With every new smart device installed, the Internet of Things (IoT) becomes increasingly pervasive and complex and the reality of a world managed by and navigated through interconnected smart devices is imminent. Indeed, BI Intelligence estimates that there will be more than 24 billion IoT devices in existence by 2020, or three for every person on the planet.
The potential for IoT is massive and we believe will have significant ramifications in the Support Services sector. The ability for all assets (physical or human) to be monitored and controlled or influenced is now possible at a cost that is both attractive and continues to decline.
This is key to a sector that is founded on rotating a fixed resource around client assets on a regular basis to prevent issues. The ability to only deploy that resource when an issue can be foreseen (by data) has major implications for efficiency and cost. The 'white van man' is set only to be seen when he is needed rather than scheduled, and he will always be carrying the right part.
For the sector to take advantage of these opportunities though it must overcome a number of significant challenges. The sector is already producing a significant amount of data. Building Energy Management Systems being a good example of this. This data is, however, currently securely tucked away in silos. To use buildings as an example, the security system probably doesn't talk to the heating system, the lighting system or the room booking system and so on.
The opportunity from IoT is not only the collection of more data but also the potential to break down the current silos and analyse all the data together to enable efficiencies.
Making sense of this data will require a whole new skill set within the sector. We are hearing more and more companies describe how difficult, and expensive, it is to find and hire a data scientist, for example. Those companies that invest in these skills early on are likely to be at a competitive advantage and see the associated benefit in growth and margins.
Some of the smaller companies in the sector appear to be showing the way forward, with close ties to Universities in Europe and the US providing access to deep analytical skills without the need to invest on a full-time basis. The UK has some of the global leaders in artificial intelligence at its universities and should therefore be well placed to leverage the technical talent on its doorstep to take a global lead in IoT.
However, if we are to make this happen then investment is needed, and a different mind set on investment is also going to be required. There is a view (shared by us) that if a technology solution or service is developed by a public Support Services company, it will be valued on the same traditional metrics that the wider sector is. By contrast, the same solution or service in the Technology sector would be valued very differently. There are no unicorns in the Support Services sector.
Perhaps the key to securing investment for IoT lies in ensuring the Support Services sector knows how to sell it. The sector currently largely sells into operational management or procurement departments but an IoT sell needs to happen at a strategic level. The sector needs to build these relationships.
Data security is obviously highly topical and it is set to become a major issue in the Support Services sector as well. The client normally retains ownership of the data, but if the sector is to be allowed full access to be able to generate the potential efficiencies it offers, then data security will have to be a key part of the service offering. It will be a potential point of difference and major element of brand perception.
With large numbers of staff employed by the sector data security may also overlap with privacy concerns.
If we can overcome these challenges, then the opportunity is clear. IoT provides the ability to easily and affordably track the usage of assets supporting a sales model of charging for usage rather than acquiring or renting the asset. Further, data from all the assets from a supplier in the marketplace can be used to improve efficiency rather than each user only looking at their own data set.
One particularly forward-thinking executive in the sector raises the possibility of buying light in the future rather than a light bulb.
In any event, to take advantage of the opportunities presented by IoT will require a change in mind set. Ford has said it needs to think like a software company. The Support Services sector needs to look at the data analytics, cyber security, machine learning, artificial intelligence and venture capital companies, and then think differently.