Using High-Tech Data to Drive Savings in Low-Tech Business Divisions

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    The Internet of Things is often talked about in terms of consumers and business strategy. Instead, maybe we should be focusing on something that’s much more applicable now: using the IoT for cost savings.

    In a recent Harvard Business School Review column, Rob Day explains how companies can leverage internal data to cut costs through energy savings.

    Now, I will warn you: Day discloses at the end that he is a partner with Black Coral Capital, a private equity firm that is focused on natural resource-related innovations. The company also invests in three of the many companies he mentions in this piece. So, there is a bias here, in that he stands to profit. On the other hand, he’s also well positioned to understand this emerging industry.

    For large companies maintaining fleets, it’s certainly worth reading since he’s addressing a major pain point: fuel costs from commercial vehicles.

    No doubt you already know that delivery companies such FedEx and UPS have famously saved millions per year in fuel savings with a telematics system and Big Data analytics; if not, CNET ran a good piece about UPS’s implementation. It turns out that delivery companies aren’t the only ones that could really use this approach. Day writes, “… many companies also face additional energy-related costs from their commercial vehicles, of which there are over 12 million in operation in the U.S. according to IHS, incurring fuel costs in the billions annually.”

    One reason facility and fleet managers haven’t addressed energy overspend is that they have neither the budgets to invest in energy saving systems, nor the information technology backgrounds needed to perform the analytics. Let’s face it: Divisions like operations, facility management and fleet management traditionally have ranked low, if at all, on IT’s priority list.

    “But as computing and networking costs have fallen over the past few decades, it has opened up a host of new ways that data and IT could be applied to drive significant cost savings in company-owned buildings and vehicle fleets,” Day argues.

    And, obviously, he’s quick to point out that startups are stepping in to address these neglected areas with offerings such as:

    • Energy dashboards
    • Virtual energy audits, which combine meter data with other basic data about a building to identify potential energy saving steps
    • Retrofitting fleet vehicles with hybrid technology
    • Using sensor data and software to optimize fleet routes
    • Predictive maintenance, which uses sensors and other data for fault-detection on equipment. For consumers, these breakdowns can be expensive and inconvenient. For businesses, they can shut down an entire facility, he points out.


    He even addresses the budget challenge in this piece, noting that some companies are using predictive analytics to help underwrite loans for energy-efficient investments.

    He also mentions that many of these companies are using “creating financing” and guaranteeing results. It sounds fishy, I know, but I actually saw an example of this type of financing years ago as an education reporter. In that case, the company relied less on technology and more on experience, self-funding energy-efficient renovations on old school buildings. The company then recouped the money (plus profit) as a percentage of the savings over a specified timeframe. For the school board, it was an obvious win.

    The big point here: Data isn’t just for marketing, sales and CXOs. CIOs should lead the way on applying data and new data technologies across the organization.

    Loraine Lawson is a veteran technology reporter and blogger. She currently writes the Integration blog for IT Business Edge, which covers all aspects of integration technology, including data governance and best practices. She has also covered IT/Business Alignment and IT Security for IT Business Edge. Before becoming a freelance writer, Lawson worked at TechRepublic as a site editor and writer, covering mobile, IT management, IT security and other technology trends. Previously, she was a webmaster at the Kentucky Transportation Cabinet and a newspaper journalist. Follow Lawson at Google+ and on Twitter.

    Loraine Lawson
    Loraine Lawson
    Loraine Lawson is a freelance writer specializing in technology and business issues, including integration, health care IT, cloud and Big Data.

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