September 2014 |

Guy Strafford - The Internet of Things

The progress made by humanity in how we communicate has changed the very nature of how we behave – from the advent of the electric telegraph in the 1700s, to the internet being publicly introduced in the 1980s, to Wi-Fi in 1991.

Wi-Fi was a big step forward in the development of human interconnectedness and human behaviour – people are now creating, consuming and sharing information 24/7, 365 days a year, in hundreds of languages, covering millions of topics. The rapid adoption and development of wireless technologies has led to one of the major technology trends of the past 10 years – coined in 1991 by Kevin Ashton, a British technology pioneer, as – the ‘Internet of Things’.

The Internet of Things

The Internet of Things refers to the interconnectivity of devices over Wi-Fi. Applications of such interconnectivity include: 

Health management Chips in health devices such as pacemakers and hearing aids to monitor performance
Wearable technology Clothing and accessories such the iWatch and Google Glass
Telematics The cross-over between telecommunications and informatics – monitors location via GPS, communicates with electric components of a vehicle to alert the user when a part needs to be changed and can even monitor driving behaviours to influence insurance policies
The Smart Home Optimising energy usage through remote management of heating/cooling systems, or replenishing the items in your fridge when stock runs low
The Smart City Soon to be completed – Songdo in South Korea will be the first city to be connected to the internet, constantly streaming data that will be monitored and analysed by computers with little or no human intervention

Research and advisory firms Gartner and ABI Reserach speculate that there will be over 26 billion devices connected to the Internet of Things by 2020. That means there will be over 26 billion new sources of information pouring onto the Internet.

Think about this – in every minute of every day:

  • More than 204 million email messages are sent
  • Over 2 million Google search queries are run
  • 48 hours of new YouTube videos are created
  • 684,000 pieces of content are shared on Facebook
  • There are more than 100,000 tweets
  • $272,000 is spent on e-commerce

In 2012, IDC found that the amount of information stored on the internet reached 2.8 zettabytes (ZB). IDC forecasts that by 2020 that number will have increased to over 40ZB. 

The sheer mass of information created has given rise to new concepts such as big data. Big data seeks to capture, categorise and effectively archive all of the useful information while filtering out the plethora of inaccurate, false or just unwanted white noise.

One of the challenges the Internet of Things aims to overcome is how to effectively use all of this information, based on human behaviours.

Companies such as Acxiom have begun mining this multitude of data to create ‘master profiles’ of more than 700m consumers across the globe, which they track and sell onto companies and advertising agencies to better target marketing campaigns.

Jawbone (which recently bought BodyMedia) have taken this one step further and have come up with what they call LifoTypes – unique profiles that combine real-time fitness data with other information such as health records, mood or online purchase history.

British Airways are trialling the use of beacons to push messages to registered customers within designated physical locations – such as an airport.

So what does this mean for the world of procurement?

Acxiom, Jawbone and British Airways are all exploring the Internet of Things concept in slightly different ways, but they all share a common driver – the need to connect raw data with individual behaviours in real-time to deliver an exceptional customer experience.

This is a critical lesson for procurement – connecting raw data with behavioural patterns (ideally in real-time) to deliver an exceptional customer experience. It’s a totally different perspective to normal procurement practices.

Looking purely at data to build decisions, a far too common approach in my experience, is a very one dimensional and shallow way of looking at the world – and does not take into consideration any of the subtleties around specific needs, situations or alternative uses for the product/service (see these ingenious Ikea hacks). However, we have found that mapping out the user journey through various processes (e.g. supplier onboarding, annual reviews, etc.) is a great exercise for identifying key collision points of data and behavior – enabling us to intervene with a customer experience activity (e.g. chemistry meetings with new suppliers for an airline business held in the airline’s airport lounge).

Technology will continue to shape the way we share, create and communicate with each other, and with the world around us. How is your business managing the rapid growth of big data? And how are you going to connect all this data with your customer’s behaviours to deliver and exceptional customer experience?

Final thought… Imagine this:
You head down to your local supermarket with your trusty ‘smart glasses’ on. As soon as you set foot in the store – you get a notification that suggests based on your low blood pressure you should head straight to the spices and condiments aisle. As you pass the vegetable section, a new notification advises that your fridge is low on milk – so you stock up. You carry on to the alcohol section, this time a notification says “People with low blood pressure should limit alcohol intake”… you keep walking. You finally reach the condiment and spices aisles and gaze at the wide selection of salt that is bestowed up on you. A new notification offers suggestions for various types of salt – iodised vs sea. You head to the automated checkout, tap your smart phone on the scanner, and walk back out of the store.

This sounds both exciting and scary doesn’t it? Well, UK retailer Tesco has just announced the use of Apple’s indoor positioning system, called Beacons (based on their iBeacon technology) in its OneStop convenience stores. Beacons use Wi-Fi and Bluetooth technology to let retailers push messages (such as offers or discounts) to consumers who have signed up for the service when they are near certain products.

Ideas that have been science fiction for decades are becoming a reality at a faster and faster rate. It’s going to be fascinating to watch what the future has in store for us.