By: Steve Schmidt
Everywhere I turn, I seem to run into another interesting opportunity to drive more value out of Machine-to-Machine (M2M) initiatives, so I thought I would share some of my thoughts on M2M. First, a common definition of Machine-to-Machine (M2M)…
Machine-to-Machine (M2M) refers to technologies that allow both wireless and wired systems to communicate with other devices of the same ability.[1][2] M2M uses a device (such as a sensor or meter) to capture an event (such as temperature, inventory level, etc.), which is relayed through a network (wireless, wired or hybrid) to an application (software program), that translates the captured event into meaningful information. (Source: http://en.wikipedia.org/wiki/Machine-to-Machine)
The initial focus of M2M, and the one that continues to get a great deal of attention because it is foundational, is the creation of a connection from a machine/device to another machine/device. Connecting devices in a one-to-one fashion was the starting point, and then connecting them in a networked manner. This assumes the device is "intelligent" -- meaning that the device can process information in some way. Making the device intelligent and finding a way to connect it are still key steps, but that is just the beginning. The real value is in what type of data is sent over the connection and what is done with that data.
The primary benefits of M2M have historically been the ability to better support remote devices, e.g., knowing when a pump is close to failure and needs to be replaced, when restocking is required in a vending machine or when a system is running old software. Additionally, M2M helps reduce the support costs associated with the maintenance of the device. M2M can circumvent the need for manual inspections, and can also speed up time to diagnosis and ultimately resolution. Customer satisfaction improves in this scenario as well, as they continue to receive uninterrupted benefit from the device.
The breadth of use cases and benefits of M2M is expanding, to include new ways to monetize the offerings from the device vendor. A wide range of opportunities open up when the M2M connection is used to share usage data from the device. For example, it enables new business models to be implemented – these can be business models that are more lucrative in general and/or more appropriate for specific sub-markets. For example, users of a device can be charged based on number of discrete uses, or usage levels during specific times of the day, or a concurrent number of users within an enterprise, or based on geographic location, or use of specific features… or any number of parameters.
This data can also be aggregated and analyzed for improved business intelligence. Seeing patterns of usage consumption can lead to focusing new sales activity on the products or features that are most highly valued, and in the most receptive markets. It can lead to targeted marketing campaigns that up-sell users to new levels of functionality or renew them at the most opportune time. It could focus development on the most valuable features, on the most widely deployed platforms. It could be fully anonymized and provided to others to be leveraged in their databases, marketing activities, or support services.
M2M has evolved to encompass and enable high-order value propositions, driving increased revenue. Maturity models presented by Gartner, Sprint, and others at recent M2M conferences reflect this evolution. They generally depict the major steps of connectivity, support enhancement, and then additional monetization.
Next time we'll take a look at a few tactical ways to more fully leverage M2M.
