How IoT Propelling Service And Business Model Transformation

It is very clear that use of technologies such as the IoT in business will continue to rise as a variety of industries are increasingly trying to make business decisions based on data, particularly as the rise of the machines continues

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The very fact that machines have started talking to machines and humans can utilize the data in real time opens up plethora of technological opportunities, leading to the development of new services and business models. And, the Internet of Things (IoT) is at the centre stage of this very technological possibility!

It is interesting to note that while digitalization transformed consumer and user expectations of the 21st century, making consumers more sophisticated and participative; it is the convergence of varied technologies with the advent of IoT that has brought the power to both industries and enterprises to meet the demanding need of instant and personalized services from their customers. Industry is experiencing an accelerated shift from producing a ‘product’ to being a provider of a ‘connected product’ wrapped with customer centric services.

This article highlights the role of IoT in enabling new services & business models in transforming traditional industries with examples from the public domain.

IoT : Some Use Cases

We start with the manufacturing industry to find how the use of technology has helped the manufacturing giants like General Electric (GE) and HP transition away from selling traditional industrial products towards selling their products ‘as-a-service’ by packaging data and digital solutions around its core offering.

GE adopted the Cloud and IoT back in 2013 when it introduced Predix, an analytics platform for managing data produced by industrial machines in the Cloud. Industries served include global enterprises in aviation, health care, energy production and distribution, transportation and manufacturing. Today, GE’s Airlines, railroads, hospitals and utilities business have the ability to manage and operate machines in the Cloud driving service delivery and business model transformation.

For example, GE now sells its engines for some thousands of dollars per operating hour (and not as one time cost of $20 – 30 million per engine). The customer pays only when the plane is flying. The services include predictive, condition-based maintenance, fuel consumption, outage management, and more. The customer benefits as a large fixed cost for them is transformed into a variable cost and reduced downtime for them means more flying hours which means more business and more revenue.

One more interesting example involving the IoT. HP transformed their business of selling Ink for printers into and ‘Instant Ink’ – the Ink Replacement Service. With HP Instant Ink service, the printer buys the ink for its customers. The Wi-Fi-enabled printer is connected to the Internet. The sensors monitor ink levels, telling HP when the ink is running low. Before the customer runs out of ink, a new ink cartridge is couriered by the company. Billing and service start after customer inserts their first HP Instant Ink cartridge to the IoT-enabled printer. The service is already available in the US and Europe.

Weaving The Magic

The magic of IoT can also be seen in the world of entertainment at Walt Disney. Disney’s success is rooted in its ability to create wonderful experiences for its customers. The company uses smart technology to create an omni-channel experience which starts right from booking the vacation at Disney Website using any device- desktop, tablet or simply a mobile phone. Post booking, the My Disney Experience tool helps users plan the entire trip, from where they will dine to securing their Fast Pass.

In the park, they can use their mobile app to locate the attractions they want to see, as well as view the estimated wait time for each of them or simply use their Magic Band – wristband embedded with short- range RFID and long range Bluetooth technologies, which customizes the theme park experience for users. They can use the MagicBand to unlock the door of the Disney Resort hotel room, enter theme and water parks, check in at FastPass+ entrances, connect Disney PhotoPass images to their account and also charge food and merchandise purchases to their Disney Resort hotel room.

Let’s Come Back To India

In India, transport and commercial fleet providers are now opening up to adopting new technologies like IoT in business as the benefits outweigh the cost of investment. Even the insurance companies have started using technology to come up with ‘use(r)-based-insurance’ which considers driver behavior as a key parameter in deciding the premium to be paid. Safe driving thus becomes very important.

VRL Travels, a Bengaluru-based private bus operator, has been successfully using sensors on most of its fleet for the past five years. These sensors can detect obstacles 40 metres ahead to automatically slow down and stop, and thereby avoid the prospect of a collision. The sensor activates the brakes, when it finds any obstacle and slows down giving jerks so that the driver can activate the danger signal to warn other vehicles coming behind of the impending danger. The timer for the sensor is set mostly during nights from 11 p.m. to 5 a.m., when drivers generally feel sleepy. A small device is also attached to the steering wheel and the driver has to constantly feel it.

If he doesn’t, the sensor suspects that he is dozing off and the vehicle doesn’t pick up speed even the accelerator is pressed.

In summary, it is very clear that use of technologies such as the IoT in business will continue to rise as a variety of industries are increasingly trying to make business decisions based on data, particularly as the rise of the machines continues. Companies that can successfully collect and ingest the data, make it available on Cloud for anytime, anywhere access, analyze data for deriving actionable and timely decisions, and are able to monetize the entire supply chain will win big by creating the right customer experience and edging competition with right product and service mix.

By : Shweta Berry, Head of Strategic Alliances- Industry & Academia, Events and CSR, Aeris Communications, India

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