MARKET I NSIGHT

The Potential for Internet of Things (IoT)

in Customer Service:
Positive Customer Experience with IoT Depends on
Successful Service and Support
Introduction............................................................................................................... 3

IoT Benefits............................................................................................................... 4

IoT Trends.................................................................................................................. 5

IoT Challenges........................................................................................................... 6

Summary and Recommendations........................................................................... 9

Oracle Considers Expanding OSvC Support for IoT............................................ 11

Legal Disclaimer........................................................................................................ 12

The Frost & Sullivan Story ...................................................................................... 13

 The Potential for Internet of Things (IoT) in Customer Service

Introduction

Recent Frost & Sullivan research identifies the Internet of Things (IoT) as one of the most important
Mega Trends for today’s organizations to consider.

IoT is a blend of sensor-fitted equipment and devices, and local networks of various standards and
technologies that transmit and receive data between them and their users over secure Internet
networks. Products such as accessories (like wearables), apparel, appliances, equipment, facilities and
homes, infrastructure, machinery, medical devices, and vehicles are being connected to businesses
and consumers through IoT. These IoT-enabled devices are often programmed to alert users to
anomalies that could indicate problems that require immediate attention. Users reach into data
repositories to uncover causes and obtain insights and opportunities, track trends, predict, respond
to likely outcomes, and test “what if” scenarios. Users include individuals; IT and line-of-business
departments; operators; and customer sales, service, and support desks.

Like most technologies, IoT has been built on a foundation of other tools and applications. There
have been connected devices for many years, but these have typically been single purpose and have
used proprietary technology, such as alarm systems. Meanwhile, remote computer and wireless device
support have become commonplace.
3
Machine-to-machine (M2M) applications, which predate IoT, also link devices and users, typically
over closed networks. In contrast, IoT is an open connectivity framework that permits data to flow Frost.com
to a wider range of applications, such as customer relationship management (CRM) systems. As
“traditional” closed-loop M2M continues to thrive for specialized, critical, and/or security-sensitive
applications, IoT can be considered a new generation of M2M.

IoT continues to expand as businesses see more relevant use cases. That growth poses
opportunities, but also challenges, for customer service organizations; how well they respond will
help determine the ultimate success of IoT.

Security &
Surveillance
Logistics
Smart
Transportation
Consumer /
Home Appliances
and Electronics
Smart
Retail Energy
Mobile and Smart Connected
Wireless Buildings and Healthcare
Communications Infrastructure

Wireless Sensor
Network and M2M
Smart
Agriculture Industrial

Source: Frost & Sullivan

 Frost & Sullivan | Market Insight

IoT Benefits

Frost & Sullivan research has identified a better customer experience as one of the most important
benefits of IoT. Examples include:
• Enhanced customer and user satisfaction. IoT gives users new access to invaluable real-
time data about their products and services, like equipment status and state, new and potential
problems, and service reminders and replacements due. It allows users to act in a timely manner
on the information gathered, which provides greater product satisfaction while cutting costs.

Consider the following examples: Enabling homeowners to remotely manage heating and air
conditioning systems, light shades, and taps reduces energy and water bills; notifying motorists or
trucking firms that critical parts of their vehicles are wearing out or are about to break prevents
more expensive repair bills and obviates towing; and informing individuals of critical health issues
(e.g., when they have to take medication) can save lives and improves quality of life, while also
managing healthcare costs.

Frost.com

• Faster, more effective, safer and less costly customer service and support. IoT facilitates
proactive analysis and repair, often detecting issues before they become serious (and expensive).
Consequently, IoT can reduce equipment downtime, repair, replacement, parts stocking costs, and
support costs (including limiting “truck rolls”). Moreover, concerned customers and employees do
not have to make as many costly-to-handle support contacts, as the devices have already “called”
the help desks.

By pinpointing the location of problems, and likely causes, there also is faster and more precise
and successful diagnosis and resolution. Field reps will know which tools and parts to bring to
bear. Their risk of accidents is lowered as access to dangerous locations such as cell towers,
heavy machinery, and to storage tanks is shorter and less frequent.

• Business intelligence. IoT collects vast amounts of data that help extend product lifetimes
and develop new products. Companies can track product and service use, how products are
used and by whom, issues such as wear and tear, environmental conditions, and other relevant
hardware and software use. And IoT allows timely and more profitable resupply. Consider that if
 The Potential for Internet of Things (IoT) in Customer Service

an enzyme freezer’s inventory falls below a specific level, an IoT solution, connected to sales and
back-end systems, can generate a lead to replenish it. With IoT-gathered information, companies
can proactively offer customized service, support, and warranty plans; upgrades; add-ons; and
replacement recommendations. They also can cross-sell and upsell targeted products and services
to satisfied customers at the right time, based on IoT data. Finally, they can reduce data network
provisioning costs.

• New revenue-generating and service-enhancement opportunities. IoT is opening

markets for “X device-as-a-service” (XaaS). One example is GPS-enabled vehicle usage tracking
for auto leases, fleet owners, rentals, and parents who have loaned their cars to their offspring.
Companies can sell information gathered through IoT or sublease IoT capabilities. They can offer
new services that also enhance the customer experience. For example, automakers are turning
their connected cars into Wi-Fi hotspots with entertainment offerings from leading vendors.

IoT Trends

The following are some of the leading IoT trends as identified by Frost & Sullivan:
• Strong innovation and demand. More products and services are being fitted for IoT.
They include vehicle telematics in trucks, product tracking and freshness alerts in truck containers, 5
self-reporting vending machines that inform distribution, user-based car insurance, and real-
time traffic information to GPS devices. Wearable fitness devices and watches also are hitting Frost.com
the market.

There is a broadening array of IoT and similar connected devices that are, or about to be, on
the market. Amazon’s Dash Replenishment Service will enable connected devices to reorder
products through buttons built into their hardware, or they can measure consumable usage
so that reordering happens automatically. Meanwhile, Amazon Prime customers can press
portable branded Dash Buttons to reorder popular items. It uses home Wi-Fi networks to
connect to Amazon apps. Amazon sends order alerts in case customers change their minds.
Bigbelly supplies solar-powered waste and recycling stations that automatically inform
collection agencies or contractors when they need to be picked up, but they can be fitted with
additional sensors that capture “urban intelligence” data from the stations. Pedestrian traffic,
noise levels, and pollution levels can be captured and leveraged for cities and towns with fully
scaled Bigbelly implementations.

Other solutions bolster security. Verizon’s Managed Certificate Services platform permits secure
data transmission and trusted information exchanges for large IoT deployments by authenticating
and verifying machine and object identities.Verizon’s M2M Management Center portal handles user
permissions and it can suspend service to rogue devices, or to devices that have been relocated
without authorization.

Frost & Sullivan forecasts that there will be 50 billion connected devices (IoT) by 2020 and that
the US connected home market will grow from $427 billion in 2013 to as much as $628 billion
by 2018, at a 3% compound annual growth rate (CAGR). Meanwhile, the global wearables market
is expected to grow at a 44% CAGR between 2014 and 2018, reaching approximately $37 billion
in 2018.
 Frost & Sullivan | Market Insight

• Expansion and shift to “product-as-a-service” (PraaS). IoT permits more products

to become “PraaS” as opposed to the traditional “sell and forget.” It is also deepening PraaS
relationships by providing richer information, improved service, and ultimately greater value.
By expanding the customer relationship, PraaS ties into the CRM strategy of maximizing
total customer lifetime value. In the PraaS model companies offer service contracts, support,
enhancements, upgrades, and extended warranty programs to generate more profits per product
sale. These programs also are aimed at retaining customers who have to replace products.

• Emerging multichannel use cases. Companies and their partners are uncovering new
ways that IoT can be integrated with multiple channels to support, benefit, and build customer
relationships. For example, when a battery-fitted device alerts a customer of a low battery, it can
recommend and set up a service appointment, or suggest the nearest place to buy a new one.
But if the battery is new, the customer may post or Tweet a question about it, and receive
answers from other customers, retailers, or even the manufacturer. If it turns out there is a problem
with the product, engineers can look into, devise, and recommend solutions, or the product could
be recalled and redesigned.

• Development of enabling technologies. Enabling technologies include small and powerful

low-cost sensors, high bandwidth, reliable and secure networks, Big Data and analytics solutions,
6
data handling and management platforms, monitoring, network management, and usage tracking
Frost.com applications. There is a growing array of tools that help companies create and customize
IoT applications, including links into other software, such as CRM for sales and service, and
enterprise resource planning (ERP) to manage IoT assets.

• Rise of the cloud. The cloud assists with IoT application development and lifecycle management.
By providing access to a standard set of published interfaces or application programming interfaces
(APIs), cloud platforms shorten the time to develop and bring new applications to market.
Data also is hosted in the cloud, and the cloud provides scalability and business continuity/
disaster recovery (BC/DR). Finally, cloud technologies and businesses’ positive experiences with
them for other critical applications, like CRM, contact center routing, and unified communications,
have opened the door for their use with IoT.

• More connectivity between IoT and contact centers. There are many IoT solutions in the
market, such as application enablement and embedded networks. But vendors also now recognize
the value of integrating IoT applications with their contact center solutions and services. There
are applications coming to market that promise to integrate IoT device alert feeds with other
channels to be handled by agents.

IoT Challenges

For all the benefits of IoT, its application faces several stiff challenges, including the following:
• Corporate and supply chain disruption. By connecting hitherto isolated products
and services, IoT is a disruptive technology. Comprehensive IoT deployments require user
education and training, in addition to investments in solutions and their installation and support.
Frost & Sullivan research identifies employee education and training as a considerable hurdle.
 The Potential for Internet of Things (IoT) in Customer Service

Managing software-controlled systems is not new for companies in the communications, financial
services, healthcare, and retail sectors. But it is new for other businesses, such as manufacturers,
resource extraction enterprises, and transportation providers.

At the same time, IoT-driven PraaS risks altering longstanding distributor and retail relationships,
such as with automotive, consumer electronics, and large appliances. Consumers are becoming
more engaged with brands, reinforced by marketing, including social media, and may expect direct
support from manufacturers, depending on the products. Both manufacturers and resellers will
have to adapt or watch competitors pass them by.

• Enterprise isolation. IoT devices, particularly older (and M2M) units, may not be connected to
businesses. There also may be multiple steps involved in transferring data. These devices do not
inform, communicate, and target future customer brand interactions at this digital touchpoint or
across other channels. While this practice provides optimal security, the downside is that it limits
the ability of companies to take full advantage of IoT.

• Connectivity issues. IoT poses a radically different environment for products, networks, and
users. Products have to be engineered to be reliably and securely connected. They require software
that must be solidly integrated with wireless systems. When the devices or users are mobile,
companies have to ensure there are no signaling dead spots. 7

• Data management hurdles. IoT devices can create large volumes of data. For example, real- Frost.com
time video feeds consume substantial volumes of bandwidth, particularly when it comes to high
resolution. Sometimes equipment sensors can flood device APIs and local networks with too
much information. Critical data may get lost or ignored in the stream, while causing data handling
costs to rise. Consequently, companies may miss critical issues or sales opportunities. At the
same time, companies may be inadequately monitoring and controlling data usage, resulting in
unnecessary expenses.

• Inadequate interoperability. This is a common problem with new and evolving technologies,
and IoT is no different. There is a proliferation of vendor standards, with each supplier taking its
own approach to IoT, irrespective of the others. As a result, the data often is not normalized and
merged (this prevents, for example, an IoT-enabled sprinkler turning on when a home’s water
consumption exceeds a pre-set level).There also are inconsistent data and private implementation
architecture problems.

But solving these issues raises questions. Should vendors collaborate among themselves or
indirectly through cloud providers? Or should all data have some common elements, depending
upon the industry or vertical type that allows for better interoperability?

This issue should hopefully be resolved with vendor adoption of open standards that also
promises to reduce the time to market for IoT solutions. There are several interoperability
initiatives under way through organizations, including the AllSeen Alliance, the Industrial Internet
Consortium, and the Open Interconnect Consortium. But much will depend on whether and to
what degree competing vendors see their financial interests are best served through cooperation.
 Frost & Sullivan | Market Insight

• Complex applications. Support agents are faced with investigating and solving problems
involving root causes that may lie with other companies’ products, or with the customers
themselves. A case in point is the connected home (Does the problem lie in the furnace, wiring,
sensors, the Wi-Fi network and connections, or in what a customer does or does not do, or even
whether he or she knows how to use the system?).

• Added infrastructure. IoT builds on a new layer of changing and often dispersed hardware,
software, and network, along with security and support requirements, that lies on top of, or
parallel to, existing equipment, communications, and IT infrastructure. A large company that has
5,000 PC ports may now have 20,000 device endpoints, for example. Therefore, companies have
to provide systems such as power and cabling to support devices and networks. Critical IoT
applications also must be added to backup power circuits.

• Heightened security dangers. Unprotected IoT devices and networks open the door to a
wide range of serious and potentially violent criminal acts. After all, IoT devices themselves can be
compromised and remotely controlled (e.g., botnets).

The US Federal Trade Commission (FTC) warns that failed user authentication and poorly secured
device and network interfaces will give criminals access to IoT in its “Careful Connections:
8 Building Security in the Internet of Things” report. As a result, there now must be comprehensive
security controls on many more devices, a.k.a. “the security of everything.” But it appears that
Frost.com
manufacturers are only now beginning to think about this issue. While intrusion detection on
servers is well known, it isn’t on products such as lightbulbs.

But stronger security also creates risks. IoT is adding to the long list of hardware and software
for which consumers and users have to remember passwords, usernames, and “secret questions.”
As a result, users often resort to using easily hackable passwords, or they write them down on
slips that are stolen or lost.

Security issues then lead to increased (and cost-raising) contacts from customers and users who
can’t access their IoT-enabled products and services. Worse yet, users must be notified of security
breaches and be walked through the often arduous recovery process.

• Privacy concerns. Many consumers may not like having businesses, employers during off hours,
and governments tracking their every move or device use, and companies reselling their data.
While consumers may be willing to forego some privacy for convenience, they may be less willing
to grant companies full access to IoT-gathered information. On the other hand, many consumers
will trade privacy to obtain access to IoT-delivered services.

• Lack of clear goals. IoT is a new technology, and companies and consumers tend to adopt and
experiment with them without having clear business or personal objectives. But while companies
will gain some insights into some of the IoT benefits and issues, they may fall prone to the latter,
resulting in wasted investments and even placing their business, customers, and staff at risk.
 The Potential for Internet of Things (IoT) in Customer Service

Summary and Recommendations

9
The Internet of Things can help companies achieve many business objectives, including improving
the customer experience, lowering support costs, engaging with customers more efficiently, greater Frost.com
loyalty, and increased sales. But to achieve these objectives requires overcoming critical technology
implementation, data handling, security and privacy challenges, and adapting business practices
around IoT.

Here are several recommendations to maximize the benefits of IoT:

• Prioritization, planning and education. Companies must decide and rank their business
goals. They should determine which products or assets should be connected to the rest of the
organization through IoT, or be closed-loop, as with point-to-point M2M applications. They also
should give strong consideration to PraaS and XaaS, and decide whether they will execute them.

Companies must realistically budget for IoT solution investments. Allocations must cover core
applications, including networking and Big Data tools, but also cabling, power, BC/DR, and other
infrastructure. Companies must equip their contact center, field support, and sales teams with the
tools to support and to extract business value from IoT. Frost & Sullivan research identifies mobile
devices, analytics tools, cloud computing, and conferencing as the most important technologies
in helping companies achieve their IoT goals.

Finally, companies should set aside resources to educate stakeholders: users—support and
field repair, but also senior management and sales channel partners; and customers—about
the features, benefits, and the issues with (and the solutions for) IoT products and services.
Companies should set up and aggressively monitor feedback systems, including on social media.
 Frost & Sullivan | Market Insight

• Connect and integrate IoT with other systems. IoT is becoming another customer contact
channel. Companies should investigate with their existing or prospective vendors how best to
link it into their contact centers, including automated proactive customer and user notification
systems, and into their CRM and ERP applications.

• Manage data flow. To avoid being overwhelmed by data, companies should consider aggregating
data close to the source, then use business rules to detect anomalies to escalate into IoT “business
engines” to take action. They also should look at data management and control applications.
They can use middleware solutions that analyze the information delivered by sensors and also run
operational data reports to pick up usage patterns.

• Ensure the “security of everything.” Companies must design, deploy, use, and manage IoT
devices with security top of mind because criminals will try and break into them. The FTC’s
“Careful Connections: Building Security in the Internet of Things” report recommends companies
encourage building “security by design.” This includes strong authentication; layered security with
techniques, such as data encryption and “salting” (adding random data to hashed data that makes
it harder to compromise); and employing more secure defaults. Companies should set up and
keep up-to-date inventory of the kinds of information in their possession. The report advises
conducting frequent security evaluations and updates as product and service environments
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change, and testing the security measures before launching products.
Frost.com
In ensuring IoT security, companies also should look at solutions. Virtual networks (VNs) feature
each device on their own network and servers in the same racks, but they cannot see each other.
With VNs, if one device gets infected it cannot spread the hack or malware to others. Companies
also should consider having IoT devices with chips and/or middleware that support security
measures and internal security protocols.

Finally, and perhaps most critically, companies have to address how customers and employee users
access devices. Security systems must be as intuitive as pushing a button, or as easy as looking into
a camera lens. Users and support desks have to be educated and trained on security procedures,
including the right steps to take if they forget them.
 The Potential for Internet of Things (IoT) in Customer Service

• Provide privacy options. Companies must let customers opt-in or opt-out of telemetry data
from customers’ equipment. The manufacturers’ default should be OFF for further protection.
Customers should be sent a single notification informing them of IoT capabilities they can select,
be given sites to visit or apps to download, and told that once there, companies will walk them
through each IoT function.
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• Select scalable solutions. IoT solutions must be sufficiently flexible to accommodate evolving
needs and to integrate into companies’ infrastructure and networks. The applications should Frost.com
have simple architectures, be easily configurable, and require minimal custom development.
Companies should partner with a vendor that can help in each step of the IoT journey from
envisioning to strategy formulation to technology selection.

Oracle Considers Expanding OSvC Support for IoT

The Oracle Service Cloud (OSvC) supports IoT by helping customers align IoT investments with OSvC
through APIs (e.g., capturing threshold exceeds alerts and routing them to support staff). OSvC logs
the events, decides which agents or non-contact center employees to route them to based on the
data provided, and displays incidents on its reporting system dashboard. Oracle is now considering
expanding OSvC support for IoT.
 Frost & Sullivan | Market Insight

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 The Potential for Internet of Things (IoT) in Customer Service

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