After efficiency and reducing costs, the typical second stage is innovation that increases revenue, using insights from the data you’re already using to improve efficiency. In the case of ThyssenKrupp, “they realized they could predict what was going to fail with high reliability and they’re somewhere in the mid-‘90s accuracy at getting the right part predictively on the truck. Now they save more money still by having the technician show up ready to do the repair, but they also have this tremendous customer experience win.”
Interestingly, ThyssenKrupp has been careful not to suggest that the prediction system replaces the expertise of their engineers. “Instead, they position the IoT system as a coach for the repair people: ‘this is going to make you better at your job, because you’re going to go out armed with the parts you need to do your job’.”
Another customer got both savings and better customer satisfaction by putting sensors in their industrial rat traps. “It doesn’t take a dead rat long to stink, so to avoid the call that says ‘it stinks here’ they’re checking their traps very frequently, and most of the time they’re checking empty rat traps,” explains Miller. “They’re able to save themselves a lot of money driving around checking empty traps, plus when a trap catches a rat, they can now get there really fast to pick it up.”
A linen service that delivers towels and sheets to hotels and hospitals found it was losing so much inventory that it was costing them millions of dollars a year. They already had trucks and laundry equipment that could read sensor tags, but they’d never put tags on the linens. “Now they can say ‘I delivered a thousand towels and I only got two hundred back’. That was pure inefficiency.’ The next step was to use the data about what linens were being laundered to run the equipment more efficiently as well. “Then the CEO said, I know what's in all the trucks, so I can run my system leaner; if I need towels for a customer, I can route a truck with towels on.”
The third stage is the business transformation that can give you a whole new business model. “If an elevator in a factory that moves something expensive being down brings the line down,” says Miller, “ThyssenKrupp can go back to those customers and say ‘we'll sell you an uptime guarantee.’ They now know their business well enough to know what sort of claims they can make for uptime and they know how to think about the potential costs of the guarantee and what offer they can afford to make to customers – and they've made a new business out of this.”
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