Schwerpunkt Interview “The Internet of Things: A New Perspective Beyond Technology” Dr. Oliver Bäcker is the Internet of Things and Emerging Technologies lead at Deloitte Switzerland and a member of the leadership team at Deloitte Digital. He has extensive experience consulting clients on the Internet of Things by providing viable IoT strategies, feasible technical solutions, and desirable designs. Oliver holds a Ph.D. in technology management from University of St. Gallen and was a visiting scholar at the MIT Center for Digital Business. His research was published by leading international journals and received multiple awards. The interview is conducted by Prof. Dr. Dennis Herhausen, Associate Professor of Marketing, KEDGE Business School 6 Marketing Review St. Gallen 1 | 2020 Schwerpunkt Interview Nowadays, everyone is talking hand with the miniaturization of smart Dr. Oliver Bäcker about the Internet of Things (IoT) devices. As they are getting smaller and Director and Internet of Things as one of the most promising smaller, it becomes easier to include cheap & Emerging Technologies lead at Deloitte Switzerland technological trends. You have sensors in many consumer products. Tel.: +41 (0) 58 2796781 been publishing about IoT for Secondly, IoT depends on the connec- [email protected] more than 10 years now. tivity between the physical world and the Why does it appear more topical digital world. Network connectivity as today than ever before? well as bandwidth and coverage are incre- I firmly believe that we need to assess the asing, which makes it easier to implement potential of the Internet of Things not just IoT solutions as compared to 10 years ago for its technological capabilities but rather when we had weaker connectivity, lower for its impact as an enabler of new business bandwidth, and less coverage. models. Thus, the focus should not be on the A third point is that when talking technology but on the associated business about connectivity we need standardized model. In this sense the topic is becoming software platforms. In the past, compa- ever more relevant because the business de- nies faced a very fragmented landscape of mand for IoT solutions is growing while the different IoT solutions. These days, we development of key enablers is reducing the see more and more standardization and a barriers to developing viable IoT solutions. consolidation of IoT platforms in the mar- Firstly, a decrease in hardware costs ket, which simplifies vendor selection and makes the implementation of IoT sensors reduces implementation costs. and technology much more feasible. In ad- The fourth and most important point is dition, the decreasing prices go hand in the maturity of complementary technolo- Marketing Review St. Gallen 1 | 2020 7 Schwerpunkt Interview gies that drive the value of IoT. Topics For me, the impact of IoT is visible ac- combination with analytics capabilities like Big Data and Analytics play a pi- ross three different dimensions. The potential problems can even be identi- votal role for the Internet of Things first dimension is operational efficien- fied in advance transforming service because the more I can learn from the cy and the associated cost reduction. tasks from reactive to predictive mainte- acquired data the more value I can ge- Condition monitoring and predictive nance. In the consumer industry, we see nerate. Thus, IoT generates more value maintenance are examples of IoT tech- IoT-empowered products entering the when combined with advanced ana- nology driving an increase in the ope- market such as coffee machines with lytics capabilities because the value rational efficiency of production lines. embedded sensors. Here, IoT technology will increase dramatically if I can ana- The second dimension is the gene- is applied to improve the customer expe- lyze, learn, and then act on information ration of new revenue streams and new rience by choosing the optimal water instead of only recording it. business models. For example, the In- temperature for a capsule while revenu- Finally, a range of technologies ternet of Things enables a new line of es for the retailer are increased by auto- that may be subsumed under the term “connected” products (e.g. cars, indust- matically reordering capsules whenever “digital reality” allow you to visualize rial machinery, coffee machines, and the consumer is running out of them. what is happening in the physical world smart home assistants) that allows com- around you based on augmented reali- panies to generate new revenue streams Although first announced ty, virtual reality and mixed reality. or sell their products at higher prices. years ago, IoT-empowered For example, as a maintenance techni- The third dimension relates to an im- smart and connected cian you can look at a production line proved customer experience where an household appliances have using an augmented reality headset and IoT solution augments the experience been slow to enter homes. see quality KPIs as well as mainte- and leads to higher customer satisfaction. Probably the most well-known nance instructions in real time. Digital example is the “smart” fridge. reality technology visualizes IoT in a Can you give us an example of Why do you think it is taking way that makes it easier for people to value creation by the Internet so much time for this appli- interact with the physical world and the of Things? ance to conquer the market? digital data associated with it. There are many industries where IoT is Especially for the smart fridge, I see a In summary, the complementary already creating value by improving couple of hindering factors. On the one technologies outlined above are boos- operational efficiency, driving new reve- hand, there is a lack of standardization ting IoT adoption and driving value nue streams, and improving customer across all the players involved, and this beyond an isolated IoT solution. experience. The manufacturing industry is a massive challenge. When looking at has applied IoT solutions for decades to RFID as a prominent product identifica- Where do you see IoT and improve operational efficiency of pro- tion technology, you would need to have its technologies creating the duction lines. IoT sensors allow detec- all products in your fridge tagged in the most impact? ting machinery malfunctioning and in same way no matter by which vendor Fig. 1: Technological Innovation and Decreasing Cost Unlock the Full Potential of IoT Smart Devices Mobility Cloud Computing Analytics Data Security · Devices are becoming · Mobile devices are · Cloud Computing is · Data from smart · Complexity of require- miniaturized and more used to control other used to drive business devices is collected ments is increasing affordable devices agility and speed-to- and monetized given the number · Away from “all-in-one” · With BYOD the focus market · Predictive analytics and types of devices devices towards moves from device · It provides an innovation helps businesses be · Increased regulation meeting specific needs management to app platform for mobile, more proactive in and focus on privacy management social, and big data driving decision-making Source: Deloitte 2019. 8 Marketing Review St. Gallen 1 | 2020 Schwerpunkt Interview Fig. 2: IoT Use Cases in Sales, Customer Service and Marketing Retail / Consumer Products Supply Chain Marketing Service & Adoption · Connected stores (digital reality, · Product provenance / · Proximity-based · Remote condition online-offline experience) supply chain visibility marketing monitoring · IoT consumer devices (e.g. PMI iQOS, · Reverse supply chain / · Digital reality · Augmented reality for Nespresso Prodigio) customer service commercials service technicians · Smart shelves (e.g. Coca-Cola) · IoT for waste · Augmented reality · Remote service using · Store checkout optimization (e.g. Amazon Go) management & tracking marketing brochures mixed reality · Quick feedback through smart packaging / in-app surveys Insurance Smart Home Crowd Smart City Management & Space Utilization · Connected cars · Smart fridge · Event management · Smart mobility · Wearables in sports · Connected · Retail banking concepts · Wearables in healthcare and entertainment systems experience · Smart parking homes / institutions · Smart home safety · Smart shop floor · Smart lighting (e.g. medication reminder) appliances · Warehouse management (e.g. remote door lock for home delivery) Source: Deloitte 2019. they are provided. Ultimately, if you can- increase the acceptance to it. Whether it will be Google, Amazon not cover 100 percent of the products of smart and connected or any other player – at some point one of with a single solution, the customer ex- devices like the fridge? the big players will “own” the infrastruc- perience is completely blown. If I have to The first point to address is to ensure ture and lock consumers into their eco- separate the fridge contents into products standardization and connectivity with system. Many people are scanning the that have an RFID tag and can be identi- open ecosystems so additional compa- smart home market but not making in- fied by the fridge and other products that nies can actually be connected to the so- vestment decisions yet because they are cannot be identified, the added value di- lution and contribute to value creation. If not quite sure which player is going to minishes. Ultimately, you will need to you consider the broader smart home provide the leading platform for the align all players involved, from the food environment there are also increasing smart home. So if you want to win the producer to the fridge producer to the in- privacy concerns that need to be smart home market and establish a lea- frastructure provider, and this is a very addressed. Recently there was a lot of ding platform it might be a promising challenging endeavor. On the other hand, bad press regarding smart speakers like strategy to open up your ecosystem for there is the issue of tagging products be- Amazon Echo listening in on consumers, more partnerships and ensure your plat- cause food retail faces very low mar- who are getting more and more concer- form has the largest reach – and finally gins.