Zero One: Schneider Electric Shines the Light on the Internet of Things

If Schneider Electric, a French giant in the energy management industry, has its way, the warm light of the Internet of Things will shine on everyone.

In business terms, this means more revenue from a new and growing class of IoT-related digital services, higher profits for its 400,000 channel partners (mostly value-added resellers and integrators), and greater cost-savings for customers.

“This has been the journey over the last five years, accelerated in 2017, and we have even more offers coming to the market in 2018,” says Cyril Perducat, executive vice president of digital services and IoT at Schneider Electric.

The ecosystem of data-driven, IoT-related services spread out over the tech landscape only a few years ago and now looks to mushroom. By 2020, more than half of Global 2000 companies will reap double the revenue growth from information-based products and services than from their traditional portfolio, says IDC.

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At Schneider Electric, here’s what a digital service looks like today:

In a typical scenario, a channel partner might sell Schneider Electric’s uninterruptable power supply equipment, or UPS, along with traditional IT integration services, to a small retailer with two or three shops. If the UPS’s battery has problems, Schneider Electric says, the unhappy retailer often goes to someone else to swap out the battery. The original channel partner loses business.

By putting IoT on the UPS, Schneider Electric helps the channel partner get ahead of the problem. Essentially, IoT tracks the battery’s cycles and lets the channel partner know when the battery needs to be replaced before it goes out.

The battery is only one example of many.

“This can be applied to more complex things, [such as] the things in a datacenter,” Perducat says. “We capture all the equipment on the network related to the operation of a datacenter – UPS and other types of equipment – and then monitor, analyze and package event logs so that the maintenance team can make informed decisions.”

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For customers, problems can be quickly identified and resolved before affecting operations. This means more uptime and lower maintenance costs, as well as peace of mind. Datacenter managers and electrical maintenance engineers, especially at hospitals, depend on a constant flow of electricity; they can rest a little easier knowing IoT is keeping watch.

For channel companies, which lead anywhere from 70 percent to 80 percent of Schneider Electric’s overall sales, IoT represents a huge upside to their businesses. They can capture more revenue and higher profits across the lifecycle of equipment than from traditional installations. That’s because ongoing digital services have better margins than installations that suffer from depressed margins due to competitive bidding.

What will digital services look like tomorrow? Imagine Schneider Electric as a kind of digital matchmaker.

“There are many things that we can imagine,” Perducat says. “Because we detect some telemetry information about the assets, we are able to identify what services a customer is most likely going to be interested in. We can recommend to a customer a partner, or recommend to a partner a customer as a qualified lead.”

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Before a match can be made, channel partners have to be ready to offer IoT-related digital services. “They need to do a shift of operating models and competencies to go there,” Perducat says. Yet many have been slow to make such a digital transformation.

They’re not alone, either.

While IDC says digital transformation spending will reach $1.7 trillion worldwide by the end of 2019, the research firm is quick to point out that nearly 60 percent of companies today are at a “digital impasse.”

Nevertheless, Perducat remains optimistic about the channel eventually embracing IoT and new digital services.

“I feel they’re all committed to that evolution,” he says.

Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is based in Silicon Valley. You can reach him at [email protected].