The Internet of Things: Changing How Technology Companies Sell

We know the Internet of Things (IoT) is a lot of hype, but the opportunity is real.   The biggest challenge for customers will be seeing the forest through the trees.  From sensors and connectivity to fog computing and platforms, to data storage and analytics - the stack is daunting. The cost and implementation is daunting. The promise of operational efficiencies and new business models is still nascent.

I have talked to colleagues at companies large and small - technology companies and system integrators - who are selling the dream. My perspective is that, as an ecosystem, we are not ready to help customers be successful. To move from hype to tangible value, new startups and large corporations alike need to change how they sell. Yes, sell.

Sell an Outcome

The Internet of Things is not a single product, it is a stack of technology and a series of process changes that are an enabler of business transformation.  It is not an application.  It is not a platform. It is not a sensor and connectivity.   You need to sell a business outcome. Define what problems your technology, solution, or service is solving for your customer. Every industry has hundreds of potential business outcomes from an IoT project and it is important that you are clear about what use cases you are solving.   The use case may expand over time - pick 3-5 to start. Learn and experience the real outcomes.  Own those use cases within that market. An example might be that you focus on Smart Cities and address 7 of the 30 use cases.  Perfect. Own it and repeat it on a few Smart Cities projects. Understand and communicate the real business benefits for your customers. Then do it again.

Know the Business

Projects related to IoT might be owned by any number of people, depending upon the industry, and the outcomes being targeted or business problem being solved. Technology companies might be selling to the CIO, but more than likely you are selling to the Chief Digital Officer or the Production Manager in the case of the Internet of Things.  Scenarios to drive new revenue with IoT tend to be the GM of a Business Unit, or a CMO. In the early days of any industry it is important to find the self-declared innovator within your target customer - IoT is no different. The first wins will come from the early adopters. Find them. Make them heros.  

The next eighteen to twenty-four months of IoT deals will be consultative sales -  a business development or market development role. Someone to learn the customers needs across their business.  The early adopter will teach you if you are willing to listen, have patience,  and can help them solve a real problem.  You need to partner to understand the use cases and the outcomes they are seeking to solve and the language they use.  A great example of this might be a phrase used in discrete manufacturing - Carpet (IT) vs concrete (plant floor).  It is their language, how they think about their world, and it has impact on the technology used.  The plant floor brings with it different security requirements; selling cloud services to the technology people on the concrete will be difficult.  The same industry uses something called Nelson rules.  This is a method in process control of determining if a measured variable is out of control and is critical to Overall Equipment Effectiveness (OEE). Understanding this will help you understand their use cases. Creating journey maps for each of the business problems you are addressing will help provide the documentation needed for project funding. It is important that you understand the customer's world. 

Make it Simple

There are three components to making the Industrial Internet of Things simple for your customer.   Sell a solution based on a reference architecture.  Build an ecosystem.  Change your compensation structure.

 The reference architecture should be done based on the business outcome and its related requirements.  Understand the IoT stack.  Identify  how your technology fits the problem being solved.  The customer may already have connectivity from OSIsoft, and may already have device management from See Control (now Autodesk), or they already use Hadoop for storage. One example might be proximity safety. In construction or manufacturing processing will need to be done at the edge and require an architecture that is designed for response times in milliseconds. Predictive maintenance in manufacturing needs to be done on the plant floor for security reasons; but the response time is broader. It could be hours, days or weeks needed to predict a possible outage - and need for scheduled maintenance.  The reference architecture for the use case is the base to understand what the customers has and what they need.

The Industrial Internet of things requires an ecosystem. There are several components that make up the stack, and dozens of technology providers for each component. Sensors, connectivity, security, algorithms - you know the list.  System Integrators have expertise on IT and OT systems and processes across different verticals. Leverage the reference architecture by business problem, by industry, to build your ecosystem of technology partners and system integrators.  Knowledge about an industry and integration across technology platforms are the keys to the success.

Change your compensation structure to match how customer wants to buy. The customer does not care about the structure of your company or who gets paid to sell each product.  Customers are seeking your help in solving a business problem. The lack of consultative sales, the complexity of purchasing multiple products in the stack (yours and your partners), and the lack of understanding the vertical industry all become the roadblock to simplification. One sales team that is compensated on the IoT use cases, one contract for an IoT reference architecture.  This won't always work, but if you make it the target, you can get close. The Internet of Things is complex. Make it simple.

Solve a business problem, know your customers, keep it simple. It is up to you to connect the dots between investments and outcomes for your customer. Build trust. Build the right partnerships. To move from hype to tangible value, vendors need to change how they sell.

The Search for Yodlee, Yummly, and Geek Squad in Consumer IoT

I was in a meeting this week where I was asked my view on the state of the Internet of Things (IoT) in the consumer market. It was an interesting question given that professionally I have been focused on enterprise and yet personally I am a consumer of IoT technology in my home. I have a Ring doorbell and an August lock installed in my house. Both have their challenges that only the tech-savvy individual can tolerate - it is these challenges that will delay mainstream  adoption another 3-5 years.  

There is a gap in the experience I have now versus the experience I expect.  To close the gap requires a shift in how consumer IoT companies approach service integration and customer care. I will  explain the shift I believe is necessary while illustrating the current gap with a few examples from my personal experience.

We are in the era of Web 1.0 when it comes to consumer IoT; the services and applications are standalone. Service Integration is a big technical challenge. Consumer IoT needs its own version of Yodlee. Yodlee is an aggregation service that allows users to see all their credit card, banking, investment, and other accounts in one place. The service is most widely known for its role in Mint’s success; enter your account logins from your portfolio of bills and banks to get a single view of your financial life. How does this apply to my connected home? Lets look at the Ring doorbell and August lock. My Ring doorbell is pressed while I am at work. I open the Ring app to discover that it is the delivery person with my new electric bike! I can see the delivery person via video and talk to them through the doorbell, asking them to put the package on the front entry to my house between the gate and the door. Next, I need to open my August lock app to unlock the gate to let the delivery person in. Two devices, two apps. Not integrated.  This is why there is a need for a Yodlee-type service integration layer that manages my logins across my devices and brands that I use for my connected home. This means the firmware and applications need to have APIs and a cloud-based service to remove the hassle of handling various connectivity protocols.

Yummly is a recipe application to find recipes from across the web and save your favorites in a single repository. The app integrates nutrition data based on the recipe ingredients and then allows you to register your Jawbone device to track the calories you will need to burn during your workout. The app also integrates with Instacart to order the shopping list for the recipes and have it delivered later that day! Access to many services in a single place. Imagine this same type of simplification of the products and services across a connected home. Consumers could use industry leading products by category, and yet manage and optimize them all via a single connected-home app. The app could make recommendations to help you optimize your electric bill by analyzing your automated blinds, furnace and AC unit.  It could reduce your water bill by coordinating the use of your washer, dishwasher and sprinklers. The connected home app would also facilitate the management of your home safety (locks, cameras, etc). There are a few attempts in this area that exist today. Octoblu has an interesting model for drag and drop automation of workflows and Smarthings which standardizes integration via a hub - I am sure there are more, but none of them are where the industry and the consumer needs them to be to drive mainstream adoption.

The Target Open House in Yerba Buena Gardens in San Francisco has created a view of this future state.  If you haven’t been there - you should go. There is a model home that you walk through and experience the automation we would all hope for - things just work - we don't see the integration, we don’t see the multiple apps - we get one experience.

The next big challenge is handling when things don’t work as expected -- customer care. The customer care required is a combination of Geek Squad, Genius Bar, and Zendesk. You need someone who can come to your home when things don’t connect to each other; you will need someone who you can take individual products to for repair, and lastly, you will need someone to call when you get locked out of your house because the firmware upgrade on your lock caused you to lose access! I love my August lock, but this did happen. Thankfully I had a key with me as a backup. Continuing on the August lock theme - it has a great feature that automatically unlocks your door based on proximity allowing for quick access on a rainy day or if you have your hands full and can’t get to your phone.  One evening I set the phone on a table near the door.  Throughout the evening I heard the door lock and unlock repeatedly about every 30 minutes. Thinking there was someone trying to break into my home I reviewed the log file on the application to see who was trying to enter our house. To my surprise, I was unlocking and locking the door. It took me a few minutes before I realized my phone’s proximity to the door was causing the lock to be activated. We submitted a bug to tech support and a few days later the problem was solved. There are usability challenges and technology kinks that will get worked out over time but the customer support offered will be critical to driving  adoption.

None of the challenges in consumer IoT are insurmountable. They require some understanding of technology and a bit of patience right now. More importantly to drive mainstream adoption they will require someone providing the abstraction layer, someone creating the integrated application, and someone providing these three tiers of customer service.

Digital Transformation and IoT

Over the last several months I have engaged with numerous companies and customers who are defining Digital Transformation and the Internet of Things (IoT) as two distinct business initiatives. I believe this is an approach that will be costly in time and dollars. IoT should be viewed as an enabler of a digital transformation strategy.   

Digital transformation is the objective; it is the investment in technology and the automation of business processes to more effectively operate a business. Digital transformation reduces cost through improved efficiency. It increases customer satisfaction through improved quality and proactive services. It broadens the ability to engage with customers across multiple channels (online, in store, mobile, etc). And it provides a means to create new business models.

Cloud computing, application programming interfaces (APIs), mobility, and social media are the technology trends that have collectively enabled the digital shift. IoT is another enabler. 

Cloud computing has created a landscape of competition; nimble businesses can deliver solutions cost effectively. Application programming interfaces simplified integration and enabled cloud and mobile application development. Mobility has offered access to information anytime, anywhere. Social media, such as Twitter or LinkedIn, has customers informed and empowered. The Internet of Things is the connectivity of physical objects over a network, creating integration between the physical and digital worlds. These trends enable digital transformation.  

Lets look at a few examples of IoT as an enabler of digital transformation.  

Where you find costs in the business, you will also find low Net Promoter Scores (NPS) or a high volume of customer service calls. This is an indicator of areas ripe for digital transformation. Warranty claims are one example. The data from sensors in a manufacturing environment (IoT) can be used to determine everything from heat and humidity in the plant to the speed of a machine. This information can be used to determine (and prevent) potential defects - reducing potential warranty claims. This will both reduce costs and improve customer satisfaction.

Another example of digital transformation enabled by IoT is around the most widely referenced use case,  predictive maintenance. The basic scenario is to use sensor data from production equipment in manufacturing, or mechanical parts on a train or airplane or even rides at a theme park, to manage downtime, ensure safety, and optimize inventory. The converged digital transformation use case is the following - step 1) sensor data tells you a part will need to be changed within the next 15 days of use, step 2) analytics engine sends request to the back-office to automatically source or order the part, step 3) part arrives and once checked into inventory the system, step 4) the inventory system connects to employee management system to identify the person with the right skills to fix the part and step 5) the individual is automatically dispatched to replace the part on a scheduled downtime. This example use case demonstrates reduced costs associated with unplanned downtime, and improves customer satisfaction when the production meets the expected delivery date.

Whether it is automation for B2C (i.e. automating interaction with customers as part of online, in store, or mobile engagement)  or B2B (providing pay per use services access to partners through APIs to transform a business model), or automation of manufacturing (using data from sensors to reduce warranty claims) - IoT is an enabler of digital transformation. A digital transformation strategy that defines the end-to-end process utilizing IoT as an enabler, will have the most success.