Does your supplier own your data, or do you?

3 years ago
/ Aviation

The world is getting more and more connected. I’m connected to my car, my kid’s watch, and my doorbell. If I were to buy a new tractor, loader, or trencher, I’d expect to be connected to that too.

For equipment manufacturers considering their connected strategy, there are two approaches. We’re going to talk a bit about each of those approaches, in general I’m an advocate of the Open approach which is described below.

Open and Closed Approaches

At a really high level, there are two approaches to making equipment connectivity happen. Closed and Open.

The Closed approach is an approach where a supplier brings a full system and solution for connectivity. This includes the onboard telematic unit, the backend/cloud service, and the mobile/web experience. This is attractive because it is an easy button, one stop shop, for connecting a machine. The downside is that you are no longer in control of your data, your customer’s data, and you’re going to rely on the permissions granted by a supplier for information that is increasingly critical to your business. They say data is the new oil, you’ve given your supplier your mineral rights.

The Open approach is an approach where a supplier brings an open system for a telematic controller or asset tracker. This means that you can change the software on the system (either internally or with contract resources). This typically means that you need to develop your own backend/cloud service and mobile/web experience. Undoubtedly, this is harder and requires more effort than a turn-key supplier-delivered approach. As they say, nothing worthwhile is ever easy and we’ll discuss the upside below, but the key is that you control your data, how it is used, and can direct the path of value added services that are built off this data. This data, this digital oil, is incredibly valuable in so many ways.

Control of Data

Before discussing data and value propositions, it is important to understand that to achieve these value propositions you must control the data. There are different perspectives on data ownership. Some people believe that the operator should control the data. Others contend that the ownership of the data should reside with the equipment manufacturers. In any event, your supplier should not own or control your data. It is simply too valuable to have to ask for permission to access, to modify, and to mine.

Decreased Costs

Access to this data provides opportunities for the reduction in costs or avoidance of expenses. These cost reductions come in a number of different packages. Having data about the fleet and its operation can lead to value added services that improve fleet safety, which limits litigation and settlement expenses with a reduction in incidents and accidents. This data can also be used to provide the evidence necessary to negotiate with insurance carriers, providing critical information necessary to manage this growing industry expense. Lastly, the data can be used to understand the circumstances related to warranty claims which can lead to the avoidance of payment on unjust claims and the improvement of design to eliminate future claims in related areas.

Increased Revenue

Control over the data creates potential for delivery of value-added services to customers, which creates potential for new streams of revenue. Such services can include things like web-based analytics that allow for more productive utilization of fleet assets and leveraging data to efficiently schedule and use expected machine downtime for maintenance. Interesting opportunities can also emerge in the monetization of third-party, value-added, services through APIs that allow selective access to your data. In these cases, a programmatic interface is created to allow additional companies to access data, at the customer’s request, to provide more niche services at high value. The access to that data can be monetized, with a fee charged to the third party, giving you a portion of their revenue stream without any of the development or maintenance burden of the niche application.

Expansion Potential

Whenever one of our customers really starts to dig into their data, two things emerge. The first is value. The second is more questions that, if answered, are expected to uncover additional exciting business value.

This is where an open platform is also critical. Answering those questions can involve changes to the software on the telematic unit, changes to the backend architecture to mine/compare/contrast data in different ways, or changes to the mobile experience to better present customer features or track customer behaviors. In this way, the cycle of data acquisition, analysis, and value creation becomes an evergreen – but only if you have the control necessary to drive the evolution of your connected ecosystem. This only happens in an open platform.

Flexibility

We believe you should have the freedom to choose. You should be free to choose which telematic supplier you select for different equipment platforms. You should be free to choose which mobile devices are compatible with your solution. In an open system, you are free to specify, implement, and manage these choices. A constraint of a closed system is that you’re locked into the offerings, and mobile device support, from a single supplier. That supplier may be great, but then you’re also locked into the timelines associated with which that supplier supports new generations of connectivity technology (4G, 5G, etc) as well as the timeliness which with that supplier can offer you access to connectivity services in new countries.

Control of Security

Open doesn’t mean unsecure. Open means having the freedom to impose your cyber rules and requirements on the system, ensuring that your security preferences are embodied in your connected solution. When you own your security you have the comfort of certainty. When you’re working in a closed party system, there are always questions about the security and control of access to your equipment, your data, and your customer’s data.