The business benefits of machine to machine

CIOs, other IT leaders, and management are beginning to wake up to the potential of machine-to-machine communications to deliver real business benefits.
Written by Tim Lohman, Contributor

Machine to machine (M2M), the automated communication of data between connected devices, has begun to increasingly capture the attention of CIOs across the globe.

The technology is moving beyond its decades of use in utilities, transport, and heavy industry into the mainstream, empowering CIOs to deliver real value, cost savings, and innovation to management and their wider organisations.

Now that networking equipment — a simple SIM card or RFID chip, in the case of M2M — and wireless carriage have dramatically decreased in cost, and wireless coverage, speed, and capacity have increased, we can now embed connectivity into the "things" we use in our day-to-day lives. That translates to new business intelligence (BI), operational efficiencies, and revenue-generating opportunities.

In the transport and logistics sector, this means that pallets and packages are able to communicate their location, allowing for real-time parcel tracking. The same application of M2M also allows the public to gain real-time updates on how far away their train, ferry, or bus is.

In the healthcare sector, M2M devices worn by patients enable real-time monitoring of vital statistics or the dispensing of medication. In retail, M2M provides better point-of-sale data, as well as better shopping experiences through personalised digital signage.

READ THIS: 71 percent say M2M is about developing new business opportunities

In the utilities sector, too, M2M powers innovation through smart meters in homes that provide near-real-time data to consumers on their usage. M2M devices are also deployed throughout power, gas, and water networks, which allow for better visibility on outages, spikes in demand, and supply routing.

With this communication, machines can be set to act against existing business rules or parameters, or to feed data through to humans, empowering them with greater awareness and insight into business and systems operations.

Because of the improved visibility, they only need to go where the attention is needed. That has a hard ROI for operations.

Just ask Michael Klausen, co-CEO at Brasserie Bread and an M2M convert. Until early 2011, the company — which bakes and supplies artisan bread and pastries to more than 500 restaurants daily — was reliant on labour-intensive and "100 percent unreliable" paper-based processes to meet its temperature-based food-safety compliance requirements.

Faced with the potential loss of health accreditation and the ability to supply specific shops, hospitals, schools, and airlines, Brasserie Bread turned to M2M. The project combines kit, carriage, management tools, software, and services from cold-chain specialist Cooltrax and Telstra. With it, the company has automated temperature readings and compliance reporting, and can now access real-time alerts in the advent of a cool-room unit failing — saving the potential loss of the next day's bake.

"I can now sleep at night," Klausen said of the benefits of the project. "I can sit at the airport and quickly run a check on where temperatures are at in the two bakeries. From a management point of view, that is a lot of time saved for me."

There's also the saving of a staff member whose sole role is to manage and monitor food temperatures.

M2M: The value

It's not just management that's beginning to realise the benefits of M2M; it's CIOs, too. Telsyte senior analyst, Rodney Gedda, said that this is because M2M can, in many instances, be tied back to a hard return on investment (ROI), as well as helping to deliver back to the business stronger BI, driving customer engagement, cost saving, business process efficiencies, innovation, and potential new revenue streams.

"If a machine or device can report back that it has broken down or that it needs refilling, then that saves, for example, a field-force employee driving around checking on these things," he said. "Because of the improved visibility, they only need to go where the attention is needed. That has a hard ROI for operations."

READ THIS: How M2M and Big Data will combine to produce everyday benefits

The combination of M2M and big data, as automotive company Ford pointed out, could produce excellent everyday benefits in the not-too-distant future. Collecting data — from a small-scale fleet of repair trucks through to a million-strong network of smart meters — then feeding that data through a processing system to deliver detailed business information is another major benefit of M2M.

"That could be used by an electricity provider to gain very detailed information on when spikes in electricity demand occur, and what usage patterns are, whether there are more optimal distribution paths, whether there is or has been an outage in a certain area, whether there is maintenance needed," Gedda said. "That kind of information is delivered through M2M, and has a powerful effect on how well your business operates."

It is really about a better user experience, and, for the service provider, it is a deeper service and relationship.

King Yew Foong, research vice president, communications service provider (CSP) strategy at Gartner, said that M2M is also being used to drive closer customer relations. Through enabling new cars with M2M, automotive manufacturers and dealers are able to actively inform customers of when tire wear is occurring, or when engines or other components are failing or due to be changed.

Similarly, office equipment that's outfitted with M2M — such as a multi-function printer (MFP) — can keep track of component wear and ink-cartridge use. When the time is right, it can automatically order a new cartridge, or request that a technician be dispatched to give it a service.

The result is that M2M can help deliver a painless service, or create the sensation that the service supplier is actively engaged in the customer relationship. "It is really about a better user experience, and, for the service provider, it is a deeper service and relationship," Foong said.

Read more on M2M:

M2M: Key considerations

While the potential of M2M is pretty clear, the technology — or, rather, the ecosystem around it — does come with its share of challenges.

Intel, for example, points to a lack of awareness of M2M as its primary challenge, mostly due to the terminology and lack of understanding about how M2M works.

Most mobile operators don't know themselves how long they will run it. If 2.5G is decommissioned, what will happen to all those M2M devices that were running on that network?

Gartner's Foong pointed to the issue of fragmentation, advising CIOs to be cautious of the M2M market's lack of providers that can act as end-to-end M2M partners.

"Historically, application development is done either in-house by the enterprise or through an SI [systems integrator]," he said. "Enterprises then build or source their own M2M platform, then they buy connectivity through the mobile operators. It is pretty much the same situation today: a fragmented marketplace. There is no single, one-stop shop."

This is something that Telstra's director of M2M, Mike Cihra, readily acknowledges. "The market is fragmented. Absolutely," he said. "There are ... very few standards, [and] you don't have any 800-pound gorillas being a catalyst or using their size to drive the market.

"You literally have hundreds of small developers, you have the [network] operators, you have the hardware manufacturers, and you have customers in the marketplace who are just beginning to understand what M2M is. So, our view is that the criticality of partnerships is really important."

READ THIS: 5 cool things you didn't know M2M could do

Choosing the right partners and providers is also critical, Gartner's Foong said, when one considers the time scale at which M2M projects operate — typically 10 to 15 years. This means that asking questions about whether the provider — particularly on the solutions end of the equation — will still be around several years down the road. Similarly, CIOs should consider the cost and likelihood of their needing to break decades-long supplier contracts.

Probing questions should also be asked, and, where possible, guarantees can be sought from carriage providers. "If I deploy an M2M project for my enterprise and I decide that it will run over 2.5G technology, what guarantee will I have that the mobile operator will still support 2.5 in 10 to 15 years' time?" Foong said.

"Mobile operators are often very reluctant to give a guarantee that they will operate their 2.5G mobile network infrastructure for 10 or 15 years. Most mobile operators don't know themselves how long they will run it. If 2.5G is decommissioned, what will happen to all those M2M devices that were running on that network?"

If things happen automatically, then you can grab any problems straightaway.

For global companies, another consideration is whether telcos will be able to ensure global network coverage and lower roaming costs in order for the potential to be realised.

Despite this, Telstra's Cihra said that the telco's M2M business has been growing about 20 percent per year off the back of declines in the price of the M2M modules and data plans. "That is tipping more business cases into a place where wireless and software with wireless into a device is potentially now a profitable opportunity for a company," he said.

Add to that on-demand cloud-based software and systems, like those rolled out by Three Wholesale, for storing M2M data and processing it into meaningful business information, and you have the ingredients for explosive growth.

Where to start

Clearly, M2M has its benefits and downsides, but determining whether the technology is right for your organisation, and where best to start with it, takes a conversation, according to Telstra's Cihra.

"It starts with the simple question of 'do they have assets in the field?' If the answer is 'yes,' then I would suggest there is a conversation to be had as to whether they have full visibility and awareness of what those assets are doing."

It's a sentiment backed up by Brasserie Bread's Klausen, who said that doing your research on the technology and what it can do for your business is the best place to start.

In his case, he has turned to partners, and also industry journals and leading European industry examples of M2M deployments — such as mixing machines communicating and coordinating workflows with ovens — to better understand the process. Nonetheless, he said that he's sold on the benefits of M2M.

"My advice is to just do it," he said. "As an owner, you just don't have the headaches and the staff doesn't have to follow processes which are just annoying. If things happen automatically, then you can grab any problems straightaway."

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