IoT success hinges on effective data protection

Enza Iannopollo/Forrester Research
22 Jul 2015

The IoT offers the potential for much deeper customer engagements than ever before, and business leaders recognize this opportunity. Whether it’s through the latest connected wearables devices or sensors digitizing traditional processes, the IoT is disrupting how businesses interact with consumers. It may make serving and retaining customers easier than ever before.

But with these new levels of engagement comes great responsibility. Firms will only be successful in an IoT world if they can serve their customers in new ways while also meeting their data protection expectations.

With the IoT, an unprecedented amount of intimate data hits firms’ platforms, allowing them to know their customers and business partners in greater detail and build more trustworthy and direct relationships with them. But leveraging personal data to build that engagement means that CIOs, in conjunction with chief information security officers (CISOs) and chief privacy officers (CPOs), must ensure protection of customers’ data.

Failure to do so destroys firms’ trust and engagement with customers and will compromise brands’ reputations. Data from the 2015 Edelman Trust Barometer shows that 68% of customers globally will refuse to buy products or services from companies they don’t trust, and will share negative feedback online, tainting the opinions of prospective customers.

On a similar note, a Forrester survey found that 39% of global business leaders of firms that experienced a data breach in the past 12 months reported damage to their brand. And 10% of UK organizations that suffered a breach in 2013 were so badly damaged that they had to change the nature of their business.

Poor data protection practices compromise the success of IoT initiatives and also have the potential to negatively affect customer lifecycles. Customers’ consent to data collection from fitness tracking devices, for example, relies heavily on effective communication about what data the device will collect and why. Consumers who agree to share their data may then decide to amend or delete it, and the firm that “owns” that data must bear the responsibility of the request across the entire IoT value chain - including device manufacturers, developers, connectivity providers, and cloud providers.

To use the IoT effectively, CIOs must employ data protection that meets and surpasses customer expectations. CIOs must build and execute on the infrastructure that supports the complex IoT ecosystem. From the outset, data should be stored and processed in dispersed clusters with access only granted to employees and external partners who legitimately need access. Firms should only collect the minimum amount of data needed. Adopting a purpose-oriented approach to data collection will not only protect valuable data from those with bad intentions, but will also help make other data operations more agile.

Technical and legal challenges are also factors, and CIOs must work with CISOs, CPOs, and internal teams to address issues like adopting transparent privacy policies for all products and services. Regardless of device size, every app running on said device must have a clear policy that allows users to set their preferences and find links to other privacy-related material. Besides necessary legal compliance, CIOs should adopt industry best practices for data protection in IoT-specific initiatives, like building data security and data privacy into devices upfront. Many organizations have made protection of customer data part of their corporate responsibility strategy.

All CIOs must remember that protecting customer data is the key to IoT success. Even if firms aren’t motivated by compliance requirements, they should invest in effective data strategies because protecting customer data is good for business everywhere. In the age of the customer, consumers will have the final say as to whether or not a brand is trustworthy - and falling short of their expectations is not an option if you want their business.

Enza Iannopollo is a researcher at Forrester Research

This article first appeared in Telecom Asia 5G/IoT Insights July edition

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