Internet of Things - impact on Support Services sector

Oct 20, 2016 / Blog


It is, of course, well known that technology is accelerating the pace of change in business. But to date this change has been most visible in the B2C sector. New business models backed by technology overwhelmed a range of incumbents: think Amazon, Uber and ASOS, to name a few.

While technology has had a massive impact on the B2B sector, it hasn’t seen a wide, disruption of existing models, rather it has enhanced them.

The Internet of Things (IoT) is the networking of physical devices that enables them to collect and exchange data. We believe its development will have significant ramifications in the Support Services sector. The ability for all assets (whether they be physical or human) to be monitored and controlled or influenced is now possible at a cost that is both attractive and continues to decline.

For 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.

The ability to fine-tune asset availability and usage by linking it to other variables has major implications for both efficiency and profitability. Activity in buildings (real time or predicted) could be linked to heating and lighting, security, intensity of cleaning and room type availability.

Energy efficiency could take a major step forward with IoT. Only using energy when it is really needed is an obvious benefit but choosing to use less energy when incentivised becomes possible on a real-time basis. The ability for utilities to influence energy consumption by discrete customer groups on a short-term basis could become a critical part of the nation’s energy plan.

IoT may accelerate the outsourcing of asset ownership to expert owners who can offer availability on demand in the same way that Uber and the like have implications for car ownership. If I really understand what assets I need, and when, because I have the data to prove it historically, and then predict it, asset utilisation can take an unprecedented step forward.

Investment is required and new technology needs to be developed, particularly around user interfaces and systems that crunch huge amounts of data and are capable of learning what needs to change to optimise efficiency.

The private sector may have an advantage in this respect. Out of the public spotlight the prospect of lower short-term profits (due to the cost of investment) for long-term gain is more palatable. And herein lies the challenge.

The technology sector is an expert at fostering and monitoring start-ups and potential disrupters and then acquiring them (at seemingly high short term valuations) so that they can leverage their long-term potential and protect and extend their existing businesses. The Support Services sector generally acquires proven long-term business models that enhance their existing models, the opposite end of the spectrum.

If the value from the potential from IoT is going to be captured by the Support Services sector, rather than technology companies or new disrupters, then a different mindset on investment (organic and acquisitive) is going to be needed and soon.

It also needs to hire a different set of skills: data analysts, user experience designers, security experts and so on, will all be required and convinced that they shouldn’t be heading off to silicon roundabout.

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.

Guy Hewett, Research Director