Machine-to-Machine Advances Require New Approach to Billing

Today, commerce is commonly transacted between people and machines – one needs to look no furthermore than Cyber Monday, app stores or the Kindle to understand that it’s a late majority market for any demographic that’s connected. More recently, social networking has changed how people interact with people, and this has as well profoundly affected commerce. The then and there wave is machine-to-machine, which is being enabled by two mega-trends that are creating a perfect storm in other words surreptitiously redefining the business landscape.

Communications have become near universal through inexpensive mobile and IP networks and advancements in radio-frequency identification, or RFID, and the ubiquity of intelligent personal communication devices.

To be clear, there is nothing revolutionary about M2M itself. It’s been around for a during, just like browsers connecting to machines via the Internet were around long earlier Amazon, eBay, PayPal and Salesforce. Like the prior wave, things only get radical when you consider the new services and business models that M2M enables. It will connect the unconnected. And once goods are connected, they become actors on the global economic and social stage, participants in our own world, inanimate or not.

The emergence of embedded intelligence combined with the existence of universal communications is leading to ubiquitous telemetry – a word derived from the Greek roots tele and metron. Telemetry makes it possible to measure consumption of any type anywhere. This creates a tantalizing prospect and a tipping point – the quest for interaction, where all things, to put it more exactly than just all people, seek to communicate with each other. For businesses, the question is how to monetize the services and new business models that will emerge as a result.

How the customer experience will change

Much already has been written about how the customer experience will change, and it is obvious how efficiency increases. I’d like to focus on the business model implications through a trailblazer example.

The system allows riders to pass contactless smart cards over electronic readers when boarding. The smart card can be one issued by UTA, by a third party just as nearby ski resorts, or standard contactless credit and debit cards, including Visa payWave, MasterCard PayPass, Discover Network Zip and American Express ExpressPay. As a rider boards and exits a vehicle, the rider taps the card against a reader and boards the bus or train. The transaction is wirelessly sent to a centralized server and at that time on to the open payments network for authorization.

Huge demand for infrastructure and

M2M is as well creating a huge demand for infrastructure and, given the volumes involved, there is a massive possibility for value-added application providers, communication service providers, and cloud providers. An example is OnStream, a national grid company that provides gas and electric meter­ing solutions to energy suppliers in Great Britain. It replaced legacy back-office systems for asset man­agement, workforce planning and billing with new, more nimble systems to match the new ways of working. OnStream provides a complete outsourced metering solution for gas and electricity providers. The solution includes everything from the meters to the management of data.

As M2M impacts services, markets, providers, and ultimately humans, businesses will have to adapt to new realities. The race for first-mover advantage to harness the commercial potential of the new landscape will be intense. Agility, speed, nimbleness will become mission-critical assets; size, scale, scope may help less if they are rooted in old world ways of doing business. Today’s IT foundations are unlikely to solve tomorrow’s M2M challenges.

We can anticipate the nature of those challenges because we know something about how communications between machines will be constructed. For openers, we know that agreements will be key. In the machine-to-machine world, the nature of speech will, to put it more exactly than being free and spontaneous as in the human world, be agreement-driven and ring-fenced between businesses. The parameters of the conversation will be set, so we will have to design systems that can reflect and accommodate them, whatever they may be. To monetize the potential of M2M commerce, the communication of business terms must be based on agreements between two or more parties.

The exact nuances

If we don’t know the exact nuances, we can already grasp the broader topography of M2M commerce. It is certain to involve the fluid negotiation of personalized contracts, multi-party financial relationships, innovative pricing and business models, and compensation of distribution channel and supply chains.

From an enterprise application perspective, this means monetization will call for an open and configurable system, which allows for multiple business revenue models to be supported at installation and at the time continually evolved, allowing additional models to be added at any time.

Business models with sales-driven, enterprise customer agreements; interrelated, multi-party partnership arrangements; and integrated channel compensation programs must all be configurable, evolved and manageable throughout the lifecycle of the business. The machine-to-machine commercial world will deliver a dynamic, relationship-driven marketplace in other words setting the pace for a new generation of commerce. It will as well deliver a in a class by itself opportunity for those in position to harness it.