The Internet of Things (IoT) is disrupting Industries with a huge potential to generate alternate revenue streams, improve cost efficiencies and transform business models. For instance, IoT is enabling Manufacturing to move towards pay per usage models, it is ensuring new waves of innovation in healthcare like biodegradable chip based tablets and enhancing cost efficiencies through optimized operations for industries like Mining. As IoT gains wider adoption, businesses will move from a product centric to a more outcome based services approach, with data coming from “things” providing useful insights. Hence it is becoming imperative for CXO’s to develop a plan around IoT, by realigning their business priorities, to take advantage of the immense value an IoT ecosystem brings. While embarking on this journey sounds exciting, there are some key questions to be answered that will help define the IoT strategy for a business going forward.
How will you continue to provide differentiated value to your customer?
With IoT we are observing a massive potential for innovative business models that are challenging the traditional style of doing business.
With greater adoption of Industrial Internet, businesses will shift towards delivering measurable results to their customers. There will be an emergence of outcome based business models led by software driven services, innovations in hardware, and the increased visibility into products, processes, customers and partners. Models around “hours of equipment operation” rather than sale which allows the customer to use the equipment in an as-a-service offering is emerging. Over the long-term, new business models around products-as-a-service, pay-per-use models and monetization of data will emerge. New business models will be based on the different kinds of data collected and the insights that can be generated from them.
How will IoT change the way your company does business?
IoT has been around for years but it’s in the limelight now. According to Gartner - The installed base of connected things will grow to 50 billion units in 2020 with 26 billion of new devices other than smartphones, PCs, tablets. Forrester predicts that “IoT software platforms will become the rage, displacing the hardware.”
IoT can scale and speed up monetization of new products and services in the market. The reduction in the cost of sensors, processing power and connectivity solutions along with changes in regulatory requirements in a number of verticals, have made IoT a feasible option. Already there are software platforms that facilitate the capture of data, storage and exchange efficiently. In manufacturing industry for example, the initial focus was on building remote monitoring and management applications for equipment within the plant. This lead to creation of application specific data in silos that could not be used to provide a consolidated view of operations. Industry 4.0 has paved way for serviceable and intelligent IOT platforms which can handle the explosion in smart devices and data transmitted to create Connected Ecosystems that directly impact Business outcome.
Is your business IoT ready?
IoT implementations require collaboration across the ecosystem with partners that can put the right technology in place and develop services around it to meet the needs of your customer.
With the IoT infrastructure in place, Data will become the currency of the IoT economy going forward. Generating business critical insights from all the data coming in can lead to many Analytics based services. They can uncover new value creation opportunities by helping customers meet specific outcomes. Analytics applied on the data sets can generate new insights about customer needs and behaviour that can help clients make a decision enabling “Insights as a service”. Also according to Gartner the two worlds of IT and OT are converging in asset intensive organizations and it is important to manage this transition by integrating the two environments. IT/OT convergence provides benefits like optimized business processes, enriched information for better decision making, lower risks, reduced costs and shorter project timelines.
Do you know where to invest in the IoT eco system?
There are three major areas where the IoT business opportunities are emerging– ‘IoT’ization for smart enablement of devices, ‘Platformization’ for development of platform to deliver services and Autonomy for taking actions in real time or bringing machine learning into decision making. Companies who will grab these IoT opportunities will have the first mover advantage in the market.
Take for instance the pharmaceutical Industry where a significant amount of money, time and energy is spent on conducting clinical trials. IoT solutions provide a great way to reduce the time and effort needed to complete the study by equipping participants with remote monitoring devices making them faster, cheaper and safer. The data coming in can unlock insights that can help in gaining a competitive advantage. The huge amounts of data getting generated from the connected “things” eco system, is increasing the value delivered to the end customers. The value may range from guaranteed machine uptime in plant sites, to tangible amounts of energy saved in residential or commercial buildings.
What are the new challenges you need to be prepared with for IoT?
As the market is still gaining maturity, there are obstacles to cross for a successful IoT adoption and implementation.
Security and privacy issues are a widely debated topic that is hindering the adoption of IoT. Protecting the privacy of the user including the IP of the manufacturer and blocking malicious activity constitutes some of the concerns and rightly so. High upfront investment costs make flexibility in the solution crucial. As more and more things get connected to the Internet, the complexity will only increase as we need to ensure Interoperability. Lack of Interoperability due to lack of standards and the presence of complex set of technologies, platforms, partnerships etc. are holding back investments in IoT. But there is silver lining as many Governments and Industry leaders have formed consortiums and governing bodies for IoT to tackle these issues collaboratively. IIC, Allseen etc. founded by leading technology companies, focus on accelerating the adoption of IoT by tackling some of these challenges by working towards more open standards and common architectures.
What you should be doing NOW!
IoT is a technology looking for a problem to solve! Prepare your business for the IoT journey before it’s too late!