Tom O'Reilly, General Manager, Global Channel Sales & Marketing, IoT Device Experience Microsoft discusses the ways the Internet of Things will transform business in the telecoms industry and beyond.
How does the Cloud create change for traditional businesses as it relates to the IoT?
The cloud has changed the way software and services are developed and consumed. Mobile devices have changed how and when people utilize software and services. Now, we find ourselves at an inflection point with devices delivering petabytes of data that can be parsed, combined, and analyzed in the cloud delivering powerful insights to businesses. The data behind IoT continues to grow at an exponential rate.
IoT is much more than devices connected to the cloud. Microsoft sees IoT as an end-to-end system where the raw data produced by edge devices is given a voice when communicated to cloud systems for aggregation, analysis, and ultimately the creation of actionable business insights. It is critical this is done securely at every step to protect devices and data and most importantly, preserve customer trust.
In this context, Microsoft views the IoT end-to-end system as an opportunity for traditional businesses to enter new markets and adopt new business models – both leading to new revenue opportunities. For example, we have device partners that have added services on top of their traditional hardware, generating post-sale revenue. The opportunity here alone is staggering. Imagine keeping hardware and machines operating at peak performance. This represents tangible value to customers because downtime equals lost revenue. This is a brand new opportunity for many businesses.
In the BUNNlink Wellness program, technology embedded in automated espresso machines used in restaurants, universities, and hotels connects to the cloud, providing insight directly into each machine’s performance and maintenance needs. Besides providing reporting and diagnostic tools, the solution also issues “red alerts” for proactive maintenance. A service technician gets an alert from a service contract subscriber on a Friday night. He grabs the part and gets to the restaurant at 6am the next morning. He’s serviced the equipment before the customer even noticed a problem.
That’s just one example of how the data that smart, connected devices produce is the enabler for these new business models. Insight about customer habits, needs, and preferences can fundamentally change the way businesses connect to their customers, improving customer’s relationship to, experience with, and loyalty to these businesses.
Microsoft has customers that are taking data from their IoT devices and using that to improve R&D efficiency and to quickly deliver new products to market – in ways that were simply too costly in the past. In an era where a shortage of talent is a reality for many companies, these technologies can make a positive impact for morale. When an employee impacts the direction of a new product with business intelligence tools, it can make them more productive, feel more empowered by effecting the company’s bottom line, and more invested in their jobs.
With the IoT, traditional businesses can get more out of existing assets. By connecting even just a few new assets to the cloud-based Microsoft Azure IoT Suite and enabling them to talk to each other, these things are possible. I know, I’ve seen it over and over again with our customers.
KUKA Systems Group (manufacturers of Chrysler Group’s Jeep® Wrangler) needed an automated manufacturing solution that would give them flexibility to produce multiple car models on the same assembly line while meeting the demands of a rigorous production schedule. Connecting data to its production line, central servers, and specialized applications and sharing it among them provides better agility. By implementing a solution as a service, driven by an intelligent system, Kuka has realized multiple benefits, including the ability to adapt quickly to daily changes in production requirements. They can manufacture a complete car body in just 77 seconds.
How should Device Partners or developers get started in determining the best way to integrate cloud services into their businesses?
Creating new revenue opportunities is a big reason companies are looking to the Internet of Things today, but because it often involves building out the organization to accommodate the new business, it generally takes longer to realize ROI from the effort. In the short term, device partners and developers can leverage their existing business, customers, and solutions to transform from selling a product into selling products and services with IoT to help generate specific outcomes for their customers.
For most businesses, what they ultimately want is to increase profits. More revenue loses its value if the cost of sales, cost of production, or operational costs are increasing as well. Integrating cloud services has an equally important internal impact as well. Small changes can make a big impact. For example, connect robots on the factory floor with back-end systems and create a production line with more continuous uptime.
Connect one handheld device to your inventory system and suddenly you’ve got real-time customer service on the sales floor.
While IoT solutions may provide value throughout your business, it is helpful to start by determining a specific business area to address with your project, such as customer relationships, supply chains, or operations. By narrowing to a single business area, it becomes easier to scope costs and demonstrate benefits. Without a defined focus area, proving ROI becomes more challenging, as it becomes difficult to associate related costs.
After deciding on the focus area of your IoT investment, determine your business objective. Consider what problem you are trying to solve or opportunity you are trying to address. Are you trying to cut costs? Increase revenue? Expand service offerings? Whatever your objective, it is important to consider both your starting point and your end goal as you scope the project. For example, if your assets are not yet connected, the scope of your project is going to be broader than if your assets are already capable of collecting and transmitting data.
An end goal of developing a new revenue model will likely involve a broader scope than a project focusing on improving efficiency in a single business process. From there, you can perform cost analysis and risk assessment, offering stakeholders tangible evidence of the benefits of the proposed solution. Evaluate multiple scenarios to form some initial comparisons and determine how IoT can offer the most value.
What factors should be considered when moving data to and from the Cloud?
I don’t know anyone who would disagree that security is the most important consideration – from protecting devices at the edge of the IoT stack, protecting customer data and privacy, and protecting a company’s own IP.
IoT security – like all other security – is only as strong as the weakest link. Microsoft’s approach to security applies a fine-toothed comb to every level of the IoT stack, from code and devices to gateways and the cloud. Our commitment to our customers is to provide proactive processes and tools and help address those weakest links. Our Security Program for Azure IoT achieves this by providing customers with security auditors wellversed in IoT, device and cloud solution security who perform a security audit on an entire IoT solutions. They can identify issues and provide recommendations to help address and solve for problems before the
worst happens. At the end of the day, security is also collaboration. In all our security efforts, Microsoft works with security partners such as device makers, solution providers, platform vendors, customers to help protect businesses – and ultimately help us raise the bar across the industry.
The other key factor is data. Businesses should be considering how they can leverage data and translate it into action. Data is the new currency for businesses, but that currency has zero value if it isn’t analyzed and the analysis leveraged for actionable insights. Just a few quick examples:
Snack-food giant Modelez used Azure IoT to understand customers’ preferences in their vending machine purchases. The company customized its offerings to better serve different customers in different locations. This data can also help companies communicate and share better with their supply chain to reduce costs and better delight their customers… or even create new revenue streams.
For example a vending machine company could identify customer buying preferences in different seasons, locations or times of day and market that information to other businesses with similar interests, such as its suppliers.
Please share an ‘ah ha’ moment you had as it relates to what the Cloud can bring to an IoT deployment?
We’ve been talking about the benefits of the cloud for a while now by moving your infrastructure (IaaS) and middleware (PaaS) to the cloud – there are companies choosing not to invest in datacenters but to invest that money into their core businesses, they can work with partners that can deliver new applications and new functionality in a fraction of the time and cost it used to take with traditional IT.
The cloud is driving a change in how companies think about their business, their customers, and their employees and is the foundation for change. Just like there is no car with just the chassis, there is no Mona Lisa without paint, there is no digital transformation without data and more importantly the actionable insights we get from it. It can literally be helping to save lives. Let me
give you an a few examples.
Dartmouth-Hitchcock: Data from sensors and devices such as blood-pressure cuffs, pulse oximeter devices and activity trackers like Microsoft Band are transmitted via smartphone to the Azure cloud. From there, it’s pulled into a Cortana Intelligence Suite dashboard at a “contact center” staffed 24/7 by registered nurses who have a singular view of each customer’s personalized care plan. When a person’s data exceeds a custom-prescribed threshold, an alert is sent to the nurse, who then reaches out to the customer via phone call, video chat or secure text — often before the person even knows there’s a problem.
Schneider Electric has built standalone solar power generators to provide light and power to hospitals and schools in areas where power has traditionally been unreliable. Schneider is using IoT to monitor these solar systems and provide alerts when power output is decreasing, preventing power failures. Since these systems have gone in, the associated clinics have never had a power outage.
Many organizations are still wondering how to invest in data-driven processes, and whether the business impact from those investments will pay off over the long run. To those companies, I would encourage them to stop wondering and experiment rapidly.
In one study sponsored by Microsoft, we are seeing a “data divide” occurring. There is a large and potentially widening gap between leaders and laggards across nearly every metric. Companies not embracing their own digital transformation could find themselves woefully behind the competition, and in some industries older business models could be phased out entirely.
How do you determine that a cloud deployment has been successful?
We look at success in many ways but the key for Microsoft is the benefit our customers receive. Did they reduce costs, add a post-sales service offering, improve efficiency, get to market faster?
Johnson Controls uses IoT to help monitor chillers in buildings. They estimate the cost of running chillers is about 50% of the cost to run a building. Using IoT to do predictive maintenance and to tune operational efficiency for one of their customers, they’ve reduced
the amount of downtime for the customer, a cost savings
of $300k per hour.
Nav Canada is using IoT to help better track planes over water increasing safety and is looking at optimizing flight routes to take advantage of prevailing winds, which they estimate will save tens of millions of dollars while also decreasing greenhouse gas emissions.
Several forward-thinking companies are already using IoT, the cloud and advanced analytics to identify and create new service lines. The more they are able to create this contrast between themselves and their competitors, the more of the market they will capture.
For example, ThyssenKrupp Elevator utilizes Microsoft HoloLens and Azure IoT Suite, allowing 24,000 elevator service technicians to visualize and identify problems ahead of a job, and have remote, hands-free access to technical and expert information when onsite, improving the way people and cities move.
The value IoT produces economically and environmentally is impressive. Microsoft is committed to helping our partners not just to grow their businesses with the IoT but doing it in a way that creates delighted customers and is changing the world for the better.