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How can companies make business out of the Internet of Things?


2 March 2017

There are a rapidly growing number of objects other than computers, smartphones and tablets with a link to the internet. This phenomenon is known as the ‘Internet of Things’, and one company that knows better than anyone how to turn it into a lucrative business 
is the Netherlands-based startup Undagrid. Company CEO Rolf van de Velde: ‘The trick is to extract the type of data you need in order to see your company in a completely different light.’

Although the Internet of Things is hardly a new phenomenon – the term was first coined back in the late 1990s – it is only in the last few years that it has truly taken off. Ranging from LED lights, thermostats and gas and electricity meters to cars, washing machines and refrigerators, a growing number of consumer goods are sharing information over the internet, while many of these items are automatically updated with the latest software.  As household appliance manufacturer Siemens puts it in a recent payoff: ‘Home is where your app is.’

Undagrid’s Rolf van de Velde feels the term ‘Internet of Things’ is already becoming overused: ‘We’re all caught up in the hype. Also, you need to be critical and wonder who ultimately stands to benefit from all these internet connections. Is it the user, or mainly the manufacturer? We believe your top priority should always be the users and their issues.’

Van de Velde’s Undagrid provides companies with online connections for specific business assets, allowing them to keep better track of – and gain greater control over – their business processes. Explained in simple terms, ‘dumb’ operating assets (without their own power supply) are equipped with a ‘smart’ device, after which these assets are collectively integrated into a secure, dedicated network which does not need to be configured or managed. The technology required is highly energy-efficient, with devices that can run for several years on a single battery.

Undagrid’s first big break was a contract with Amsterdam Airport Schiphol, where it upgraded more than 5,000 non-motorised vehicles (ranging from trailers to boarding stairs) to the Internet of Things. The problem with these vehicles was that trolleys and carts would often go missing for longer periods of time, or that the ones required would be parked in the wrong place at the wrong time.  Van de Velde: ‘For the logistics companies involved, finding and moving all those items takes a lot of time, energy and money.

“We enable Schiphol to track the location of any object in real-time and find out how long it’s been idle and whether it will be used again in the immediate future.”

This makes it possible to manage their fleet far more efficiently, resulting in massive cost savings. Airport companies love our system, and ten airports across Europe and the Middle East will be using it by the end of this year.’

Predicting outcomes

IoT essentially offers non-stop connectivity and virtually infinite information flows. While useful applications of the technology in the consumer market are still being explored, in the business market its value has been clear for some time, Van de Velde explains. ‘Companies in any industry always have a need for information that enables them to improve their processes. For example, some of these companies at Schiphol Airport might realise that they need fewer resources to be able to perform the same work.

At the next level, then, it becomes easier all the time to predict outcomes: if the number of passengers we process increases by X next year, how can we best allocate our current or new business assets, and should we perhaps modify our operations? You can take it one step further by linking different types of information flows together. This can lead to a further increase in revenue and even to the creation of all-new business models.’

Van de Velde is most interested in this latter phenomenon. ‘There is a lot of room for improvement when it comes to efficiency, especially in the aviation industry, which is our main focus. Yet we are also aware that incremental innovation is not limitless. You can’t prepare your company for the future by squeezing every euro from the business process; you need to develop a new way of thinking. The trick is to extract the type of data you need in order to see your company in a completely different light.’

Extreme growth

Van de Velde expects the Internet of Things to grow exponentially over the next three to five years. ‘Devices and vehicles manufactured for the consumer market will become smarter, and improved user-friendliness will be one of the main factors in determining whether or not something will be successful. At the same time, many of the less sensible applications won’t last.’ Van de Velde believes the Internet of Things will be permanently integrated into companies’ business operations. ‘Anything that can become smarter will become smarter, and this will lead to all kinds of new applications – that is, provided that we successfully manage issues relating to security and ethics.’

There is no doubt that those issues exist. Van de Velde: ‘This is a particular concern in public utility services, as you want to prevent hackers from accessing streetlights and barriers and the like. For security reasons and other concerns, I expect systems that are currently controlled from a central location to be replaced by decentralised solutions. In other words, we will see the emergence of devices that, while they are part of a specific network, perform actions and reactions on an individual basis. As well as significantly improving security, this also leads to massive cost savings relating to the storage of all sorts of unnecessary data.’

There are also ethical issues at play, as it’s not always clear who ‘owns’ the data and who decides for what purposes it may and may not be used. Van de Velde: ‘Suppose we discover that at Schiphol Airport, the carts of airport company X are parked in front of an aircraft ten minutes longer on average than the carts operated by airport company Y. That amounts to ten minutes of turnaround time, which can easily run into the tens of thousands of euros.

So while this data theoretically has financial value, it’s not our intention to exploit that value, at least not initially. Our ethical principles are clear-cut: our services must benefit our customers. It’s wrong for us to force a customer to purchase something simply because it’s going to benefit me, while I try to convince them that it’s what they need. At the end of the day, the information belongs to the customer, not to us.’

New business

Van de Velde regards his company as a subcontractor rather than an all-round service provider: ‘That’s another specific feature of the Internet of Things. Just like the internet itself has been constructed over the past 23 years from various building blocks, the Internet of Things is also revealing itself to be a puzzle, with many different players supplying one, two or more pieces.’

The aspect of his job Van de Velde enjoys the most is talking to clients about genuinely new business: ‘In companies and boardrooms all over the world, people are asking the question of what they need to do to survive in the future, amid all these radical changes. How can we achieve organic growth by applying new technologies, new resources and new ways of thinking? The Internet of Things provides an answer to many of those questions – not relating to technology, but to the new ways of thinking it has the potential to unlock.’

Want to know more about big data? Read the interview with NPM portfolio company Conclusion.