IoT and the Customer
By Juliet Shavit, President and CEO of SmartMark Communications, LLC
I recently sat in a room full of telecom network engineers to discuss the topic of IoT and the customer. I followed several presentations on U/X and BSS, but when it came to my presentation, I felt a sudden stillness in the air. Radio silence. It was terrifying.
A week later I delivered the same address to a number of telecom CEOs at a business conference, and the response couldn’t have been more different. Thankful and full of relief, I began to understand what the critical difference was between the two audiences. The first audience really had no knowledge of the customer outside BSS metrics or click-through numbers. The second audience had a greater urgency to understand what customers wanted. They understood that the future of their business depended on it.
I’ve deduced from that experience that the urgency of this topic is truly critical for C-levels because their future business models depend almost entirely on uptake of consumers; However, the message must be delivered throughout the organization, so that it resonates with the engineers.
But what do customers want? What are a bunch of lazy millennials willing to pay for and what will keep existing customers from jumping ship to new OTT providers? Will Amazon take over the world or is there a place for innovation among infrastructure-heavy incumbent providers?
The answer lies in an operator’s approach to innovation, because at the end of the day, innovation is what will catch the attention of a customer glued to their smartphone screen. It will make them look up. It will make them engage, and it will more importantly make them subscribe. I will also argue that that innovation must be linked directly to customer control.
The Business of Innovation
If IoT is a tricky word, then the word “innovation” is even trickier. For the purposes of this argument, IoT is the digitization of traditionally non-digitized industries. How do industries and business models embrace the world of the Internet and what opportunities will such an embrace entail?
To really understand the business behind monetizing IoT, service providers must look at before and after scenarios around some industries that have drastically been impacted by IoT.
Energy and Utilities
One can argue that the energy industry has undergone one of the most transformational evolutions of any industry as a result of IoT. According to a recent report, the global Smart Grid technology market is poised to grow at a CAGR of around 29.5% over the next decade to reach approximately $830.56 billion by 2025.
The introduction of Smart Grid, with an emphasis on advanced metering infrastructure (AMI) has allowed for utilities to better collect, understand and analyze customer usage information with the ultimate goal of forecasting and managing load reduction. More importantly, the technology has allowed customers to better understand, manage and control their energy use.
The deployments of new wireless mesh networks coupled with a wave of innovation around personal energy management, have offered up opportunities to those companies with the motivation and the tech know-how to help utilities transform their businesses. Whether it is management of those newly enhanced network operations centers or the systems necessary to help utilities understand the data now available, communications service providers have more than ample opportunity to support and collaborate with utilities on the future of energy distribution and management.
And, if AMI is not sexy enough, the race has already begun for building smart cities and enabling smart homes. The prize goes to those fastest and most innovative to market, with the customer at the center of their story.
Financial Services
By the time my children turn into responsible, account holding adults, retail banks may be obsolete. So is the direction we are moving in with the financial services industry. Despite the largest looming cyber threats ever, people are flocking to their computers to utilize online banking and money management tools. Direct deposit has become so popular it has threatened to make the U.S. Postal Service nearly obsolete.
But what is really driving the mad rush to online banking? I would argue that it is the same thing that is driving customer demand across all industries – control.
The Internet has introduced consumers to unprecedented control over their money, and everyone from applications developers to managed service providers have caught on. Telcos must sit up and smell the data centers.
Banking is a highly deregulated market, so helping the banking industry understand and help guide consumers through the digital channels to optimize investments and secure their futures is a challenge made possible only through the introduction of IoT. Therein lies great future opportunities for service providers.
Retail
There is arguably no industry greater impacted by IoT than retail. One needs to only take a visit to the abandoned storefronts in the local mall to see the physical implications of such a transition. And customers, my friend, are the grand prize for those businesses who can differentiate themselves in a highly competitive, overly crowded virtual world.
The market opportunity here is for those communications providers who can leverage their history of customer experience and stacks of data analytics tools to help online retailers hook customers – and not just for the moment — but for the long-term through cookies and other session data. The most innovative and qualified party able to help to reel in customers wins.
The opportunities in the retail environment for service providers is not a secret. Everything from online storefronts to billing, rating and charging to entire U/X designs are currently some services the telcos are offering their retail business customers.
In the olden days (when I was a young person), telcos would have one lonely opportunity, to offer telephone services. Even triple play seems like an ancient and underwhelming opportunity in comparison.
Real Estate
I can hardly remember the days before Realtor.com. In fact, I have bought at least three houses as a result of my own ability to surf and sort, itemize and customize. Long gone are the days of waiting for your real estate agent to drive by with the print outs and take you on never-ending site visits.
Managing information, data analytics and customization are all ways today’s operators are helping the real estate industry identify customers and manage their experiences.
IoT has reinvented the real estate customer experience. Putting control in the hands of the customer, as we saw similarly in the previous examples, once again, is critical to this industry’s evolution.
Industry Pressures from IoT Mean New Opportunities to Innovate for Operators
But not all industries have seen a surge of business opportunity thanks to the proliferation of the Internet. Here are a few examples where IoT has disrupted industry is a strongly negative way. The question then arises from these examples is what is the role of the telecom service provider in these disrupted industries?
Music
The music industry is a clear example of a once thriving industry crippled strongly by the increased popularity of digital streaming. For an industry that moves from physical to digital mediums, purchase price has dropped astronomically. In addition, in today’s environment, where you can simply stream or download your favorite songs instead of being forced to buy an entire CD, the overall cost for music is going down.
As alluded to in the introduction to this section, the music industry is just one hit hard by the rise in IoT. Yet, telecom service providers can drink a glass half full if they are agile, innovative enough and hire a new group of hungry young millennials.
The upside of this industry challenge is the increased popularity of subscription services outside traditional voice, text, video and data. Can music be a service? Should telcos be looking at these models themselves, given their infrastructure capabilities to host and deliver content? It certainly makes for an industry discussion, particularly to those slightly weathered incumbents looking at competing against the hip younger players.
Education
Thankfully I haven’t yet heard of medical degrees being offered online, but chances are that is a matter of time. These days, to gain any level of education, one need only sit in front of the computer. While maybe not making us more social creatures, IoT is forcing a new generation of people to get educated online because it is easy.
But one of the greater challenges with the proliferation of online high education courses, means that the costs normally allocated to traditional brick and mortar universities are declining. There is no need to room and board. College textbooks are all online. According to a recent article, nearly 2.5 million fewer students are enrolling in colleges and universities.
This means that the education industry may be in desperate need for technology support from those who can best help them transform their businesses and make new investments in cloud infrastructure and related services. Whether it is the upward trend in purchasing solutions to meet the rising demand for online education or finding the right managed services strategies to partner with schools across the globe, telecom service providers should be paying close attention. Those with the desire to innovate and explore new territory will have much to gain from this industry’s need to adapt better to an IoT world.
The Roadmap to IoT Customer Innovation
There is one common thread in all of the industries highlighted above. It is opportunity. So, for telecom service providers in need of better understanding how to monetize IoT investments, I encourage them to look at IoT in a different way—as a door to the development of new innovative services. It is no secret that B2B revenue far exceeds residential, but with this gift of opportunity comes a great responsibility for operators.
Communications service providers must open their minds and step outside their comfort zone. They must engage with consumers better, remind themselves what it is like to be a consumer in industries outside telecom. They must also remember that what customers want now, more than ever, is control.
At the heart of this opportunity lies innovation and the demand for communications service providers to make a better effort to understand customer behavior outside traditional telecom services. They must re-examine their business service strategies to really appreciate the opportunities that IoT brings with it. If they don’t, their younger, more agile and music-listening competitors will.