IoT as a Service: A new business model?
How will 5G change the way you do business?
According to recent research from Osborne Clarke and written by the Economist Intelligence Unit, 87 percent of executives surveyed believe that connectivity will be more important to the way their businesses run in the next five years.
5G connectivity will soon enable new technologies on scale, such as connected vehicles and even connected healthcare. New technologies, new products and new connective potential is also enabling new business models. The next generation of products will need to connect (globally), interact with new partners and ecosystems, and may be available in as-a-service formats (made possible through real-time remote connectivity).
(Internet of) Things as a Service
It's not just about responding urgently to the disruption facing almost every industry today. "As a service" is increasingly how we like to consume things: in a flexible way, as much as we need on a daily basis, scaling up or down according to today's need. Instead of buying a car, we order a ride; instead of buying grocery or goods, we order online for delivery. This is also the way the software world has been moving for some time.
Today's physical products are often software- driven and defined, as software brings the competitive advantage. There are opportunities to add more functionality over time and charge accordingly. To enable this, products must become connected, and "network-native" for over-the-air software or firmware updates, online support and diagnostics, or for applying the latest security patches. Connected sensors can be placed in factory equipment, to feed information into a cloud-based "digital twin"—a digital model of the physical environment or equipment—which is used for optimizing manufacturing flows.
As the digital world merges into the physical, there are opportunities for companies to evolve their products, in ways we probably can't even predict.
Standardizing and scaling IoT
Are our things ready to be connected? Yes, but it's not scaling well yet. Its early days for IoT, and the industry is fragmented with many types of chipsets, without any default operating system for connected devices—in fact, in order to meet the low-power, low-cost requirements, many things launch without any operating system at all. This inhibits software and app developers. Compare the fragmentation to your smartphone, which is much more standardized and has led to massive scale, lower costs, and a huge variety of apps available. We need the same scale in IoT.
At least the connectivity environment is preparing. Despite the wide diversity of demands that IoT connectivity places on networks, they're adapting well. 5G offers faster response times and higher capacity. The industry is also expanding at the low-end with low-power coverage such as NB-IoT and Cat-M, which provide better coverage deep within buildings. This low-power coverage works well for reaching smart meters, connected water pumps and other devices located in basements. Mobile cellular and fiber networks are expanding everywhere right now.
IoT data, value and privacy
So far, the physical world and the digital world have coexisted alongside each other, such as a rideshare booking service or an app sitting on a car dashboard, managed by the driver. Online shopping, social media, streaming services and other digital services are all conducted on a screen, hardly touching the physical world. This is changing now, as IoT establishes more embedded connectivity, a real merger of digital with physical, as the report also describes.
All the transactional data about the daily usage of the product, combined with AI tools, can be useful for analytics and product improvements. As companies connect their products, they quickly experience a deluge of data. Managing this effectively is the preoccupation of the IT industry today.
As we see it, extra value comes when organizations are able to share and combine the data with that of their partners, customers and other stakeholders, to enable innovation. We've seen the potential of this with Drive Sweden, where diverse companies come together to see just how the future of transport could look.
To achieve this, we must determine what kind of data we're all able to share. In the pursuit of innovation, this data sharing must also be balanced with data confidentiality of the company's proprietary information as well as the important customer privacy and consent. It needs to be discussed, early, amongst all stakeholders, as the Osborne Clarke report highlights well. This discussion is important as more data assets combine, and security and privacy become additional industry hot topics on most executive agendas.
The future of IoT and connectivity are shaping the way companies are doing business already today. Products are becoming connected and offered as-a-service; companies prepare for wireless, low-power and 5G enabled networks. Data and AI will bring the necessary insights and intelligence.
Our networks will soon be brimming with innovation. How will your business take advantage?