Hippo: IoT-based paradigm shift from passive to active insurance companies

I’m a big advocate of incremental IoT strategies (check out my recent webinar with Mendix on this approach), for existing companies that want to test the waters first. However, I’m enough of a rabble-rouser to also applaud those who jump right in with paradigm-busting IoT (and big data) startups.

Enter, stage left, a nimble (LOL) new home insurance company: Hippo!

IMHO, Hippo’s important both in its own right and also as a harbinger of other startups that will exploit the IoT and big data to break with years of tradition in the insurance industry as a whole, no longer sitting passively to pay out claims when something bad happens, but seizing the initiative to reduce risk, which is what insurance started out to do.

After all, when a Mr. B. Franklin (I’ll tell you: plunk that guy down in 2017 and he’d create a start-up addressing an unmet need within a week!) and his fellow firefighters launched the Philadelphia Contributionship in 1752, one of the first things they did was to send out appraisers to determine the risk of a house burning and suggest ways to make it safer.

Left to right: Eyal Navon, CTO and cofounder; Assaf Wand, CEO cofounder of Hippo

In fact, there’s actually a term for this kind of web-based insurance, coined by McKinsey: insuretec” (practicing what he preached, one of Hippo’s founders had been at McKinsey, and what intrigued the founders about insurance as a target was that it’s a huge industry, hasn’t really innovate for years, and didn’t focus on the customer experience.).

I talked recently to two key staffers, Head of Product Aviad Pinkovezky and Head of Marketing, Growth and Product Innovation Jason White.  They outlined a radically new strategy “with focused attention on loss reduction”:

  • sell directly to consumers instead of using agents
  • cut out legacy coverage leftovers, such as fur coats, silverware & stock certificates in a home safe) and instead cover laptops, water leaks, etc.
  • Leverage data to inform customers about appliances they own that might be more likely to cause problems, and communicate with them on a continuous basis about steps such as cleaning gutters that could reduce problems.

According to Pinkovezky, the current companies “are reactive, responding to something that takes place. Consumer-to-company interaction is non-continuous, with almost nothing between paying premiums and filing a claim.  Hippo wants to build must more of a continuous relationship, providing value added,” such as an IoT-based water-leak detection device that new customers receive.

At the same time, White said that the company is still somewhat limited in what if can do to reduce risk because so much of it isn’t really from factors such as theft (data speaks: he said thefts actually constitute little of claims) but from one, measured by frequency and amount of damage (according to their analysis) that’s beyond their control: weather. As I pointed out, that’s probably going to constitute more of a risk in the foreseeable future due to global warming.

Hippo also plans a high-tech, high-touch strategy, that would couple technnology with a human aspect that’s needed in a stressful situation such as a house fire or flood. According to Forbes:

The company acknowledges that its customers rely on Hippo to protect their largest assets, and that insurance claims often derive from stressful experiences. In light of this, Hippo offers comprehensive, compassionate concierge services to help home owners find hotels when a home becomes unlivable, and to supervise repair contractors when damage occurs.”

While offering new services, the company has firm roots in the non-insuretech world, because its policies are owned and covered by Topa, which was founded more than 30 years ago.

Bottom line: if you’re casting about for an IoT-based startup opportunity, you’d do well to use the lens McKinsey applied to insurance: look for an industry that’s tradition-bound, and tends to react to change rather than initiate it (REMEMBER: a key element of the IoT paradigm shift is that, for the first time, we can piece “universal blindness” and really see inside things to gauge how they are working [or not] — the challenge is to capitalize on that new-found data). 

IoT: LiveBlogging PTC’s LiveWorx

Got here a little late for CEO Jim Heppelman’s keynote, so here goes!

  • Vuforia: digital twin gives you everything needed for merging digital “decorations” on the physical object
  • Unique perspective: AR takes digital back to the physical. Can understand & make better decisions.
  • Virtual reality would allow much of the same. Add in 3-D printing, etc.
  • “IoT is PLM.” Says PTC might be only company prepared to do both.
  • Says their logo captures the merger of digital and physical.
  • Case studies: they partnered with Bosch’s Rexroth division. Cytropac built-in IoT connectivity–  used Creo. Full life-cycle management. Can identify patterns of usage, etc. Using PTC’s analytics capacity, machine learning analysis. Want to improve cooling efficiency (it was high at first). Model-based digital twin to monitor product in field, then design an upgrade. How can they increase cooling efficiency 30%??  Came up with new design to optimize water channel that they will build in using 3-D printing. Cool (literally!). 43% increase in cooling efficiency. The design change results in new recommendation engine that helps in sales. Replaced operating manual with 3-D that anyone can understand. (BTW: very cool stagecraft: Heppelmann walks around stage interviewing the Rexroth design team at their workstations).
  • Ooh: getting citizen developers involved!!!  Speeds process, flexibility. App shows how products are actually operating in the field. Lets sales be much more proactive in field. Reinventing CRM.  May no longer need a physical showroom — just put on the AR headset.
  • Connectivity between all assets. The digital twin is identical, not fraternal. Brings AR into factory. They can merge new manufacturing equipment with legacy ones that didn’t have connectivity.  ABB has cloud-based retrofit sensors. Thingworx can connect almost anything, makes Industry 4.0 possible. Amazing demo of a simulated 3-D disassembly and replacement.
  • Hmmm — closing graphic of his preso is a constantly rotating circular one. Anticipating my “circular company” talk on Wednesday????

Closing the Loop With Enterprise Change Management. Lewis Lawrence of Weatherford, services to petroleum industry:

  • former engineer. In charge of Weatherford’s Windchill installation (they also use Creo).
  • hard hit by the drop in gas prices
  • constant state of flux
  • 15 years of constant evolution
  • their mantra: design anywhere, build anywhere.
  • enterprise change — not just engineering.
  • hmmm: according to his graphics, their whole change process is linear. IMHO, that’s obsolete in era of constant change: must evolve to cyclical. Ponderous process…
  • collect data: anything can be added, if it’s latest

The IoT Can Even Help You Breathe Better: GCE Group’s Zen-O portable oxygen concentrator for people with respiratory problems (not actually launched yet):

  • InVMA has built IoT application using ThingWorx to let patients, docs and service providers carefully monitor data
  • GCE made radical change from their traditional business in gas control devices. Zen-O is in the consumer markets. They were very interested in connected products — especially since their key competitor launched one!
  • Goals: predictive maintenance, improved patient care, asset management, development insight.
  • Design process very collaborative, with many partners.

The Digital Value Chain: GE’s Manufacturing Journey. Robert Ibe, global IT Engineering Leader at GE Industrial Solutions:

  • supports Brilliant Factory program.
  • they design and manufacture electrical distribution equipment, 30 factories worldwide.
  • “wing-to-wing” integrated process
  • had a highly complex, obsolete legacy
  • started in 2014: they were still running really old CAD technology. 14 CAD repositories that didn’t talk to each other. 15 year old PLM software. No confidence in any of data they had.
  • They began change with PLM — that’s where the digital thread begins.  PLM is foundation for their transformation.
  • PLM misunderstood: use it to map out cohesive, cross-functional, model-based strategy. Highlight relevance of “design anywhere — manufacture anywhere.” Make PLM master of your domain. Make it critical to commercial & manufacturing. Advertise benefits & value.
  • Whole strategy based on CAD. Windchill heart of the process.
  • Rate of implementation faster than business can keep up with!
  • Process: implementation approach:
    • design systems integration
    • model-based design
    • digital thread
    • manufacturing productivity.
  • common enterprise PLM framework
  • within Windchill, can see entire “digital bill of documents.”
  • focused on becoming critical for supply chain.
  • total shift from their paper-based legacy.
  • integrated regulatory compliance with every step of design.

It’s Not Your Grandmother’s IoT: Blockchain and IoT Morph Into An Emerging Technology Powerhouse:

  • Example of claims for fair-traded coffee that I’ve used in past

Finding Business Value in IoT panel:

  • Bayer — been in IoT (injection devices for medicine) for 7 years.  Reduced a lot of parts inventory.
  • Remote control of vending machines replaces paper & pencil
  • Your team needs to evangelize for biz benefits of IoT
  • New Opportunities:
    • vision and language
    • interacting with physical world
    • problem solving.
  • Didn’t know!  Skype can do real-time translation.
  • Google Deep Mind team worked internally, cut energy costs at its server farms. 15% energy reduction.
  • Digital progress makes economic pie bigger, BUT  most people aren’t benefitting economicallly. Some may be worse off. “Great decoupling” — mushrooming economic gap. One reason is that tech affects different groups differently.
  • “Entirely possible to create inclusive prosperity” through tech!

 

WEDNESDAY

Delivering Smart City Solutions and an Open Citywide Platform to Accelerate Economic Growth and Promote New Solution Innovation, Scott McCarley, PTC:

  • $40 trillion potential benefits from smart cities
  • 1st example & starting point for many cities, is smart lightpoles. Major savings plus value added. Real benefit is building on that, with systems of systems (water, traffic, energy, etc.) — the systems don’t operate in isolation.
  • Future buildings may have built-in batteries to add to power supply. Water reclamation, etc.
  • Cities are focused on KPIs across all target markets.
  • Cornerstone systems for a city: power & grid, water/wastewater, building management, city services & infrastructure.
  • Leveraging ThingWorx to address these needs:
    • deploy out-of-box IoT solutions from a ThingWorx Solution Provider: All examples, include Aquamatix, DEPsys (grid), Sensus, All Traffic, Smoove (bike sharing).
    • leverage ThingWorx to rapidly develop new IoT solutions.
      connect to any device, rapidly develop applications, visually model systems, quickly develop new apps. Augmented reality will play a role!
    • create role-based dashboards:
      one for your own operations, another for city.
    • bring the platform to create a citywide platform.
      Sum of connected physical assets, communication networks, and smart city solutions.

Digital Supply Networks: The Smart Factory. Steven Shepley, Deloitte:

  • 3 types of systems: 1) foundational visualization solutions:  KPIs, etc. 2) advanced analytical solutions 3) cyber-physical solutions.
  • Priority smart factory solutions:
    • advanced planning (risk-adjusted MRP), dynamic sequencing, cross network.
    • value chain integration: signal-based customer/supplies integration, dynamic distribution routing/tracking, digital twin.
    • asset efficiency: predictive maintenance, real-time asset tracking intelligence, energy management
    • labor productivity: robotic and cognitive automation, augmented reality-driven efficiency, real-time safety monitoring
    • exponential tech: 3-D printing, drones, flexible robots.
  • How to be successful: think big, start small, scale fast
  • Act differently: multi-disciplinary teams,
  • sensors getting simpler, easier to connect & retrofit. National Connectors particularly good.

Global Smart Home, Smart Enterprise, and Smart Cities IoT Use Cases. Ken Herron, Unified InBox, Pte.

  • new focus on customer
  • H2M: human to machine communication is THE key to IoT success. Respect their interests.
  • Austin TX: “robot whisperer” — industrial robot company. Their robots aging out, getting out of tune, etc. Predictive analytics anticipates problems.
  • Stuttgart: connected cow — if one cow is getting sick, may spread to entire herd. Intervene.
  • Kuala Lumpur: building bot — things such as paper towel dispensers communicating with management.
  • London: Concierge chatbot — shopper browsing can chat with assistant on combining outfits.
  • Dubai: smart camera. Help find your car in mega-shopping center: read license plates, message the camera, it gives you map to the car.
  • Singapore: Shout — for natural disasters. Walks the person making the alert through process, confirms choices.
  • Stuttgart: Feinstaubalarm — occasional very bad airborne dust at certain times. Tells people with lung problems options, such as taking mass transit.
  • Singapore: Smart appliances — I always thought smart fridge was stupid, but in-fridge camera that lets you shoot a “shelfie” does make sense
  • Fulda Germany: smart clothing for military & police: full record of personal health at the moment. Neat!
  • Noida India — smart sneakers can automatically post your run results (see connection to my SmartAging concept)

Business Impact of IoT, Eric Schaeffer, Accenture:

  • Michelin delivery trucks totally reinvented, major fuel savings, other benefits.
  • manufacturing being deconstructed
  • smart, connected products are causing it
  • industrial companies must begin transformation today

Thingworx: Platform for Management Revolution. W. David Stephenson, Stephenson Strategies:

Here are key points from my presentation about how the IoT can allow radical transformation from linear & hierarchical companies to IoT-centric “circular companies” (my entire presentation can be found here):

  • The IoT can be the platform for dramatic management change that was impossible in the past.
  • Making this change requires an extraordinary shift in management thinking: from hierarchy to collaboration.
  • The results will be worth the effort: not only more efficiency & precision, but also new creativity, revenue streams, & customer loyalty. 
  • In short, it will allow total transformation!

Kickstarting America’s Digital Transformation. Aneesh Chopra & Nicholas Thompson!

  • on day one, Our President (not the buffoon) told Chopra he wanted default to be switch from closed to open government & data.
  • National Wireless Initiative: became law 1 yr. after it was introduced.  Nationwide interoperable, secure wireless system.
  • Obama wanted to harness power of Internet to grow the economy. Talked to CIO of P & G, who was focused on opening up the company to get ideas from outside.
  • Thompson big on open data, but he thinks a lot more now is closed, we’re going wrong way.
  • Interesting example of getting down cost of solar to $1 per installed watt!!
  • Thompson: growing feeling that technology isn’t serving us economically. Chopra: need to democratize the benefits.
  • Chopra talking about opening up Labor Dept. data to lead to creative job opportunities for underserved.

 

 

 

 

Servitization With IoT: Weird Biz-Speak, But Sound Strategy

I love it when manufacturers stop selling things — and their revenues soar!

That’s one of the things I’ll cover on May 2nd  in”Define Your Breakout IoT” strategy, (sign-up) a webinar I’m doing with Mendix. I’ll outline an incremental approach to the IoT in which you can make some early, tentative steps (such as implementing Augury’s hand-held vibration sensor as a way to start predictive maintenance) and then, as you gain experience and increase savings and efficiency, plow the savings back into more dramatic transformation.

One example of the latter that I’ll detail in the webinar is one of my four “Essential Truths” of the IoT: rethink products. By that I meant not only reinventing products to be smart (especially by building in sensors so they can report their real-time status 24/7), but, having done that, exploring new ways to market them.  Or, as one graphic I’ll use in the presentation puts it, in mangled biz-speak, “servitization.”

              Hortilux bulbs

Most of the examples I’ve written about in that regard have been from major businesses, such as GE and Rolls-Royce jet turbines, that are now leased as services (with the price determined by thrust generated), but Mendix has a smaller, niche client that also successfully made the conversion: Hortilux, a manufacturer of grow lights for greenhouses.

The Hortilux decided to differentiate itself in an increasingly competitive grow light market by evolving from simply selling bulbs to instead providing a comprehensive continuing service that helps its customers optimize availability and lifetime of grow light systems, while cut energy cost.     

Using Mendix tools, they created Hortisensehttp://www.hortidaily.com/article/31774/Hortilux-launches-Hortisense-software-suite, a digital platform that monitors and safeguards various grow light processes in the greenhouse using sensors and PLCs. Software applications interpret the data and present valuable information to the grower anytime, anywhere, and on any device.

With Mendix, Hortilux created an application to collect sensor data on light, temperature, soil, weather and more. Now users can optimize plants’ photosynthesis, energy consumption, and greenhouse maintenance. Most ambitiously, it provides comprehensive “crop yield management:” 

  • Digital cultivation schedule
  • Light strategies based on plant physiology and life cycle
  • Automatic light adjustment based on predictive analytics (e.g. weather forecast, energy prices, produce prices)

The app even allows predictive maintenance, predicting bulbs’ life expectancy and notifying maintenance to replace them in time to avoid disruptions in operations.

In the days when we suffered from what I call “Collective Blindness,” when we lacked the tools to “see” inside products to m0nitor and perhaps fix them based on real-time operating data, it made sense to sell products and provide hit-or-miss maintenance when they broke down.

Now that we can monitor them 24/7 and get early enough warning to instead provide predictive maintenance, it makes equal sense to switching to marketing them as services, with mutual benefits including:

  • increased customer satisfaction because of less down-time
  • new revenues from selling customers services based on availability of the real-time data, which in turn allows them more operating precision
  • increased customer loyalty, because the customer is less likely to actually go on the open market and buy a competing product
  • the opportunity to improve operations through software upgrades to the product.

Servitization: ugly word, but smart strategy. Hope you’ll join us on the 2nd!

Updating my “SmartAging” device design criteria

Could seniors be the ideal test group for user-friendly consumer IoT devices?

Two years ago I created a series of criteria by which to evaluate IoT devices that seniors might use (N.B., I didn’t really focus on ones specifically designed for seniors, because I have an admitted bias against devices with huge buttons or that look like mid-century period tube radios — it’s been my experience that seniors aren’t crying out to be labeled as “different.”) to improve their quality of life.

The particular emphasis was on what I called “SmartAging,” which synthesizes two aspects of the IoT:

  • Quantified Self health devices to keep seniors healthier longer and to become partners with their doctors rather than passive recipients of care, and
  • smart home devices to make it easier to run their homes, so that seniors could remain on their own as long as possible rather than entering some drab, sterile assisted-living facility (again, my bias showing…).

A lot has happened since I compiled the list. The changes have solidified my conviction that seniors, especially the less technologically minded, might be the acid test of consumer IoT user friendliness because they can’t be expected to work as hard at mastering devices, they don’t have the automatic openness of digital natives, and encounter differing degrees of reduced agility, etc. 

Also, given the current political climate, it makes sense to try to improve seniors’ lives as much as possible without requiring costly public services that are in jeopardy (I am trying to be civil here, OK?).

The most dramatic of these developments is the amazing success of Amazon’s voice-activated Echo.  I’ve praised it before as an ideal device for seniors, partially because voice is such a natural input for anyone, and particularly because it means that the tech-averse don’t have to learn about interfaces or programs, just speak! Even better, as the variety of “skills” increases, the Echo really is becoming a unified SmartAging hub: I can now control my Sensi smart thermostats and the “Ask My Buddy” skill can even call for assistance, so it works for both halves of SmartAging.  Although I haven’t tested it, I assume much of this also holds true for the Google Home.

There’s an increasing variety of other new Quantified Self devices, some of which are specifically focused on seniors, such as the GreatCall Jitterbug Smart phone, which comes with a simplified, over-size home page featuring “brain games” a la Lumosity, and an Urgent Response system (all of these features are available on an iPhone and, I assume, on Android, but must be set in Settings rather than being the default settings).

In addition, on the personal level, I convinced my Apple Store (disclaimer: I’m at the bottom of the food chain with Apple, not privy to any policies or devices under consideration, so this is just my opinion) to let me start bi-weekly classes at the local senior center on how to use Apple devices, especially the iPad. I continue to work with a lot of seniors who come into the store who are often leery of tech products.

Silver Medal!

Most directly, last month’s companywide Apple Wellness Challenge was life-changing for me.  This year the friendly competition focused on the Apple Watch (important, since a watch is a familiar form-factor to geezers). After wasting three days trying to find the app, I really got into the event because we could share results with friends to encourage (or shame, LOL) them — that really motivated me.  Bottom line: I managed to win a Silver Medal, Apple featured my experience on the event website, and, most important, I made lasting changes to my fitness regimen that I’ve sustained since then, now exercising almost an entire hour a day. I couldn’t help think afterward that the program really did show that user-friendly technology can improve seniors’ lives.

Sooo, with a few more years to think about them and more progress in devices themselves, (as well as increased sensitivity to issues such as privacy and security) here are my amended criteria for evaluating products and services for seniors. As I mentioned the first time, Erich Jacobs of OnKöl assisted with the specs):

Ease of Use

  1. Does it give you a choice of ways to interact, such as voice, text or email? Voice in particular is good for seniors who don’t want to learn about technology, just use it.
  2. Is it easy for you to program, or — if you them give your permission — does it allow someone else to do it remotely?
  3. Does it have either a large display and controls or the option to configure them through settings?
  4. Is it intuitive?
  5. Does it require hard-wired, professional installation?
  6. Is it flexible: can it be adjusted? Is it single purpose, or does it allow other devices to plug in and create synergies? Can it be a true hub for all your IoT devices?
  7. Does it complicate your life, or simplify it?
  8. Do any components require regular charging, or battery replacement?

Privacy, Security, and Control

  1. Is storage local vs. cloud or company’s servers? Is data encrypted? Anonymized?
  2. Do you feel creepy using it?
  3. Is it password-protected?
  4. Is security “baked in” or an afterthought?
  5. Can you control how, when, and where information is shared?
  6. If it is designed to allow remote monitoring by family or caregivers, can you control access by them?
  7. Will it work when the power goes out?

Affordability

  1. Are there monthly fees? If so, low or high? Long term contract required?
  2. Is there major upfront cost? If so, is that offset by its versatility and/or the contrast to getting the same services from a company?
  3. Does full functioning require accessories?

Design/UX

  1. Is it stylish, or does the design” shout” that it’s for seniors? Is it “Medical” looking?
  2. Is the operation or design babyish?
  3. Would younger people use it?
  4. Is it sturdy?
  5. Does it have “loveability” (i.e., connect with the user emotionally)? (This term was coined by David Rose in Enchanted Objects, and refers to products that are adorable or otherwise bond with the user.)

Architecture

  1. Inbound
    1. Does it support multiple protocols (eg. Bluetooth, BluetoothLE, WiFi, etc)
    2. Is the architecture open or closed?
  2. Outbound
    1. Does it support multiple protocols (eg. WiFi, Ethernet, CDMA, GSM, etc)
    2. Data path (cloud, direct, etc)
  3. Remote configuration capability (i.e., by adult child)? If so, can the user control amount of outside access?

Features and Functions

  1. Reminders
    1. Passive, acknowledge only
    2. Active dispensing (of meds)
  2. Home Monitoring
    1. Motion/Passive Activity Monitoring
    2. Environmental Alarms (Smoke, CO, Water, Temp)
    3. Intrusion Alarms (Window etc)
    4. Facilities/Infrastructure (Thermostat)
  3. Health Monitoring
    1. Vitals Collection
    2. Wearables Activity Monitoring
    3. Behavioral/Status Polling (How are you feeling today?)
    4. Behavioral Self-improvement
  4. Communications Monitoring
    1. Landline/Caller ID
      1. Identify scammers
    2. eMail and computer use
      1. Identify scammers
    3. Mobile phone use
  5. Fixed Personal Emergency Response System (PERS)
  6. Mobile Personal Emergency Response System (PERS)
  7. Fixed Fall Detection/Prediction
  8. Mobile Fall Detection/Prediction
  9. Telehealth (Video)
  10. New and Innovative Features

If you’re thinking about developing an IoT product and/or service for seniors I hope you’ll consider the SmartAging concept, and that these criteria will be helpful. If you’re looking for consulting services on design and/or implementation, get in touch!

Surprising Benefits of Combining IoT and Blockchain (they go beyond economic ones!)

One final effort to work this blockchain obsession out of my system so I can get on to some exciting other IoT news!

I couldn’t resist summarizing for you the key points in”Blockchain: the solution for transparency in product supply chains,” a white paper from Project Provenance Ltd., a London-based collective  (“Our common goal is to deliver meaningful change to commerce through open and accessible information about products and supply chains.”).

If you’ve followed any of the controversies over products such as “blood diamonds” or fish caught by Asian slaves & sold by US supermarkets, you know supply chains are not only an economic issue but also sometimes a vital social (and sometimes environmental) one. As the white paper warns:

“The choices we make in the marketplace determine which business practices thrive. From a diamond in a mine to a tree in a forest, it is the deepest darkest ends of supply chains that damage so much of the planet and its livelihood.”

Yikes!

Now blockchain can make doing the right thing easier and more profitable:

“Provenance enables every physical product to come with a digital ‘passport’ that proves authenticity (Is this product what it claims to be?) and origin (Where does this product come from?), creating an auditable record of the journey behind all physical products. The potential benefits for businesses, as well as for society and the environment, are hard to overstate: preventing the selling of fake goods, as well as the problem of ‘double spending’ of certifications present in current systems. The Decentralized Application (Dapp) proposed in this paper is still in development and we welcome businesses and standards organizations to join our consortium and collaborate on this new approach to understanding our material world.”

I also love Provenance’s work with blockchain because it demonstrates one of my IoT “Essential Truths,” namely, that we must share data rather than hoard it.  The exact same real-time data that can help streamline the supply chain to get fish to our stores quicker and with less waste can also mean that the people catching it are treated fairly. How cool is that?  Or, as Benjamin Herzberg, Program Lead, Private Sector Engagement for Good Governance at the World Bank Institute puts it in the quote that begins the paper, Now, in the hyper-connected and ever-evolving world, transparency is the new power.

While I won’t summarize the entire paper, I do recommend that you so, especially if blockchain is still new to you, because it gives a very detailed explanation of each blockchain component.

Instead, let’s jump in with the economic benefits of a blockchain and IoT-enabled supply chain, since most companies won’t consider it, no matter what the social benefits, if it doesn’t help the bottom line. The list is long, and impressive:

  • “Interoperable: A modular, interoperable platform that eliminates the possibility of double spending
  • Auditable: An auditable record that can be inspected and used by companies, standards organizations, regulators, and customers alike
  • Cost-efficient:  A solution to drastically reduce costs by eliminating the need for ‘handling companies’ to be audited
  • Real-time and agile:  A fast and highly accessible sign-up means quick deployment
  • Public: The openness of the platform enables innovation and could achieve bottom-up transparency in supply chains instead of burdensome top-down audits
  • Guaranteed continuity:  The elimination of any central operator ensures inclusiveness and longevity” (my emphasis)

Applying it to a specific need, such as documenting that a food that claims to be organic really is, blockchain is much more efficient and economical than cumbersome current systems, which usually rely on some third party monitoring and observing the process.  As I’ve mentioned before, the exquisite paradox of blockchain-based systems is that they are secure and trustworthy specifically because no one individual or program controls them: it’s done through a distributed system where all the players may, in fact, distrust each other:

“The blockchain removes the need for a trusted central organization that operates and maintains this system. Using blockchains as a shared and secure platform, we are able to see not only the final state (which mimics the real world in assigning the materials for a given product under the ownership of the final customer), but crucially, we are able to overcome the weaknesses of current systems by allowing one to securely audit all transactions that brought this state of being into effect; i.e., to inspect the uninterrupted chain of custody from the raw materials to the end sale.

“The blockchain also gives us an unprecedented level of certainty over the fidelity of the information. We can be sure that all transfers of ownership were explicitly authorized by their relevant controllers without having to trust the behavior or competence of an incumbent processor. Interested parties may also audit the production and manufacturing avatars and verify that their “on-chain” persona accurately reflects reality.”

The white paper concludes by also citing an additional benefit that I’ve mentioned before: facilitating the switch to an environmentally-sound “circular economy,” which requires not only tracking the creation of things, but also their usage, trying to keep them out of landfills. “The system proposed in this paper would not only allow the creation (including all materials, grades, processes etc) and lifecycle (use, maintenance etc) to be logged on the blockchain, but this would also make it easy to access this information when products are returned to be assessed and remanufactured into a new item.”

Please do read the whole report, and think how the economic benefits of applying blockchain-enabled IoT practices to your supply chain can also warm your heart.

 

IoT Intangibles: Increased Customer Loyalty

There are so many direct, quantifiable benefits of the IoT, such as increased quality (that 99.9988% quality rate at Siemens’s Amberg plant!) and precision, that we may forget there are also potential intangible benefits.

Most important of those is customer loyalty, brought about by dramatic shifts both in product designs and how they are marketed.

Much of this results from the IoT lifting the veil of Collective Blindness to which I’ve referred before: in particular, our prior inability to document how products were actually used once they left the loading dock. As I’ve speculated, that probably meant that manufacturers got deceptive information about how customers actually used products and their degree of satisfaction. The difficulty of getting feedback logically meant that those who most liked and most hated a product were over-represented: those who kinda liked it weren’t sufficiently motivated to take the extra steps to be heard.

Now, by contrast, product designers, marketers, and maintenance staffs can share (that critical verb from my Circular Company vision!) real-time data about how a product is actually operating in the field, often from a “digital twin” they can access right at their desks.

Why’s that important?

It can give them easy insights (especially if those different departments do access and discuss the data at the same time, each offering its own unique perspectives, on issues that will build customer loyalty:

  • what new features can we add that will keep them happy?
  • can we offer upgrades such as new operating software (such as the Tesla software that was automatically installed in every single car and avoided a recall) that will provide better customer experiences and keep the product fresh?
  • what possible maintenance problems can we spot in their earliest stages, so we can put “predictive maintenance” services into play at minimal cost and bother to the customer?

I got interested in this issue of product design and customer loyalty while consulting for IBM in the 9o’s, when it introduced the IBM PS 2E (for Energy & Environmental), a CES best-of-show winner in part because of its snap-together modular design. While today’s thin-profile-at-all-costs PC and laptop designs have made user-friendly upgrades a distant memory, one of the things that appealed to me about this design was the realization that if you could keep users satisfied that they were on top of  new developments by incremental substitution of new modules, they’d be more loyal and less likely to explore other providers.

In the same vein, as GE has found, the rapid feedback can dramatically speed upgrades and new features. That’s important for loyalty: if you maintain a continuing interaction with the customer and anticipate their demands for new features, they’ll have less reason to go on the open market and evaluate all of your competitors’ products when they do want to move up.

 

Equally important for customer loyalty is the new marketing options that the continuous flow of real-time operating data offer you. For a growing number of companies, that means they’re no longer selling products, but leasing them, with the price based on actual customer usage: if it ain’t bein’ used, it ain’t costing them anything and it ain’t bringing you any revenue!

Examples include:

  • jet turbines which, because of the real-time data flow, can be marketed on the basis of thrust generated: if it’s sitting on the ground, the leasee doesn’t pay.  The same real-time data flow allows the manufacturer to schedule predictive maintenance at the earliest sign of a problem, reducing both its cost and the impact on the customer.
  • Siemens’s Mobility Services, which add in features such as 3-D manufactured spare parts that speed maintenance and reduced costs, keeping the trains running.
  • Philips’s lighting services, which are billed on the basis of use, not sold.
  • SAP’s prototype smart vending machine, which (if you opt in) may offer you a special discount based on your past purchasing habits.

At its most extreme is Caterpillar’s Reman process, where the company takes back and remanufactures old products, giving them a new life — and creating new revenues — when competitors’ products are in the landfill.

Loyalty can also be a benefit of IoT strategies for manufacturers’ own operations as well. Remember that the technological obstacles to instant sharing of real-time data have been eliminted for the supply chain as well. If you choose to share it, your resupply programs can also be automatically triggered on a M2M basis, giving an inherent advantage to the domestic supplier who can get the needed part there in a few hours, versua the low-cost supplier abroad who may take weeks to reach your loading dock.

It may be harder to quantify than quality improvements or streamlined production through the IoT, but that doesn’t mean that dependable revenue streams from loyal customers aren’t an important potential benefit as well.

Blockchain might be answer to IoT security woes

Could blockchain be the answer to IoT security woes?

I hope so, because I’d like to get away from my recent fixation on IoT security breaches and their consequences,  especially the Mirai botnet attack that brought a large of the Internet to its knees this Fall and the even scarier (because it involved Philips, a company that takes security seriously) white-hat hackers attack on Hue bulbs.  As I’ve written, unless IoT security is improved, the public and corporations will lose faith in it and the IoT will never develop to its full potential.

Now, there’s growing discussion that blockchain (which makes bitcoin possible), might offer a good IoT security platform.

Ironically — for something dealing with security — blockchain’s value in IoT may be because the data is shared and no one person owns it or can alter it unilaterally (BTW, this is one more example of my IoT “Essential Truth” that with the IoT data should be shared, rather than hoarded as in the past.

If you’re not familiar with blockchain, here’s an IBM video, using an example from the highly security-conscious diamond industry, that gives a nice summary of how it works and why:

The key aspects of blockchain is that it:

  • is transparent
  • can trace all aspects of actions or transactions (critical for complex sequences of actions in an IoT process)
  • is distributed: there’s a shared form of record keeping, that everyone in the process can access.
  • requires permission — everyone has permission for every step
  • is secure: no one person — even a system administrator — can alter it without group approval.

Of these, perhaps the most important aspect for IoT security is that no one person can change the blockchain unilaterally, adding something (think malware) without the action being permanently recorded and without every participant’s permission.  To add a new transaction to the blockchain, all the members must validate it by applying an algorithm to confirm its validity.

The blockchain can also increase efficiency by reducing the need for intermediaries, and it’s a much better way to handle the massive flood of data that will be generated by the IoT.

The Chain of Things think tank and consortium is taking the lead on exploring blockchain’s application to the IoT. The group describes itself as “technologists at the nexus of IoT hardware manufacturing and alternative blockchain applications.” They’ve run several blockchain hackathons, and are working on open standards for IoT blockchains.

Contrast blockchain with the current prevailing IoT security paradigm.  As Datafloq points out, it’s based on the old client-server approach, which really doesn’t work with the IoT’s complexity and variety of connections: “Connection between devices will have to exclusively go through the internet, even if they happen to be a few feet apart.”  It doesn’t make sense to try to funnel the massive amounts of data that will result from widespread deployment of billions of IoT devices and sensor through a centralized model when a decentralized, peer-to-peer alternative would be more economical and efficient.

Datafloq concludes:

“Blockchain technology is the missing link to settle scalability, privacy, and reliability concerns in the Internet of Things. Blockchain technologies could perhaps be the silver bullet needed by the IoT industry. Blockchain technology can be used in tracking billions of connected devices, enable the processing of transactions and coordination between devices; allow for significant savings to IoT industry manufacturers. This decentralized approach would eliminate single points of failure, creating a more resilient ecosystem for devices to run on. The cryptographic algorithms used by blockchains, would make consumer data more private.”

I love it: paradoxically, sharing data makes it more secure!  Until something better comes along and/or the nature of IoT strategy challenges changes, it seems to me this should be the basis for secure IoT data transmission!

 

 

 

Siemens’s Mobility Services: Trains Become IoT Labs on Wheels

George Stephenson's Killingworth locomotive Source: Project Gutenberg

George Stephenson’s Killingworth locomotive
Source: Project Gutenberg

As those of you who know rail history understand, with Stephenson as your last name, you’re bound to have a strong interest in railroads! Add in the fact that I was associate producer of an award-winning documentary on the subject back in the early 70’s, and it’s no wonder I was hooked when I got a chance to meet with some of Siemens’s top rail executives on my trip to Barcelona last week (Disclaimer: Siemens paid my expenses, but didn’t dictate what I covered, nor did they have editorial review of this piece).

What really excites me about railroads and the IoT is that they neatly encapsulate the dramatic transformation from the traditional industrial economy to the IoT: on one hand, the railroad was perhaps THE most critical invention making possible 19th century industry, and yet it still exists, in recognizable but radically-evolved form, in 2016. As you’ll see below, trains have essentially become laboratories on wheels!

I dwelt on the example of the Union Pacific in my e-book introduction to the IoT, SmartStuff, because to CIO Lynden Tennison was an early adopter, with his efforts focused largely on reducing the number of costly and dangerous derailments, through measures such as putting infrared sensors every twenty miles along the rail bed to spot “hotboxes,” overheating bearings. That allowed an early version of what we now know as predictive maintenance, pulling cars off at the next convenient yard so the bearings could be replaced before a serious problem. Even though the technology even five years ago was primitive compared to today, the UP cut bearing-related derailments by 75%.

Fast-forward to 2016, and Siemens’s application of the IoT to trains through its Mobility Services is yielding amazing benefits: increasing reliability, cutting costs, and even leading to possible new business models. They’ve taken over maintenance for more than 50 rail and transit programs.

While I love IoT startups with a radical new vision and no history to encumber them, Siemens is a beacon to those companies firmly rooted in manufacturing which may wonder whether to incorporate the IoT in their services and strategy. I suspect that its software products are inherently more valuable than competitors from pure-play software firms at commercial launch because the company eats its own dogfood and applies the new technology first to the products it manufactures and maintains — closing the loop.

Several of its executives emphasized that one of the advantages Siemens feels they enjoy is that their software engineers in Munich work in a corner of an old locomotive factory that Siemens still operates, so they can interact with those actually building and maintaining the engines on a daily basis. When it comes to security issues, their experience as a manufacturer means they understand the role of each component of the signaling system. Dr. Sebastian Schoning, ceo of Siemens client Gehring Technologies, which manufactures precision honing tools, told me that it was easier to sell these digital services to its own client base because so much of their current products include Siemens devices, giving them confidence in the new offerings. GE enjoys the same advantages of combining manufacturing and digital services with its Evolution Series locomotives.

The key to Siemens’s Mobility Services is Sinalytics, its platform architecture for data analysis not just for rail, but also for industries ranging from medical equipment to wind farms. More than 300,000 devices currently feed real-time data to the platform,   Consistent with my IoT-centric “Circular Company” vision, Sinalytics capitalizes on the data for multiple uses, including connectivity, data integration, analytics, and the all-important cyber security — they call the result not Big Data, but Smart Data. As with data services from jet turbine manufacturers such as Rolls Royce and GE, the platform also allows merging the data with data from sources such as weather forecasts which, in combination, can let clients optimize operating efficiency on a real-time M2M basis.  

With the new approach, trains become IoT laboratories on wheels, combining all of the key elements of an IoT system:

  • Sensing: there are sensors on the engines and gearboxes, plus vibration sensors on  microphones measure noises from bearings in commuter trains. They can even measure how engine oil is aging, so it can be changed when really needed, rather than on an arbitrary schedule.
  • Algorithms to make sense of the data and act on it. They read out patterns, record deviations & compare them with train control systems or vehicles of the same type.
  • Predictive maintenance replaces scheduled maintenance, dramatically reducing down-time and catastrophic failure.For example: “There’s a warning in one of the windows (of the control center display): engine temperature unusual. ‘We need to analyze the situation in greater depth to know what to do next  — we call it  ‘root cause analysis,” (say) Vice-President for Customer Support Herbert Padinger. ‘We look at its history and draw on comparative data from the fleet as a whole.’ Clicking on the message opens a chart showing changes in temperature during the past three months. The increased heat is gradually traced to a signal assembly. The Siemens experts talk with the customer to establish how urgent the need for action is, and then takes the most appropriate steps.”  He says that temperature and vibration analyses from the critical gearboxes gives Siemens at least three days advance notice of a breakdown — plenty of time for maintenance or replacement.  Predictive maintenance is now the norm for 70-80% of Siemens’s repairs.
  • Security (especially important given all of the miles of track and large crowds on station platforms): it includes video-based train-dispatch and platform surveillance using its SITRAIL D system, as well as cameras in the trains. The protections have to run the gamut from physical attacks to cyber attacks.  For security, the data is shared by digital radio, not networks also shared by consumers.

When operations are digitized, it allows seamlessly integrating emerging digital technologies into the services. Siemens Digital Services also included augmented reality (so repair personnel can see manuals on heads-up displays), social collaboration platforms, and — perhaps most important — 3-D printing-based additive manufacturing, so that replacement parts can be delivered with unprecedented speed. 3-D printing also allows dramatic reduction in parts inventories and allows replacement of obsolete parts that may no longer be available through conventional parts depots or even — get this — to improve on the original part’s function and/or durability, based on practical experience gained from observing the parts in use.  Siemens has used 3-D printing for the past last 3 years, and it lets them assure that they will have replacements for the locomotive’s entire lifespan, which can exceed 30 years.

The results of the new approach are dramatic.

  • None of the Velaro trains that Siemens maintains for several operators have broken down since Sinalytics was implemented. Among those in Spain only 1 has left more than 15 min. behind time in 2,300 trips: .0004%!
  • Reliability for London’s West Coast Mainline is 99.7%

  • Perhaps most impressive, because of the extreme cold conditions it must endure, the reliability rate for the Velaro service in Russia is 99.9%!

Their ultimate goal is a little higher: what Siemens calls (pardon the pun) 100% Railability (TM).

And, consistent with what other companies find when they fully implement not only IoT technology, but also what I like to call “IoT Thinking,” when it does reach those previously inconceivable quality benchmarks, the company predicts that, as the software and sensors evolve, the next stage will be new business models in which billing will be determined by guaranteeing customers availability and performance.

PS: I’ll be posting more about my interviews with Siemens officials and the Gartner event in coming days.

2nd day liveblogging, Gartner ITxpo, Barcelona

Accelerating Digital Business Transformation With IoT Saptarshi Routh Angelo Marotta
(arrived late, mea culpa)

  • case study (didn’t mention name, but just moved headquarters to Boston. Hmmmmm).
  • you will be disrupted by IoT.
  • market fragmented now.

Toshiba: How is IoT Redefining Relationships Between Customers and Suppliers, Damien Jaume, president, Toshiba Client Solutions, Europe:

  • time of tremendous transformation
  • by end of ’17, will surpass PC, tabled & phone market combined
  • 30 billion connect  devices by 2020
  • health care IoT will be $117 billion by 2020
  • 38% of indiustry leaders disrupted by digitally-enabled competitors by 2018
  • certainty of customer-supplier relationship disruption will be greatest in manufacturing, but also every other market
    • farming: from product procurement to systems within systems. Smart, connected product will yield to integrated systems of systems.
  • not selling product, but how to feed into whole IoT ecosystem
  • security paramount on every level
  • risk to suppliers from new entrants w/ lean start-up costs.
  • transition from low engagement, low trust to high engagement, high trust.
  • Improving efficiencies
  • ELIMINATE MIDDLEMAN — NO LONGER RELEVANT
  • 4 critical success factors:
    • real-time performance pre-requisite
    • robustness — no downtime
    • scalability
    • security
  • case studies: energy & connected home, insurance & health & social care (Neil Bramley, business unit director for clients solutions
    • increase depth of engagement with customer. Tailored information
    • real-time performance is key, esp. in energy & health
    • 20 million smart homes underway in GB by 2020:
      • digitally empowering consumers
      • engaging consumers
      • Transforming relationships among all players
      • Transforming homes
      • Digital readiness
    • car insurance: real-time telematics.
      • real-time telematics data
      • fleet management: training to reduce accidents. Working  w/ Sompo Japan car insurance:
    • Birmingham NHS Trust for health (Ciaron Hoye, head of digital) :
      • move to health promotion paradigm
      • pro-actively treat patients
      • security first
      • asynchronous communications to “nudge” behavior.
      • avoiding hip fractures
      • changing relationship w/ the patient: making them stakeholders, involving in discussion, strategy
      • use game theory to change relationship

One-on-one w/ Christian Steenstrup, Gartner IoT analyst. ABSOLUTE VISIONARY — I’LL BE INTERVIEWING HIM AT LENGTH IN FUTURE:

  • industrial emphasis
  • applications more ROI driven, tangible benefits
  • case study: mining & heavy industry
    • mining in Australia, automating entire value train. Driverless. Driverless trains. Sensors. Caterpillar. Collateral benefits: 10% increase in productivity. Less payroll.  Lower maintenance. Less damage means less repairs.
    • he downplays AR in industrial setting: walking in industrial setting with lithium battery strapped to your head is dangerous.
    • big benefit: less capital expense when they build next mine. For example, building the town for the operators — so eliminate the town!
  • take existing processes & small improvements, but IoT-centric biz, eliminating people, might eliminate people. Such as a human-less warehouse. No more pumping huge amount of air underground. Huge reduction with new system.  Mine of future: smaller holes. Possibility  of under-sea mining.
  • mining has only had incremental change.
  • BHP mining’s railroad — Western Australia. No one else is involved. “Massive experiment.”
  • Sound sensing can be important in industrial maintenance.  All sorts of real-time info. 
  • Digital twins: must give complete info — 1 thing missing & it doesn’t work.
  • Future: 3rd party data brokers for equipment data.
  • Privacy rights of equipment.
  • “communism model” of info sharing — twist on Lenin.

 

Accelerating Digital Transformation with Microsoft Azure IoT Suite (Charlie Lagervik):

  • value networking approach
  • customer at center of everything: customer conversation
  • 4 imperatives:
    • engage customers
    • transform products
    • empower employees
    • optmize operations
  • their def. of IoT combines things/connectivity/data/analytics/action  Need feedback loop for change
  • they focus on B2B because of efficiency gains.
  • Problems: difficult to maintain security, time-consuming to launch, incompatible with current infrastructure, and hard to scale.
  • Azure built on cloud.
  • InternetofYourThings.com

 

Afternoon panel on “IoT of Moving Things” starts with all sorts of incredible factoids (“since Aug., Singapore residents have had access to self=driving taxis”/ “By 2030, owning a car will be an expensive self-indulgence and will no longer be legal.”

  • vehicles now have broader range of connectivity now
  • do we really want others to know where we are? — privacy again!
  • who owns the data?
  • what challenges do we need to overcome to turn data into information & valuable insight that will help network and city operators maximize efficiency & drive improvement across our transportation network?
  • think of evolution: now car will be software driven, then will become living room or office.
  • data is still just data, needs context & location gives context.
  • cities have to re-engineer streets to become intelligent streets.
  • must create trust among those who aren’t IT saavy.
  • do we need to invest in physical infrastructure, or will it all be digital?
  • case study: one car company w/ engine failures in 1 of 3 cars gave the consultants data to decide on what was the problem.

Live Blogging Gartner ITxpo Barcelona!

After a harrowing trip via Air France (#neveragain) I’m in lovely Barcelona, live-blogging Gartner ITxpo courtesy of Siemens — but they aren’t dictating my editorial judgment.

Keynoter is Peter Sondergaard, Sr. VP, Gartner Research:

  • start with high-scale traditional IT structures, but with new emphasis on cloud, etc. IT system now partially inside your org. and part outside.  We are half-way through transition to cloud: half of sales support now through cloud. More financial, HR & other functions. General trend toward cloud, but still some internal processes as necessary. Must clean up traditional inside processes.
    • “Ecosystems are the next evolution of Digital”
    • Must learn to measure your investments in customer experience.
    • Starting to explore VR & AR (personal shout out to PTC & clients such as Caterpillar!!)
    • must understand customer’s intent through advanced algorithms.  Create solutions to problems they don’t even know they have!
  • next domain of new platform: Things:
    • build strategies with two lenses: consumer preferences, AND the enterprise IoT lens.
    • leverage exponential growth in connected things
    • 27445 exabytes of data by 2020!
    • can’t just bolt on new systems on old ones: must rework existing systems to include devices — processes, workflow, much harder (i.e., my circular company paradigm).
  • intelligence: how your systems learn and decide independently
    • algorithms– algorithmic intelligence — drives decisions
    • now, AI, driven by machine learning. Machines learn from experience.
    • information is new code base
    • we will employ people to train things to learn from experience through neural networks
  • ecosystems
    • linear value supply chains transformed to ecosystems through electronic interchange.
    • others can build experiences, etc. that you haven’t thought out through APIs  — my “share data” Essential Truth. APIs implement business policies in the digital world.c
  • customers
    • customer driven

Where to start?

  • 70% of IoT implementation is through new organization within companies!

Now other Gartner analysts chime in:

  • insurance: engage your customers.
  • smart gov: must interact with those who implement. Must re-imaging public involvement sense/engage/interact
  • case study: Deakin University in Australia: digital platforms to enhance student experience.
  • case study: Trenitalia mass transit system switching to predictive maintenance! Huge cost savings. “Experience hands & beginners mind at work” — love that slogan!!!! “Listen to the train instead of scheduling maintenance”
  • blockchain: ecosystem, brilliant in simplicity. All can see transaction but no one can invade privacy. Use to solve many problems: data provenance, land registry, public infrastucture, AI.
  • Woo: use this to TRANSFORM THE WORLD!!!
  • ratz — I was preoccupied at time, they talked about a new mobility system for seniors — re my SmartAging paradigm!!
  • paradigm shift — partnering with competitors (much of what I wrote about in DataDynamite: share data, don’t hoard it!)  Think about Apple & Google driving car companies’ interfaces. “Do you join hands with digital giants or join hands with them?”).
  • ooh, love the digital assistant correcting his presentation. I can only dream of a future where there are millions added to grammar police!