The digital insurer for industry
Jackson Bond and the other two founders of Relayr in Berlin share an ambitious goal. Bond’s enthusiasm is evident as he explains: “In two years we want to be seen as the standard for data applications in predictive analysis in mechanical engineering.” Together with partners in the insurance sector he is changing the business models of SMEs.7 Sep. 2018
Bond left his native America, arriving in Berlin in the early 1990s where he settled and set up several companies, including one engaged in developing voice command control, which boasted top clients such as Volkswagen. In the course of these ventures he gained insights into the world of industry. Relayr was the outcome, a flourishing business with interests in five countries that now employs 200.
“For SMEs, digitization is not rocket science – we realized it could only work if we had a good understanding of the world of OT and IT”, says Bond. The company in Berlin is not a data analysis centre. The company has set itself the goal of understanding the entire production process as well as the old and new machines involved. It will then collect data from the production line to store it in the cloud and analyze it using algorithms. Relayr guarantees that by installing the Relayr platform in on-prem, cloud or hybrid systems it will offer the flexibility to integrate new and old industrial IoT features and business models within the current IT ecosystem. That might appear complicated at first to smaller companies, but investors are queuing up. In the last two years more than €50 million has flowed. In spring 2018 Deutsche Telekom alone invested €30 million.
Bond realized: “We have a chance of getting business among SMEs only if we are prepared to become acquainted with their production processes. This creates confidence among owners.” The Relayr CEO is sure this is the right approach but does not think confidence can be built solely by offering knowledge, so they have secured the backing of an investor. “We insure the projects. We make a commitment.” The Relayr investor is Munich RE.
In an official statement the company explains that particularly when switching from Capex to Opex-based business models new issues will emerge in connection with liquidity and risk. These would be revealed within the Relayr project and addressed accordingly in the form of innovative funding alternatives and insurance developed in cooperation with the company‘s partners. What does this mean precisely? Joachim Wenning, CEO at Munich RE, explains in his blog: “Today it is possible, with the aid of sensors, to predict and avoid malfunctions.
So why not take this to its logical conclusion and offer the customer a guarantee on a specific machine capacity?” In his blog he discusses the opportunities provided by digitization in manufacturing enterprises. “Insurers want to earn from this too. Sensors are changing production and risk management. To the same degree that industrial players are increasingly networked, so too will their needs and risks be altered. New financial requirements must be met in a networked world in which customers will pay only for what they actually need – whether equipment, machinery or vehicles. Customers may be less interested in cover for damage or risk minimization, but want a guarantee for certain performance levels of machines and equipment.”
This philosophy appeals to Bond. “Innovation is the enemy of security. But with Munich RE we bring security into the project.” And in Germany? Do SMEs feel too secure? “No, Germany has a great position in mechanical engineering and companies have the relevant data. AI is not an American discovery, Germany is also ahead in this field of cutting-edge research”, says Bond, who also gives the following advice to SMEs: “Try things out and learn that failure happens. That is an important lesson businesses can learn from companies in the US.”
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