I heard an interesting story the other day, and it reminded me of one of the interesting hidden benefits of using an M2M solution. The company that deployed the M2M solution was in the "food fluid" industry, in that they helped restaurants/cafeterias with a wide range of things from delivering fountain pop syrup, to maintaining grease traps, to maintaining the cooking oil used in their fryers. In this particular example, the company was using an M2M solution to help provide a better service to their customers who used fryers with cooking oil.
The company’s customer needed to know the status of the cooking oil for a variety of reasons, ranging from how the filters were working to when the oil was ready to be resold (as it was used in various transportation applications). As a whole, this is not an earth-breaking application, as monitoring of “something” is one of the core applications in the M2M suite. What was interesting was what else the customer was able to do with the solution.
There were a few other parties that were interested in what was going on with the fryer, ranging from the owner of the restaurant, to the company who serviced the fryer itself, to the manufacturer of the fryer. Since they were connecting to the main control board of the fryer, it was quite easy to gather all of the operational data, and the company was actually able to sell this data to other parties for a small fee or in exchange for better pricing. For the other companies (such as the restaurant owner), the low cost (I think they charged a couple of dollars a month) to get vital information about their fryer (which was a huge part of their business) was a no-brainer.
In this case, the “oil company” was able to earn back enough income that it almost covered the on-going cost of the M2M solution, making it an incredible ROI (as the ROI itself was justified by their own gains alone). This got me to thinking...are there any other cases like this?
Equipment OEM selling data to customers
In this scenario, the initial reason for the installation of an M2M solution by the OEM was actually for their own use. This particular company manufactured large scale generation systems that are used for large remote camps (such as in Mining and Oil/Gas exploration). Their customers were very demanding, and this can be a very competitive space, and as such, they are looking for all of the advantages that they can get. Their use of M2M solutions was for the purpose of getting valuable information from their remote pieces of equipment back to their engineering department. Engineers could see in real-time how different components were holding up under real-life uses and were able to stay one step ahead of their competition by constantly making changes to improve the reliability (and more importantly, the efficiency) of their equipment. Efficiency was actually the key, since the main input cost to running these systems is diesel fuel, and an optimized system will cost much less to operate over time. The company was able to charge a premium for their products as an upfront purchase, as the user was able to save fuel costs over the life of the project to justify the higher costs.
Once the OEM had all of this valuable information, they realized that they were able to actually use it in two ways – first as a profit centre and second as a way to increase loyalty.
This company used many different part suppliers for their engines, and these companies found this information to be quite useful. The OEM was able to increase their leverage to the suppliers (through reduced costs), as they were able to provide this real-time data in exchange for better pricing. As well, the OEM has a vast network of distributors and service technicians who provided valuable on-site break/fix services for the customers. These technicians were able to use this data to better predict failures, and as such, this data was worth paying for.
In the end, I don’t know how the economics of the data played out (meaning that I don’t know how much of the costs that they were able to recover), but I imagine that it was at least a significant portion of the costs of the M2M solution.
Keeping track of the little ones
This one is one that I have heard a few times, and it is not a brand new idea. With the increase in school violence, a lot of parents are concerned to find out the whereabouts of their children at all times, and in many cases, they are willing to pay for knowing this information.
Most school buses have some sort of tracking solution on-board (or, they will in short order). These solutions are primarily used by the bus company, as they provide information that allows them to both improve driver behavior and to reduce costs of their bus (by reducing speed/idling, optimizing routes, etc). One interesting twist to this is the introduction of both video and RFID technology.
Through video solutions, bus companies are able to better see what is going on in their buses, and this is good for a few reasons. First, it reduces on-board violence and vandalism while also allowing good feedback in terms of driver behavior. However, smart bus companies are making this information active to parents (for a fee), so that they may see their child on the bus. This is for both security reasons (“is little Tyler on the bus?”) and even for bullying concerns. The video is generally available in a time-delay fashion or able to be recalled for past lookup.
The use of RFID technology is even more personal to the parents. Many buses are equipped with RFID sensors to better log driver behavior and for security reasons (the driver uses their RFID key fob to both log who is driving what bus and even to prevent unwanted usage). Some companies are using this same RFID technology to allow parents to get notified by SMS or email when their little one gets on/off the bus. Generally, the RFID tag is either laced into their shoes or sewn into a bag. This is especially great for parents who are unable to wait at the bus stop with their children.
Bottom line
The return on investment for M2M solutions is usually very strong on its own. However, intelligent salespeople are doing more research on their customers and taking the time to learn more about their businesses. When you know about a customer’s business, you are often able to find unique ways to help justify the purchase now and for years to come.
As always, let Novotech know how we can help with your M2M needs, such as monitoring solutions. You can visit our web page @ www.novotech.com. As well, feel free to reach out to me directly ....larry(@)novotech.com. You can also follow us on Twitter (@NovotechM2M) and you can follow me personally as well (@LBNovotechM2M).