Internet Of Things is all over HVACR. Is the value there yet?

State of IoT in HVACR industry: AHR EXPO 2020

AHR Expo is the world's largest HVACR (Heating, Ventilation, Air-Conditioning, Refrigeration) event, attracting the most comprehensive gathering of industry professionals from around the globe each year. Manufacturers of all sizes and specialties come together to share ideas and showcase the future of HVACR technology under one roof.
AHR Expo is an important event for us, as a lot of Blynk customers are exhibiting there, and it's the best place to get a snapshot of the industry achievements.

It used to be mostly a "mechanical engineering" event, and even in 2017, when I first got there, there were just a few companies who mentioned IoT or connectivity at their stands. Only the most prominent players in the industry presented their IoT solutions. In my conversations with potential clients at that time, no one was taking IoT seriously. And it's understandable, there already were Modbus, BacNet – well-defined protocols to connect machines to a PC or PLCs to make them work in unison without any Clouds and external access.
I feel like I'm at CES. Every company now has a cloud, a mobile app, an IoT platform, a dashboard...
Pavel Bayborodin
CEO at Blynk.io
Fast forward to 2020 I feel like I'm at CES.

Every company now has cloud, a mobile app, an IoT platform, a dashboard. Half of all the presentations and speakers were about new connected products or IoT solutions. From Raypak (a Rheem Company) presenting their new Raymote IoT system to Ayla Networks talking about redefining HVACR asset management.

The speed at which the industry has adopted the IoT technology is just mind-blowing. Leaders unlock the potential of machine learning for predictive maintenance, while followers are hurrying up to connect their equipment and participate in the IoT race. The rest are shocked, realizing that they are already "late to the party."

I've spent 3 days at the event and I noted a few areas which I believe will be the top priority for the industry in the coming years. I choose to focus on real commercial opportunities driven by the IoT technology, so you won't hear much about widely hyped up AI, Machine Learning, or predictive maintenance (yes, there was plenty of those at the event too).

What happens after equipment gets connected?

Redefining business models

The typical "sell and forget" approach can no longer be applied to the connected devices. There are ongoing costs to maintain the Cloud, store and process data, fix software issues, and provide customer support for the applications. A lot of companies are worried about managing these new recurring costs, as ROI strategy often hasn't adequately been planned out in the beginning.

Now, when the most companies has successfully surpassed the first stage of getting their Things on the Internet, questions arise: What's next? How to monetize it?

Answering these questions requires creativity, thorough data analysis, and a lot of experiments. My conclusion from AHR: we are not there yet and there is still a lot to be done.
Internal transformation

Usually, engineers are the first ones to introduce the technology to the company. However, everyone, from marketing to the tech support teams can and should use this innovation to achieve their goals.

Marketing team has now a new direct communication channel, which was close to impossible before. Tech Support can now see in great detail what is happening with equipment in real-time, checking warranty issues, and helping customers to configure expensive equipment remotely while talking to them over the phone. Reliability teams now have tremendous amounts of data to analyze what leads to errors and malfunctioning.

This internal integration process is not always straightforward and requires leadership to get all the teams trained, aligned, and motivated to use the tech.
Therefore if often gets overlooked.

But we at Blynk see this as one of the most critical components of getting IoT solution to actually work for your business. That's why we always help our clients to develop this strategy early on.
Security and Quality

Security should have been #1 on this list, but I think there is already enough emphasis on it (or is it ever enough?).

From my observations at AHR 2020, HVACR industry today predominantly offers proprietary IoT solutions developed in-house. No doubt, large companies are capable of delivering high-quality and secure products, but I've also witnessed a lot of poorly designed solutions, unfortunately.

It's a constant debate: to build in-house or choose an external platform. As a CEO of an IoT platform, I'm biased. Still, from my experience, small and medium-sized companies are risking a lot when developing solutions in-house with no experience in cybersecurity. Not to mention that IoT geneally requires costly human resources and expertise in different domains. Cloud infrastructure knowledge, connectivity, and user experience design are not a core strengths of a typical equipment manufacturer.

Even when going a platform route, security should be a top focus, especially for HVACR products. I'm seriously concerned when trustworthy companies like Frigidaire run their equipment on a Chinese IoT platform known for its security issues and vulnerabilities.

Due to my background in product experience design, I noticed a lot of gaps in usability as well. Considering that HVACR equipment falls into the category of products that profoundly affect people's lives, numerous conditions and edge-cases need to be thought through when designing these products.

One of the examples I recall is a Smart Home Water Control system by StreamLabs. This device is installed at the beginning of your home water line and tracks if there is water leakage. You can set it up so that it can shut off the water based on rules, or you can do it manually from anywhere in the world.

The product seems to be really well-designed. However, one critical use-case was worrisome for me. In the case of the Internet or power outage, the device can automatically close the valve and cut the entire house from water. To fix it, you would need to go to the device and press a physical button to unlock it. I guarantee nobody will ever remember to press this button in this situation. More likely they will call a service person who won't even be familiar with this system.

Of course, ironing out issues like that is just a matter of time. In only three years, the industry got digitalized to its highest level ever. I'm excited to see how it will evolve and make our lives better in the upcoming decade.

Key Takeaways.

  1. HVACR industry has adopted the IoT technology. There are still a lot of challenges to solve, but it's no longer a hype, it's a reality.
  2. IoT related costs are not insignificant. Businesses need to think of ways to cover these recurring costs and generate new revenue streams from the new IoT capabilities.
  3. Getting various departments involved in the use of the IoT tech is a must and will result in better business outcomes.
  4. Security, security, security (and quality)!
If you are working on an IoT project - let's get in touch. We'd be happy to learn about your business challenges and share our expertise.
Feb 7, 2020
CEO at Blynk

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