Internet of Things: Buzzword or Business Value? An Interview With AT&T's Penrose

The Internet of Things (IoT), like big data, is a hot buzzword. But is IoT actually a new market? The concept of IoT has been around for decades. IoT is an evolution of the Machine to Machine (M2M) market, which focused largely on industrial industries. Today, M2M has evolved into IoT. It also goes by many other terms. GE focuses on a portion of IoT that it calls the Industrial Internet. Cisco calls it the Internet of Everything (IoE) and Microsoft coined the Internet of Your Things (IoYT). All of these terms describe an ever-expanding universe of connected devices and data.

To gain a perspective on how IoT is evolving, I interviewed Chris Penrose, Senior Vice President of Internet of Things Solutions for AT&T Mobility. AT&T has been active in the M2M and IoT market for years. In the fourth quarter of 2014, AT&T announced that its services are supporting 20 million IoT connected devices that aren’t smartphones and tablets. Originally the company had two organizations that addressed the market, with an emerging devices organization that focused on end consumers (e.g. e-readers, connected cars etc.) and an M2M organization that focused on business to business (B2B) solutions. As the market progressed, AT&T found that the lines between the B2B and B2C markets had blurred and the company integrated the organizations in late 2014. While IoT is the overarching category, companies are increasingly focusing on the delivering specific vertical market solutions to create business value.

Understanding this, AT&T’s business development team has also taken a vertical centric approach to IoT solutions. A few of its key verticals are the connected car, healthcare, smart cities, energy, asset tracking and usage-based insurance. Global connectivity is obviously a key requirement for many IoT initiatives and AT&T offers a global SIM program today. However, Penrose noted that IoT is about more than connectivity. A successful IoT strategy requires bringing the right people together across an organization and its partners to build an integrated business process that is enhanced by connectivity and new data from sensors. It also requires integration with back end systems to make the data actionable. Penrose noted that the key to IoT success is defining your objective at the outset. He listed three broad categories for measuring success and business value such as generating efficiencies, driving cost out of the business and using IoT to generate new revenue.

Penrose and I agree on the need for companies to understand their IoT goals.  In my opinion, there are at least three ways that IoT data and services can benefit a business. A successful IoT strategy will help companies:

• Make existing processes more efficient. Today Industrial IoT offers many examples of how a process can be made more efficient by minimizing downtime or improving the information accessibility. For example, a plant manager can receive real-time notifications when equipment fails on the line. A plant manager that is walking the plant floor could also use IoT, analytics and visualization tools to access to the efficiency of each machine, view production from any location, and reduce time to decision and action.
• Enhance existing business processes with new information and features. Context from IoT sensors, such as location, motion and environmental conditions, can be used to improve numerous industries. Third party data, such as weather data, government data, reviews and traffic information are additional data inputs that can be used to improve processes. In the enterprise market, IoT is changing asset and supply chain management. For example, AT&T’s Cargo View provides not just real-time cargo tracking, but also the health of the asset in transit (e.g. temperature, vibration, etc.) This type of information is valuable for companies that want to know not only if its cargo has arrived, but also what condition it was in when it arrived. Context from IoT will enable companies to provide new service level agreements (SLAs) and enhance customer care with portals that offer real-time information. At CES, AT&T and Emerson showed a demonstration of  how IoT can provide enhancements to physical goods. For example, Emerson can push updates such as new recipes to a connected oven. Imagine a world where physical goods can be constantly updated with new software-based features. These are just a few examples of how IoT will fundamentally change industries and business process, such as supply chain management.
• Enable new business models. IoT sensor data and IoT platform features such as split billing, rules-based engines, task automation and data analytics will help companies unlock new revenue opportunities. For example, carrier services like AT&T’s split billing allows companies like GM to pay for mobile data that is used to deliver OnStar services, but if the car owner  wants to use create a mobile hotspot in the car it can be billed as a separate data plan or added to their mobile share plan. Usage and behavior based insurance billing,  such as Progressive Insurance’s Snapshot program, provides another example of how IoT can enable new business models.

A company should start their IoT journey with at least one use case that produces a measurable business value. Simply experimenting without any way to prove business value from IoT will waste money and time. These are two items that are in short supply. Now that we can connect devices, there are many questions a company needs to answer to make an IoT strategy pay dividends. What types of context should we collect? What needs to be analyzed and acted upon immediately versus what data can wait for batch processing? What new third party data sources are available and how can they help my business? And of course, how do I secure IoT should be one of the first questions a company addresses to make sure its data is safe. While IoT might be today’s buzzword, it’s here to stay and it can offer real business value.