The Internet of Things (IoT) will play an indispensable role in helping us tackle the many challenges facing a digitalized society. In particular, it will support efforts to move toward a circular economy. We have to recycle, if we want to use the world's scarce resources sustainably. In this interview, Rami Avidan, responsible for the Deutsche Telekom Group's IoT business, explains why the pace of harmonization and standardization in the Internet of Things urgently needs to be intensified.
Can the Internet of Things truly change societies and economies?
Rami Avidan: I don't want to sound to philosophical, but I am convinced that the IoT can help make the world a better place. I'll offer you an example that illustrates why I feel this way. Currently, some 30 percent of all food produced worldwide winds up as waste. We all agree that this is crazy and unacceptable. We need to use food and resources more intelligently and more sustainably. And this is an area where IoT can make a big difference. To optimize our food production, we need to work with the data generated in such areas as food cultivation and processing. IoT data can help us bring food to markets much more efficiently. While IoT is not the sole solution, it can contribute significantly to society's efforts to address the problems of food waste.
"The IoT can contribute significantly to society's efforts."
Can the IoT make significant contributions in other sectors as well?
Rami Avidan: This is all about making fundamental changes in the ways we do things, with the aim of achieving a circular economy. Today, companies produce products that are designed to be discarded within a few short years or even months. Their aim in doing so is to encourage consumers to keep buying new products – the latest products. But we could produce things that last much longer if we wanted to. And we could recycle just about all products, and their components, at the end of their lifecycles. Such strategies would enable us to use the world's resources more efficiently.
Are you implying that production costs are no longer such a hindrance to such strategies?
Rami Avidan: Staying cost-effective is still a major challenge for companies. The IoT will play an increasingly important role here as well. IoT data can help us invest in the right areas, manage companies more effectively, produce more efficiently, use resources more sustainably, and optimize logistical processes. To benefit in such ways, companies should not make IoT technology their starting point, however rather their strategic agenda the focal point. They should begin by developing their business models and determining precisely what products they want to produce and what services they want to offer. Only then should they turn to the technologies involved and explore how they can best use the IoT.
"To benefit in such ways, companies should not make IoT technology their starting point, however rather their strategic agenda the focal point."
What drives the market for IoT solutions?
Rami Avidan: Prices, first of all. The prices for IoT solutions have dropped considerably. Prices for the requisite hardware are also significantly lower than they used to be. The prices for relevant connectivity and services are now much more reasonable as well. On the other hand, the numbers of companies now offering various parts of IoT solutions have grown enormously, so it's very difficult to get a clear view of the market. Worldwide, you simply do not find some leading IoT provider who can offer everything from one source. Why is that? Because IoT solutions are highly complex and comprise a great many components.
Why do so many companies still have such a hard time introducing IoT solutions?
Rami Avidan: Because of the complexity involved, and because IoT technologies are still greatly under-standardized. Many players are out there, doing their "own thing," but none of them can meet all the requirements in their own right. This means that standardization in the IoT needs to be greatly improved. The various IoT ecosystems need to be harmonized. The IoT's real strengths emerge when systems within it can communicate seamlessly with each other. The IoT's purpose gets defeated in cases in which a company's own different IoT solutions fail to be interoperable. We urgently need to improve IoT interoperability.
"Many players are out there, doing their "own thing," but none of them can meet all the requirements that can apply. The various IoT ecosystems need to be harmonized."
How can that happen?
Rami Avidan: Sectorally oriented solutions tend to predominate in today's market. A close look at companies' requirements, however, reveals that many industry-specific IoT solutions are basically very similar, since the underlying processes are similar. The hardware, software, connectivity and security needed are virtually the same. Most of the requirements involved, across all sectors, are being met by basically the same systems. In terms of strategy, therefore, Deutsche Telekom is seeking to build a comprehensive IoT ecosystem for businesses, with all kinds of standardized services. And with a horizontal IoT structure that applies to about 70 percent of all IoT scenarios in companies, regardless of sector. The remaining 30% will still call for customized solutions. In short, we are opening up organizational silos. And we are offering our customers trustworthy consulting. Our customers are certainly warming to this approach, because they're not looking just for suppliers in this area – they're also looking for partners.
Is Deutsche Telekom running the risk of trying to become one of these "one-stop providers?”
Rami Avidan: We're not doing these things alone; we're working with strong partners such as Microsoft, Software AG and SAP. And we're using an open IT architecture that any company can quickly build on. We rely on specialists – the right ones in each case – for only the 30 percent of IoT scenarios calling for customized solutions. The advantage of this approach, for our customers, is that our ecosystem is standardized and homogeneous. Data is the real "gold" of the IoT, and our ecosystem solutions give companies the data they need, wherever they need it.
"Data is the real "gold" of the IoT, and our ecosystem solutions give companies the data they need, wherever they need it."
Do customers profit in other ways as well?
Rami Avidan: By building such an ecosystem for many different players, and operating it centrally, we are able to exploit benefits of scale. As a result, companies can save considerably in comparison to IoT solutions that they operate themselves. A second key point is that the ecosystem's IT architecture is forward-looking. Those who participate in it will always enjoy the benefits of any new developments. And a great deal is happening in the IoT market, technologically speaking. A great many start-ups have appeared, and they are driving innovation forward in leaps and bounds. Consequently, a harmonized IoT ecosystem will always protect customers' investments.
Until now, at least, the market has tended to associate "Deutsche Telekom" and the "IoT" with "connectivity." Is connectivity just part of the overall picture?
Rami Avidan: Connectivity is the most important aspect of any IoT solution. That said, the market's association – the one you just mentioned – tells only part of the real story. Granted, connectivity is not exactly "sexy." It's sort of the ugly duckling in the IoT zoo. But if you take the connectivity out of any IoT solution, that IoT solution will be dead on arrival. In other words, reliable connectivity is an indispensable part of any IoT solution. Deutsche Telekom stands for high-quality connectivity, and it has been offering IoT solutions on the market for years now. To mention just two examples, the large array of IoT solutions it offers includes tracking and tracing solutions for the logistics sector, and vehicle-connectivity solutions for the automotive industry.
Who processes the enormous quantities of data that IoT solutions generate, and how can companies use this data effectively?
Rami Avidan: That is an important question. At present, companies use less than five percent of their IoT data. We can increase that percentage by showing how valuable the data is and how it can be processed. To do that, we need to take the complexity out of the required data analysis. And we need to encourage companies to not only use the data themselves but also make it available and usable for others. To that end, we're establishing a digital data market, known as the Data Intelligence Hub, via which data can be marketed transparently and in conformance with the EU General Data Protection Regulation.
"At present, companies use less than five percent of their IoT data."
How could they increase that percentage?
Rami Avidan: Think of the condition and status data that companies collect, for maintenance purposes, on machines they use. The machine data that one company collects could be of great interest for other companies that use the same machines. Or for companies who are planning to use such machines. Such data could give such companies very valuable insights in advance of their investments.
Which industrial sector is furthest along in use of IoT?
Rami Avidan: On average across all sectors, 10 to 20 percent of all companies are now using IoT solutions. I would definitely say that the logistics sector is the leader in this regard, although it still has a great deal of room to step up its use. IoT solutions are still not the norm in transport vehicles, for example, even though vehicle-connectivity enhancements offer great opportunities for optimizing operations.
"To think big, companies should analyze their IoT opportunities and use the results to develop IoT strategies for their entire organizations."
How should companies approach IoT – what is your recommendation?
Rami Avidan: They should think big, but start small and then scale fast. Ultimately, a company's IoT solution will reach throughout the company's entire organization. For that reason, companies shouldn't begin by installing stand-alone systems somewhere in their operations. To think big, a company should analyze its IoT opportunities and then use the results to develop IoT strategies for its entire organization. A good way to start is to undertake a small project that can quickly produce results that anyone can appreciate. And it's vital to ensure that all employees understand where the IoT journey is heading. A focus on technology alone will fall short. IoT solutions affect workflows, and employees need to be able to see how the IoT can benefit them in their own work.
BVL Digital Podcast: The Internet of Things in Logistics with Rami Avidan
Rami Avidan speaks about the vision and big promise of IoT, examples and use cases, security concerns and the importance of building out an IoT ecosystem of trusted partners.
In the podcast by BVL.digital, the digital contact point for association members and logistics enthusiasts of the Bundesvereinigung Logistik e.V. (BVL), the association invites thought leaders, decision makers and doers in the logistics sector. Podcasts deal with topics such as digital transformation, sustainability, technologies and innovations, start-ups, world trade and logistics as a field of work.
Find the full episode here: BVL.digital, Apple Podcasts, Spotifiy, Google Podcasts