Besides allowing enterprises to maximize their operational efficiency, the Internet of Things also opens up a whole new world of interfaces across which enterprises can connect with their customers. The shift embodied by the IoT isn’t merely an opening up of new channels of marketing. Rather, it fundamentally restructures the entire relationship chain between the enterprise, its products and its customers.
Marketing as Continuous, Engaged Conversation
The highly individualized, disaggregated data that can be gathered from a robust Internet of Things deployment generates invaluable opportunities for marketing. Tracking current and potential customers through a variety of devices and networks allows marketers to know when to engage with customers, and how to customize marketing content to specific situations and contexts, and how to carry the conversation forward past the point of sale to generate a sustained engagement. This will allow for marketing strategies that are highly involved and relevant, without becoming intrusive and unwelcome.1
Products as the Site of Iterative Co-Creation
As more and more physical products come embedded with a digital layer, they produce a whole range of usage data that had to previously be obtained from the customer through somewhat tenuous means such as customer surveys and focus groups. Such usage data is a one-to-one conversation with the customer unlike any other, a real-time demonstration of how customers use your product, when they use it and for what purposes.
Properly analyzed and smartly leveraged, it will fundamentally change how products are designed, produced, marketed and serviced, as it helps enterprises get closest to the ideal of co-creating products with constant engagement with their customers.2
The Transition from Product Sales to Service Relationships
The most disruptive but exciting possibility offered by the Internet of Things is a fundamental shift in business models away from product sales to service sales. This shift, which first began in certain high-tech industries such as jet manufacture, sees enterprises transition to usage agreements of various kinds from outright sales transactions.3
This transition has become possible for three reasons: First, the increased ability to track when and how various physical assets are used, allows for more robust use-based pricing agreements to be evolved.
Secondly, thanks to the combined data gathered from across all connected assets, enterprises are able to gain more unique insights into the long-term operation of various kinds of equipment in ways that customers, with their limited view and experience of product usage, cannot manage.
And finally, real-time analysis of IoT data allows for more proactive predictive maintenance that automatically enhances the use life of various products. The future could well see a situation where most products in our lives are only leased from their manufacturers, with greater and lesser bouquets of associate services offered on flexible licensing plans4.
What’s Standing in the Way? Barriers to Widespread IoT Adoption
Amidst all of the rosy predictions on the future potential of the Internet of Things, more than a few notes of caution have been sounded. Although in terms of sheer numbers, the growth of smart devices has been quite rapid, the Internet of Things is still quite far from becoming a full-fledged reality in our lives. In order for the potential of this paradigm shift to be realized, there are a few key barriers that have to be overcome.
Interoperability and Common Standards
Even as an ever-increasing number of devices are being connected to the Internet, they are appearing in a digital world that is composed primarily as a marketplace of silos. What this means is that while every device has the capacity to transmit and receive information through the internet, most devices often require the mediation of a particular vendor. For instance, the Fitbit can only pass on its relevant health data through the Fitbit service, with no provisions for the data to be passed on to any other relevant applications.
The current moment in the IoT journey is one where keeping people stuck in such “walled gardens” provides a competitive advantage to companies, as they seek to keep their existing consumer base locked in, even as they try to grow it further.5 This situation is exacerbated by the fact that this initial phase of IoT products is marked by strong first-mover advantage that accrues to manufacturers who first bring a product to the market and corner the market share for it. In such a situation, the time and effort spent on the complexities of interoperability seem an unnecessary investment.
Although many industry coalitions have emerged alongside Standards Developing Organizations, to increase efforts towards common standards, there are still multiple, sometimes contradictory efforts in the offing, and it’s anyone’s guess when a set of common standards will evolve, and what they will look like.
Such a development, however, is crucial to the development of the IoT, for, as the McKinsey report cited above states, “In our analysis, of the total potential value that can be unlocked through the use of IoT, 40 percent of this value, on average, requires multiple IoT systems to work together.”6
Data Collection and Analytics
“The Internet of Things is about data, not things,”7 announces the headline of a 2015 article on Forbes.com. On the face of it, the point of the article seems like something of a given. After all, why install so many sensors in so many things if not to collect data? Yet, as a McKinsey report observes, “Most of the IoT data collected today are not used at all, and data that are used are not fully exploited.”8
Seen in the light of this information, the Forbes article has two urgent, relevant points to make. Firstly, it argues, smart devices must not only measure data, but measure them accurately. As an example of data inaccuracy, the author of the article cites his experiment with different fitness trackers observing that the different trackers came up with different estimates of calorie consumption across 5 different bicycle rides. While in such contexts, this variation might be an acceptable level of noise, the article argues, the stakes are infinitely higher for companies acting on their data and hence accuracy is a much higher requirement there.
More importantly, the article argues, the data collected, no matter how accurately measured and transmitted, is useless unless it can be acted on. In other words, an IoT implementation is of no value unless backed by a strong analytics engine and a sound business strategy that can convert the analyzed data into a coherent set of responses and actions. Data that is simply filed away instead not only adds unnecessary costs to the company, but could also become a source of legal liability in case of leaks and a liability in the form of opportunity costs robbing capital away from other more profitable activities.
Privacy Concerns
Privacy is the great double-edged sword of consumer IoT applications. While the IoT vision is built on the possibility of making larger parts of our lives visible as calculable and analyzable metrics, this same possibility of automating also generates significant privacy anxieties. These anxieties mark a shift from current concerns about privacy as data security and protection of consumer data from illegal theft or use, as the Internet of Things raises anxieties about how to view legal or permissible data collection.
Privacy Fears Map onto Four Primary Issues
Firstly, the issue of invasive identification and the loss of minimal anonymity in the marketplace or public sphere. As greater parts of our lives become visible to different IoT systems, the possibility that we could be more pervasively and specifically identified through the aggregation and correlation of different data streams, significantly reduces the opportunities we have to control how much of ourselves we show to the public world or the marketplace.
Secondly, as highly interoperable systems develop, the question of who becomes accountable for each piece of data collected becomes far more complex, as a number of agencies function as stakeholders for each piece of data.9 Thirdly, with the automation of data collection through IoT solutions, traditional consent models for rights over collected data become untenable. In particular, if IoT applications do not provide for direct user interaction with devices and channels, then how is consent to such data collection to be given or withheld?
Finally, such questions of consent also extend to issues of transparency and ethics of data collection, as the question of how to make consumers aware of how, why, and for whose benefit data is being collected, becomes a central enterprise and ecosystem concern.10
Enterprise Risk and Security Concerns
2015 was the year that the everyone realized the IoT could be hacked with disastrous consequences, thanks to a series of high-profile demonstrations of IoT security vulnerabilities. Suddenly, everything from spying on children through Barbies and baby monitors to remotely unlocking and starting cars to even potentially stopping a man’s heart by hacking a wi-fi enabled pacemaker became terrifyingly real possibilities.11 Even as the security risks of consumer-facing IoT deployments have begun to be taken account of, it is enterprise security that is being recognized as the real bugbear of large-scale IoT adoption.
As the sheer volume of internet-enabled devices connected to enterprise networks increases, and the scope and complexity of these networks grows, a range of security vulnerabilities have to be contended with. At the level of network end-points firstly, threats of physical attacks on devices in remote locations as well as disruptive cyberattacks such as distributed-denial-of-service attacks must be contended with. More importantly, network endpoints, which are often built as resource-constrained devices, do not allow for the implementation of resource-heavy security protocols but also present the possibility of offering back-doors into more sensitive areas of enterprise networks. Enterprise security, then, is not merely a question of securing the central core of data networks, but of applying a spectrum of security solutions across a chain of device types at various points in the network.12
Further complexities arise from the fact that IoT deployments bring together disparate systems that may have a life either prior to or even beyond the enterprise infrastructure as part of which they were originally deployed. In simpler words, IoT deployments will have to deal with the complexities of integrating legacy systems, as well as with the possibilities raised by orphaned systems created by the winding down of enterprises that deployed them. While some of the problems thus created can be handled by vulnerability patching, this default solution may not fit all cases.
Thus security strategies must be evolved that account for the scalability, complexity and persistence of IoT deployments.
Finally, the sheer amount of data generated by IoT deployments require strong security analytics in order to properly assess the sensitivity of all of the data produced. A key task for enterprises will simply be to identify and distinguish legitimate and malicious traffic patterns from among the masses of data produced.13
References
[1] “The Internet of Things for B2B Marketers”, Knowledge Tree.com, https://www.knowledgetree.com/blog/2015/08/the-internet-of-things-for-b2b-marketers/
[2] “B2B Beat: Why the Internet of Things is Crucial for B2B Marketers, LinkedIn Marketing Solutions Blog, https://business.linkedin.com/marketing-solutions/blog/b/b2b-beat-why-the-internet-of-things-is-crucial-for-b2b-marketers
[3] “How the ‘Internet of Things’ is Transforming the Meaning of Product”, Forbes.com,
http://www.forbes.com/sites/danwoods/2014/06/25/how-the-iot-is-transforming-the-meaning-of-product/#e9ce37241329
[4] “How Smart, Connected Products are Transforming Companies”, Harvard Business Review,
https://hbr.org/2015/10/how-smart-connected-products-are-transforming-companies
[5] “Interoperability: The Challenge Facing the Internet of Things, Altimeter Group,
http://www.altimetergroup.com/2014/02/interoperability-the-challenge-facing-the-internet-of-things/
[6]The Internet of Things: Mapping the value beyond the hype, McKinsey Global Institute, https://www.mckinsey.de/sites/mck_files/files/unlocking_the_potential_of_the_internet_of_things_full_report.pdf
[7] “The Internet of Things is about data, not things”, Forbes.com, http://www.forbes.com/sites/moorinsights/2015/07/30/the-internet-of-things-is-about-data-not-things/#530a36074e45
[8]The Internet of Things: Mapping the value beyond the hype, McKinsey Global Institute,
https://www.mckinsey.de/sites/mck_files/files/unlocking_the_potential_of_the_internet_of_things_full_report.pdf
[9] Consumer Perceptions of Privacy in the Internet of Things: What Brands can Learn from a Concerned Citizenry, Altimeter Group, http://www.altimetergroup.com/pdf/reports/Consumer-Perceptions-Privacy-IoT-Altimeter-Group.pdf
[10] The Internet of Things: Understanding the Issues and Challenges of a More Connected World, Internet Society, https://www.internetsociety.org/sites/default/files/ISOC-IoT-Overview-20151014_0.pdf
[11] “How the Internet of Things got hacked”, Wired.com, http://www.wired.com/2015/12/2015-the-year-the-internet-of-things-got-hacked/
[12] “Internet of Things (IOT): Seven Enterprise Risks to Consider”, Tech Target.com,
http://internetofthingsagenda.techtarget.com/tip/Internet-of-Things-IOT-Seven-enterprise-risks-to-consider
[13] The Internet of Things: Understanding the Issues and Challenges of a More Connected World, Internet Society, https://www.internetsociety.org/sites/default/files/ISOC-IoT-Overview-20151014_0.pdf
