This is heralding a new revolution, which is spearheaded by a mega trend that is getting enabled by several technology evolutions that businesses cannot afford to ignore anymore – Internet of Things (IoT).
Consumer IoT – Only Tip of the Iceberg!
Gartner predicts the IoT to drive a global economic value-add of $1.9 trillion by 2020. A McKinsey Global Institute report goes one step further, predicting that IoT will have a potential economic impact of $3.9 to $11.1 trillion in 2025, which amounts to about 11% of the world economy in 2025. Although consumer-facing applications of the IoT are where most eyeballs are focused now, the report sees greater potential value from IoT in business and the industry. Out of the total top end economic impact of $11.1 trillion, $9.2 trillion is expected from the business impact.
With significant potential value to be gained from IoT, organizations recognize that they need to act now and start assimilating how they can benefit from it. According to a global survey by IDC, 72% of health care respondents, 67% of transportation respondents, and 66% of manufacturing respondents called the IoT transformative.
Where will the Transformations Occur?
The immediate impact will be in increased efficiency and improved asset utilization. IoT will help enterprises move toward new business models - as outcome based and enable new revenue streams through data-driven services. From manufacturers to utilities, oil and & gas to transportation, aerospace and defense to semiconductors the ability to have them being “intelligent assets” provides a huge opportunity to optimize activities right across the organization, from maintenance scheduling or repair avoidance to energy consumption, asset utilization, reduce mean time to value and start a whole gamut of new offerings and services, which cuts across not just functional silos of one company but starts traversing the value chain.
For instance, in one early adoption through connecting one of the consumable replenishments to the cloud, a major office automation player was able to improve revenues in the first year itself by more than $ 100 M by giving their sales and channel proactive alerts. Similarly, Healthcare industry studies have shown that continuous tracking of patients’ health through remote monitoring can reduce readmission of a patient by nearly 45%. With increased proliferation of smart devices across, and then the ability to leverage the information to create a transformative impact on business processes and people practices will have far reaching economics and business impacts.
Realizing the full value of IoT
The true transformational value of IoT cannot be realized if we just light up dark assets (or make them intelligent). The connected things need to be at the center of a value cycle, which involves generating data from the things, optimizing processes to change people’s actions thereby improving productivity. For example, for an airline manufacturer, enabling the engine to transmit live data, such as vibration level, temperature, spare parts’ maintenance history, etc., can optimize the MRO (Maintenance, Repair, and Overhaul) processes to orchestrate right spare parts and the right people at the right time. Thus the cycle of things to things (transmitting data), things to people (dashboards) and people to things (triggers/actions to be taken) needs to be enabled to realize the full potential of IoT in the future. There are of course situations where the final action is also a thing to thing thus eliminating human intervention.
In my next blog, I will cover in detail the steps you need to take to architect the right strategy to justify your IoT investments.