Dominic Smith explores the Internet of Things (IoT) and examines the tremendous possibilities for new revenue streams that it presents. How, he asks, can companies maximise this potential and deal with the challenges of machine-to-machine (M2M) communications and IoT billing?
The buzz surrounding the Internet of Things (IoT) is becoming increasingly louder, but what exactly is the IoT and how will it affect us?
Essentially, the IoT (sometimes called the Internet of Everything) is a network of physical items such as vehicles, buildings and appliances that are embedded with sensors that can communicate with each other and us. MIT researcher Kevin Ashton coined the phrase “internet of things” back in 1999 and ever since then, businesses and people have been trying to work out ways to monetise the concept.
Research from Gartner calculates that by the end of 2016, there will be 6.4 billion connected ‘things’ that range from smart cars, smoke detectors, door locks, industrial robots and streetlights, to heart monitors, trains, wind turbines and toasters. By 2020, the research firm estimates that this will have multiplied to more than 20 billion of these so-called ‘smart’ devices, all transmitting data to us, to the cloud and to each other. Examining the potential for revenue, McKinsey has published its report, The Internet of Things: Mapping the value beyond the hype, which estimates that the IoT could generate up to $11.1 trillion a year in economic value by 2025. That’s a staggering figure by any standards, yet McKinsey adds the caveat that it may actually understate the true potential!
Technology forecaster, Daniel Burrus, adds to this view in his article for Wired when he says that in discussing “the next big thing” nobody is thinking big enough. Burrus argues that so far, too much of the focus has been on machine-to-machine (M2M) communications, which, he says, misses the point, because a machine is only a tool and can only gather data. It’s the analysis and interpretation of that data that will allow it to be leveraged – and cloud-based applications will be the key to using that information – so when that happens, the IoT will become a major engine for creating new products and services, many of which we can’t yet even imagine.
Is IoT the basis for a fourth industrial revolution?
The energy and electrical appliance industries have been early (if relatively unsophisticated) adopters of the idea of connecting ‘smart’ products, and Siemens is one of the most enthusiastic. The German-based corporation is said to be working on the basis that ‘smart’ products and services are beginning to power what is increasingly being seen as a Fourth Industrial Revolution
(after steam, electricity and wired computers) and the concept certainly seems to be gathering momentum.
Confidence in McKinsey’s revenue predictions is borne out by the fact that technology giants such as Apple and Google are investing significant resources in research and development of IoT products. In 2014, at its Worldwide Developers conference, Apple introduced Homekit, an Internet of Things platform, while Google paid $3.2 billion for home automation company, Nest Labs. At IBM’s Almaden lab in California, the IT giant is reported to be working on a gas sensor with multiple applications
that can not only detect biochemical threats in public spaces, but also tell you whether the fish in your fridge is off, and even diagnose certain diseases simply by analysing your breath.
What about data privacy and security in IoT systems?
However, while there is enormous potential for benefits, there are also major concerns about the wisdom or desirability of connecting everything that can be connected.
For instance, it might at first glance seem an attractive prospect to have your alarm clock wake you and at the same time communicate with your coffee machine and toaster to get your breakfast ready, then for your car to drive you to work, via a route with the least amount of traffic while you are being briefed on your day’s schedule, or simply catch up on your messages and emails via your smartphone. But how would you feel about it if your boss also had access to all that information about the start to your day? And what if someone else could hack into all your personal information via something as seemingly innocent as your toaster? Or switched the route that your car took, or the speed at which it drove?
Back in 2011 I wrote about M2M and the case of the disappearing SIM cards
. It was a far less sinister scenario than the one just outlined, but it nevertheless demanded further examination: In an effort to better manage the city’s heavily congested traffic, the Johannesburg Roads Agency installed around 600 “smart” traffic lights with embedded SIM cards that used GPRS to report faults back to a central office.
Such an innovation would seem to have obvious benefits, but the local thieves in South Africa were also quick to realise the potential those SIM cards had for making free telephone calls, and within two months, more than two-thirds of the smart traffic lights had been robbed of their SIM cards.
What struck me about this story, apart from the ingenuity of the thieves, was the issue of how M2M services should be deployed. In particular, I asked whether M2M should be managed on the same core BSS/OSS platforms as the more traditional retail services?
It’s not clear if these traffic-light SIMs were managed on the host operator’s core infrastructure or on separate systems. However, it would seem that the change in usage pattern really should have been picked up and addressed much sooner than it was. In an integrated BSS/OSS environment you would expect a fraud system to identify that these SIMs were being used in other devices and to make calls from other locations.
So when looking at IoT billing solutions
, whether it’s for a consumer value-added service, or an M2M service, the same levels of planning and testing are required; and the fulfilment, assurance and billing processes remain critical to overall success.
Whilst IoT services may have relatively simple pricing models with each CDR (Charging Detail Record) having a small individual value, high transaction volumes mean that apparently small pricing errors could multiply rapidly, causing potentially huge revenue assurance implications.
The essentials of IoT billing solutions
When billing for the Internet of Things, BSS/OSS systems need to be able cope with new business models focused on high volume but low margin transactions. Account structures too, will pose new challenges, not only in terms of billing many thousands of services per account, but also requiring the administration and provisioning of connections in bulk.
A fast, reliable billing engine that can process and monetise big data collected from ‘things’ is crucial to maximising the potential of the IoT. At Cerillion, our Enterprise BSS/OSS
solution is designed to support M2M/IoT services as part of a full suite deployment, including itemised and aggregated charging and billing options corresponding with the M2M/IoT service model and the management tools needed for bulk service fulfilment, for example provisioning thousands of SIMs.
Cerillion customers can easily integrate M2M/IoT services into their communications portfolio, and Cerillion Enterprise BSS/OSS can also be delivered to specialist M2M/IoT platform providers and aggregators.
However, as EY
identified in their market analysis, cloud computing provides the platform for the IoT to really flourish, and that is where Cerillion Skyline, our cloud billing
platform, forms the other key element of our M2M/IoT strategy. We have recognised that in many cases Communications Services Providers (CSPs) are not prepared to disrupt their existing BSS stack to support new services, or worse still their existing systems are unable to support the demands of M2M/IoT services. Cerillion Skyline is ideally placed to solve this problem, allowing CSPs (and other companies) to enter the M2M/IoT market without needing to alter their existing BSS and without any significant upfront investment.
As IoT connectivity becomes embedded within every ‘thing’ you can buy, it is now critical for service providers to put in place agile billing
solutions that will support these new business models. IoT monetisation is now the name of the game and those who invest in flexible business support systems will be the ones who can successfully convert the IoT buzz into bucks.