Start your Internet of Things project today
As the number of connected devices grows astronomically, many more manufacturers are jumping into the fray. IDC estimated that the install base for Internet of Things units was 9.1 billion as of the end of 2013. And it expected the installed base of Internet of Things units to grow at a 17.5 percent compound annual growth rate (CAGR) during the forecast period to 28.1 billion in 2020. From Nest Learning Thermostats to water sensors to connected homes, firms such as Morgan Stanley predicted not surprisingly the number of connected Internet of Things devices to approach 75 billion by 2020.
Testing the limits of possibility
Use cases for the Internet of Things are limited only by imagination. Consider Internet of Things applications for the insurance industry. Insurers can leverage their policyholders’ driving data as part of telematics strategies. Or with connected homes, insurance companies can monitor exposure to everyday household risks.
Perhaps one of the largest impacts on business is the weather. Did you know that routine weather events generated costs of over 500 billion dollars in 2014 in the US alone? One of the use cases for utilizing weather data is to provide policyholders with weather alerts. Weather alerts have the potential to save insurance companies by helping policyholders prepare for weather-related events that may damage property. For example, insurers can text their policyholders when a hailstorm is on its way so that policyholders can move their vehicles into a garage or other covered parking. That way, damage to the vehicles and future claims can be minimized or prevented. Imagine the improved experience for your policyholders.
Diving deeper into the Internet of things
What do these use cases mean for manufacturers? What do they need to consider when laying out their connected device strategies? The Internet of Things is still at an early stage; the connected market started over a decade ago to monitor and control every piece of information from physical and social environments.
In the past, many of these units were hardwired together in a complex system, but with analytics, cloud computing, mobile computing, telematics, wireless connectivity and other technology advancements, the birth of the Internet of Things transpired. For example, the Nest Learning Thermostat performs the basic function of an ordinary smart thermostat: it monitors, adjusts and maintains a predetermined configuration. But this Nest thermostat also senses humidity, activity and light, and its built-in intelligence learns how and when the user likes to adjust the temperature. It can even optimize the house’s temperature for energy efficiency.
These features, however, don’t make the Nest thermostat part of the Internet of Things. But when it’s connected to an insurance company or the Nest Account—hosted by Google, Nest’s parent company—through a home Wi-Fi network, it has far greater value. That connection allows people to monitor and change the temperature from their smartphones, modify the heating schedule and analyze their home heating activity. It also allows insurance companies to offer incentives for precautionary and timely alerts preventing losses.
What makes up the Internet of Things market? Consider these Internet of Things components:
- Applications and mobile applications
- Consumer data: health, locational, interaction and so on
- Devices, monitors, controls and so on
- Network and connectivity
- Sensors: connected home, connected automobile, connected work, connected life and connected consumer
- Social business
- Weather data
Organizations are now accumulating terabytes and petabytes of data from various devices, including machine, mobile, user, web logs and cookies, social media and so forth. The challenge is not in storing this information, but in actually using this data for competitive advantage. Organizations are rushing to store this wealth of information for fear of missing opportunities, which brings us back to the key questions: what, where and how do you start?
Holding the keys to Internet of Things project success
The key to winning the race to a competitive advantage is not by storing all or most of the data, but by deriving value and insight that can be tied to business outcomes, return on investment (ROI) and profitability. You can take several, recommended high-level steps to begin your big data journey:
- Identify business use cases tied to business outcomes, metrics and your Internet of Things roadmap.
- Identify business champions and sponsors of your organization that can lead the Internet of Things as a business initiative.
- Select the right set of people, processes and technology—including platform solutions—for your Internet of Things project.
- Build a lab—an Internet of Things Lab—that can prototype different solutions and integration points. Use point solutions for speed-to-market and cost considerations, but plan to build, buy or rent the underlying Internet of Things platform before the system becomes overly complex with many point solutions.
- Be agile by executing your project and proof of concept (POC) in sprints or short projects with tangible and measurable outcomes that either increase efficiency, enhance customer experience, reduce costs, prevent losses or increase revenue.
- Plan for the security and privacy of the data. Consider and simulate the risk of a data breach.
- Build on small successes, and integrate your data platform with operational applications that will empower your field sales and customer representatives to use the insight to delight your customers.
Beginning a thousand-miles journey with a single step
This endeavor is a journey and not an end or a destination. Improve your processes and technology in steps, and help your business champions understand that the connected world is here to stay and grow. IBM and the Internet of Things can change how insurance companies do business. Insurers have the opportunity to enhance policyholder retention, risk management, crisis response, claims management and more. Outthink limits and discover what your insurance company can do with the Internet of Things in a demo.