Thanks to the the Internet of Things, product-based businesses are morphing into service-based businesses, providing value-added services through software.
For example, Pirelli and Michelin are embedding tyres with sensors. Those sensors convey data about vehicle performance and road conditions to the driver and the car’s computer, improving safety and efficiency. The example shows how the former one-off supplier/customer transaction becomes an ongoing relationship.
But it raises a number of privacy and data protection issues that didn’t previously exist (or were less prevalent) in the former, one-off purchase:
1. More data - collecting basic transactional data, such as customer name/email, billing and payment details was the norm. Internet-enabled products collect far more data. Things like geolocation, user habits, health statistics, energy consumption etc. A data breach now reveals your customer’s most intimate details, in real-time, with serious legal consequences.
2. Data protection - this enhanced pipeline of data provides rich pickings for cyber criminals. Product makers have to invest in data encryption and ‘security by design’, or outsource their security risk to third parties, which comes at a price. But if you’re making internet-enabled door locks for example, one data breach (as opposed to one defective lock) affects the household every single customer.
3. Law enforcement - tech companies like Apple and Facebook receive a lot of requests for customer data from law enforcement agencies. It takes significant resources to respond when the police come knocking. And if your wrist watch become a smartwatch, complete with geo-location and messaging, you might one day be subpoenaed to hand over customer data.
In an age where software is eating the world, we are more connected and networked than ever before. What used to be a one-off transaction, has become a continuous stream of data-rich interactions, where suppliers are legally bound to protect and manage their customer’s data.