Internet of Things – No, it’s the Internet of Services
Vice President and Principal Analyst, Constellation Research
Constellation Research
Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems.
Coverage Areas
Consumerization of IT & The New C-Suite: BYOD,
Internet of Things, IoT, technology and business use
Previous experience:
Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...
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Right now your home is well on its way to becoming a ‘Service’ that supports your life style. Sure, this is done through a number of Internet of Things, IoT, devices, but individually as ‘things’ they don’t add the same value as they do collectively as a ‘service’. In fact its arguable as individual ‘things’ they add confusion and complexity, whereas integrated together they provide simplicity and value as to how well your home can support your lifestyle.
Ever come home to a cold home because you changed your plans? Or been delayed and come home to find the heating is on burning expensive power according to the pre set time clock? Your home should be adaptive, and agile, capable of supporting your lifestyle, in short it should be working as a ‘Service’ to support your lifestyle. Not as a collection of IoT devices that have to be individual accessed and read.
There are several companies providing remote access and sensing to manage the furnace, or boiler, others provide remote management of alarms, or video to check out rooms, and an ever-growing list of other ‘things’. All from your Smart Phone, or Tablet, with its own list of Internet enabled Apps to control devices as diverse as remote control of yard, or garden, irrigation. You can even be ‘virtually at home’ by being able to watch a home TV program from your hotel room in another country, etc.
Once again it’s the consumers and their use of consumer technology that is driving the pace! BUT its not the ‘Things’ that are providing the value individually, it’s the integration of a number of IoT Devices into ‘Services’ that comprehensively answer a particular requirement area.
It’s simply not practical to have each, and every device, even if grouped under headings such as temperature management, or alarm management, as a separate set of ‘things’. If each set of IoT devices require screen space, and memory, for access, and use, on a Smart Phone, or even the bigger screen of a Phablet, or Tablet, that’s difficult. Add the challenge of then taking action through another App, and it’s next to impossible. Currently there are two possibilities; the first is that the consumer, or user, finds and makes use of a ‘Service Manager’, and the second is a major home supplier, such as an energy utility, introduces a ‘Service’ with added value from other aspects of its business or data).
As an example of the consumer using their own Service Manager the the App If Not This Then That, INTTT, is a example to use to describe the ability to link up IoT sensing with automation of responses. INTTT uses ‘triggers’, inputs from IoT devices, with scripts called ‘recipes’ to provide the predetermined automation of responses. A colleague has used INTTT to build the following; On leaving his place of work within a certain time period, an SMS is sent to his working wife stating that he (at least) is leaving for home, at work his ‘Out of Office’ message is turned on, whilst at Home the heating is turned on. The same user has built other ‘recipes’ to control arriving at work, (be great in a smart building or city to be able to reserve parking!), or an device providing a triggering alarm bring up a recipe for sending messages, turning on home cameras, etc.
In parallel, and in what should be a thought provoking move, his social media connections record the shift from ‘work mode’ to ‘home mode’ and allow home based social interactions to start. Why, thought provoking? Because the teaming of triggers from the IoT based Service into the Social Media Services is reflective of an important development in how Digital Business is likely to develop.
A successful Digital Business will need to combine ‘awareness’ of events from IoT with ‘social media’ interactions to understand opportunities arising in the market place.
INTTT is a good example of a generic ‘service’ manager that can be used to create Internet ‘Services’ from IoT devices in any number of scenarios in business as well as for consumers. Limiting the scope to just ‘Home Automation’, introduces a number of players with established integrated technology products for ‘operating’ a home, however that doesn’t necessarily make them part of this new marketplace. The original definition of Home Automation (as with smart buildings) focused on a computer within the home managing the various aspects. The arrival of IoT based devices has dramatically changed this into an Internet based environment using Mobility and Cloud technology to develop a radically new form of Home Automation packaged as ‘Internet of Services’.
The ability to choose how to manage your home as an Internet based ‘Service’ that both senses, and responses, to your lifestyle rather than as a set of disparate connected IoT ‘Things’ is now a reality for many consumers. Consumers once again proving to be the driving force in adoption in the shift from ‘Internet of Things’ to integration with added value by the ‘Internet of Services’.
The smarter Utility suppliers see IoT with Big Data technology as an opportunity for them to repackage their offerings into ‘Services’ increased their interactions and relationship with their customers through adding new value. (Not to be confused with much of the hype around Smart Meters). In the UK British Gas, the dominant supplier, but facing heavy completion in a deregulated market, offers its customers for a modest sum of a little over $120, a remote management package for controlling the Furnace, or boiler called ‘Hive’. The functionality of Hive is currently pretty low, but the low installed cost, the simplicity of use via a Smart Phone, and the real advantage it offers, have combined to win a substantial number of customers.
The technical details cover a number of sensors and operating control devices linked in the home via the wireless WiFi hub; then over the external Internet to a British Gas Cloud based hub, or server. Here the data is collected and collated before being fed over the Internet, or 3G, to the users SmartPhone, via a downloaded App. It is therefore a genuine IoT based installation using Mobility and Cloud in addition and has no requirement for a central computer in the home as with older forms of Home Automation. The customer does not own any of the components, but is provided with a free ‘Service’ of remote control together with a monthly review on the details of their use of energy, including anonymous data as a comparison with other users running the same installation.
For British Gas the ‘Hive’ ‘Service’ provides real time data covering all aspects their customers use of energy from temperatures required at different times of day, furnace/boiler use and efficiency, and much more that directly feeds their planning and supply operations. Marketing not only gain hugely valuable data on their customers but in addition have direct access to the customers via their mobile devices right at the time when they provide valuable information and tips on more efficient use of expensive energy.
British Gas uses IoT with Mobility and Cloud to supply a value adding Service that changes their relationship with the customer and allows both to gain value through the Smart Data the Hive Internet Service delivers. A prime example of how IoT used well as a value creating service is a competitive game changer.
Introducing the phrase Game Change also reminds how the cost of IoT today provides a game change as to how widely previous good practice for the level that ‘Services’ have been practiced. Sensing and monitoring on high value items such as aircraft engines has been used for some years under the name of ‘Power by the Hour’. Instead of selling the engine, and hopefully a maintenance plan, the manufacturer offers the use of the engine paid for at a specified rate per hour of operation. Usually this includes an uptime guarantees all of which make the ability to read and react to the condition of the engine and the manner it is being used (abused) critical.
‘Power by the Hour’ is an excellent example of an industry shift to the Services based Operational Expenditure, OpEx, Digital Business model, away from the traditional Capital Expenditure, CapEx, business model with its large capital requirements. The need to tie up scarce, expensive capital in the purchasing of engines, a stock of spares, and to cover unplanned operational down time and repair bills is removed and replaced by operational expenditure on the Service.
Sensors, and sensing using older, and more expensive, forms that predate IoT are clearly the enablers of these well-established ‘Service’ business models, albeit only possible in extreme high value market sectors. Now IoT sensors at a few dollars a time connected through the ubiquitous Internet offer similar capabilities at a fraction of the cost, it’s truly a game changing moment. But the big point to grasp is what creates the value is the ‘Service’ with its value created by the addition of Data. The difference between the home consumer constructing their own home Service manager with INTTT, and the British Gas Hive Service is the incorporation of British Gas owned Data to create a value added Service. It’s the same for the engine manufacturer responding to the real-time ‘trigger’ events by combined the IoT real-time data with their own legacy data to create a unique capability under pinning the Service.
A thousand IoT ‘things’ might provide, or add to, the mountain of Big Data, but to create Services with real value to a user means hiding the Internet of Things complexity, and substituting an Internet of Services that focuses on and delivers the required business value from the Internet of Things by incorporating valuable information.
Big Data is getting to a point on its hype cycle when the question ‘where next with Big Data’ is being asked, and to some degree there is an answer in the recent blog ‘Turning Big Data upside down into Smart Data’. The reality is that real-time data ‘triggers’ will drive the need to find and transform much of the knowledge an Enterprise holds in its own Big Data into the well structured responses as in ‘sense and respond’. Much is spoken on the transformation to the Service Economy and Digital Business; the role of Big Data at the center, usually linked to Social Media, but much less to the hard facts of what a Service really contains and what ‘triggers’ its value.
The realization that it is the Internet of Things that ‘senses’ and that is linked to responses through value creating ‘Services’ seems slow to be realized, probably because Internet of Things growth has not yet hit the IT department. Most important of all is the realization that Digital Businesses will be competing in an ‘Internet of Services’ that use Big Data as a significant of an Enterprise’s ability to use its acquired experience for competitive advantage.
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