Strategy and Data Monetization with EY’s Head of IoT

Strategy and Data Monetization with EY’s Head of IoT
Daniel Elizalde

Aleksander brings a unique perspective that I haven’t had in the show yet. EY is one of the top consulting companies in the world, and as a result, they have worked with thousands of companies across many markets and verticals.  

 

Aleksander shares his experience on what works and doesn’t work companies embark on their IoT journey. He also shares his philosophy on IoT data monetization. This is an episode no Product Leader should miss.  

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Episode details: Strategy and Data Monetization with EY’s Head of IoT

“The education process and the knowledge transfer between the vendors and between organizations and the clients are very limited”  – Aleksander Poniewierski

About Aleksander Poniewierski:

Aleksander Poniewierski is the Global IoT Leader at EY, being responsible for leading the Advisory Practice focused on the development of Strategy, Design, Implementation, Process Optimization, Business Model Innovation, Security and Protection for global Clients in both Consumer and Industrial IoT. He is a globally recognized expert in the field of Cybersecurity and Critical Infrastructure Protection.

Previously, Aleksander led the IoT/OT Advisory Practice for the EMEIA region. Throughout his career, he built the IT Advisory practice in Poland and CSE, where he led numerous IT and OT projects for some of the largest companies in the region. Before joining EY, Aleksander was responsible for managing IT Security at telecommunication companies.

Aleksander graduated from Upper Silesian University in 1997 with a Master’s degree in Information Technology. He received his Ph.D. in Economics from Poznan University of Economics. Additionally, he has participated in many Executive Programs provided by Harvard Business School, Carnegie Mellon University and LMD University.

He is an Advisory Council Member of the Center for Global Business at the University of Texas at Dallas (UDT). He is the author of many publications as well as a recognized keynote speaker at numerous conferences related to Cyber Security and IoT/OT.

About EY:

EY is a global leader in assurance, tax, transaction, and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients, and for our communities.

Topics we discuss in this episode:

  • Aleksander shares his background and about EY.
  • EY’s approach to IoT solutions.
  • Common challenges companies have when deciding to go into IoT.
  • How to help your company understand the value they could derive from IoT.
  • What to do to avoid getting stuck at the proof of concept or pilot phase.
  • How to not fixate on solving the “technology selection” problem.
  • What other areas Executives may not consider when planning their IoT strategy.
  • Aleksander’s philosophy around IoT monetization and how companies should think about this.
  • Advice for Product Leaders who are new at developing IoT solutions.

To learn more about Aleksander and EY:

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Read the Full Interview: Strategy and Data Monetization with EY’s Head of IoT

Aleksander:  The educational process and the knowledge transferring between the vendors and between organization and clients, is very in flux.

Daniel:  Welcome, to episode number 16 of IoT Product Leadership, a podcast featuring in-depth conversations with product leaders on what it takes to build great IoT products. I’m your host. Daniel Elizalde. I am very excited about today’s episode. My guest is Aleksander Poniewierski, who joins us today all the way from Poland. Aleksander is the global IoT leader at EY, where he is responsible for leading their advisory practice focused on IoT. This is a very special episode because Aleksander brings a unique perspective that I haven’t had in the show yet.

Daniel:  EY is one of the top consulting companies in the world, and as a result, they have worked with thousands of companies across many markets and verticals. Aleksander shares his experience on what works and doesn’t work when companies embark on their IoT journey. He also shares his philosophy on IoT data monetization. This is an episode no product leader should miss. To learn more about Aleksander, about EY, and to access the resources mentioned in this episode, visit IoTproductleadership.com. There you will find the show notes for all episodes including this one.

Daniel:  Hi Aleksander, welcome to the show. I’m really excited to have you with us today.

Aleksander:  Hello Daniel. Good morning.

Daniel:  I want to start the episode by learning a little bit more about you. Do you mind sharing with us your background and how you arrived at where you are today?

Aleksander:  So, my background is IT. And my background is telecom. So, I started my career many years ago as the IT security manager for a mobile telecom company and then I changed a little bit industries, from a mobile telephone company to a fixed-line telecom company and very much focused on as an IP provider, an internet provider. It was the ’90s, last century, and then I jump into the different river, the river of consulting, so I started the in Anderson, and then we merged with EY and for more than 15 years, I run a different kind of businesses in EY.

Aleksander:  The first part was very much focused on IT advisory, the classic IT advisory then very much focused on IT security, risk management and after that, I established, after the year 2000, the OT, operational technology practice, very much focused on security, cyber critical infrastructure protection as well as the integration between OT and IT and finally, a couple of years ago, we had implemented also a machine learning concept for OT, IT and IoT.

Aleksander:  So, for last two years, I run IoT practice globally for EY, managing a different kind of opportunities for a different kind of clients around the globe. It is a very short introduction.

Daniel:  Yeah, that is very interesting. I always love learning about the journey. We all arrived at this IoT positions in very different ways and you are leading such a big organization from a consultant side, I think is really interesting to learn how you arrived there.

Daniel:  So, speaking about EY, let me ask you a little bit about this.

Can you tell me more about your company, how you work, your approach to IoT solutions and this is particularly interesting because this is the first time that I have somebody from one of the big consulting companies in my show, so it’s a different perspective for our listeners and I think it’s going to be very valuable, so can you tell us a little bit about that?

Aleksander:  EY is a huge company, and we are almost 270,000 people around the globe. We have four main discipline, audit, insurance, tax advisory then advisory business, business advisory and transaction support. IoT services, we mostly serve from the advisory and transaction advisory side, so IoT is very much focused on bringing the value to the client.

Aleksander:  So, usually when we talk to our clients, we advise them how to optimize their business or how to grow their business. The same has a philosophy, IoT focus. In EY, we have two main, like we say, tracks. The one IoT lack is about the optimization. It’s about advising clients how to better utilize their resources, their assets and another track is about the growth, about to grow business, advising clients how to connect their products or how to measure this connectivity between product and clients.

Aleksander:  It is two-way communication from the advisor perspective. The first way is just to design advice and structures. And the second way of the communication, is the implementation, is the running, the solution for the client, who is the client. Because we don’t have at EY, a technology, we don’t own any technology. We are not developing a technology; we cooperate with different partners like Microsoft, SAP or GE or IBM or others.

Aleksander:  We use their technology and we build our own EY solution based on that, but very, very coherent with the client’s needs. So, it is the basic philosophy and they can summarize the philosophy of EY approach, but we are a kind of gravity between vendors and the clients, so we are the glue building a solution from existing on the market, the technologies, and the imagination, dreams, and needs coming from the clients.

Daniel:  That’s an interesting concept, particularly because I do believe that there is this need in the stage that IoT industry is right now, where there are the needs of the clients and there is a vendor. But there is that glue in between that a lot of companies are missing, so it’s really interesting to see how your company fills that void.

I want to piggyback on that question, and since you have seen a lot of different industries and a lot of different customers around the world, I would like to get your perspective on what are some of the common challenges companies have when deciding to go into IoT?

Aleksander:  It’s very hard to believe, but globally, there are no huge differences, different geographies. What are the common, shall we say, challenges for a client, so whatever we talk about the US or Europe, or Japan or Asia, or Australia, the first and the biggest, let me say, issue and concern is that awareness of IoT technology.

Aleksander:  I’m not talking about just the definition, what IoT really is, I’m not talking also, about some basic understanding, what is the value coming from IoT, but the awareness in the sense that many companies, they don’t know really, what they can achieve having IoT implemented. I observe this awareness, this lack of awareness as the biggest barrier when we talk to the clients and here, I also come with the second, very much, correlated with that element, education.

Aleksander:  The education involved with technology possibilities, education about the process change and the education to come up with the possibilities is very immature. The education process and the knowledge transferring between the vendors and between organizations and the clients are very limited.

Daniel:  I agree with that. That’s really interesting that you’re seeing it all over the world. I’ve had the same experience with the people that I interact with and the students at my Stanford classes and online, etc. It’s always that same issue and the education, not only about the technology as you say but about what to do with it, how to start a project, how to take it; compile it to scale, etc. I agree that I’ve seen the same kind of challenges.

So, let me ask you, how do you in your company, work with your customers to help them reach that gap? To help them understand the possible value they can derive from IoT.

Aleksander:  The first and the most common ask or approach comes from the situation when the clients want to somehow design the target operating model. So, they know that some elements exist. They know that there are some keywords like IoT, AI, blockchain, but they don’t know how to use this technology. And then, they ask us to help them to understand how IoT can really bring the value for them.

Aleksander:  We can call this kind of service as an IoT transformation strategy. We can call the service as the architecture design, or we can just call this service as a workshop when we discuss with the client out of possible, what is possible. What we did, we invested around the globe as EY, a tremendous amount of money to build more than 17 wavespaces. Wavespace is the place where we can ask a client to come. We can show different kind of technologies including IoT and then, using this environment, we can build for them prototypes. We can build for them, or simulate for them, the value creation process. We can really show them what is possible and what is not possible. It is basically the first and the most common way how we talk to the client, how we try to solve their problem or how we’re solving their problem.

Aleksander:  The second source of let me say, projects, are very much focused on the integration. So, usually when the clients, when they have a huge digital transformation process, or as we say, the rollouts of the new infrastructure that IoT is coming at one point. When they need to do real-time synchronization data, when they need to connect devices with other devices and when they are talking about connectivity and mixing connectivity with the prediction, AI prediction, they ask ourselves how to make it possible, how to make it real, and usually, on the table, we have a couple of different proof of concept. They already deliver but never had a value coming from that and then they are asking us, what is possible and how to really, during this transformation, digital transformation, how to make this technology working for them.

Aleksander:  Here, is the second source of projects. The last one comes from the cybersecurity perspective. Usually, when companies are trying to be very modern and they implement a lot of fancy stuff, they recognize that cybersecurity is the real issue. And then, when they want to connect their factories to the internet, when they want to connect their assets into the ecosystem, they recognize that the threats are coming from outside and then IoT security, OT security is even harder to solve as the traditional route, IT security issue.

Aleksander:  So, here is the last, but very, very powerful source of the projects we have.

Daniel:  For sure, security has to be considered from the very beginning. With that in mind though, do you see that companies come to you early on so that you can help them with these three types of projects, or do you see that they come to you when they already spent a lot of money and they get stuck and they don’t see any return?

Where do you see is the state of the industry trying to get help, so to speak?

Aleksander:  I think both. 50-50. The 50% of companies, you say the leaders, they recognize that the way how they build their IoT transformation journey was not correct or the way how they really value the business case, how they build the business case was not the perfect one or the way how they thinking to scale up or roll out the solution was not perfect, was the first part.

Aleksander:  The second part of the clients which are more, let me say, traditional thinkers, they are not the leaders in the sense that they want to follow and they want to have a better understanding and wider and deeper analysis. And then, they come with the very well defined aim, and target of what they want to achieve.

Aleksander:  The first is mostly about ideas, innovation; the second is about getting revenue or getting the cost down.

Daniel:  I say it’s an interesting split 50-50.

Also, some of those companies that start to get traction or they have some ideas on how to move forward, they go into, let’s say, a proof of concept to evaluate their ideas, or they go into a pilot phase. But, many companies get stuck there and they are not able to take it past that pilot phase. Why is that and what advice would you give those companies to get past that stage?

Aleksander:  I think it is one of the biggest problems we observe in the IoT world. Companies are trying to get shiny new things, easy to implement technology and they experiment. They are trying to use this technology as a toy, as a little, like we say, sandbox. They want to prove that something is possible. And for some of the clients, who just, the connectivity in between two or three sides, but not connectivity for the purpose of reporting, not connectivity for the purpose of the ERP, but the purpose of the connectivity of the devices. The devices can talk. The devices can somehow react for the comment coming from other part of the globe is something shiny, is something really fascinating.

Aleksander:  But then, when they come to the C level, the management level, they have a huge difficulty to answer two questions. Question number one is but why? Why should we spend $1 billion or $100 million or even $1000 for a product, what is the return on investment? The second question is, how about scale? It is quite relatively easy to connect two or three devices together, but if we have 200 sites around the globe, how are you going to scale the solution? How are you going to implement the solution, roll out the solution? Here, if we talk about the millions of devices and the time needed to implement and correlate, integrate the prices, the answer is, from the mathematical perspective, is we need to have $1 billion and we will work for the next ten years.

Aleksander:  But, the management board knows that the technology they are using today will change next year or even next six months. So, here is the dilemma. And then, the proof of concept is a great thing and I really like to see proof of concept increase awareness, but really, the answer why? What is the purpose of that and the answer how to implement is the really important thing.

Daniel:  Yeah, it’s really applying the concept of discovery and experimentation, but with a purpose. You’re making sure that you know why you’re answering these questions and sometimes I see pilots as they have done the work and they know the why and the pilot is more for technical feasibility and that tends to work a little bit better, but I agree that starting a pilot without having a clear path, it’s really relatively easy to connect devices, but then what?

Aleksander:  Yes, and you are right. I help serve some clients, some of the very, very smart teams, able to really develop and able to really roll out the solutions, but all of those themes, when they are very technical, they have a problem to talk about business. When you have a business team, and they can really build new revenue streams coming from that, they are not able to show the prototype, so the perfect mix is when you have three teams or three, let me say, three phases in the team.

Aleksander:  The very technical and the very aware and educated, the tech staff, knowing what is possible in this jungle of different platforms, hundreds of different protocols and so on. The second phase you need to have in this thing today is the very common shape. Someone who’s not only the financial guy or the traditional business analyst, but somehow, someone who is able to really validate the value of data and the last one is someone who has a huge implementation experience, especially change management experience because dealing with the people, dealing with the big change is the native problem, the native issue for IoT implementation and at least those three figures, those three persons, you need to have on the team to start talking about proof of concept and then showing the results.

Daniel:  That’s very interesting because it seems like you are describing what in my world, is really the role of product management than product leadership, just to be that center point between the technology aspects and the business aspects and the deployment aspects and having this mediation point that is looking after the business implications of this projects and the technology implications and be that glue within the teams.

Aleksander:  Many people know how to build a solution. Let me give you a very simple, very, very simple IoT example, smart parking. We’ve had hundreds of thousands of cities around the globe and the smart city concept is everywhere. Probably, there is IoT project that you can find in each of the smart cities, smart parking.

Aleksander:  The smart parking business cases I saw, most of them are running on the condition that you don’t need to have people managing the spaces and you can better utilize spaces, because if you put the green or red light, people will park on the free spaces, and then they said, “And we have 100 parkers parking, and we don’t need any logistic people. We don’t need anyone.”

Aleksander:  The parking and the one guy sitting at the front of the money drawer at the front of the dashboard and everything will run forever. The true is, that if you don’t have a right project manager, if you don’t have a change management person, and when you don’t ask the basic question, and how about the maintenance of the sensors, because you need to have a new role on the parking, someone who is going to maintain, to clean the sensors.

Aleksander:  And then, instead of having the people managing the traffic, you will have a people cleaning the sensors. It is right. It is very good, but you need to have this experience, and you need to have this kind of knowledge on your team. Otherwise, you will build a wonderful, smart parking, but after six months when the sensors are getting dirty, and parking is not any longer fictional, so it is this kind of example.

Daniel:  I think that is an excellent example because it really resonated with me with a lot of the Silicon Valley companies that I talked to where the technology by itself will have merit, and as long as we can connect these sensors in the parking lot, wonderful things will happen. And then, if on top of that we put artificial intelligence, oh boy, we’ll make billions, and the reality is that it’s not that easy. Its change management is figuring out how you roll it out, how you maintain it, operate it, decommission it, etc.

Daniel:  I’m really glad you shared that example with us. We’ll be right back. If you’re looking to take your IoT skills to the next level, I highly recommend checking out my online courses designed specifically for product managers in the IoT space. Visit iotproductleadership.com/courses to learn more. If you need to hone your IoT product strategy skills, or you’re looking to land your next job in IoT product management, my online courses are your accelerated path to get there. So, enroll today in my popular IoT product manager certificate program or my brand new online course, Breaking Into IoT Product Management, and join professionals from top IoT companies like Google, Amazon, GE, Tesla, and Samsung, just to name a few who are now part of this exclusive community.

Daniel:  Once again, the URL is iotproductleadership.com/courses. I look forward to having you as part of the community.

Daniel:  Going deeper a little bit into that topic, I often see as well that companies fixate on solving this technology selection problem, because there’s an abundance of technology that you can get to build IoT solutions and companies starting their journey say, “Well, the most important thing is for us to select the technology so we can put together our solution and off we go.” But, as you mentioned, the technology’s just a portion of what you need to deploy this successful solution. So, what are other areas that executives usually don’t think about when they’re planning their IoT strategy?

Aleksander:  Yes, you are right. The companies and especially the tech guys in the companies, they think that having the IoT platform and having the service provider and having the team able to run the AI on the top of that is all about. The truth is that you need to have at least two elements with that. You need to have all regulatory compliance and the law knowledge at the back of you because the IoT is changing very much the ecosystem.

Aleksander:  The IoT is changing the rules, and the IoT is very often aggregating the data in the way that having the new, portion of information you can really force someone’s privacy, or you can really add the security concern into that.

Aleksander:  Another dimension is what I previously say, it’s change management. Change management is the way you will deal with people, not only with technology but with people. Very often I heard or I read in the newspaper, that the robotic process automation, or AI or IoT, will reduce the use of people and the people will have no work any longer.

Aleksander:  It is not true, because the IoT, AI, the robotics and stuff like that is changing the roles. Those technologies require a different skill set. It is the perspective you need to really focus on, and because it’s a very, very specific one. People, advisor services are extremely important. So, we have the technology, we have these people issues, legal issues which is a very big topic and at the end of this story, you had a new way of changing processes. Because, traditional processes, existing for years or even hundreds of years, like traditional insurance, like a traditional supply chain and planning and operation, that IoT is changing a lot.

Aleksander:  Not only giving the own line, real-time information but because of implementing IoT solution, you will rebuild the processes. You will rebuild the business processes and operational processes, so the extremely important role is that economic aspects of this implementation and that canonical aspect, the business aspect of this change. So, how to create a new business model or new operating model is not any longer a discussion how to make, automate things, but here is the way how to use the very simple small things, which is called IoT data synchronization, changing the way how we run our operation for years.

Daniel:  Yeah, you touch on very powerful areas. I agree with you that the people aspect is often overlooked and we need to understand that we’re building this technology and the solutions to impact people on the other end. There’s always a human on the other side, so we have to focus on that as opposed to the technology for technology’s sake.

Aleksander:  And education. The technology, like IoT and AI, that continues education and the continued source of knowledge and the quality of knowledge, is really crucial because you will run … changing your environment from the third generation or industry 4.0 into the industry product, into the IoT generation, require the source of the knowledge and the source of talents.

Aleksander:  You need to really book the source of talents for you, for your company and it is not easy to think in this way. In the traditional world, we just ask consulting companies, we just ask the integrator to implement a solution and then having the knowledge, having the methodology, and having the procedures, you run the operation.

Aleksander:  In IoT world, in AI world and within a robotic process world, you need to really build resources working for your ecosystem, be part of the ecosystem and you need to educate them all the time, because of the technology change. Here is the huge change.

Daniel:  Very insightful. Very interesting thinking. I really like how you phrase that idea of the people first. I want to revisit some of the things you just mentioned about the importance of focusing on the economic value and I want to ask you if you could share your philosophy around IoT data monetization. You and I were talking about it yesterday on our previous call. You have really interesting perspectives in this area and I would love it if you could share your thoughts on that.

Aleksander:  When we think about it, imagine technologies or when we think about everything that’s possible today, the first question is why, and the first answer is in 90% of cases, making data work for you, monetize data, is the answer. In IoT, there is a very bigger opportunity, because the IoT is giving you the opportunity to build something which is called asymmetry of information.

Aleksander:  It is a very well known term from the 20th century, but think you can build your business and you can generate a margin, you can generate the value when you know more than your client. It is the basic concept of the insurance market, for example. Because you know more and your clients know less you can really buy a risk and in IoT, when you have real-time data coming from different sensors, and when you can build based on that, the asymmetry of information between you and second and the third party, you can build something which we, like you, I would call the asymmetry of information or bridge of asymmetry of information. And then, you can really validate what is the value of this particular information coming from the data for the particular time in the particular location.

Aleksander:  The concept of the asymmetry of information can build your business case and having the value of this asymmetry, you can generate, drop it, or you can reduce the cost. In most of the cases, we analyze, and we analyze the hundreds of the cases of different companies. Only the cases where we show the real asymmetry of information, to monetize data, was the case where the companies sold the value.

Aleksander:  It was only the point where you can really argue for revenue, or you can really press for optimization, the cost of [inaudible 00:32:56], where you can build asymmetry of information coming from data. It is the way how you can monetize the data.

Daniel:  That’s really interesting. I know that you have several articles and material about that concept on the website. We’ll put some links to that on the show notes as well. Very interesting approach. All right, Aleksander, this has been a fantastic conversation, and before we go, I want to ask you a question that I ask all of my guests, that is, what advice would you give product leaders who are new at developing IoT solutions?

Aleksander:  So, first of all, prepare your elevator speech. Prepare something like a small material, a small package of information you can give to your stakeholders; you can give to your clients; you can give to your peers to educate them to bring the awareness. Give them the level of information, bring them to the level of information and keep them at the level of information. They will talk to you in the same language.

Aleksander:  The second thing is showing different technologies. Show the different technologies coming from different vendors, from the different perspective. Show them what is possible, and then the last thing, build for them the answer for their pain and be very open be very relative. Trying to find something which was unsolved ten years ago are five years ago in the particular business and trying to find the solution coming from IoT, AI, doctrine, whatever, emerging technologies, and show them that on the particular technology, on very low cost and with very smart way, you can implement, you can roll out and you can manage to bring the money to the company as additional revenue stream or reducing the costs or optimize the utilization of the assets.

Daniel:  That is definitely great advice. Aleksander, thank you so much for being in the show today, I really appreciate your insights, and I know these are going to be very valuable for all of our listeners.

Aleksander:  Thank you Daniel, and thank you all of you.

Daniel:  Thank you for listening to this episode of IoT product leadership. To make sure you don’t miss out on any of my conversations with IoT product leaders, make sure you subscribe to this podcast on iTunes, or wherever you get your podcasts. Also, don’t forget to check out my online courses designed specifically for product managers in the IoT space. To learn more, visit iotproductleadership.com/courses.

Daniel:  I am Daniel Elizalde, and I’ll see you next time.

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