Since “Data is the new oil”, points to consider while exploring

Few weeks ago I came across an interesting article about iRobot the maker of robotic vacuum cleaner Roomba plans of monetizing the vast data they have accumulated over the years. These robotic smart devices while vacuuming home they are in are also smart to figure out the layout to work around the furniture, across multiple rooms etc. Over a period of time they develop a rich map of the houses they vacuum. The original intent to develop the map was to enable features such as when low on charge to stop vacuuming and head back to its dock to recharge and then return to the same spot to finish the job.

Now comes the interesting part, having a good understanding of layouts of vast number of houses is a very important input for designers of smart homes and of other home products such as air-conditioners, lighting, smart speakers, and a number of products we use in our homes. In other words this data is very valuable not only to the makers of Roomba but also to lot many other companies. Sharing or selling customer’s data with others is not that simple as there are privacy concerns that needs to be addressed. One option to address this is to anonymize the data by scrubbing out personally identifiable information. However the company later issued a statement that they do not sell customer data interestingly they also mentioned that they may do so in the future with their customers’ explicit consent!

The machines we use in and outside ours homes have been becoming smarter over the years. With digital technologies making significant progress in the recent past has paved the road for devices such as home appliances leapfrog into becoming hugely smarter. They get smarter by learning from other appliances by exchanging data via their makers. The information shared could be e.g. usage pattern, features used, performance, wear and tear of key parts, etc. These received from across installation base which could be hundreds of thousands will provide useful insights which would help companies make products better and design new products and services. Information received by the device in the form of software upgrade helps it perform better a great example is our phones the same device that have gotten better over a period of time with software upgrades.

It is only a matter of time before water heaters, air conditioners, washing machines, dish washers, water kettles and even electric toothbrush in our homes start having deep conversations with their makers. The use of the data collated from these equipment are only limited by imagination. With access to information of set of electric equipment in a specific geographical location may help the power company streamline the supply.

For leaders of organizations leading digital journey of makers of these devices have a very interesting problem to solve. The challenge among many is to decide what information is important, mode of information transmission (including tech details such as protocol), the platform which will capture the information, frequency of update, etc. The technology in this space is fragmented. Unlike most challenges of the past this will require deep collaboration of cross-functional teams such as marketing, product engineering, sourcing, manufacturing (mostly outsourced), risk and legal. This cross functional team will have to collaborate with a new set of teams that probably never existed before in several of these organizations such as analytics or data science, information security, hardware (such as sensors) and software (not just ERP). These new talents will result in new culture and new ways of doing things. Finding and retaining these new talent is an entirely new challenge for the HR team. This also requires collaboration with new set of vendors again kind of technology vendors the enterprise hasn’t engaged with before. In other words the company will have to prepare and undergo deep transformation.

Finally, is it worth it: These smart(er) devices over a period of time will outperform conventional ones in offering superior customer experience. With products and services getting commoditized the key differentiator now and in the foreseeable future will be customer experience. Information collected from the devices would play an important role in improving existing products and enhance customer experience. These insights also help greatly in designing new products and services. Very soon it will be a matter of survival. To add to that there could be others who may find use for this data such as makes of smart homes. According to IHS Markit Global revenue for the smart home market is forecast to reach approximately $18.0 billion in 2018, nearly double the $9.8 billion reached two years earlier in 2016.

Most key pieces of this puzzle are getting in place and the race has begun, whoever gets there first would have significant advantage. This is very similar to the industrial internet journey GE embarked on years ago investing billions to successfully transform itself to become a software and analytics company. It’s time for others to start charting their own exciting journey, the new oil is waiting to be tapped!

Source:

https://www.reuters.com/article/us-irobot-strategy/roomba-vacuum-maker-irobot-betting-big-on-the-smart-home-idUSKBN1A91A5?il=0

https://bgr.com/2017/07/24/roomba-home-maps-irobot-privacy/

https://blog.ihs.com/the-path-to-mass-adoption-for-the-smart-home