M A R K E T I N S I G H T

The Potential for Internet of Things (IoT) in Customer Service: Positive Customer Experience with IoT Depends on Successful Service and Support

Introduction .............................................................................................................. 3

IoT Benefits .............................................................................................................. 4

IoT Trends ................................................................................................................. 5

IoT Challenges .......................................................................................................... 6

Summary and Recommendations .......................................................................... 9

Oracle Considers Expanding OSvC Support for IoT ........................................... 11

Legal Disclaimer ....................................................................................................... 12

The Frost & Sullivan Story ..................................................................................... 13

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IntroductIon

Recent Frost & Sullivan research identifies the Internet of Things (IoT) as one of the most important Mega Trends for today’s organizations to consider.

IoT is a blend of sensor-fitted equipment and devices, and local networks of various standards and technologies that transmit and receive data between them and their users over secure Internet networks. Products such as accessories (like wearables), apparel, appliances, equipment, facilities and homes, infrastructure, machinery, medical devices, and vehicles are being connected to businesses and consumers through IoT. These IoT-enabled devices are often programmed to alert users to anomalies that could indicate problems that require immediate attention. Users reach into data repositories to uncover causes and obtain insights and opportunities, track trends, predict, respond to likely outcomes, and test “what if” scenarios. Users include individuals; IT and line-of-business departments; operators; and customer sales, service, and support desks.

Like most technologies, IoT has been built on a foundation of other tools and applications. There have been connected devices for many years, but these have typically been single purpose and have used proprietary technology, such as alarm systems. Meanwhile, remote computer and wireless device support have become commonplace.

Machine-to-machine (M2M) applications, which predate IoT, also link devices and users, typically over closed networks. In contrast, IoT is an open connectivity framework that permits data to flow to a wider range of applications, such as customer relationship management (CRM) systems. As “traditional” closed-loop M2M continues to thrive for specialized, critical, and/or security-sensitive applications, IoT can be considered a new generation of M2M.

IoT continues to expand as businesses see more relevant use cases. That growth poses opportunities, but also challenges, for customer service organizations; how well they respond will help determine the ultimate success of IoT.

Retail

Smart Agriculture

Smart Buildings andInfrastructure

Industrial

ConnectedHealthcare

Mobile andWirelessCommunications

Wireless SensorNetwork and M2M

Consumer /Home Appliancesand Electronics

Security &Surveillance

LogisticsSmartTransportation

SmartEnergy

Source: Frost & Sullivan

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Iot BenefIts

Frost & Sullivan research has identified a better customer experience as one of the most important benefits of IoT. Examples include:

• Enhanced customer and user satisfaction. IoT gives users new access to invaluable real-time data about their products and services, like equipment status and state, new and potential problems, and service reminders and replacements due. It allows users to act in a timely manner on the information gathered, which provides greater product satisfaction while cutting costs.

Consider the following examples: Enabling homeowners to remotely manage heating and air conditioning systems, light shades, and taps reduces energy and water bills; notifying motorists or trucking firms that critical parts of their vehicles are wearing out or are about to break prevents more expensive repair bills and obviates towing; and informing individuals of critical health issues (e.g., when they have to take medication) can save lives and improves quality of life, while also managing healthcare costs.

• Faster, more effective, safer and less costly customer service and support. IoT facilitates proactive analysis and repair, often detecting issues before they become serious (and expensive). Consequently, IoT can reduce equipment downtime, repair, replacement, parts stocking costs, and support costs (including limiting “truck rolls”). Moreover, concerned customers and employees do not have to make as many costly-to-handle support contacts, as the devices have already “called” the help desks.

By pinpointing the location of problems, and likely causes, there also is faster and more precise and successful diagnosis and resolution. Field reps will know which tools and parts to bring to bear. Their risk of accidents is lowered as access to dangerous locations such as cell towers, heavy machinery, and to storage tanks is shorter and less frequent.

• Business intelligence. IoT collects vast amounts of data that help extend product lifetimes and develop new products. Companies can track product and service use, how products are used and by whom, issues such as wear and tear, environmental conditions, and other relevant hardware and software use. And IoT allows timely and more profitable resupply. Consider that if

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an enzyme freezer’s inventory falls below a specific level, an IoT solution, connected to sales and back-end systems, can generate a lead to replenish it. With IoT-gathered information, companies can proactively offer customized service, support, and warranty plans; upgrades; add-ons; and replacement recommendations. They also can cross-sell and upsell targeted products and services to satisfied customers at the right time, based on IoT data. Finally, they can reduce data network provisioning costs.

• New revenue-generating and service-enhancement opportunities. IoT is opening markets for “X device-as-a-service” (XaaS). One example is GPS-enabled vehicle usage tracking for auto leases, fleet owners, rentals, and parents who have loaned their cars to their offspring. Companies can sell information gathered through IoT or sublease IoT capabilities. They can offer new services that also enhance the customer experience. For example, automakers are turning their connected cars into Wi-Fi hotspots with entertainment offerings from leading vendors.

Iot trends

The following are some of the leading IoT trends as identified by Frost & Sullivan:

• Strong innovation and demand. More products and services are being fitted for IoT. They include vehicle telematics in trucks, product tracking and freshness alerts in truck containers, self-reporting vending machines that inform distribution, user-based car insurance, and real-time traffic information to GPS devices. Wearable fitness devices and watches also are hitting the market.

There is a broadening array of IoT and similar connected devices that are, or about to be, on the market. Amazon’s Dash Replenishment Service will enable connected devices to reorder products through buttons built into their hardware, or they can measure consumable usage so that reordering happens automatically. Meanwhile, Amazon Prime customers can press portable branded Dash Buttons to reorder popular items. It uses home Wi-Fi networks to connect to Amazon apps. Amazon sends order alerts in case customers change their minds. Bigbelly supplies solar-powered waste and recycling stations that automatically inform collection agencies or contractors when they need to be picked up, but they can be fitted with additional sensors that capture “urban intelligence” data from the stations. Pedestrian traffic, noise levels, and pollution levels can be captured and leveraged for cities and towns with fully scaled Bigbelly implementations.

Other solutions bolster security. Verizon’s Managed Certificate Services platform permits secure data transmission and trusted information exchanges for large IoT deployments by authenticating and verifying machine and object identities. Verizon’s M2M Management Center portal handles user permissions and it can suspend service to rogue devices, or to devices that have been relocated without authorization.

Frost & Sullivan forecasts that there will be 50 billion connected devices (IoT) by 2020 and that the US connected home market will grow from $427 billion in 2013 to as much as $628 billion by 2018, at a 3% compound annual growth rate (CAGR). Meanwhile, the global wearables market is expected to grow at a 44% CAGR between 2014 and 2018, reaching approximately $37 billion in 2018.

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• Expansion and shift to “product-as-a-service” (PraaS). IoT permits more products to become “PraaS” as opposed to the traditional “sell and forget.” It is also deepening PraaS relationships by providing richer information, improved service, and ultimately greater value. By expanding the customer relationship, PraaS ties into the CRM strategy of maximizing total customer lifetime value. In the PraaS model companies offer service contracts, support, enhancements, upgrades, and extended warranty programs to generate more profits per product sale. These programs also are aimed at retaining customers who have to replace products.

• Emerging multichannel use cases. Companies and their partners are uncovering new ways that IoT can be integrated with multiple channels to support, benefit, and build customer relationships. For example, when a battery-fitted device alerts a customer of a low battery, it can recommend and set up a service appointment, or suggest the nearest place to buy a new one. But if the battery is new, the customer may post or Tweet a question about it, and receive answers from other customers, retailers, or even the manufacturer. If it turns out there is a problem with the product, engineers can look into, devise, and recommend solutions, or the product could be recalled and redesigned.

• Development of enabling technologies. Enabling technologies include small and powerful low-cost sensors, high bandwidth, reliable and secure networks, Big Data and analytics solutions, data handling and management platforms, monitoring, network management, and usage tracking applications. There is a growing array of tools that help companies create and customize IoT applications, including links into other software, such as CRM for sales and service, and enterprise resource planning (ERP) to manage IoT assets.

• Rise of the cloud. The cloud assists with IoT application development and lifecycle management. By providing access to a standard set of published interfaces or application programming interfaces (APIs), cloud platforms shorten the time to develop and bring new applications to market. Data also is hosted in the cloud, and the cloud provides scalability and business continuity/ disaster recovery (BC/DR). Finally, cloud technologies and businesses’ positive experiences with them for other critical applications, like CRM, contact center routing, and unified communications, have opened the door for their use with IoT.

• More connectivity between IoT and contact centers. There are many IoT solutions in the market, such as application enablement and embedded networks. But vendors also now recognize the value of integrating IoT applications with their contact center solutions and services. There are applications coming to market that promise to integrate IoT device alert feeds with other channels to be handled by agents.

Iot challenges

For all the benefits of IoT, its application faces several stiff challenges, including the following:

• Corporate and supply chain disruption. By connecting hitherto isolated products and services, IoT is a disruptive technology. Comprehensive IoT deployments require user education and training, in addition to investments in solutions and their installation and support. Frost & Sullivan research identifies employee education and training as a considerable hurdle.

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Managing software-controlled systems is not new for companies in the communications, financial services, healthcare, and retail sectors. But it is new for other businesses, such as manufacturers, resource extraction enterprises, and transportation providers.

At the same time, IoT-driven PraaS risks altering longstanding distributor and retail relationships, such as with automotive, consumer electronics, and large appliances. Consumers are becoming more engaged with brands, reinforced by marketing, including social media, and may expect direct support from manufacturers, depending on the products. Both manufacturers and resellers will have to adapt or watch competitors pass them by.

• Enterprise isolation. IoT devices, particularly older (and M2M) units, may not be connected to businesses. There also may be multiple steps involved in transferring data. These devices do not inform, communicate, and target future customer brand interactions at this digital touchpoint or across other channels. While this practice provides optimal security, the downside is that it limits the ability of companies to take full advantage of IoT.

• Connectivity issues. IoT poses a radically different environment for products, networks, and users. Products have to be engineered to be reliably and securely connected. They require software that must be solidly integrated with wireless systems. When the devices or users are mobile, companies have to ensure there are no signaling dead spots.

• Data management hurdles. IoT devices can create large volumes of data. For example, real-time video feeds consume substantial volumes of bandwidth, particularly when it comes to high resolution. Sometimes equipment sensors can flood device APIs and local networks with too much information. Critical data may get lost or ignored in the stream, while causing data handling costs to rise. Consequently, companies may miss critical issues or sales opportunities. At the same time, companies may be inadequately monitoring and controlling data usage, resulting in unnecessary expenses.

• Inadequate interoperability. This is a common problem with new and evolving technologies, and IoT is no different. There is a proliferation of vendor standards, with each supplier taking its own approach to IoT, irrespective of the others. As a result, the data often is not normalized and merged (this prevents, for example, an IoT-enabled sprinkler turning on when a home’s water consumption exceeds a pre-set level). There also are inconsistent data and private implementation architecture problems.

But solving these issues raises questions. Should vendors collaborate among themselves or indirectly through cloud providers? Or should all data have some common elements, depending upon the industry or vertical type that allows for better interoperability?

This issue should hopefully be resolved with vendor adoption of open standards that also promises to reduce the time to market for IoT solutions. There are several interoperability initiatives under way through organizations, including the AllSeen Alliance, the Industrial Internet Consortium, and the Open Interconnect Consortium. But much will depend on whether and to what degree competing vendors see their financial interests are best served through cooperation.

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• Complex applications. Support agents are faced with investigating and solving problems involving root causes that may lie with other companies’ products, or with the customers themselves. A case in point is the connected home (Does the problem lie in the furnace, wiring, sensors, the Wi-Fi network and connections, or in what a customer does or does not do, or even whether he or she knows how to use the system?).

• Added infrastructure. IoT builds on a new layer of changing and often dispersed hardware, software, and network, along with security and support requirements, that lies on top of, or parallel to, existing equipment, communications, and IT infrastructure. A large company that has 5,000 PC ports may now have 20,000 device endpoints, for example. Therefore, companies have to provide systems such as power and cabling to support devices and networks. Critical IoT applications also must be added to backup power circuits.

• Heightened security dangers. Unprotected IoT devices and networks open the door to a wide range of serious and potentially violent criminal acts. After all, IoT devices themselves can be compromised and remotely controlled (e.g., botnets).

The US Federal Trade Commission (FTC) warns that failed user authentication and poorly secured device and network interfaces will give criminals access to IoT in its “Careful Connections: Building Security in the Internet of Things” report. As a result, there now must be comprehensive security controls on many more devices, a.k.a. “the security of everything.” But it appears that manufacturers are only now beginning to think about this issue. While intrusion detection on servers is well known, it isn’t on products such as lightbulbs.

But stronger security also creates risks. IoT is adding to the long list of hardware and software for which consumers and users have to remember passwords, usernames, and “secret questions.” As a result, users often resort to using easily hackable passwords, or they write them down on slips that are stolen or lost.

Security issues then lead to increased (and cost-raising) contacts from customers and users who can’t access their IoT-enabled products and services. Worse yet, users must be notified of security breaches and be walked through the often arduous recovery process.

• Privacy concerns. Many consumers may not like having businesses, employers during off hours, and governments tracking their every move or device use, and companies reselling their data. While consumers may be willing to forego some privacy for convenience, they may be less willing to grant companies full access to IoT-gathered information. On the other hand, many consumers will trade privacy to obtain access to IoT-delivered services.

• Lack of clear goals. IoT is a new technology, and companies and consumers tend to adopt and experiment with them without having clear business or personal objectives. But while companies will gain some insights into some of the IoT benefits and issues, they may fall prone to the latter, resulting in wasted investments and even placing their business, customers, and staff at risk.

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summary and recommendatIons

The Internet of Things can help companies achieve many business objectives, including improving the customer experience, lowering support costs, engaging with customers more efficiently, greater loyalty, and increased sales. But to achieve these objectives requires overcoming critical technology implementation, data handling, security and privacy challenges, and adapting business practices around IoT.

Here are several recommendations to maximize the benefits of IoT:

• Prioritization, planning and education. Companies must decide and rank their business goals. They should determine which products or assets should be connected to the rest of the organization through IoT, or be closed-loop, as with point-to-point M2M applications. They also should give strong consideration to PraaS and XaaS, and decide whether they will execute them.

Companies must realistically budget for IoT solution investments. Allocations must cover core applications, including networking and Big Data tools, but also cabling, power, BC/DR, and other infrastructure. Companies must equip their contact center, field support, and sales teams with the tools to support and to extract business value from IoT. Frost & Sullivan research identifies mobile devices, analytics tools, cloud computing, and conferencing as the most important technologies in helping companies achieve their IoT goals.

Finally, companies should set aside resources to educate stakeholders: users—support and field repair, but also senior management and sales channel partners; and customers—about the features, benefits, and the issues with (and the solutions for) IoT products and services. Companies should set up and aggressively monitor feedback systems, including on social media.

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• Connect and integrate IoT with other systems. IoT is becoming another customer contact channel. Companies should investigate with their existing or prospective vendors how best to link it into their contact centers, including automated proactive customer and user notification systems, and into their CRM and ERP applications.

• Manage data flow. To avoid being overwhelmed by data, companies should consider aggregating data close to the source, then use business rules to detect anomalies to escalate into IoT “business engines” to take action. They also should look at data management and control applications. They can use middleware solutions that analyze the information delivered by sensors and also run operational data reports to pick up usage patterns.

• Ensure the “security of everything.” Companies must design, deploy, use, and manage IoT devices with security top of mind because criminals will try and break into them. The FTC’s “Careful Connections: Building Security in the Internet of Things” report recommends companies encourage building “security by design.” This includes strong authentication; layered security with techniques, such as data encryption and “salting” (adding random data to hashed data that makes it harder to compromise); and employing more secure defaults. Companies should set up and keep up-to-date inventory of the kinds of information in their possession. The report advises conducting frequent security evaluations and updates as product and service environments change, and testing the security measures before launching products.

In ensuring IoT security, companies also should look at solutions. Virtual networks (VNs) feature each device on their own network and servers in the same racks, but they cannot see each other. With VNs, if one device gets infected it cannot spread the hack or malware to others. Companies also should consider having IoT devices with chips and/or middleware that support security measures and internal security protocols.

Finally, and perhaps most critically, companies have to address how customers and employee users access devices. Security systems must be as intuitive as pushing a button, or as easy as looking into a camera lens. Users and support desks have to be educated and trained on security procedures, including the right steps to take if they forget them.

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• Provide privacy options. Companies must let customers opt-in or opt-out of telemetry data from customers’ equipment. The manufacturers’ default should be OFF for further protection. Customers should be sent a single notification informing them of IoT capabilities they can select, be given sites to visit or apps to download, and told that once there, companies will walk them through each IoT function.

• Select scalable solutions. IoT solutions must be sufficiently flexible to accommodate evolving needs and to integrate into companies’ infrastructure and networks. The applications should have simple architectures, be easily configurable, and require minimal custom development. Companies should partner with a vendor that can help in each step of the IoT journey from envisioning to strategy formulation to technology selection.

oracle consIders expandIng osvc support for Iot

The Oracle Service Cloud (OSvC) supports IoT by helping customers align IoT investments with OSvC through APIs (e.g., capturing threshold exceeds alerts and routing them to support staff). OSvC logs the events, decides which agents or non-contact center employees to route them to based on the data provided, and displays incidents on its reporting system dashboard. Oracle is now considering expanding OSvC support for IoT.

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