, specifically in North America. It can increase efficiency, saving time, and cutting fuel costs by assigning and adjusting work orders automatically. It can also improve the customer experience by enabling transportation companies to keep them informed on the location their shipment and anticipated delivery time as well as logging a driver’s working hours, speed, and driving behavior.
Once cars are connected, automotive manufacturers can also gather detailed data about how often they are driven, which amenities are being used, which systems are malfunctioning, and thousands of other data points. The manufacturer can spot the underlying causes of failures, pre-emptively issue recalls, improve designs to iron out problems, better target new features to driver and market preferences, and issue guidance to dealer sales and maintenance staff.
In conclusion, IoT has the potential to fundamentally disrupt the way we live and work. It offers organizations the opportunity to transform how they operate: improving their customer experience, accelerating growth, and managing evolving risk. It’s already transforming whole industries, from healthcare to retail. And there’s much more to come.
Tony Judd is Managing Director of Verizon UK&I and Nordics