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The rise of the Internet of Things

Kenny MacIver — November 2016

IoT has moved from theory into practice, argue four thought leaders — Aviva CIO Monique Shivanandan, MIT professor Carlo Ratti, thyssenkrupp CEO Patrick Bass, Allianz Worldwide Partners’ innovation head Dr Steffen Krotsch.

For much of this decade, the promise of adding intelligence and connectivity to physical objects has been just that — more talk than actions.

But since 2015, companies in sectors as diverse as insurance, transportation and agriculture have embraced the Internet of Things (IoT) in a big way — and seen significant paybacks.

A great example is German engineering group thyssenkrupp, where its CEO for North America, Patrick Bass, has been leading a preventative maintenance initiative within its elevator division that uses IoT and the data generated from sensors to cut the number of service engineer call-outs by half.

“We want to connect a million pieces of equipment out there across the globe,” Bass says of the company’s program. The demonstrable benefits exist on two levels, he highlights. Not only is thyssenkrupp saving hugely by dramatically reducing the number of unscheduled call-outs to fix broken equipment, but it is improving relationships with its customers — owners of buildings for whom an out-of-service elevator is a major problem.

“You’re talking about an IoT application that not only provides efficiency to the company, you also derive immediate customer value,” he says.

The transformational impact of IoT and related big data reaches deep into company business models, he observes. “It has to be very specifically tied to the vision of what you’re trying to challenge in the disruption of your business model. It’s a journey that you go through — the realization that this is not an IT project; this is not an R&D project. IoT is a business transformation project,” he says.

“IoT gives us the potential to build customer experiences that are more frequent, richer and pleasant.”

Inspired by the threats and opportunities of digital models, much of the insurance industry is also well into an IoT journey — spurred by developments such as smart homes and connected cars.

As Steffen Krotsch head of innovation at Allianz Worldwide Partners says, insurance naturally follows where customers go.

“Internet of Things and smart objects are [involved in] more and more of the segments of the lifestyle of our customers. As we are driving to serve our customers and assist them we also have to embrace this technology. On the other hand — and more importantly — this technology also gives us the chance to take preventative action rather than only be there when something [bad] happens. IoT gives us the potential to be there for our customer on a more continuous basis and the chance to build customer experiences that are more frequent, richer and pleasant.
Underwritten by IoT

There is parallel thinking at follow insurance company Aviva. “It is just so exciting,” says CIO Monique Shivanandan, “leveraging IoT technologies, putting them all together in a way that really helps our customers, all the new devices, from Fitbits to home-detection devices that monitor your water pipes and turn them off if you have a leak.”

“I think the opportunities and impact of the Internet of Things will be immense and the disruption incredible” she says, citing just two examples. “Just look at the creative minds that are building driverless cars or Airbnb changing the whole hotel industry. How does that affect insurance? Well, everything changes [from] how people need to be insured to how Aviva interacts within those ecosystems.”

And she predicts that, going forward, “Aviva’s propositional differentiation for customers is really around how we incorporate and build a bundle to leverage those Internet of Things capabilities to give customers something that may prevent a robbery or prevent a fire, as well as help customers recover more quickly when such things do happen.”

“The smart city is a computer scientist’s dream come true.”

But it not just within business that IoT is being applied enthusiastically. One of the most important areas for the application of IoT is the city.

“All those technologies that have changed our lives over the past 10 to 20 years are now entering physical space,” says Carlo Ratti, an architect, designer and a professor at MIT where he runs the Senseable Cities Labs. “It’s about the internet becoming Internet of Things and as such the way we understand, we design and we live in cities is being radically transformed.”

From Tokyo to Singapore, Boston to San Francisco, IoT is being applied to address the challenges of modern cities. “If you look at the impact of Internet of Things on cities it is manifold: think about energy, about waste, about transportation, about water management.”

“The race for urban optimization is at full tilt,” says Ratti, “where every piece of information is instantly revealed and the urban machine can be controlled and optimized.” But the forces shaping tomorrow’s smart cities — from planners and architects to technology companies — need to adopt a human-centric approach.

For centuries, the job of shaping the future of cities has been the domain of urban planners, architects and social theorists. But today, says the founding partner at Carlo Ratti Associati, a new player has entered that arena: the technologist.

“The smart city is a computer scientist’s dream come true,” says the author on the impact of digitalization on cities. “Cutting-edge cities are now shaped by the advent of pervasive information technology, enabling real-time connection, interaction and communication. Ubiquitous technology is suffusing every dimension of urban space, transforming it into a computer for living.”

• Illustration: Getty/Jason Fawcett

First published
November 2016
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About: Big Thinkers of 2016
Big Thinkers of 2016 Insights from technology and business leaders Monique Shivanandan, Patrick Bass, Dr Joseph Reger, Thierry Bedos and Steffen Krotsch, plus business school professors, authors and thought leaders Don Tapscott, Carlo Ratti, Linda Hill and Herminia Ibarra.

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