‘V-Engineering’ part 2: Cloud: new gateway for remote monitoring and mobile commerce

The application of roadmap strategies such as digital media, remote machine management, location based services, mobile payments and more are changing retail as we know it, including vending. Last month, I reviewed several advancements currently under development by technology suppliers and vending operators. This month, I will focus specifically on cloud computing and its implications for remote monitoring and mobile payments.

While many industries have tapped the capabilities of cloud computing, the vending industry has been cautiously reluctant, or unaware, of its potential. The term “cloud computing” is used to describe Internet-based computing and therefore the phrase “in the cloud” refers to applications performed via the internet.

A major consideration in cloud computing is that since the Internet supports the bulk of the application, the vending operator does not have to procure dedicated hardware (the basic input/output device needed) or specialty software at the operational level. It is for this reason that cloud computing is often described as “software-as-a-service (SaaS)”.

Cloud computing emerges

Accessing a service from the cloud, which may be billed on a subscription basis, is often achieved by opening a browser and completing a secure login procedure. This simplicity is both welcomed and the basis of a concern surrounding security. Fortunately for the vending operator, secured connectivity and authentication are the responsibility of the SaaS provider.

Cloud computing enables the establishment of a communication pathway between a connected vending machine and the vending operator for timely remote messaging (machine alerts. alarms, and calibrated events) aimed at minimizing down time while containing costs (maintenance, replenishment, pre-kitting, and servicing). Cloud computing enables vending operators to have access to important applications (e.g., vending management software and cyber wallets) through an Internet web browser.

In the past few years, some vending companies switched from company-owned hardware and software assets to a cloud-based subscription service model. This form of automation offers the opportunity to deploy technology without a large upfront capital expenditure or an abundance of on-premises hardware or software.

In essence, cloud computing enables on-demand access to a shared set of automated resources (networks, servers, storage, and applications) with minimal service provider interaction. There are SaaS vending management software (VMS) packages and remote machine monitoring (RMM) applications available, as well as recently introduced applications involving virtual wallets, dynamic couponing, and enterprise resource planning (ERP) solutions.

The objectives of cloud computing are: improved productivity, minimized risk of downtime, maintenance of current application, highly secured access, data protection, and reductions in capital expenditures. Several branches of the V-Engineering roadmap include mobile devices having seamless access to cloud-based applications.

Cloud enables remote monitoring

RMM applications were the first managed through the cloud and continue to be among the most popular. RMM applications can be accomplished through a variety of wireless network technologies. RMM-equipped vending machines are configured to transmit data over the network to a connected cloud-based server.

Vending machines are polled on a regular basis and sales audit and alarm data are transmitted to a remote solution provider network for analysis and data storage. The remote application software typically analyzes the data to determine the inventory status of product sales, by column, of each machine.

An additional forecasting algorithm may be applied to predict additional sales likely to occur by the time of the next date of service. This data can then be used to provide a dynamic replenishment (pre-kitting) and service schedule (dynamic scheduling).

Once a dynamic schedule is derived, its contents can be used to construct pre-pick lists for each machine and can then be aggregated to produce location, route, and truckload reports. Cloud-based RMM capabilities are significantly enhanced through the incorporation of accurate and timely data, producing:

Dynamic Forecasting

Having data indicating when coins or currency require collection or knowing machine inventory levels for pre-pick replenishment or awareness of maintenance or service alarms in advance of route trafficking can be of assistance in determining warehousing needs as well as tracking product movement. Pre-packing (pre- kitting) products at the warehouse can significantly impact route efficiencies.

Dynamic Notification

Machine communication of events and alarm conditions can be used to monitor and manage machines. Key factors relate to machine functionality, inventory movement, mechanics, and settlement data.

Dynamic Pricing

Two-way communication between a machine and remote device can enable remote price updating from a distant location.

Dynamic Scheduling

Since not all machines will require service, collection, or replenishment on a fixed schedule basis, a dynamic scheduling algorithm is capable of constructing a flexible routing without reliance on inefficient, static routing.

Dynamic Routing

Given the flexibility of dynamic scheduling, route maps can be built based on required stops (e.g., servicing or replenishment). Dynamic routing software can be applied to produce an efficient routing scheme.

Dynamic Couponing

Digital coupons can be found on Websites, through Web advertisements, received via email, pushed by opt-in programs, or available through related digital media. The difference between a traditional printed coupon and a dynamic coupon is its unique “call-to-action” (apply in a timely manner). The fact that the coupon is usually time and/or location specific (expires in a short timeframe) lends itself well to cloud computing monitoring in real time.

Cloud-based mobile wallets

Cashless vending normally refers to credit/debit account transactions via a magnetic stripe or contactless plastic card. The recent advent and implementation of cloud-based mobile wallets has added another settlement option.

A recent online survey conducted by Visa found that nearly two-thirds of respondents between the ages of 25 and 34 responded favorably to using a mobile phone for purchase payment. The survey also revealed that 64 percent of the respondents were interested in receiving coupons through a mobile device. In addition, more than half of those surveyed admitted carrying a mobile phone at least 75 percent of the time.

It is widely assumed that the demand for NFC technology is being heavily driven by the emergence of contactless payment formats packaged into mobile devices (advanced m-commerce).

The development and deployment of embedding NFC chipsets into cellular phones is projected to drive widespread adoption of a mobile wallet (also termed a cyber wallet or e-wallet) during the next couple of years.

It is important to remain mindful that data exchange in a mobile wallet transaction is controlled by the NFC chip in the phone. Hence, the POS terminal and the smartphone must both be NFC-compliant for settlement to occur.

A mobile payment solution requires downloadable applications for both the payment device and retail POS device. As physical and virtual points of sale converge, payment processes are being streamlined into a simpler data exchange. The transference of payment account information can be accomplished by activating the mobile wallet and selecting the desired account for transaction settlement.

The consumer will then be presented with the operator’s mobile Web page to select the payment option. Successful operations require that the machine reader support software capable of interoperating with the wallet’s functionality.

Since mobile wallets store account and proprietary data on a secure, remote cloud-based server and are powered by NFC technology, there is an assumption of reduced risk of unauthorized interception or interference.

While a mobile wallet is primarily a payment device, the ability to receive and store coupons, promotions, incentives, rewards, loyalty points, video clips, and other value-added services are important considerations. A mobile wallet may be built on a mobile commerce platform capable of integrating with a bank, payment processor, and wireless carrier.

A cyber wallet can work with either contact (magnetic stripe) or contactless near field communicationo (NFC) payment technologies without requiring hardware changes at the point of sale.

E-wallets’ value-added features

An e-wallet may offer a number of value-added features including e-receipts, advertising, loyalty programs, couponing, location-based services, social media, video clips, and secure storage for proprietary data (e.g. driver’s licenses, ID cards, and others). The fact that the proprietary contents of the mobile wallet reside on the cloud and not inside the physical mobile device provides protection against the theft or destruction to the device itself.

This Internet basis also provides a real-time clock for monitoring dynamic promotions that often are time sensitive.

Our next article will examine location-based services, QR codes and user analytics


Michael Kasavana, Ph.D., is the NAMA endowed professor in hospitality management at Michigan State University in East Lansing, Mich. He has been researching vending technology for several years.