Keeping Customers at the Heart of The Internet of Things: Impact, Opportunities, Risks
The Internet of Things brings with it great opportunities and great risks. Opportunities for financial gain and greater efficiencies for paying customers, and risks of misuse of data and dangers of turning into another method of unlawful surveillance.

We've all heard the saying, “If you’re not paying for it, you’re not the customer.”

In the era of pervasive mobile Internet, social computing and free social-networking platforms, the individual paying for a service and the user consuming the service are not always the same. So the question is, who is the customer and in whose interest does the technology service provider make its services available?

For social and search platforms -- the customer typically tends to be those individuals and companies who have subscribed to paid solutions like Google AdWords/AdSense, Facebook Advertisements, Twitter Firehose, etc. In effect, the people who are searching, tweeting, posting updates and photos are not the customer, but rather help generate the contextual data and information being consumed by the paying customers.

This situation is amplified in the context of the Internet of Things (IoT), where the data that is generated and acquired is usually from the physical world. Who owns this data, who is utilizing the services analyzed/computed from this data and who is paying for the data sensing, acquisition, analysis and associated services and thereby gaining the economic advantage of the ecosystem?

The customer of a platform or solution can be considered to be those who can affect a change in the platform or solution based on their requirements or changing needs. In that context, most of the people using the Internet-based platforms are not the customers of that platform, but users. In understanding the impact of Internet related technologies (including the Internet of Things) on a customer, this distinction between the users of a platform and the customers of the technology/platform is important.

IoT Device and Data Aggregation – Opportunities and Risks

At the core, the IoT is about sensing data wirelessly from a large geographical area, and then aggregating, analyzing and, if required, taking action based on that data. A large number of IoT Platforms and middlewares are currently available for helping solution developers and customers manage the IoT device and data deluge. While some of these platforms and middlewares are designed to be hosted on-premises (in customer data centers), others are designed to be used in the SaaS and multi-tenancy mode via cloud-enabled web services APIs.

A large commercial project is currently underway which, though not strictly an Internet of Things project, is looking to aggregate retail transaction data using Point of Sale (PoS) devices from over 9.3 million kirana stores in India (kirana is a small retail store that sells groceries and Fast Moving Consumer Goods products). A commercial initiative by SAP, called Project Ganges, is looking to provide highly affordable PoS devices that will scan retail products just when they are about to get sold, and will transmit this information in real time to cloud enabled data storage and analytics servers (as compared with the earlier data updates of retail transactions using batch-mode).

Opportunities arising from IoT for Customers and Users

The opportunities associated with the Internet of Things are immense. Cisco pegged the potential bottom-line value of the Internet of Things to be around $14 trillion in the coming decade (recently upped to $19 trillion). McKinsey Global Institute estimated the potential economic impact of IoT to be between $2.7 trillion to $6 trillion per year by 2025.

When IoT is appropriately implemented, it could provide customers with a real-time stream of data and information from a large, geographically dispersed part of the physical world. Such aggregation and analysis of data would be immensely useful for a wide range of decision makers, especially those who are adept at utilizing data to make decisions. As opposed to tweet-based “trending topics” or online search based “zeitgeist trends,” one of the fundamental strengths of the IoT is that it can provide the pulse of real-world events and activities.

An example of how IoT would impact a paying customer’s operations can be seen in projects which involve device-based data aggregation in the retail sector. Large Consumer Packaged Goods (CPG) industries typically have significantly high marketing and sales budgets. The effect of a marketing campaign is not easy to assess, and tends to involve pre- and post-campaign surveys, questionnaires and retail transaction data.

Once Internet connected PoS devices are available and data is aggregated in real time, finding the sentiment of a large group of retail buyers in a particular geographical area becomes more accurate, and marketing managers can see the effectiveness of their marketing efforts in closer to real time. Hence, one of the first opportunities arises for the marketing departments of the CPG industry.

Typical small Indian retailers tend to stock 300 – 500 individual units of retail products because real-estate and shop floor space is of prime concern. Stocking rarely purchased goods or being unable to anticipate demand could mean a significant loss of revenue for these small retailers. With more real time dashboards of customer sentiment and expected demand, these retailers could manage their stocked units in a far more efficient manner, and serve customers with products that have a higher chance of meeting the customer needs and requirements.

IoT technologies have also been used extensively for real time wireless energy monitoring in buildings and the “built environment.” Projects such as My Energy and Neighborhood Scoreboards help with automated and periodic visualization of energy consumption in buildings. Research has found that homes and neighborhoods that provide accurate and timely information about energy consumption tend to have decreased energy usage. It also fosters a sense of friendly neighborhood competition and encourages people to become more efficient in their energy usage which results in lower bills. The Internet of Things, using standardized technology products and wireless protocols, can provide an economical solution for collecting energy consumption data in real time for apartments and buildings.

Risk associated with pervasive use of IoT

In the book “To Save Everything, Click Here,” author Evgeny Morozov argued that once people become used to incentive based actions (e.g., receiving game-theory based incentives for saving home energy, as in the above projects), we end up optimizing our behavior locally, but end up with sub-optimal behavior globally. In other words, we might do the right thing only if certain kinds of incentives are put in place. The impact of incentives based on large scale aggregated data analysis is not yet fully understood.

IoT can be used to passively make assessments of user’s moods based on the kind of purchases s/he makes, but given the power of this technology, it also has the potential to affect the sentiment of the user by providing timely and contextual information about in stock products that a marketer would like to sell. This kind of two-way sensing based contextual advertisements are already in place on news, media and other content publishing websites – it’s only a matter of time before this is adapted for IoT triggered advertising. Whether the impact of such real time analysis is favorable or not is left to the reader.

The greatest risk of an ethical misuse of IoT lies in it being used for large scale surveillance and profiling of people, based on the data sensed via their actions and transmitted without their explicit knowledge. Government surveillance programs like PRISM have clearly shown that when powerful technological platforms are made available (like those from Google, Yahoo, Facebook, etc.), it creates opportunities for government agencies to overreach on personal privacy, over and above what the law permits. Indiscriminate use of IoT can only exacerbate this situation of wide scale surveillance.

What is necessary to mitigate this risk, is to build an explicit “Opt-in” button which users of IoT are fully aware of, so that they can choose when and how data involving them from the real-world is sensed and transmitted to Big Data platforms for further analysis.

The risk of misuse of IoT is real, but the opportunities available from a measured implementation are hugely significant. The Internet of Things can lead to better utilization of natural resources, monetary savings for end users and more timely and effective reach for commercial paying customers. The net impact of the Internet of Things, when used appropriately and keeping the users, as well as the customer’s interests at heart, can have an immensely positive effect on people as well as on the society as a whole.

Title image by Kentoh (Shutterstock)

Editor's Note: Read a different perspective on the Internet of Things in Bring the Internet of Things to Customer Service and Support