Tellient Blog

Thoughts On Things


What is the Cost of NOT Having IoT Analytics?

I met with a company last week that expressed interest in hearing more about how our IoT Analytics solution could help them. This is a very large, household-name consumer electronics manufacturer, and you likely own or have owned several of their products. When I got to the meeting at their office, the room was full; there were a bunch of technologists, marketing people, product people, and even some customer service managers.

It was explained that they had been thinking about whether to deploy analytics on their connected products portfolio at all, and they wanted an explanation of how analytics might benefit them. When you walk into this sort of big meeting at a big company, there is always a ranking member (RM) who drives the discussion. Sometimes that ranking member is cool and helpful. Other times, not.

Before I even opened my laptop, the RM stated flatly, “We have more data than we know what to do with, and we don’t even use it. We have stopped subscribing to very expensive sources of information that are supposed to help us, and there has been no negative impact. So before you get started, tell me what the cost of not generating more data is when we aren’t going to use it anyway.”

I told him the story of the Mazda R100, the rotary engine and J.D. Power. You may or may not know that what set Mazda apart in the 1970’s was a different kind of engine. Instead of pistons, it had a rotary mechanism that delivered advantages in power, weight and bunch of other things that are important to engines. It was a new technological approach to an existing product much the same way Internet of Things is a new technological approach in that the car was still a car, but the engine inside it was completely different.

I went on the explain how J.D. Power was the analytics firm of its time. After all, they do what analytics deployments aim to do, which is provide actionable intelligence about a company’s products, customers and business. It’s just that consumer surveys are a really slow way to do it compared to a real-time big data solution. J.D. Power sent questionnaires to owners of the Mazda R100 and put the results in a report that they sold to car manufacturers. Mazda was not among the purchasers of the report.

Too bad, because one of the findings in the report was that about 20% of owners of the Mazda R100 reported engine failure between 30,000 and 50,000 miles. 20% is a huge number. There was a defect in the engine that Mazda did not even know about yet, and a small research firm in California had uncovered it for them. The only problem was that Mazda didn’t buy the data.

Then the shit hit the fan. The Wall Street Journal did a front page article about it, then the New York Times and other publications piled on. Rather than listen to the data, Mazda tried to discredit J.D. Power, and when they finally got around to acting on the data, Mazda had a PR nightmare on its hands and the cost of warranty repairs almost sunk the company.

At least one guy at Mazda found lucidity, though. Rodney Hayden, the then-VP and GM of Mazda went on to say,

“It seemed to me that J.D. Power and Associates was providing a service. Dave Power simply provided research for manufacturers that the manufacturers were neglecting to do on their own. Bringing the problem of the rotary engine to light was a blessing in disguise for Mazda. Sure, it was painful. But if it hadn’t happened, if Dave Power hadn’t been on the scene to bring the rotary engine’s problem into focus, the problem would have gone on for a longer period of time, and it would have been much more expensive to overcome, if Mazda could have survived it at any cost.”

(For the benefit of this post, I took the preceding quote from an excellent book about J.D. Power, called “POWER: How J.D. Power III became the Auto Industry’s Advisor, Confessor and Eyewitness to History” by Sarah Morgans and Bill Thorness.)

The book goes on to make the case that had Mazda accepted the criticism and acted on it, there really wouldn’t have been a controversy. It was just embarrassing that fourteen of Mazda’s competitors had the information when they did not.

“So,” I said to the room, “What is the cost of NOT deploying IoT Analytics?” I mean really, what could that J.D. Power report have possibly cost at the time? Thousands? Mazda certainly could have afforded it. In any case, it would have been a lot cheaper than dealing with a global PR nightmare. It would have been a lot cheaper than having to replace entire engines under warranty when the underlying problem came down to a simple coolant o-ring. It would have been a lot cheaper than whatever customer trust they lost along with missed sales. If Mazda had had the information, they would have been better off.

The reality is that in the Internet of Things, you can assume that all of your competitors are going to have the competitive advantage of IoT Analytics. How would you quantify the cost of not having it?

I finished my preamble by explaining that IoT is being driven in large part by some large companies that have made the same products for a long time, and now all of a sudden they are making those same products with a new feature called “connectivity.” It is not pejorative to say that the innovation curve for, say, toaster ovens, peaked some time ago. But to think of connectivity as a feature of an otherwise stable product category is missing the point entirely. A CONNECTED TOASTER OVEN IS A COMPLETELY NEW PRODUCT that will be used in different ways by consumers who are immersed in a fundamentally new technology environment.

Completely new usage patterns are going to emerge, new ecosystems are going to form, and new data – tons of it – is going to be generated, possibly to the benefit of the companies introducing this new technology in their products, but very probably to the great benefit of those companies shrewd enough to recognize that having the information in the first place is the first required step to gaining any competitive advantage from it.

The Tellient IoT Analytics solution is affordable no matter how you look at it. The client is free, adding zero cost to the bill of materials. Under a certain threshold, usage data is even free. Integration is easy, and we’ve been sure to optimize for even the most resource-constrained environment; if your microprocessor running the thinnest RTOS can accomodate another 3K, you’re in business. We have listened to our customers and designed our solution to be the obvious choice for outsourced product intellience, and we’ll be releasing our open-source client to the public by the end of the year.

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About The Author

Shawn Conahan

Shawn Conahan is the founder of Tellient. His mission is to make smart things smarter. (Just ask his modded Roomba named Robbie with adaptive mapping and navigation.) Shawn also loves infographics, and his all-time favorite is the Carte figurative des pertes successives en hommes de l'Armée Française dans la campagne de Russie 1812-1813 on his office wall.