Mohsen Mohseninia is vice president of market development for Europe at Aeris. With more than 18 years of experience in the telecoms sector and an early pioneer of the machine-to-machine market, Mohseninia joined Aeris in 2013. Prior to that he was head of M2M for Logica in the UK, having worked for the company in Europe, the Middle East and Africa developing Logica’s global Operational Support Systems business targeting telecom businesses. Here, he tells George Malim that, as organisations move from pilots and trials into larger scale deployments, monetisation of the IoT is being given far greater attention. That attention, critically must cut across the entire business and engage all stakeholders because, as Mohseninia emphasises, IoT monetisation means complete business transformation that will turn traditional business models on their head, turning products into services. Early cost saving projects are a red herring; the real IoT deal is IoT transformation
IoT Now: How can organisations gain the flexibility to offer multiple services over their IoT infrastructure, thereby enabling multiple revenue streams?
Mohsen Mohseninia: Most organisations that have looked at a business case for their IoT have typically focused on a business case that has the shortest path to enabling them to save money. They’ve looked at IoT solutions to automate processes such as local authorities emptying bins. With sensors to communicate when a bin is full, the authority only needs to send out a truck to collect the rubbish when the bin is full, thereby saving the cost of trucks driving round checking whether bins need emptying.
The real value of IoT to organisations is in the way it fundamentally changes their interaction with customers
This has been the easiest path to IoT monetisation because it saves money. However, the real value of IoT to organisations is in the way it fundamentally changes their interaction with customers. The disruption it can have to their business model in terms of moving from a capital expenditure (capex) model to one that is much more based on a recurring operational expenditure (opex) model is at the heart of this.
I’m talking about IoT users harnessing the power of IoT to transform their businesses so they sell their products and services as a service rather than in the traditional model. Why can’t you sell usage of a car based on the mileage the customer drives rather than requiring them to pay €30,000 just to have a car?
The real power of IoT is in enabling this type of new model, where the greater portion of monetisation will take place, rather than in scenarios where automation can achieve cost savings. In the traditional way of doing business – selling unconnected products – the enterprise was focused on the features and benefits of their products whilst in the connected services world they will be more focused on the utilisation of their products as well as their customer expereince. This is where they will generate the most revenue from their products. In essence their products will become the strategic assets of their organisation where maximum utilisation will be essential for their success.
However, for that to happen and companies to have that business model transformation they need certain capabilities at their disposal so they can use the power of IoT across the whole business rather than only in specific departments. IoT needs to deliver value to marketing departments in terms of brand recognition, for example. It also needs to provide value to financing by providing a different way to monetise the assets of the business. IoT is not for one department, it is for all departments.
IoT Now: What are the advantages of using a single provider to control the entire service chain? Why is this better than using several providers?
MM: In order to deliver an IoT solution effectively there are many components that need to come together. You need a device that transmits data using some sort of transport mechanism such as ZigBee, Wi-Fi, narrowband IoT (NB-IoT) or cellular connectivity. A device that transmits a set of data on a regular basis to a data ingestion system to generate immediate insights as well as longerterm analysis to be performed. The data must be stored securely, visualised and presented and then decisions need to be made through the decision-making machines, systems and processes within an organisation. Typically all these components are supplied by different suppliers with independent product lifecycles.
As you can see, it’s a really fragmented landscape and organisations have tried to create an integrated capability themselves have found it extremely challenging to bring together a specific device, software, connectivity, data storage and analytics capabilities. The challenge is long and complex with lots of opportunities for things to go wrong.
IoT in essence is a collection of bits so we think the more of the components and the capabilities that can be supplied as a shrink wrapped offering, the easier it will be for companies to manage risk and the easier and faster it will be for them to deploy services. It won’t be a single supplier scenario though, that’s a utopia, but, by using a smaller number of suppliers to support more of the IoT functionality the situation will be simplified.
It’s important to recognise that these capabilities are not the core business of IoT users so their energies are better spent directed at developing new offerings, products and services which make use of IoT rather than trying to build IoT capabilities themselves. I’m talking to insurance companies who want a deeper understanding of how IoT can change the way they interact with their customers and provide insurance not as an evil people must have but as a service people want to have.
These insurers don’t care about the how of the capability, just that it exists. They are thinking about potentially outsourcing the whole infrastructure including the devices and the logistics to a third party that is expert and just benefiting from the data and the analytics to transfer their business from product centric to customer centric.
Always in industry as a whole there is the question of whether to go for best of breed technological solutions or to take a holistic approach. My view is that if you get something at 20% of the risk that provides 80% of the desired solution it beats something at 80% of the risk with 120% of the solution. It’s about getting to the end goals with minimal risk.
IoT Now: How can suppliers create confidence in customer organisations that they won’t be charged for functionality they’re not using? How might this work in seasonal industries?
MM: I think it is vital for the charges to be transparent. The whole shift IoT brings is a move from capex to opex with everything as a service. If you’re operating in that paradigm having a fixed cost that you’re not generating revenue from would be a fatal model.
We have customers in the combine harvester market; it’s a precision agriculture business. They only operate from April to October so, while we could say that’s your problem, here’s an annual fee for using the services, we understand the model is seasonal and we’ve built our billing model to cater for that. We charge them only when they make money. Parked harvesters don’t make money so when they’re not working, they’re not being charged.
It’s fundamental to be able to support your customers’ business model fully, not just in words. The only way we succeed is if our customers succeed. That’s fundamental to the opex model.
IoT Now: What are the challenges involved in educating the market place to look beyond IoT capabilities as a commodity and look to the value IoT platforms can generate?
MM: The biggest challenge is to create consensus across organisations and across enterprises. That has to bring in all the chief stakeholders because it does impact them all. You need the entire organisation engaged to support that transformation and I believe that is starting to happen. For instance, the emergence of chief digital officers and chief IoT officers is demonstrating that IoT is going up the management chain and becoming a board level issue.
It will take time because enterprises have operated with the same business model for the last 50 years and that won’t change overnight. However, as more adopt IoT, the pace of change will accelerate. The current challenge remains creating consensus within enterprises.
IoT Now: How does Aeris add value to basic IoT capabilities by bringing in additional capabilities such as analytics?
MM: We see our role as being the partner that can help enterprises on the journey from being businesses that provide unconnected products to ones that provide connected services. Our technology helps them fundamentally transform their business models and the customer experiences they deliver.
