Monetizing - CDM Media...the monetization of the IoT in some depth; i.e., the Monetization of...

Jon Gettinger Adam Han�Bob HardenBrian James

Je� KaplanAriane Lindblom Brendan O'Brien Parker Trewin

Monetizingthe Internetof

ThingsPerspectives from the front lines

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CONTENTForeword

What Makes the ‘Internet of Things’ is Important

Taking Aim in the IoT World

Two Ways the Internet of Things Will Unlock Your Customers’ Revenue Potential

The ‘Not So Simple’ Truth of the IoT

Disruption of Capitalism and Other Challenges

Pitfalls and Perils on the Road to IoT Nirvana

Personalizing the Internet of Things

The ‘Reach Out and Touch Everything’ Era

Will Connected Devices Disconnect the Family?

What the IoT Can Learn from Nordstrom

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The Arab Spring movement of 2011 grabbed the world’s attention and was made possible by the pervasive use of social media. The “Twitter Revolution”, as it has been called by some, fueled the rapid inclusion of participants in protests, allowed the immediate dissemination of information to the outside world, and thwarted outdated suppression efforts.

It was fundamentally different from any

previous uprising in human history and it was made possible by a confluence of technological advances that included the internet itself, the smart phone and, of course, Twitter.

No one could have predicted how these

technologies would end up serving as the foundation for such seminal changes in global human behavior.

The Internet of Things (IoT) represents

a similar example of how technologies can come together in unpredictable ways to create

something new (e.g., the commoditization of RFID and TCP/IP hardware, the prevalence of internet-ready wireless networks, etc.). More importantly, the IoT is enabling new business models that will eventually cause societal shifts just as big as the internet and the smartphone did.

At Aria Systems we spend a lot of time

thinking about the ways in which our technology contributes to businesses seeking to capitalize on the ever-changing ways to engage with customers. Our collective interest in the IoT and its organic overlay with a long list of monetization models should be self-evident if you’ve been reading this Internet of Things anthology series.

As We embarked upon this effort it quickly

became obvious that it would be a disservice to our readers not to elevate our thinking. We needed to go beyond what was strictly relevant to the IoT’s capacity for monetization and include perspectives that looked at the IoT from other angles.

Foreword

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The IoT is far more than just the promise of new ways to make money. It will usher in new ways that humanity can become socially richer. And, like any major societal advance, it will also usher in new challenges to be met and overcome.

Just as no one was able to predict the Twitter Revolution in 2011, no one today can tell us what the IoT will ultimately bring to the world. In this IoT anthology, the best thinkers among Aria’s experts drew upon their respective experience and gazed into their crystal balls to offer food for thought.

Seeing the colors laid out upon an artists’ palettes is not enough to predict what they will paint, not even for the artists themselves. The only thing we do know is that many “artists” will avail themselves of the IoT “pallet”, and masterpieces will be born. It’s only a matter of time. Like you, we can’t wait to be there when those masterpieces are unveiled.

In the meantime, we must quickly prepare

ourselves for a world that will be radically different from the one we occupy today.

Foreword

What Makes the ‘Internet of Things’ is Important By Brendan O’Brien

ere at Aria Systems, we live and breathe all things related to monetization via customer care and relationships. We live in a world where recurring revenue

management is becoming a dominant theme. Lately there’s been a natural gravitation to the Internet of Things/Internet of Everything, and the synchronicity between the business models the IoT produces and how Aria is serendipitously designed to support all of it. Simply put, we want people to think a lot about the new age the IoT heralds. To that end, this post is the first in a series intended to explore the monetization of the IoT in some depth; i.e., the Monetization of ThingsTM.

We thought it wise to begin by discussing something that, while arguably quite basic, is such fertile ground for idea generation that it almost can’t be discussed enough: Why is the Internet of Things important?

In general, the IoT promotes a heightened level of awareness about our world, and a platform from which to monitor the reactions to the changing conditions that said awareness exposes us to. And, like the advent of the internet itself, the IoT enables a myriad of applications ranging from the micro to the macro, and from the trivial to the critical. Since we’re focusing here on why the IoT is important, let’s turn our attention to the “macro” and the “critical” first, and look at some provocative ideas that are already in development across the globe.

Smarter Natural Disaster ManagementThe ability to accurately predict the onset of conditions that promote forest fires before they get out of control (or even begin), allowing containment teams to respond more quickly and first responders to rapidly manage targeted evacuations. This same concept applies equally to the smarter detection of and reaction to

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Monetizing the Internet of Things

“… the IoT enables a myriad of applications ranging from the micro to the macro, and from the trivial to the critical.”

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“… the IoT promotes a heightened level of awareness about our world, and a platform from which to monitor the reactions to the changing conditions that said awareness exposes us to.”

mudslides, avalanches, earthquakes and other natural disasters.

Smarter Urban ManagementCities and counties automating traffic management that effectively notices and governs the flow of traffic based on ever-changing conditions; parking applications that intelligently guide cars to open spots, eliminating wasted time and energy and dramatically cutting back on emissions; automating utility consumption, generation and distribution on a grand scale, all with an eye to the mitigation of waste that far exceeds the capabilities of existing systems.

Smarter HealthcareWearable devices that detect a host of health problems, potentially before they even occur,

and immediately administer life-saving drugs or deploy emergency responders with detailed information placed instantly in their hands or alert family members as-needed.

The ideas above barely skim the surface of the deep sea of possibilities afforded by the coming IoT age, and they all share a common (and not accidental) adjective here: “smarter”. If “smart” is defined by the confluence of access to information and the ability to utilize that information in meaningful and appropriate ways, then the promise of the Internet of Things is, simply, a much “smarter” planet that keeps us safer, balances the personal good with the greater good, and improves humankind’s chances at providing a more sustainable legacy for future generations.


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Brendan O’Brien , Co-founder and Chief Evangelist at Aria Systems, has been in the subscription services business for over 20 years, and is recognized as a pioneer and thought leader. In 2002 he introduced the world to Cloud billing, and has innovated database-driven, enterprise-grade web applications for companies ranging from Medical Manager to Wright Express, and LaserLink. All this before the concept of “Cloud” was even on the horizon.

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Taking Aim in the IoT WorldBy Jon Gettinger

“...the loT will continue to drive the growth of recurring revenue businesses across multiple industries.”

e are at the beginning of another explosion in information applications. This one is being driven by small, intelligent sensors that can

precisely measure and communicate stuff like temperature, position, movement, light and chemical traces. These connectable sensors are reliable, manageable and affordable enough to be within reach of both businesses and consumers.

This entire sensor universe (and its associated infrastructure) is referred to as the Internet of Things, or IoT. It is, in essence, a new type of platform with astounding breadth and complexity. According to industry research firm Gartner, by 2020 there will be a staggering 26 billion of these connected objects, more than three times the number of smart phones, tablets and PCs combined.

Early adopters are already using the IoT to deliver valuable new services. Major vendors seeing another internet-sized opportunity

have begun laying the Cloud foundation for the impending gold rush. For me, I like to think about the IoT combined with powerful mobile devices and fast, anytime/anywhere networks. Now that is a platform that can cause some serious economic disruption across many industries!

Some businesses are delivering solutions that are much closer to what their customers actually want. For example, rather than sell you an air conditioner, I can now sell you a service that keeps your building between 68 and 72 degrees year-round, or warn you of an impending heart attack. Other businesses are using the IoT platform to become dramatically more efficient. Why stockpile unnecessary material when my partners can now precisely monitor my consumption and increase or decrease delivery as required? Turbo-charged supply chains. The possibilities are astounding.

The effect on marketing will be staggering. Let’s take a look at just one important activity: connecting with qualified buyers, what is

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Jon Gettinger, Senior Vice President of Marketing at Aria, has over twenty years experience working in the software industry with more than a decade in executive roles. he has been involved with the SaaS business since the very beginning when in 1998 he founded a company that delivered SaaS testing solutions for web businesses. Most recently, he was the head of marketing at Fortify Software prior to their acquisition by hewlett Packard. he believes in the transformative power of IT, the genius of molecular gastronomists, and in the mysterious force that is the Rule of Three.

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“According to industry research firm Gartner, by 2020 there will be a staggering 26 billion of these connected objects, more than three times the number of smart phones, tablets and PCs combined.”

referred to in marketing as “targeting”. A large portion of marketing dollars is wasted when the wrong offers are made to the wrong people at the wrong place and time. Better information about the buyer fixes this problem and gives businesses like Facebook and Google, with their vast warehouses of user data, the ability to command top-dollar for their advertisements. The IoT will generate an enormous, truly unprecedented amount of precise information about buyers and their needs.

It’s a marketer’s dream come true. And it is easy to see how, with all this additional data, the IoT will have a dramatic impact on both the economics and performance of targeting.

Better targeting means new market opportunities for services. Many of the

problems IoT entrepreneurs will go after will be recurring in nature, so I expect the IoT will continue to drive the growth of recurring revenue businesses across multiple industries. Better targeting also gives vendors the ability to more precisely price and package their wares. More agile vendors will take advantage of this to expand into new markets, or steal market share from competitors.

This is great news for us at Aria, as we are focused on helping customers implement sophisticated monetization strategies and adapt them to go after new opportunities. As we have seen with past technology waves, there will be many new options for marketers. The next few years should be very exciting indeed! I’m looking forward to the ride.


ver the past few years, there’s been a lot of hype about the Internet of Things (IoT) and its massive potential to change how we live, work and conduct

business. From wearable devices to smart appliances that share information via sensors, it seems that every company is embarking on a bold Internet of Things strategy. In fact, nearly three-fourths of enterprises believe that IoT solutions will create new business opportunities and bolster existing offerings. By 2020 the IoT will produce an estimated 50 billion connected devices, and IoT solutions will generate $7.1 trillion. Yet the current

reality paints a very different picture: Most of the IoT use cases today are focused on cost reduction and efficiency – and only 13% of IoT use cases between 2009 and 2013 targeted revenue growth or innovation.

So, how will companies drive future revenue growth from the Internet of Things?

While we are still in the early stages of the IoT, many compelling use cases are emerging across various industries. Several of these use cases create new ways to drive growth and profitability from existing customers. How? The Internet of Things simply

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“With the rise of the Cloud and big data, we are now able to collect and aggregate more information about customers than ever before.”

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Two Ways the Internet of Things Will Unlock Your Customers’ Revenue PotentialBy Ariane Lindblom

Show Me the Money:

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“The Internet of Things simply represents another “smart” endpoint to better understand customer behavior, value sentiments and product consumption.”

represents another “smart” endpoint to better understand customer behavior, value sentiments and product consumption.

With the rise of the Cloud and big data, we are now able to collect and aggregate more information about customers than ever before. Once companies have reliable real-time, context-aware data feeds from multiple product sources collected over time, they will shift how they do business with customers even more rapidly.

Ultimately, the IoT will change how companies bring new “value” to products and services, engage their customers and drive future growth strategies.

To make this shift, companies need to take a different approach – think differently – and focus on services rather than products. Using specific use cases, here are two primary ways the IoT will help drive customer growth:

1. Moving from Products to OutcomesCombined with the Cloud, the Internet of Things is already changing business models and related product offerings. One of the biggest shifts has been the move from selling discrete products with attached services to

selling complete “outcomes”, or Outcomes as a Service (OaaS). Think of OaaS as simply a product wrapped in a service-based SLA or goal.

One great example of OaaS is a leading commercial air conditioning company that’s leveraging usage analytics and the IoT to charge for and deliver outcome-based air conditioning that focuses on specific energy consumption targets and temperature SLAs. The days of selling an air conditioning unit and simply hoping that the customer will have the desired experience are now long gone. Other OaaS examples include preventative maintenance services, such as anticipating the wear-and-tear of a device, or creating product education services based upon usage and adoption patterns.

The healthcare and medical device

industries are key verticals that stand to benefit tremendously from the IoT. Even today, a number of medical device companies are developing greater connectivity in order to improve communications between health care providers and patients while also providing real-time monitoring of patient health through bedside diagnostics.

The list of new business models enabled


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“Ultimately, the IoT will help companies create more sustained value by moving from a one-time “initial sale” focus to an ongoing relationship with customers.”

by the IoT is endless – asset sharing, verticalization, advanced telematics and connected cars, home automation and more. Net-net: With new insight into how customers are using a product or service, combined with other data sources in the Cloud, businesses have new ways to deliver value to customers and monetize solutions.

2. Deepening Customer RelationshipsBy bolstering traditional sales acquisitions and customer support, the Internet of Things has become a new frontier for CRM. In order to minimize churn and create life-long customers, the IoT places a greater emphasis on ensuring that customers derive ongoing value from a product or service across the customer lifecycle (onboarding, adoption, renewals and expansion). The first sale initiated by CRM is now the starting point for the IoT across the customer lifecycle.

By connecting the dots and aggregating

data from the IoT with other valuable customer data in the Cloud, companies are better equipped to engage customers. here are some use cases that demonstrate how the IoT can be leveraged to drive deeper customer

relationships and loyalty:

1. Combine usage behavior with other customer history to predict and prevent churn

2. Recognize buying behavior to adjust merchandising and align with local preferences

3. Deliver customized offers at the perfect moment (e.g., when a customer enters a store)

4. Manage inventory volume based upon demand and purchases (Amazon does this today!)

5. Understand product usage and trends to improve future product development efforts

What’s next for the IoT in today’s enterprise?

While the IoT holds broad appeal across every branch of enterprise, its effect on how companies manage their customer relationships will be priceless. Ultimately, the IoT will help companies create more sustained value by moving from a one-time “initial sale” focus to an ongoing relationship with customers. The specific effects will


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“With new insight into how customers are using a product or service, combined with other data sources in the Cloud, businesses have new ways to deliver value to customers and monetize solutions.”


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Vice President of Solution Marketing at ServiceSource, Ariane Lindblom is an experienced global manager, strategist and marketer practiced in all aspects of customer acquisition, including segmentation, sales strategy, solution selling, product marketing, lead generation, sales enablement and account management.

be felt in how companies go to market and leverage their CRM systems and other data to better understand and engage with existing customers.

How will your company leverage the IoT to better engage your existing customers?

How will you integrate IoT processes and information into your front office systems to deliver a more compelling experience?

If your business is customer-centric, it’s time to incorporate the IoT into your long-term strategy. Your viability may depend on it.

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The ‘Not So Simple’ Truth of the IoTBy Brian James

“It’s anyone’s guess how the IoT will ultimately be used to effectively connect an unbelievably broad range of devices.”

he Internet of Things is exciting. By connecting machines, objects, agents (aka “things”) via the internet so that systems work more effectively, people will have the

information they need to make better decisions and improve their quality of life. Sign me up.

But with such a big promise one thing is clear: the IoT will be anything but simple. The IoT will be more complicated and chaotic than we expect. Innovation and competition will play out across devices, services, apps, platforms, standards, monetization models, geographies and users to name just a few.

The fact is, the IoT is kind of like the pony express was when it was first launched: it worked better than what we had, it underwent a lot of changes, and consumers won while business fortunes rose and fell. It’s anyone’s guess how the IoT will ultimately be used to effectively connect an unbelievably broad range of devices. For example, CellNet, a Silicon Valley darling back in the late 90’s, did “electronic meter reading” before the IoT

had any collective consciousness. CellNet has been acquired multiple times, and finally, electronic meter reading is now commonplace. But CellNet struggled for years, and I still don’t have an app that enables me to engage my family in reducing electricity usage. We do have far fewer meter readers.

Last week Nike launched its IoT device, the FuelBand App for Android, to the headline, “Pigs Fly, Still Can’t Put Their Flaps Toward NikeFuel”. But wait – didn’t Nike throw in the towel on its FuelBand device in April of this year, having not achieved its ambitious goals? Is Nike in or out? Or just doing it? Is Nike selling devices, apps or an experience? It’s unclear.

For consumers the IoT is about better; for businesses the IoT is more complicated. Each needs to identify how it will deliver competitive advantage – which may mean more or less consumer choice. For example, I’m still waiting for Sirius XM to offer traffic updates on demand. I don’t want to pay a monthly fee for stuff I don’t use regularly. But is paid-on-demand traffic viable when free

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At Aria, as the Sr. Product Marketing Director, Brian James packages platform capabilities and helps customers understand the power of recurring revenue and how it can effectively drive innovation, efficiency, and greater revenue growth. Brian has been helping companies use technology to drive innovation and efficiency for over 20 years at small and large companies including Accenture and Oracle. With leadership roles in product management, marketing, consulting, strategy, and implementation Brian brings a wealth of experience to Aria Systems and its customers.

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“By connecting machines, objects, agents (aka “things”) via the internet so that systems work more effectively, people will have the information they need to make better decisions and improve their quality of life.”

traffic maps are available on your smartphone? Or will “distracted driving” laws favor one form of distribution over another? For businesses the IoT is anything but simple, even after the technology challenges.

Apple just launched the homeKit to connect “home things” including thermostats, door sensors and cameras together. They are one of a myriad of companies vying to be the new standard, and have entered the fight for one or more standard connecting platforms. Prepare yourselves for dizzying competition and rapid innovation.

One thing is clear: The IoT vendors who have clarity of purpose and unprecedented flexibility, agility and speed are going to be more effective at establishing an IoT presence. Why? Because they will be more responsive to the needs and desires of their market and customers. Period.

I recently came across the “Air Quality Egg” which monitors air quality wherever you put it. Great idea, but what happens when I put my “Egg” in a box along with some car exhaust and smoldering leaves? That action would skew the data and therefore skew Air Quality Egg’s learning. So it’s important that companies not only collect the data, but understand what it means to their market now and in the future.

If companies are going to take advantage of the biggest market opportunity we may see in this lifetime, they will need a well-thought-out plan for how and with whom they will compete. They’ll need to decide whether they will compete with the device, the service(s), the app(s), the platform(s), the standard(s), the monetization model(s) or combinations of these.

The simple truth of the IoT is that it isn’t so simple. But it will be big, it will be exciting, and anyone can be a part of it.


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Disruption of Capitalism and Other ChallengesBy Brendan O’Brien

“No technological shift we have ever witnessed will bring as much disruption with it as the IoT…”

In all systems, great change is always preceded by great disequilibrium.

For the past 20 years or so, everyone who knows me has eventually heard me spout

the line above. It’s something in which I firmly believe, and it doesn’t take much pondering to come up with anecdotes that support the claim.

Whether it’s a toddler going through potty training, the behaviors of subatomic particles during nuclear fission, a society shifting to a new social norm, the widespread adoption of a new technology, or the arrival of a new boss at your company... it’s all the same: As systems undergo the shift from old model to new, the transitional period is fraught with instabilities and unforeseen disruptions. Put more plainly, things get “squirrely”.

The good news is that the mere expectation of impending “squirelliness” (okay... I’ve officially used that non-word enough…) is the most important tool in overcoming it.

So as the Internet of Things, the greatest technological and social shift since the adoption of the World Wide Web, gets underway, let’s talk a bit about what we can reasonably expect if we want to find stability and success on the other side. Keep in mind my assertion that the IoT is both a technological and a social shift. As such its pitfalls and dangers will be both technological and social in nature, and the point is not to presume to tell you exactly how to solve these problems. Solutions will arise from the minds of individuals smarter than I, and from the adoption of standards both imposed and de facto which do not yet exist.


The ‘Internet of Things’ (IoT):

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“The IoT is about nothing if not incredible volumes of data, and those who succeed will be those who begin by investing heavily in a robust massive data strategy.”

Data VolumeA Boeing 777 jet on a transatlantic flight from JFK to heathrow has four engines, and during that flight each of those engines generates one terabyte of data. It’s admittedly a grand example, but should act as a wake-up call for anyone planning their IoT strategy. Data volumes are going to far exceed anything we’ve ever seen. Not only will “Big Data” immediately become “Massive Data”, but for the full promise of the IoT strategy to come to fruition, there will need to be significant upgrades in infrastructure, broader acceptance of the necessity for a massive data strategy by businesses of all kinds, and major leaps forward in the technologies and protocols used in the storage, transmission and parsing of the coming data flood. The IoT is about nothing if not incredible volumes of data, and those who succeed will be those who begin by investing heavily in a robust massive data strategy.

SecurityEmbedded in the flood of data discussed above will be all kinds of personally identifiable information (PII). Whether that data is directly present in any given data transmission or obfuscated to some degree, for the IoT to “deliver” to consumers, this PII (or more likely the indirect pointers to it) must be present or IoT devices and services will be unable to provide the highly personalized

experiences consumers and businesses will expect. Additionally, demand will more certainly grow for democratized sharing of IoT data in order to deliver “cross-platform” value. For example, the idea of your American market Volvo’s embedded IoT sensors being able to seamlessly find and pay for parking during your weekend trip to Toronto? Please! But it will require data sharing. So, when I ponder the manifold increase in data volume, the high sensitivity of the data within, and the market necessity to allow disparate entities to share data from disparate sources (and in the blink of an eye... did I mention that?), I ask myself whether the level of security currently afforded by today’s protocols and practices can handle it, and I get worried. Very worried.

StandardsThe World Wide Web only began to fulfill its true promise when standards for TCP/IP (and its all-important child hTTP), hTML, JavaScript, CSS and SSL were established and widely adopted. The IoT will initially be able to “ride” on pre-existing standards and protocols (in fact, it already is doing so), but as data volume and data security needs morph and increase, it is safe to assume that existing standards will not scale. The IoT is demanding new standards of its own for communication and data formatting and rapid development/deployment. Luckily plenty of bright people


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“The IoT is demanding new standards of its own for communication and data formatting and rapid development/deployment.”

are busy at work trying to tackle the problem, although no one yet can say which standards will do the job most effectively and will “win” - be it those being created by large corporate alliances like the Industrial Internet Consortium, or those by community/open-source style entities like the AllJoyn Alliance (or combinations of both). All we can say for certain now is that what we currently have in the way of internet standards is highly unlikely to scale and extend in the ways the IoT will demand.

Subscription FatigueThe shift to recurring revenue was well underway before we all started talking about the IoT, and when we here at Aria look at the myriad services we expect to arise from the wide adoption of IoT technologies, we see an even larger wave approaching the shore: a wave of service offerings that lend themselves perfectly to recurring revenue models that we already know are desirable to consumers, businesses and investors.

Taken at face value, that’s great news for a company like ours that offers a platform for managing recurring revenue businesses. But taken to its logical extreme, one must presume that the average consumer paying for 10-20 subscription/recurring services today may very well have a different mindset when

that number increases to 100 or more and their ability to effectively manage a personal budget becomes ever more unwieldy. I call this anticipated swing of the pendulum “subscription fatigue”, and believe it will be best mitigated by players who offer means for consolidation of heterogeneous services, services offered by different providers, onto a single monthly bill.

Instead of getting 100 “hits” against my credit or debit card spread arbitrarily across the month, wouldn’t it be cool if I was given the option at the time of signing up for IoT-enabled service number 101 to be able to simply add it as a new line item to a bill I already get on, say, the 15th of every month? Sounds like it might be attractive to many people, and it sounds fairly simple, doesn’t it? But this idea fundamentally challenges the direct relationship consumers have with providers as it necessitates the introduction of an intermediary entity that to some degree must stand between a consumer and a provider, an entity that would essentially be responsible for “floating” monies for some number of days for that consumer each month. This could be quite challenging for many merchants who are understandably very motivated to “own” their own customers, not to mention the intermediaries responsible for this “float” who are assuming some amount of risk themselves.


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“All we can say for certain now is that what we currently have in the way of internet standards is highly unlikely to scale and extend in the ways the IoT will demand.”

But it is doable, and one need look no further than business models like PayPal or LevelUp to see rudimentary examples of what I’m talking about.

A Fundamentally New Business ParadigmOkay, here’s the part of this essay where I recognize I’m inviting many readers to believe I might be a little crazy. That’s alright... I’m used to it; but stay with me. If we take all of the (admittedly predictive) assertions I’ve made above, what I personally see coming is a fundamental challenge to the very nature of capitalism and the merchant/customer relationship as we know it.

When you go to the supermarket today and fill up your cart, you are purchasing goods that were provided by a wide array of manufacturers and producers. You pay the cashier at checkout, and at some point the store remits appropriate payment to all of those individual providers. Simple enough, but keep in mind this important fact: The supermarket itself, prior to you walking through its doors, made a whole bunch of decisions beforehand about exactly which producers’ goods to make available to you.

But the IoT’s full promise is centered on the fact that there is an unforeseen and unforeseeable “web” of provider interactions

that must be accommodated in order for consumers to see the full value in the connected devices and services enabled by the IoT. Remember my example above of the American market, IoT-ready Volvo parking in IoT-ready Toronto? In a traditional business partnership model, that example would have only worked if Toronto’s city planners had taken the time to directly or indirectly establish a partnership with Volvo. But what if our example driver was trying to park an Audi instead? Or visiting Montreal instead of Toronto? Is it reasonable to assume that every IoT-ready municipality will pre-establish relationships with every conceivable automobile manufacturer? It’s not, and this example of an interaction between an IoT-enabled car and an IoT-enabled municipal parking system is a simplistic and relatively predictable one. With the IoT, we must begin our planning with the assumption that we cannot foresee every service it will enable, much less the complex web of potential interactions between disparate services that smart people will dream up and that consumers will ultimately demand.

What I’m suggesting here is that there will be a demand for a “bottom-up”, more democratized version of capitalism driven by users of services themselves. They will expect an ever-more seamless set of interactions


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“… the IoT’s full promise is centered on the fact that there is an unforeseen and unforeseeable “web” of provider interactions that must be accommodated in order for consumers to see the full value in the connected devices and services enabled by the IoT.”

of these services among a host of providers that isn’t encumbered by having to wait for these providers to pre-establish business partnerships in advance. While it may be acceptable in these early days of the IoT for a car buyer to learn in advance the list of municipal parking systems with which a Volvo or an Audi interacts in order to influence their car-buying decision, the infinitely more powerful selling tool is obviously being able to tell that buyer, “It works with all of them.” Extremely easy to say, extremely hard to do, and not merely because of its technological challenges (such as the standardization challenge described above). The larger challenge is one of establishing a new extensibility for business partnerships themselves.

There you have it, and while I admit that I am most certainly not 100% prescient on all of the points above, I believe a few core points are absolutely undeniable. No technological shift we have ever witnessed will bring as much disruption with it as the IoT, and those disruptions will run the gamut from the purely technological to the most fundamental ways in which commerce operates and the ways in which humans interact with one another... disequilibrium on every front. The winners in the IoT will be those who have the wisdom to begin their efforts with the adoption of the mantra that they don’t know what they don’t know, and therefore do all they can to prepare themselves technologically and even psychologically for the widest array of possibilities in advance.


Pitfalls and Perils on the Road to IoT NirvanaBy Bob Harden

As I sat down to actually write this post I spent a chunk of time staring at an empty page and scratching my head (a risky activity for me given the steadily declining amount of hair still

attached to it). What does “IoT Nirvana” even look like? It’s a dizzyingly broad subject.

From a consumer perspective, I would broadly describe it as hands-on technology that gives me more insight into and control over the things that are important to me. I see at least five significant issues that need to be addressed along the way:

• Ease of use• Security and privacy• Liability• Government intervention• Evil (Google-style)

One App to Rule Them All

“One app to rule them all, one app to find them, One app to bring them all, and in the Cloud to bind them” - me

Not a line from Tolkien, but probably only because apps didn’t exist in his time.

Whether it’s controlling the lights in my living room from a hotel in Brazil, wearing a wristband that accurately predicts the moment I’m going to die so that it can alert the coroner to be on hand when the fateful moment arrives, or owning a refrigerator that warns me when my milk expires, there are thousands of potentially cool IoT services available to give me more control over my daily life.

What won’t be cool is purchasing 10-20

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“Since recurring revenue will be the dominant monetization model for the IoT, you should expect the customer experience to be critical for the IoT’s success as well.”

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“Customer retention and up-selling are critical for profitability, and happy customers are much more likely to stick around and upgrade than unhappy customers.”

different services from 10-20 different vendors using 10-20 different apps with 10-20 different user interfaces. If that’s the way the IoT goes, it will be a long tough slog to nirvana. Lack of standards and closed product ecosystems will not get us where we need to go.

Brendan O’Brien alluded to this in a post a couple weeks back and I think he was spot on. For the IoT to be user friendly, we’re going to need service aggregators: one-stop shopping for a wide variety of services, with one bill and (most importantly) one app that integrates all your services in an easy-to-use interface. Apple seems to be giving this some thought with homeKit, but their history points to closed ecosystems and Apple-only products.

I’m looking for something a little more open and inclusive than that. I want the ability to pick and choose preferred providers with a single app to run all my services, like an Amazon Prime for the IoT. Jeff Bezos, if you’re reading this, I want a cut. Then again, you’re probably already working on it.

Internet of Things or Internet of Targets?The Department of Defense and the government’s Office of Personnel

Management have both recently been hacked by the People’s Republic of China. If we can’t keep classified government information secure, how are we going to keep the information about where you drove your car last week secure? The saving grace might be that no one but your mechanic or insurance company will be interested in that information, but I wouldn’t bet on it.

How secure will our connected homes be? How about our medical monitoring devices?

If it’s connected, it’s hackable. And if it can be hacked, it will be hacked eventually. If you’re lucky, the hacker will just be a kid hacking into your home to turn on your kitchen lights at 3:00am. You’ve been punked, but there’s no real harm. But if you’re unlucky…

A recent study from Fortify found that 70% of the most commonly used IoT devices had vulnerabilities. The most commonly used devices and their Cloud components had an average of 25 vulnerabilities per device. 80% of devices tested leaked private information including user names, addresses, dates of birth, and credit card or health information. If our lives are going to be more connected,


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“Lack of standards and a closed product ecosystems will not get us where we need to go.”

with truly sensitive information available to be hacked, we’ll need better security protocols and practices.

Legally SpeakingOne of my favorite quotes from my programming days is, “Designers who try to make things completely idiot-proof usually underestimate the ingenuity of complete idiots.” You can’t test for every possible case because you can’t identify them all. So what happens when one of those unimagined and untested cases causes an injury, or a property loss, or the exposure of sensitive consumer data?

If McDonald’s can get sued and lose because a cup of hot coffee is actually served hot, what’s in store for the manufacturer of a home management system that gets hacked? What’s the manufacturer’s liability for the pain and suffering involved when that kid hacks your system and punks you by turning on your lights at 3:00am, repeatedly, for several weeks?

The answer is, we don’t really know. I worry that the IoT opens the door to a whole new set of legal precedents around product liability and data breaches, and that sorting

all of that out will at some point put a damper on innovation.

How Do We Tax It?The previous issues almost surely guarantee that the government will get involved. We’ll have to let them in the door, and once they’re in, they will never leave. That usually brings unintended consequences. Check out Robin Cook’s medical thriller Cell for a truly creepy vision of what government intervention in the IoT could look like in the medical field.

And when government gets involved,

inevitably the question comes up, “how do we tax it?” In an age where governments at all levels are struggling to meet budgets, it’s almost inevitable that someone within the bureaucracy will look at the vast number of online transactions or data and see dollar signs. Advocates for the IoT will need to get in front of this to ensure that the government becomes a partner to innovation and not an impediment.

Do No EvilYes, I’m talking to you, Google. I want to see how you’re going to balance the whole “Do no evil” thing with the unprecedented potential


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“…the IoT, done right, will make the world a better place by providing you more control over your day-to-day life and perhaps making your world a little safer.”

financial gain of being able to detect the sensor in my Nikes or my wrist appliance, and provide presence-based advertising in public places based on massive volumes of data collected from all of my other IoT devices. Cashing in on that opportunity will not make the world a better place.

But the IoT, done right, will make the world a better place by providing you more control over your day-to-day life and perhaps making your world a little safer. And that’s a good thing, regardless of what obstacles we might encounter along the way.


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AUThOR BIO

With expertise in recurring revenue strategies and implementations, former Director of Billion Solutions at Experian, Bob harden, is now Founder and Principal of The harden Group. Contact [email protected] or visit www.hardengroup.net.

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Personalizing the Internet of ThingsBy Jeffrey M. Kaplan

“Personalizing how the IoT captures, collates and shares the data generated in this connected world is the key to fulfilling its promise.”

combination of technological innovations and macro-market trends are converging to create unprecedented opportunities that will transform how nearly every

industry operates as a result of connecting a widening array of objects, devices and services via the “Internet of Things” (IoT). Personalizing how the IoT captures, collates and shares the data generated in this connected world is the key to fulfilling its promise.

The IoT idea has become one of the hottest technology topics of 2014 because a variety of consumer and industrial products can now be connected in a scalable and economical fashion to produce a new set of services which were not possible in the past.

Today’s IoT capabilities have evolved from a previous generation of machine-to-machine (M2M) sensors, systems and software that were primarily utilized to handle a finite set of industry-specific functions. One of the most prominent examples has been deploying

sensors on commercial vehicles to track their movement and status in order to fine-tune transportation logistics and reduce potential downtime.

Since the cost of the nanotechnology that powers the remote sensors has been cut dramatically, the range of ‘things’ that sensors can be attached to has become limitless.

Even more importantly, the Cloud has made it financially feasible to deploy the sensors anywhere because it significantly reduces the connectivity costs. In addition it reduces the cost of capturing, storing and analyzing the data generated by the sensors, as well as sharing the output of said analysis to whoever needs it.

Now, nearly every industry is exploring ways to connect to their end-products to better understand how they operate so they can improve their efficiency, and better understand how they’re used in order to better serve their customers.

A


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“Since the cost of the nanotechnology that powers the remote sensors has been cut dramatically, the range of ‘things’ that sensors can be attached to has become limitless.”

In the consumer world, IoT implementations have already become commonplace via a variety of wearables. The most common of these consumer goods is an assortment of fitness products like Fitbit, and the most elaborate is Google Glass. What they both have in common (along with countless other IoT consumer items) is their ability to capture data from the user’s personal experience, analyze it in the context of other data points, and provide the user with valuable insights that can help them better understand their behavior and improve their performance.

This functionality is not only empowering to the individual, it is also a powerful tool for commercial product providers to build a tighter bond with their customers in an increasingly commoditized marketplace. The key is personalizing IoT solutions in the industry sector the same way personalization has become the norm in the consumer web.

We are all accustomed to Amazon’s ability to immediately recommend books, movies and other consumer items to us based on our previous purchases using continuously learning analytics. A growing number of vendors are developing similar abilities to enable their connected objects and devices to deliver the same benefits in the IoT environment.

Fitness services, such as MapMyRide and Strava, have capitalized on the data captured from their users’ exercise activities to develop new value-added services that offer deeper insights into their routines and provide more detailed statistics regarding how they rank against others. Based on these data, these services can sell advertising space to various companies seeking to appeal to their highly-targeted population of users. They can also repackage the data to help other businesses improve their products.

This personalization process has become expected in the consumer world.

What makes the IoT phenomenon especially exciting is the infinite ways in which the consumer applications of today can be converted to commercial and industrial uses, thereby transforming how various businesses operate.

For instance, fitness-oriented wearables are quickly being converted into health-oriented devices aimed at helping patients overcome various ailments. These new health monitors enable doctors to more closely track their patients’ vital signs, and also allow the patient to view how they are progressing. These connections can substantially improve the quality of care to the patient while


AUThOR BIO

Jeffrey M. Kaplan is the Managing Director of ThINKstrategies (www.thinkstrategies.com), founder of the Cloud Computing Showplace (www.cloudshowplace.com) and host of the Connected Cloud Summit focused on the IoT market on September 18 in Boston, MA (http://cloudsummits.com/event/connected-cloud/.) he can be reached at [email protected].

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“The key is personalizing IoT solutions in the industry sector the same way personalization has become the norm in the consumer web.”

reducing the cost of healthcare delivery for the provider.

The same equation holds true for other industries. Transportation companies can use data generated from various sensors attached to their vehicles to monitor their status and location, identify issues before they become real problems, and recommend methods to improve their performance and efficiency. Personalizing this analysis to match the driver, vehicle, cargo and terrain will be the key to properly leveraging the IoT’s capabilities.

Given all these ‘moving parts’, determining how to measure the value of this IoT personalization process will be essential.

The factors for success will be calculating the economic value to the user in light of competitive alternatives, and having the right mechanism to test, set and administer the constantly fluctuating price-points in the increasingly personalized IoT marketplace.

When these issues are overcome, both the customer and vendor will reap the benefits. Customers will gain better quality products and services that will employ the customers’ buying and usage data to keep pace with their constantly evolving needs. And, the vendor will have an opportunity to retain and produce more profitable revenue from customers in an increasingly competitive marketplace.


The ‘Reach Out and Touch Everything’ EraBy Parker Trewin

ow big will the IoT be? According to ReadWrite, if you ask Cisco and Morgan Stanley it’s somewhere between “big” and “ginormous”.

Cisco says there will be 50 billion devices connected by the end of the decade. Morgan Stanley extrapolated a 50% higher estimate at 75 billion. To put it into perspective that’s 9.4 connected devices for every man, woman and child on this spinning little ball we call home. Morgan Stanley suggests that even that number could be low with up to 200 devices helping each of us stay better connected.

The IoT is big news because it borrows from the old Ma Bell campaign and significantly ups the ante: “Reach out and touch somebody” is becoming “Reach out and touch everything.” And in that there’s some good news, some bad news. All those 75 billion devices are “…generating signals of data to be analyzed and measured, many of which in real- or near-real-time.” And while self–driving cars, automated

security systems, hydration reminders, and course-correcting behavior alerts stand to increase amenity, wellness and safety, there is also a very real give-get transaction that’s taking place.

We are trading service for personal information that’s a quantum leap from what we are used to; the website tracking information that Facebook collects is a good example of this. With class-action suits filed against Facebook as recently as last week, it’s clear that many aren’t on board with the present standard for handling personal information. With emerging IoT technologies collecting terabytes of personal data, the question is, “Are we ready to unbutton the equivalent of our online dress shirts while many are still loosening up their collars?”

While one could argue that privacy concerns vary as much as dress codes, which range from free-spirited California nudists to burqa-clad Afghani Muslims, the question remains: how will anyone feel when the data that Facebook

H


“Reach out and touch somebody’ is becoming ‘Reach out and touch everything’.”

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“With emerging IoT technologies collecting terabytes of personal data, the question is, ‘Are we ready to unbutton the equivalent of our online dress shirts while many are still loosening their collars?’ ”

collects, analyzes and distributes to “improve your experience” explodes to a gazillion device manufacturers? It’s one thing to grant access to your clicks, uploads and site visits, but the IoT thrusts upon us another level of scrutiny: how long and how well you sleep, what you eat, where you drink, how alert you are, how warm you keep your house, when you close shop, when you power up, ad infinitum.

how comfortable can even the California nudist be when the opening of the kimono goes beyond skin deep to reveal their habits, moods and behaviors? Ready or not, it’s a question that we’ll soon be asking ourselves as we embrace the rise of the machines.

The IoT requires a level of acceptance that blows past social voyeurism and sharing. With the IoT, we go beyond accessing personally identifiable info to increasingly personal information on how we live our lives. Like the social era before it, how we feel about the IoT boils down to two things: how much we value the service versus how much we abhor living under a microscope, and how

much we trust its myriad operators.

Recent news also suggests that this might be a ways off. To get there, industry must confront security breaches that threaten bank accounts and erode customer confidence in what we’d expect to be the most technologically demanding companies – banking and online retailing. Still, the IoT manufacturers can learn much from the successes and mistakes of social and web services companies that have preceded them and have navigated these rocky waters.

Trust is bolstered by two simple and powerful notions: appropriate transparency and active permission. I, for one, am selectively on board if manufacturers and providers have told me in a way I can understand, exactly what they intend to do with the information they collect, and if I give them explicit permission to do this. Of course, they then must do what they say.

And while this may never get a nudist in a burqa, or vice versa, it might provide clothing that we can all be comfortable in.


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AUThOR BIOParker Trewin, Aria Systems’ Senior Director of Content and Communications, has repositioned brands and created award-winning content. his efforts have led to industry-wide recognition that include CoDIES, Stevies, Edison, MarCom Platinum, and BMA Gold awards. By combining classic PR strategies with content marketing acumen, Parker championed owned and earned content that has been published in the Wall Street Journal, the London Times, Businessweek, The New York Times, Computerworld.de, TechCrunch, Lifehacker and huffington Post.

Will Connected Devices Disconnect the Family?By Adam Hanft

olstoy famously said, “All happy families are alike, each unhappy family is unhappy in its own way.”

Why am I beginning a piece about the Internet of Things with a nod to the patriarch of the 19th century novel? Because I want to shift the focus of the conversation about connected devices and their technological implications to a discussion of the human implications of a world where there are potentially hundreds of sensors monitoring thousands upon thousands of interactions in every household.

Families are a complex mixture of sharing and privacy. Over time, as technology has innovated, it has added new tensions to the inherent privacy tension. For example, television sets first entered our lives as big consoles that sat it in the living room. Everyone in the family

watched the same thing, which meant parents knew every second of their kids’ entertainment consumption.

But the advent of small, portable sets

changed that. It meant that kids could watch what they wanted in the privacy of their bedrooms, outside of parental oversight. This created all kinds of struggles between children seeking independence and parents seeking control and insight.

The evolution of the personal computer magnified this tension. The days of the “family computer” seem like ancient history, but there was a time when there was a single giant digital structure in the kitchen or family room that parents and kids shared. As the internet emerged – and within it the whole “net nanny” phenomenon – the issue was heightened as

T


“Who will the refrigerator text when it’s being opened in the middle of the night for a midnight snack?”

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parents worried and children, particularly as they got older, chafed under the perceived panopticon.

Flash forward to the Internet of Things, when dozens and dozens of physical objects in the house become connected devices that are capable of capturing, relaying and storing personal, individual information. Just think about the implications of that. Suddenly, ordinary activities and behaviors are instantly available and shareable to all, and the household becomes its own Big Data warehouse.

how much time did Zachary actually spend brushing his teeth? how many steps did dad reallytake according to his FitBit – and exactly where did he take them? how often and at what times over the weekend did Grandpa hit the Jack Daniels, and how much did he drink when? And what about data related to internet-enabled pill boxes? The amount of data that’s gatherable and crunchable from the IoT in the average household is massive in its size, and meaningful in its implications.

It also raises questions like: Who in the household has access to the data from the refrigerator, the toilet, the car, the front door,

the back door, the Nespresso? What happens when a divorce lawyer wants it?

Most of the focus on the IoT is on projections for its astounding growth. Revenue will be bigger than smart phones, PCs and tablets combined, gushes Business Insider. Others are worrying about the cybersecurity implications. But remarkably little attention is being paid to the psychological impact of what happens when virtually every behavior, action and decision of each member of a household is potentially available to every other.

What will its impact be on spousal relations? What will it do to the teenagers who - under the best of conditions - are fueled by hormones to drive for independence with a raging skepticism of their parents? What kind of struggles and countermeasures and work-arounds will erupt? What kind of behavioral tricks and nudges will be tried by those who have access to the data to encourage specific behaviors? Who will the refrigerator text when it’s being opened in the middle of the night for a midnight snack? With families in America under profound levels of stress, what are the unintended emotional consequences of the IoT?


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“Just think about the implications of connected devices where suddenly, ordinary activities and behaviors are instantly available and shareable to all, and the household becomes its own Big Data warehouse.”

In the fascinating book “A history of Private Life”, the author notes that for centuries, public and private life was no different based on the living conditions of the vast majority of people, other than the very wealthy. Everyone lived out in the open in large rooms; the notion of

privacy in the household is a comparatively modern invention. Paradoxically, the IoT – a modern invention - will return us to the time when the public and private stages were one. Let the modern family beware.


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“what are the unintended emotional consequences of the IoT?”

AUThOR BIO

Adam hanft is founder of hanft Projects, a NYC branding firm. Mr. hanft is a thought leader, marketing expert, cultural critic and advisor to many leading digital and consumer packaged goods companies.

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What the IoT Can Learn from NordstromBy Bob Harden

“The vendors who will thrive in the IoT will be those who add value to their products through a personalized customer experience…”

had the opportunity of a lifetime a few years ago. I was the president of my local school board, and we were one of five school districts nominated for a national award. The award ceremony was in the

Senate Dining Room at the U.S. Capitol. hillary Clinton was one of the featured speakers. At times, I had trouble seeing the podium because Ted Kennedy’s head was in the way. Yes, I’m name dropping – it was that kind of event. There was even the possibility of a visit to the White house.

As with most opportunities, this one came with a challenge. At the time, I owned one reasonably nice suit - a ratty old blazer and no ties. You don’t show up to the White house wearing blue jeans and a golf shirt, so I was in a bit of a bind. What to do…

I put on my one reasonably nice suit and went to Nordstrom. When the sales associate

asked, “Can I help you?” I responded, “Yes, I need a shirt and tie that I can wear to the White house.” I explained my situation, and for the next 15 minutes we tried various combinations of shirts and ties against my suit to find just the right look. I came away with a pair of shirts and ties, and a few days later I was the best-dressed school board member in D.C. (Those who know me well know just how unbelievable that statement is).”

When you walk in the door at Nordstrom, you know you are going to find two things: quality and service. Personalized service. The kind of service that looks at you and your reasonably nice but out-of-fashion suit and thinks, “hey, I can even make that look good,” and then proceeds to do just that. I’ve been to Nordstrom many times since, looking for that personalized shopping experience with someone who can tell me, “That looks good,” or, more importantly, “Maybe you should try

I


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“In the recurring revenue world, we talk a lot about the customer experience as a key driver to success.”

this instead.” It’s that personalized service, consistently delivered, that sets Nordstrom apart from so many of its competitors.

So, what does this have to do with monetizing the Internet of Things, aka the Monetization of Things? At first glance you might say, “Not very much.” But think about it. What are we looking for today as consumers? I don’t know about you, but I’m looking for two things: value and personalization. In today’s world those two are usually pretty tightly coupled.

We tend to think of value strictly in terms of price, but we should probably think more in terms of return on investment. I’m pretty sure I paid more for those ties at Nordstrom than if I had bought them from a budget retailer. But today I own four ties, two from one of those budget retailers and the two from Nordstrom. Guess which two I wear the most? Where did I get the better ROI?

In the recurring revenue world, we talk a lot about the customer experience as a key driver to success. Customer retention and up-selling are critical for profitability, and happy customers are much more likely to stick around and upgrade than unhappy

customers. Since recurring revenue will be the dominant monetization model for the IoT, you should expect the customer experience to be critical for the IoT success as well. I think this will play out in two key areas: ease of use and personalization.

Back to my Nordstrom experience: I walked in the door, found the nearest sales associate, and asked them to help me solve a problem. Basically, I flipped a switch and then got out of the way. That’s how we want our “things” to work too. Whether it’s a home management system or a wearable medical device, we want it to be easy to use. Complex configuration routines will fail; easy configuration routines will win.

I also want my device to work the way I want, when I want. I want it to be MY device - not something with cookie-cutter factory settings, but something that is flexible and personalized to me. The more options the better, so long as it’s easy to use. Again, back to my Nordstrom example: that sales associate asked me about my personal tastes (e.g., nothing pink) before we started our search. her recommendations were personalized to me. Someone else wearing the same suit might have walked out with different shirts and ties.


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So what might this look like in an IoT setting?

Picture a medical sensor (perhaps a wristband, patch or even a small implant) that tracks vital information. That information is transferred real-time to an app on your phone. The app settings are personalized based on your medical history and preferences, which were gathered through a simple online questionnaire when you signed up for the service.

The app generates an alert when something doesn’t look right. That alert goes to a call center at the Mayo Clinic, where nurse practitioners and on-call doctors can read the data, review them against your

history and get you on the phone if there’s a potential problem. Imagine getting a call from a cardiologist saying that your heart is showing irregular patterns and you need to call 911. Or maybe they call 911 for you. Now that’s customer service. If that sounds a little far-fetched, check out the new health app in the next version of ioS and OS X. We’re already halfway there.

The vendors who thrive in the IoT will be those who add value to their products through a personalized customer experience, the way Nordstrom does. And speaking of Nordstrom, I still only own one suit, and yes, it’s the same suit. I see another trip to Nordstrom in my future.


“...Customer retention and up-selling are critical for profitability, and happy customers are much more likely to stick around and upgrade than unhappy customers.”

Aria Systems, Inc.

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San Francisco, CA 94107

Phone: 415.852.7250

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Aria Systems, Inc.

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Phone: 484.427.8200

Fax: 484.427.8201

Sales -Toll Free: 1.866.933.ARIA (2742)

1.877.755.2370

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About Aria SystemsAria Systems powers recurring revenue for enterprises, enabling market expansion, improving customer relationships and providing more revenue predictability. Aria is used by brand name companies such as AAA NCNU, Constant Contact, EMC, Experian, HootSuite, Ingersoll Rand, RedHat and VMware to evolve their recurring revenue businesses while delivering outstanding customer experiences.

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