This blog is part of a tailor-made content series around the SAS Forum Belux 2015. It is linked with the event track called `Internet of Things’. Click here to join the event and learn more about the other 3 tracks (Data Management, Digital Society and Data Science).
It is striking how so many C-suite decision-makers understand the potential of the Internet of Things (IoT) to deliver long-term revenue growth (57 %) and even believe that their organisations have the capability to create new, service-based income streams using the IoT (84%). Yet, in stark contrast, just 7% seems to have developed a comprehensive strategy and committed investments accordingly. (source)
Most companies tend to think of IoT in the (very) long term: valuable, yes, but for (much) later. Often, the gap between their situation and the use of IoT is so considerable that they feel paralyzed by it: they lack the right IT and telco-infrastructure, the in-house talent, the budgets, the customer demand or struggle with interoperability issues, security challenges and the absence of clear government regulation in the matter. Others just prefer to wait for a more widespread and affordable adoption of the available technology.
Beyond operational efficiency to boosting revenue and new business models
Early adopters in the realm of IoT tend to be using it for operational efficiency. No surprise, then, that most executives who are contemplating it, cite cost-cutting (44 %), employee productivity improvements (46 %) and asset optimization (46 %) as most likely to benefit from it. (source) A great example is that of MyJohnDeere, a platform built by the agriculture company John Deere, which allows farmers to manage their sensor-enhanced equipment, personnel and farm operations in real time with data analytics.
The reason why operational efficiency leads the way in IoT is logical enough. Testing a new trend inside an organisation is often more small-scale and controllable than rolling it out outside. And yet, the external possibilities of the IoT – for serving customers and developing new business models – tend to be even more significant. It can boost revenue by increasing production or by enhancing customer demand. IoT could, for instance, enable ultra-customized marketing campaigns based on the location of consumers and of the infrastructure and services around them. It could allow sensor-enabled products to directly interact with browsing consumers. Insurers could leverage on-board diagnostics in cars for more customized services for their customers. Or IoT could empower remote monitoring in healthcare for the elderly or those living in closed-off locations. On another level, everyone is talking about the need for (open) data sharing and the richness of co-creation these days. Well, the IoT could have a major role in that if players within supply chains and cross-industry consortia would share their data on the matter.
Fear of the Gap versus disruption
These are the externally-focused and revenue-driving measures where the true disruptive value of the IoT lies. As stated previously, for many the enormity of the existing gap still overshadows the potential that such an IoT migration represents. And that is understandable. But while organisations are waiting to see where the first movers are heading, they will find themselves subtly yet increasingly at the back of the race. Because the potential impact of the IoT is mind-shattering. Servitization can and will redefine the business models of entire industries. A fully connected world will also completely transform the way we work, and which capabilities we will need. Just think of what it means in terms of the required skill set for something like industrial maintenance: how this will shift from manually looking for and solving defects to intelligent data crunching, planning and proactively attacking problems. The bottom line is this: the IoT is here to stay and will only get bigger. And fast. So your organisation ought to be investigating how it can profit from it if it does not want to become redundant in a quickly changing world.
If you feel the gap between you and the IoT is too big, just start with manageable steps and with a limited scope which can easily be redirected. Begin on the inside, first, by looking into how it can help you optimize your operational efficiency. And then dare to go beyond that, to how it can benefit your customers with new business models. Or try to investigate the possibility of sharing data and co-creating with cross-industry consortia. And while you’re doing that, plan a hiring strategy that’s coherent with the essential skills of the future IoT workforce and find out how to make your company attractive to them. I will not sugar-coat it: many steps will have to be made – some more radical than others – but the value these can offer is beyond exciting.
Join SAS Forum Belux on October 15 next in Antwerp to gather other valuable insights about the digital society, the Internet of Things, data science and data management.