Monetising the IOT

The first Monday of every month Bijoy Munda of Baranti a small tribal village in the district of Purulia West Bengal, pays offs his house and his shop’s electricity bills from his phone. While he was at it this Monday, Dr. Miku Sinha a senior orthopedic surgeon from across the planet, connected to Munda’s son over a video-call, while taking a breather in between his busy on-call schedule from coastal UK’s Cardiff, seeking to check out the mud-hutted accommodation quality of the exclusive homestay arrangement in Munda’s tribal village, which the Munda family is organising for Dr. Sinha’s photography tour to India next month. On spot Dr. Sinha’s wi-fi enabled camera would transfer fresh data through a portable device onto his stock photography account. Which would then immediately be accessed and potentially carted for an online sale worldwide across media.

With 90 million people living in smart homes across the world already, smart devices are exploding  that number almost by the month with a yet unknown but very exciting future. It’s estimated that by  2020, there will be 50 billion connected devices and around $309 billion in incremental revenue opportunity for IoT suppliers, mostly in services and over the next ten years the Internet of Everything will, according to leading analysts, create between $6 trillion and $33 trillion of new value.

Change in Focus

With numbers like these, it’s clear IoT is not just another trend, it’s the future of life and business. It describes an environment where everyday devices are connected to the Internet, as well as one another with a seismic shift for businesses. Ready or not, the Internet of Things is taking over the world. Every day, more and more objects have some sort of network connection – from coffee makers to security cameras, from air quality sensors to connected cars, there isn’t a single area of our life that won’t be touched by IoT devices in the next decade.

In fact, predictions state that in 2018, there will be more IoT gadgets than mobile devices. Just for an idea…in 2015, there were about 15.4 billion connected devices. This number will grow to 30.7 billion in 2020, and 75.4 billion by 2025. Products like industrial sensors, connected manufacturing machines, in-store analysis devices and workspace management applications are already on the market. These B2B IoT devices will fundamentally transform the way organizations do business with other companiesWearable devices are also noticeably growing. From 28.3 million units sold in 2016, industry forecasts show an increase to 82.5 million units in 2020, a 31 percent growth.

Prioritising Expenditure

Now the question is how much money is involved in the IoT ? For an idea we can take a look at the 2016 spendings. Last year global spending on the IoT across markets was $737 billion and by 2020, this number is expected to reach $1.29 trillion, a compound annual growth rate of 15.6 percent. The IoT will also add $10 to $15 trillion to worldwide GDP growth by 2030 – the equivalent of China’s entire current economy. The health care market will feel the impact of the IoT. ACT an organization representing over 5,000 mobile technology companies, is forecasting a $117 billion connected health care market by 2020.

But the IoT isn’t all about spending, either. For example, the city of Barcelona saves $37 million a year, thanks to smart lighting. And the city’s many IoT initiatives have created 47,000 new jobs. This year, 60 percent of global manufacturers will use analytics data recorded from connected devices to analyze processes and identify optimization possibilities. The same report also predicts that the IoT will lead to a 15 percent productivity increase in delivery and supply chain performance. By 2020, 75 percent of new cars will come with built-in IoT connectivity. Technology is already in our clothes, too, already there were 9,68,000 smart clothing units sold in 2015, a number that will reach 24.75 billion in 2021 – at a stunning 71.6 percent compound annual growth rate.

Combining Data

Moving ahead and putting for example a GPS sensor in a tractor may prove to be working towards a specific function – it will allow you to monitor the vehicles location. Similarly a spectrographic sensor has a specific function – it will help you measure the absorption, emission and scattering of Electromagnetic Radiation (EMR) of an object. In isolation neither of these two sensors sound particularly interesting but with the right perspective, knowledge and foresight, the right team will realize that by combining the data streams from even just these two sensors will allow farmers to increase their crop yields by an average of 20%. At the same time it will help them reduce the amount of herbicides they use, reducing their impact on the environment. If you’re wondering how we can achieve these results using just two sensors the answer is so simple that even a child could understand it. Using GPS you can record your tractors movements around a winter wheat field, meanwhile spectrographic sensors embedded in the crop sprayers mechanical booms use hyper-spectral analysis to determine the EMR bio-signature of all of the plants it’s passing over. To a layman all of this will probably still mean nothing and if you don’t have the right team of experts in place then you’ll have just scored an own goal and missed a golden opportunity. Subsequently I can’t stress enough how important it is that you have the right subject matter experts in your team because a specto-grapher will be able to tell you that every plant has a different bio-signature. Now, armed with this new information, your team can create a system that allows the sprayer to differentiate weeds from winter wheat plants so when – and only when the sprayer detects a weed – it’ll spray it with the right amount of herbicide with pin point accuracy, reducing waste, maximizing yields and inevitably growing top line.

Monetising 

At this time congratulations are in order – well done you’ve just helped increase global food production. But how do you turn this into a value your business can bank? Well, as we’ve already seen you’ve just used the Internet of Everything to create new value and once you’ve quantified it and proven it works, you need to develop a go-to Market plan. In this case, for example you could sell the insights that the information from your agricultural machinery has just gathered back to the farmers as a service – after all, not only have they just reduced the amount of herbicide they have to buy and know which areas of their land are more prone to weed outbreaks but they’ve also got 20% more winter wheat to sell. So now when we look back at our goals of achieving better customer loyalty, differentiating our organization and improving our top line have we succeeded? Well this was only an example but perhaps we did…however, what might be more interesting to you is the fact that the Internet of Everything doesn’t just give your organization the opportunity to identify a few new revenue streams but many. There are billions and billions of new uses cases waiting to be discovered and the only way you are going to increase the prosperity of your business is to get out there and work on finding them.

The Indian Scene

India saw the highest number of people going online for the first time during 2012-15 period among all countries. About 17.8 crore people went online during this three-year period, which is much more than that of China, Brazil, Japan and neighbouring countries of Pakistan and Bangladesh. The government in India is working on an ambitious plan to create a $15 billion IoT industry in the next six years. Industrial Internet – estimated to cross $300 billion by 2020 – is changing the way companies operate. It’s driving automation, efficiencies and safety and has the potential to add $10-15 trillion to global gross domestic product by 2032.

The telecom sector is going to invest around Rs 5-6 lakh crore over the next three to four years, so as to provide choice to customers on 4G and maybe later on, on 5G network. Major mobile operators expect converged services to emerge as the major business model for them in the near future with the rapid growth of the Internet of Things. One of the prominent sectors that take value out of it is the auto sector with 90% of cars set to get connected by 2020. It’s driven by the need for us to operate better in our cars, but also allows manufacturers to have a better understanding of the operation of the car. How you maintain the vehicle helps them up sell or cross sell.

Transportation companies are saving millions of dollars by reducing fuel consumption using data captured, transmitted, and analysed in near real-time. Local governments are making budgets go further with LED smart street lighting that does not need regular maintenance, but can automatically report when it needs to be repaired. Utility companies are eliminating costly and inconvenient home visits to read meters by introducing smart meters that report more granular usage data without human intervention.The other sector is retail. It’s all focused around giving the consumer a richer experiencemer a richer experience by leveraging data. Whirlpool and Electrolux are already embedding sensors into devices like washing machines and fridges. The data helps not just with maintenance but to provide new offers and better service to customers.

Way Ahead

So the time has come for the world to move from isolated, optimized cells, to fully integrated data and product flow across borders. Boundaries of individual factories will no longer exist. Instead, we will have interconnections across multiple factories or even geographical regions. Armed with connected devices, people are now equipped with more information to make choices and voice their opinions. As cognitive computing is applied to IoT data, opportunities for greater operational efficiency, quality and waste reduction are identified. Cognitive computing coupled with instrumented and interconnected data is also driving new business models and creating new opportunities for market expansion. With the rapid adoption of these technologies, companies across all industries, such as telecommunications, manufacturing, insurance, healthcare, automotive and electronics are reducing costs, generating revenue and creating differentiation.