Connecting the dots: Three big reasons businesses are thinking about IoT
During a recent happy hour gathering of Fathom Consulting colleagues, a few of us realized a common thread running through several otherwise unrelated projects. It seemed that, all of a sudden, many of our clients had been bitten by the “connectivity” bug. Though diverse across industries, products, and services, many of our clients were actively exploring ways and reasons to allow their standalone products to communicate—to each other, to the cloud or data hub, and, in some cases, directly to users.
An active discussion ensued: What had we learned across these projects that we could share with product and program owners who might be considering connectivity solutions in the near future? Thus, a blog series was born. (Watch for two more posts in the near future!)
But first, a few definitions
Internet of Things (IoT) refers to the networking of physical things (often referred to as “smart devices”) in order to collect and exchange data. Some products we’ve worked with include medical devices, inventory control tags, and consumer goods.
A simpler, but related, concept is that of “connected devices.” Connected devices send or receive data to at least one other device. They might use Internet protocols to make the exchange (making them part of the IoT), or they might just be connected directly to one other device (for example, a monitor on a patient that communicates via Bluetooth to a monitor across the room).
These days the terms are used almost interchangeably. For these blog posts, we’re sticking with the broader label of “connected devices”—since most of the points we want to make are relevant whether or not the device is truly part of the IoT.
“Connectivity is the tool, not the target”
Let’s start off with the obvious way that this latest technological capability is identical to all the others that came before it. Just like getting on the web in the late ‘90s and getting on social media 10 years ago was unwise unless you had a valid reason to do so, pursuing a connectivity solution just for the sake of it is just as likely to leave product owners feeling disappointed, foolish, and poor. Like all successful innovations, a move into a connected landscape must be underpinned by solid business and user objectives. We’ll explore three good business reasons to get connected in this post and user benefits in the next post.
1. Provide efficient service and effective support
Traditionally, products that have shipped and are in the hands of users can be hard to maintain. The user has to do their own maintenance, and troubleshooting often involves frustrating phone calls to 1-800 numbers.
But products that have shipped and are connected can more easily be maintained and repaired by a remote update. Rather than a service technician being deployed when things break down, fixes or version updates can be pushed to a user’s device via the Internet. The company saves time and money, and the user is back up and running much faster.
Combine the ability to service products remotely with increased visibility into how the product is operating, and it may be possible to proactively solve a problem before the user is even aware there is one. Connectivity can not only prevent things from going wrong, but also make sure things go right. As an example, Tesla Motors recently pushed an update to its cars allowing drivers in Florida to drive more miles between battery charges as they evacuated prior to the arrival of Hurricane Irma.
Even in cases in which a physical product must be fixed in person, the benefits of a company communicating with its products can still be realized. Data received from the device ahead of time could be used to diagnose the problem and ensure the dispatched technician has the correct tools, parts, and expertise to complete the job.
2. Gather data on product usage
When sitting down to discuss how a product could be improved or what features should make the cut-off for the next launch, we consistently counsel our clients to consider how their users use the product today. It makes more sense to spend design and development capital on important experiences that a re frequently used or difficult rather than upgrading features that no one knows exist. Yet often our clients have to make educated guesses or spend time on baseline research just to understand what, exactly, their customers are doing with their products.
But when products in the field are connected and communicating usage data, suddenly insights about problem areas or underutilized features are readily available. These insights can inform product design and feature lists in a way analogous to web analytics. When combined with additional information the device might collect on the location, time, and the user’s identity, this data can even serve as the foundation of a robust persona or inform an audience-specific design process.
In addition, usage information could empower others at the company who interface with the user. Perhaps a certain user needs additional training on advanced features or is operating the product in an unethical or inefficient way that should be addressed. If the inventory of consumable products can be captured and transmitted, then sales calls or promotions could be expertly timed.
3. Define new service and revenue models
The ability to provide more options for serving and charging your customers increases exponentially once a physical product is connecting in real time. Rather than a monthly service fee, customers could pay for each time or day they use the product. These options could be attractive to customers who otherwise would not have purchased the product, believing that they wouldn’t use it enough to justify the subscription fees (similar to the pay-as-you-go mobile phones).
Leasing models on connected products could now include low, medium, or high-usage plans, or advanced features could be immediately enabled after payment of an upgrade cost—akin to web apps like Google Drive or SurveyMonkey. This gives the makers of physical products new ways to get their foot in the door with customers at a lower price point. Costly medical monitoring equipment or seldom-used safety equipment could follow the path of tiered pricing models set out by digital-only companies like Hulu, or sell packages of concurrent users like Adobe.
Instead of connecting with customers a few times a year via in-person visits or phone calls, you could have literally hundreds of small touchpoints with them each month as they interact with you via the product. This could drastically change the closeness of the service relationship, while saving the business money on a costly field sales and service team.
Need more reasons?
These benefits to the business may be reason enough for many organizations to see the value in getting connected. Basic back-of-the-napkin math on increased sales or savings from more efficient service is often enough to justify the investment in getting connected. But remember—we’ve only covered the internal benefits here! Next time we’ll explore how to create connected solutions users will love, too.