March 1, 2013

Three Outcomes Leading Developers and Deployers of Internet of Things & M2M are Thinking About Beyond Money

Chris Rezendes, President, INEX Advisors

Standards and values matter a whole hell of a lot to most of the people at the leading edge or in the middle of the development and deployment of Internet of Things (IoT), Machine-to-Machine (M2M) and connected device solutions. That is one of the most important things that I took away from The Internet of Things World Forum Steering Committee (#IOTWF) meetings held at Cisco last week in San Jose.

Standards are paramount.  Defining, publishing, implementing, monitoring, revising, refining, improving them.  But not only technical standards.

Values matter.  Market size, growth, revenue, margin and potential for return.  But not only market value.

Cisco Chairman and CEO John Chambers gave a typical pitch-perfect presentation on the value at stake with the Internet of Things at this gathering of IoTcommunity members.

Most of you have probably read or heard about the $14.4 trillion opportunity that has been fairly widely quoted.

That is only one-third of the story.

The second part of the story was a synthesized view of standards

Chambers talked a bit about standards as well.  Actually, every one of the roughly 100 people that contributed to the gathering talked about standards.

You bet there were sessions dedicated to technical standards – architecture, platform, security, etc.  But there were other standards discussions that I experienced first-hand in structured round tables, informal group discussions and some intense one-on-one discussions.  These exchanges were with people from Cisco and other organizations; enterprise and embedded technology markets; solution developers and deployers from the public and private sector and from developed, redeveloping and developing economies.  (More on the concept of redeveloping economies later in this post.)

As you might imagine, and as Michael Koster and Rob van Kranenburg have blogged about in more detail, the technical standards discussions were complicated and nuanced.  But there were at least a handful of consensus conclusions:

  1. Pursuit of a singular ‘monolithic’ standard architecture is not practical
  2. Even standards focused on specific architectural layers for IoT (think OSI model) will likely be challenging, if not impractical, and likely yield multiple instantiations
  3. However, pursuit of standards for specific services or functions might yield valuable horizontal  ‘building blocks’ such as
    1. Self describing objects in IoT systems
    2. Event-based session/ transaction processing, management and analysis models
    3. Bi-directional control-enabling security regimes

In addition to technical standards (Standards of Construct), the group talked about Deployment Standards (Standards of Conduct) or Policy Development.  People in the room had vast experience with a wide range of data management requirements ranging from PCI in retail to multi-domain classified systems in national security.

A recurring theme at the meetings was the need for use-case scenarios to form the context for application of technical or deployment standards.

With respect to deployment standards policy development, five questions formed the core of a number of discussions:

  1. What data sets are under consideration?
  2. Who owns those data sets?
  3. Who has access rights to those data sets?
  4. What are the exploitation guidelines for those with access rights to the data sets?
  5. What are the disclosure, enforcement and remediation rules?

In other words, explicit recognition that neither private enterprise data management policies, or social media ‘rules’ would meet the needs of IoT ecosystems as the attendees imagined them.

An impressive outcome from the meetings was the near-consensus that private industry would need to take an active, coordinated, transparent role in the development of policies to frame the deployment of IoT/M2M device intelligence streams.  At INEX we were thrilled for we have been arguing for this for some time.

And that last third of the story?  A synthesized  definition of value   

Complementing the $14.4 trillion ‘Value At Stake’ thesis, and the budding consensus on standards on construct and conduct, was the crescendo on values.

Every single one of the individuals that I spent time with elevated social and ethical values alongside the $14.4 trillion opportunity and the need to define technology development and deployment standards.

Note:  Most of those people were in for-profit organizations.

Values is a vague term but at this conference at least, clarity was emerging in the form of a focus on ‘economic stability’.  Attendees that I spoke with – from across the spectrum – shared a vision that the IoT represents much – MUCH – more than an opportunity to make a little or a lot more money.  I would dare say that many, perhaps most, of the people at the meeting agreed that:

  1. IoT deployments MUST meet the standard of value creation on a use case scenario basis in order for it to scale profitably for deployers and developers.
  2. Many IoT use case scenarios – actual and aspirational – define value in terms of creating time and meaning for people as much as cost savings or revenue enhancements for deployers.

Time matters so much because so many people have so little of it.  This is especially true in the developing world.  Grundfos proved the point and walked the walk.  They have deployed networked pumps across a number of austere physical and networking environments at clean water wells.

When the status of the pump/ well/ water are transmitted to citizens and businesses in need of water through their cell phones, these systems create time for people.  They no longer have to risk 4/8/12 hours per day walking to a well that might not be operational.  Now, their yield, or return, on the hours they invest walking for that water has gone up exponentially.

And with that time, they can create more meaning.  They can rise above subsistence.  They can find and work and hold jobs.  They might even make new markets.  Andrew McAfee’s TED2013 talk makes the argument forcefully.

But the anecdotes around value creation were not limited to developing economies.  They extended to a broad range of markets in what are often described as developed nations.

We explored the concept of ‘re-developing’ economies.  Re-developing economies might include the vast majority of second and third tier cities and towns across most of the developed world.  The US, Western Europe, Japan … re-developing economies are those that are on a regional economy disintermediation curve.

The direction of the global economy has left far too many communities outside the 100 largest and fastest growing cities – and their most exclusive suburbs – reeling.  It has left the smaller cities and towns outside the 100 fastest growing cities in the developing economies in dangerous positions.  It has arrived too many regional economies with unsustainable levels of economic instability.

Too many families with unhealthy levels of economic instability.  And we know economic instability and uncertainty are lethal to most of the goals that many of us are pursuing.

What Those Who Will be Successful In IoT/M2M Know

Here is what I took away from my time in San Jose last week:  A growing number of IoT developers and deployers are focusing on economic stability as a core outcome of their efforts; emphasizing the intelligent application of pragmatic standards; and looking to a future where $14.4 trillion in forecasted value creation will prove to be far too conservative. Those focusing on IoT solutions outcomes that drive economic stability know that they will generate much, much more value AND profitable revenue  in all economies.

What outcomes are your teams focusing on as you execute your IoT/M2M strategy? Share your comments.

March 1, 2013