Much has been made of the transformative potential of the Internet of Things (IoT) on business. Many service providers are investing heavily in IoT connectivity, platforms, ecosystems, and managed services aimed at large enterprise customers, with several boasting significant industry depth in segments such as healthcare and automotive. In the end, though, B2B IoT is much like any other ICT service: the focus must be on the business process that has to be improved, the problem that has to be solved, or the new revenue opportunity that must be created.
Ovum participated in an industry event in Italy, organized by software provider SAP and its customer Trenitalia, which featured the first connected train journey in commercial service. For Trenitalia, the business problem which it looked to an IoT solution to address was the maintenance of the rolling stock, which is "a runaway cost for a company," according to Danilo Gismondi, CIO of Trenitalia. The answer to this issue for Trenitalia is its new Dynamic Management Maintenance System (DMMS), developed in partnership with SAP.
Thousands of sensors onboard Trenitalia's new trains, plus real-time connectivity to SAP's HANA cloud platform to crunch the data, will allow DMMS to predict the failure of long-distance components. DMMS will thereby remove the need for statistics or time interval-based train management and can improve efficiency, create cost savings, and, most importantly for Danilo Gismondi, raise safety standards and improve his customers' travel experience, which are key goals for Trenitalia.
It is rare that revenue figures for IoT deployments are made public. Trenitalia estimates that in the first year of operation, it will see up to a 10% decrease in annual maintenance costs, as well as a €10–20m ($11–22m) saving in cost-of-failure and disservice payments. As a €50m ($56m) investment, DMMS will be on track to pay for itself in its first year – generating pure profit for Trenitalia thereafter.
The pain point that drove the project was purportedly the need to improve passenger experience, simply because a better-running service will be a more attractive and profitable business for its operator. "Maintenance is a competitive factor, not just a cost," says Trenitalia's CTO Marco Caposciutti; and activities can now be directed to where they benefit customer experience the most: improving Wi-Fi operation and air conditioning, for example. Interestingly, the cost savings could actually be considered a secondary, albeit welcome, side effect.
The lesson being taught by SAP and Trenitalia is a simple but crucial one for all technical enablers of enterprise IoT projects: namely, that the focal point must always be placed on the customer's customer. I firmly believe that the proliferation of this attitude will be instrumental to the successful growth of the Internet of Things.
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