We didn’t transition away from film-based photography because we ran out of film, says author Tony Seba, well-regarded thought leader on market disruption. We switched over to digital photography because it had a more compelling business case.
That’s exactly what’s going to help make the internet of things (IoT). (We like to use the term Smart Infrastructure Solutions, or SIS.) Transformative technologies are helping build the business case for IoT and SIS (see related sidebar) in the utility space very quickly, according to David Green, an IHS Markit analyst, at the most recent European Utility Week.
As it turns out, according to Green, some costs related to IoT and SIS are already justified for many utilities because these organizations have installed necessary hardware in the form of advanced metering infrastructure (AMI). Now all the utilities need to do is leverage that AMI equipment to support IoT applications.
How disruptive technology can change a business case
To understand how technology can change a business case, let’s look more closely at Seba’s example. How did new technology hobble the film-based photography industry?
“Every click was a cash transaction for Kodak,” Seba wrote in his best-selling book titled Clean Disruption. “Every click involved burning film (cash for Kodak). The film had to be processed with special paper (cash for Kodak). The paper needed a printer developed especially for after-market photo stores (cash for Kodak). Want to double-size it and get two copies of each photo? Cash for Kodak.”
Digital photography’s business case pulled the cash away from Kodak and into consumers’ hands. In 1994, Apple launched one of the first digital photography devices, QuickTake, which Time Magazine called the first digital camera for the consumer. Ten years later, Kodak was delisted from the Dow Jones Industrial Average after being part of it for the past 74 years.
How AMI builds the business case for SIS and IoT
Things happen fast when people discover a positive business case for a new technology, and that’s about to impact AMI deployments, according to Green. That’s because AMI can deliver a lot more value beyond the meter-to-cash applications most utilities use to justify investing in it. Utilities only need to apply an IoT mindset to their AMI investments and leverage the technology for other applications.
If you define SIS or IoT as a network of connected devices that produce data, and you’re planning to do something with that data, AMI is an SIS and IoT application noted Green at the most recent European Utility Week. Green spoke to Teresa Hanson, vice president of Content at Clarion Events and editor in chief for the organization’s utility-oriented trade publications. He told Hansen that AMI is the single biggest IoT (SIS) network most utilities have, and it comes with a business case built in.
According to Green, the IHS Market team identifies four pillars of IoT (SIS) and names them after the activities involved in related processes. The first activity is called “connect,” and it refers to the various devices hooked into an IoT network and how you transport data to computers upstream. Next comes “collect,” which refers to the data devices can use to support automation and feed into a centralized system to support other applications. For utilities, smart meters are commonly used connection devices.
Pillar three is called “compute” and it represents the computations that turn data into actionable insight and automation support. Finally, there’s the “create” pillar, which covers what you’re going to do with the data.
Is There a Difference Between IoT and SIS?
According to Forbes, IoT is, “the concept of basically connecting any device with an on and off switch to the Internet (and/or to each other). This includes everything from cellphones, coffee makers, washing machines, headphones, lamps, wearable devices and almost anything else you can think of.”
At Aclara, we look at SIS and IoT as somewhat synonymous, with a big difference. SIS isn’t just about connecting things to the Internet. It is about elevating current AMI technologies to allow complex management of events on distribution systems for electric, water and gas networks.
So, instead of just connecting sensors to the intranet, SIS integrates a range of hardware, software and data technologies to collect and process data that delivers actionable insights, making distribution systems more efficient, responsive, resilient and reliable.
Finding the payback
Green says the biggest area of spend for utilities is on data collection, which is what they’re doing with AMI. What’s more, most are justifying AMI based on meter-to-cash applications, but Green maintains that the biggest value is on data collection and computation, or what utilities can do with all that data they collect.
Once utilities truly start leveraging that meter-to-cash investment called AMI, they will see they already have an IoT solution in place, and it comes with a built-in business case, the thing Tony Seba says can change an innovation from a gee-whiz gadget to a transformational technology.
In other words, IoT isn’t some big, scary initiative utilities will need to undertake. With some 700 million smart meters already installed worldwide, it’s a done deal for many utilities, and others are starting to notice.
“By understanding applications beyond meter-to-cash, investment for IoT [SIS] in utilities will now be pushed forward,” said IHS Market Analyst Susanne Cumberland in a recent blog. “For 2019 and beyond, the conversation for AMI and IoT will be centered on the total cost of ownership of the solution and increasing the potential for further applications of the same communication networks.”
At Aclara, we support utilities with integrated SIS that goes far beyond the traditional boundaries of IoT. Check out our electric, water, and gas SIS systems on our website. These include our leak detection, load control, distribution operations, and gas pressure monitoring solutions.https://www.aclara.com/wp-content/uploads/2017/11/STAR-Network-4000-Gas-MTU-Datasheet-Aclara.pdf
Learn more about how AMI is a foundational technology for IoT or SIS in utilities. View the video.