Communication as we know it today has evolved rather rapidly over the last century. Machines first made their presence felt with technologies like the printing press, telegraph and telephone. While these machines were facilitating communication, note that it was still a form of human-to-human interaction. Computers then came along and we saw the beginning of human-machine interactions. A third kind of communication has become a reality today – one where machines talk to each other.
Devices of all sizes and shapes come equipped with sensors such as cameras and GPS’s that store all kinds of information about users. These are linked to networks (both wired and wireless) that can analyse this data, understand it and respond in real time. This phenomenon of devices sensing and communicating with one another in a space where humans are often superfluous is the Internet of Things (IoT).
Machines are becoming increasingly personalized and integrated in our daily lives. And we can look forward to a connected, IoT-enabled future. For example, your refrigerator could soon become your diet planner. ’Food sensors’ in your refrigerator can monitor your diet and can even be programmed to place grocery orders online. Similarly, advanced CCTV cameras or ‘intelligent eyes’ can now be your security guards, alert to the scene unfolding in front of them. Imagine a lift surveillance system that can detect suspicious behavior and send out warnings to security networks. Indeed, IoT can make our lives safer and reduce human error in everyday decisions.
For a device to get a status of IoT, it should be able to send information over the internet and take action based on feedback. Before deciding if an existing machine should be equipped with such data tracking and transmission, firms need to think beyond manufacturing. They need to identify what services will be required and how the end customer will be affected.
I believe the IoT-CUVE (Customer Value Enhancement) Methodology can help companies make an ecosystem-oriented evaluation based on:
- Capital expenditure required to procure the device in question.
- Service Value realized by service provider once the device is IoT enabled. This includes the revenue generated through services designed on top of the IoT device – e.g., monthly subscription fees for a ‘diet planner’ service bundled with a refrigerator in IoT form. Such a refrigerator can also order food on your behalf. Since one IoT can provide many services, we should consider the revenue from all services associated with a particular device.
- Customer Value realized by those who avail this service. A campus that switches from normal security cameras to ‘intelligent eyes’ might see its requirement for security guards drop from, say, 50 to just 10. So the customer value per camera is the salary for 40 security guards divided by 100 cameras multiplied by the lifespan of the device, minus the cost paid for the service.
- Cost of conversion to IoT. These accounts for the incremental capex for converting the existing device, e.g., a $700 refrigerator might become $725.
- Potential customer base for the IoT device.
If you are able to create a win-win-win situation (for the manufacturer, service provider and customer), then the entire ecosystem stands to gain. Indeed, as consumers become more tech-savvy and connected, IoT is likely to play a defining role in their daily lives?