Feature: Vodafone's Erik Brenneis on how IoT is only just the beginning
Is your company embracing the future with the Internet of Things (IoT) and harnessing the potential for renewed efficiency and growth? We spoke with Erik Brenneis, Vodafone’s CEO, Global Enterprise, about the solutions it provides…
The Internet of Things (IoT) is revolutionising business and British telco giant Vodafone has been pioneering the implementation of IoT systems for its business customers across all sectors since 2011.
This year, Vodafone became the first global provider of IoT to reach the milestone of 50mn connections – driven by around one million new connections each month.
Following the recent publication of Vodafone’s fifth annual IoT Barometer Report, Erik Brenneis, Vodafone’s CEO, Global Enterprise, outlined the range of benefits users are getting from IoT and the pathways to implementation to achieve the greater business insights, reduced costs and enhanced employee productivity reported by users globally.
“We wanted to share our data with the world via the Barometer Report to offer qualitative analysis about underlying trends in the market to stimulate and inspire others to push IoT forward,” says Brenneis.
The 2017 edition shows (from its sample of 1,278 companies across 13 countries) the percentage of those with more than 50,000 connected devices has doubled in the last 12 months and that 84% of adopters saw their use of IoT grow during the period. Crucially, 51% of IoT users say the technology is increasing revenues or opening up new revenue streams while 66% of companies agree that digital transformation is impossible without IoT.
IoT connects objects, turning them into intelligent assets able to communicate with people, applications and each other. So, what is driving growth in the number of companies using this tech on a massive scale and what does it mean for globally focused businesses? “Recently, many companies implemented IoT with just one of their products at the luxury end of the scale,” explains Brenneis. “For example, only expensive cars were connected at first and then manufacturers moved to a wider mass-market roll out. For instance, every Vauxhall that rolls off the production plant now has wifi powered by Vodafone as standard.
“There are two things driving the increased number of larger IoT projects,” Brenneis explains. “When a utility project like smart metering reaches full roll out, after a couple of years you start to hit large numbers of devices then, as the IoT market matures, more and more companies connect their complete portfolio, not just their premium products, so it drives them towards being large customers.”
Transport and logistics is leading the drive of growth in IoT due in part because the car industry is so large. However, Brenneis notes that its actual penetration hasn’t been particularly high – even in a mature market like the EU only 15-20% of cars currently on the road are connected, so there’s still huge potential for growth.
On the logistics side, fleet management and container tracking through the use of new telematics products harnesses the insights of IoT to monitor a shifting payload of high value assets. “You can put a sensor into a shipping container and measure temperature to be more informed about how you’re delivering fruit or dry goods and improve your wastage,” offers Brenneis.
Return on investment
The Barometer Report also found a direct correlation between scale of adoption and ROI (Return On Investment) with positive returns for sectors across the board.
“Once companies start connecting they have more information on how a supply chain is working or a process plant is operating, allowing them to become more informed about other parts of their business,” explains Brenneis.
“As the information starts to flow out, an IoT project grows into more parts of the business, becoming integral to core ERP (Enterprise Resource Planning) systems and customer records so it’s no longer just a standalone way of measuring isolated areas of a business, but an opportunity to use plentiful data to make educated improvements in the business model.”
Connecting for success
Brenneis believes that in order to leverage the full potential of IoT, businesses need to find the right partners to deliver or manage their IoT solutions. Multinationals may already have the know-how at their disposal to select the right telecoms partner and integrate suitable hardware, but the smaller you get as a company, the more specialised your IoT needs may be.
This is where Vodafone comes in with its ability to collaborate, bringing new partners into the equation to ensure they develop the right ecosystem for each customer. “It’s what we do working with small and medium enterprises,” maintains Brenneis. “A company may come to us for advice on how to connect its coffee machines and we could help implement business processes and – with an IBM or Accenture – hardware solutions through our partners, such as Gemalto or Sierra Wireless who steward the development of their IoT solution. Ultimately, our approach is not to define business processes for the customer, but to provide communications expertise and security features to bring all the pieces of the ecosystem together.”
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Security is at the core of Vodafone’s offering as a telecoms operator. Adhering to strict rules on data privacy, the company is preparing for the GDPR (General Data Protection Regulation) rules which will be in force in the EU from next year. “An overall IoT system needs to be designed in a secure way from the outset,” advises Brenneis. “It’s the customer’s responsibility or that of the system integrator. On our side, when we supply IoT connectivity we need to ensure the SIM card, data connection and the system – our service delivery platform – are secure and not vulnerable to hacking. We use a Virtual Private Network (VPN) for the connection between a central station and our global sim card and we also have encryption and authentication mechanisms built into our SIM and the VPN. We actively monitor both our communication channels and our data centres, so with these hurdles in place, we deter hackers and keep our networks safe.”
The traditional choices for IoT connectivity have been wifi, cellular and fixed line, but what technological breakthroughs can companies harness or securely embrace digital transformation with IoT? “In our opinion, NB-IoT (NarrowBand-IoT – a Low Power Wide Area Network radio technology developed to enable a wide range of devices and services to be connected using cellular telecommunications bands) fills a void in the market some proprietary technologies like Sigfox tried to fill,” says Brenneis. “But these were not standardised to make it easy to buy the hardware from suppliers with the help of several network operators for systems support. That void, where you have relatively low data volumes, but with the need for a robust and reliable system, required a low-cost solution with long battery life. Typical application examples would be water and gas meters where there is no power line. That’s why Vodafone took the lead in the industry to help define this new standard and to roll out these networks, enabling the highest bandwidth with low latency. It’s a great example of technology enabling efficiency and completely new business models where, for example, you can have connected fire sensors on a cost-effective budget.”
Revenues from IoT
Efficiency may be the most common reason IoT is embraced but what are the other key benefits? “Ten years ago, when IoT emerged, it was called M2M (Machine to Machine) and fleet management was a very dominant application. Now, there are also more IoT solutions for customers allowing them to open new revenue streams,” explains Brenneis. “Car manufacturers don’t just sell the car’s connectivity, but can collect a monthly service fee from the customer for the connected features. At the start of the decade TomTom created HD Traffic, which was the first system to measure traffic accurately on smaller streets as well as major highways opening up a new market for them. Amazon created an e-reader with an embedded SIM card that was completely invisible to the customer to download books and helped to drive sales. These are the big trends and there are also new service models for customer contracts for remote monitoring and control of an asset like a home’s heating system, lessening reliance on service technicians.”
Vodafone worked with Analysys Mason to deliver the Barometer Report. The agency predicts by 2022 the adoption of IoT solutions will be much more widespread than the current 29% identified in the survey, driven by unexpected developments as IoT becomes more mass market. They expect it will become simpler, faster and cheaper to build IoT products when the current standards battles have been played out.
IoT has gone from niche to mainstream in just five years and Brenneis believes it will continue to grow the world over, noting that the number of skilled software engineers and hardware integrators present in a region will determine the scale of its development there.
"We’ve only seen the beginning of the positive impact IoT can have,” he adds. “In retail, the customer experience can be streamlined with more accurate real-time, location-specific delivery services that bring the purchase to you.”
The self-ordering fridge may not have made a lasting impression, but Brenneis expects that eventually you’ll be able to walk in to a supermarket take what you want and walk out as your purchases will identify themselves via connection with your phone and you’ll be billed automatically. Meanwhile, in the transport arena, he predicts traffic flow will be massively improved through new solutions like automated driving and parking space management. “We’ll see a positive impact on the world because all this stuff that costs us a lot of time will be made simpler and more effective,” he enthuses.