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Microsoft Exec Dishes On The Internet Of Things

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The Internet of Things (IoT) has been a hot topic in retail…and even on this blog.

But sometimes, there’s so much noise buzzing around the web that it’s challenging to truly understand what IoT means, and how it will impact retail businesses of all shapes and sizes.

In the below Q&A, Tracy Issel, General Manager of Worldwide Retail, Consumer Goods, Hospitality & Travel at Microsoft, sets the record straight. 

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Retail TouchPoints (RTP): In your description, what is the Internet of Things (IoT)?

Issel: The term the Internet of Things’ (IoT) isn’t new. It was actually coined nearly 20 years ago by professors at MIT to describe a world where “things” — which can be devices or sensors — are both smart and connected, with the ability to collect and share data. Data coming from those devices and/or sensors is endless, and when combined and analyzed with other types of data, it can uncover insights that were out of reach in the past. The relationships between all these things, and the invaluable data created by them, is what the IoT is all about.

Imagine if your business could understand and make use of the data collected by the things most critical to your business and its processes, and if that understanding could help make your business thrive. Although technology experts have anticipated the evolution of devices with embedded microchips, the proliferation of industry devices, and the rise of machine-to-machine communications scenarios for decades, today the IoT is at an inflection point.

Gartner has predicted that the IoT, which excludes PCs, tablets and smartphones, will grow to 26 billion units installed in 2020. The IoT promises vast opportunities, but it also poses challenges for businesses that seek to take action and realize tangible results as it can seem overwhelming, complicated and expensive.

At Microsoft, we believe the IoT can make a difference to your business right now—beginning with the things in your business that matter the most. It’s really the Internet of Your Things, and it starts by building on the infrastructure you already have in place, using familiar devices and services in new ways, and incorporating the right technology to ultimately help you make more informed business decisions using data-driven insights.  

RTP: In what ways do you see retailers leveraging the IoT in the future?

Issel: The IoT isn’t a futuristic scenario and while there are many applications we have yet to uncover for retail, several are already visible. 

Earlier this year, at the National Retail Federation show, Microsoft, along with our partner Accenture, demonstrated the “Connected Fitting Room,” an experience that brings technology into the last “dark channel” of retail: the brick-and-mortar store. Coca-Cola Amatil, a leading beverage distributor in Australia and APAC, is utilizing interactive digital signage installed on the coolers — those large refrigerator-like vending machines. These digital signs are designed to collect data on sales and customer interaction, and share content with customers at the point of sale — such as discount offers and weather reports. They also draw consumers into an interactive multimedia and social-media experience, via the coolers and the consumers’ own devices, offering games, contests, Facebook posts and more.

Looking to the future, the Internet of Things along with big data analytics can have a huge impact on retail. Among some interesting scenarios: think about automated shelf replenishment where sensors could automatically detect when specific products are running low, send a message to the backroom and trigger replenishing the shelves. Or using sensors to monitor length of checkout lines and open new ones as needed to minimize customer wait times. Or tapping data from geo-spatial technologies to pick your next optimal store location with laser-specific precision. The future possibilities are beyond what we could imagine today. 

RTP: Why is the concept becoming such an important part of the retail industry?

Issel: What is playing out in the industry today is a perfect storm of several trends colliding and creating new disruptions (as well as opportunities) for retailers. Computing horsepower is becoming more affordable especially as cloud computing takes off, vastly expanding our capability to crunch very large data sets. 

Analytics tools are becoming easier to use, bringing the power of insights from data within reach of the business decision maker. Increases in machine-to-machine device connectivity is creating a whole new class of devices beyond just PCs, tablets and smartphones – everything from light bulbs and washing machines to point-of-sale terminals is becoming connected. And most importantly, retailers are experiencing a tectonic shift in the balance of power towards consumers. Armed with mobile technology and data literally at their fingertips, today’s consumer expectations around service, value, choice, offers and customization are constantly evolving, driving new behaviors and previously unseen trends. 

IoT is fuelling many of these trends, and data—big, small, dark data– has emerged as the hidden treasure trove that retailers need to get better at understanding, so they can better understand consumers of their products. In fact, a recent global study Microsoft commissioned with IDC found the “data dividend” opportunity for retailers making smart use of data to have a potential net value of $94B over a four year period. And while we as a broader society have many big questions we still need to answer around what constitutes appropriate use of data, it is clear that retailers can no longer afford to ignore the potential of trends like big data and IoT to truly transform customer experiences and their own businesses.

RTP: What advice would you give retailers that haven’t yet taken advantage of the Big Data craze, but want to?

Issel: Industry hype can become overwhelming, pressuring retailers to do something bold and ambitious around trends like big data and IoT even before their business objectives are well-defined. The reality is that there is much that retailers can do with the data, systems and devices they already have. This is why we anchor our message to our customers around the “Internet of Your Things”— identify the key business problem you’re looking to solve or process you’re looking to change and then look at how data, devices and analytics can all come together to give you the insight you need to address it.

Retailers already capture copious amount of data — whether through POS transactions, customer loyalty programs or social media efforts. So it’s less about chasing more data but rather getting smart with what you already have and using proven technology platforms that can scale up as your big data ventures grow more ambitious.

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