New Essential Business Strategies Introduced by IoT
The IoT accelerates the pace of change as the industry frontrunners bring the new technology into wider use. Companies become familiar with the IoT stack and are more eager to apply it to their core operations. In a chain reaction, the impact of the IoT on the enterprise adds momentum to the adoption of other esoteric technologies, such as Big Data and AI.
The recent “Voice of the Enterprise” survey by 451 Research finds that two thirds of the 500+ interviewed IT decision-makers plan to steadily increase their IoT spending in the next 12 months. The poll also pinpoints the trend towards more business-minded IoT implementation, such as operations-focused facilities automation, which has finally overtaken data center and IT infrastructure optimization as a top priority.
It is thus apparent that, besides its hype in the consumer electronics market, the IoT ushers in a new era of data-driven business strategies and technology inspired services. We expect 2018 to be the year of the global transition to these new approaches.
Data-driven LOB operations
Since its inception several years ago, the IoT used to be heavily centered around remote equipment monitoring, sensor data collection, and improved technical efficiencies. However, the priorities have finally started to change in favor of more business-oriented process automation.
Line-of-business (LOB) operations are now a major target for the IoT since many companies have already tested it on small-scale projects and are willing to go ahead with strategic implementation. There is also greater clarity and a plenty of real-life examples in how the IoT may be used in specific LOB operations to capture business value.
For example, manufacturing companies are able to go beyond basic equipment monitoring solutions to enable predictive maintenance with additional analytics and automated workflow management. As a result, the IoT ensures maximum uptime, speeds up critical decision making, and simplifies workload management on the factory floor.
In a similar way, logistics companies combine vehicle tracking and telematics solutions with cargo tracking, RFID-based warehouse management, and workforce management applications to build fully transparent supply chains for their clients. The IoT has become a key competitive advantage and a foundation for their business development.
Analytics at scale
The unprecedented amount of data spawned by IoT devices and sensors hammers home the value of Big Data analytics for the enterprise. Only a fraction of companies have been able to successfully monetize IoT data so far, while for the large majority its potential remains grossly underutilized. This trend is about to change with data science gaining traction.
Data science and Big Data have had a solid track record in advertising, Telecom, and IT infrastructure management. Now they are being paired with smart connected devices to harvest abundant IoT data in a broader variety of business settings. Consumer data analytics has been effective to help understand user preferences, discover potential product improvements, and manage advertising and marketing campaigns. In healthcare, real-time patient data analytics is the leading edge innovation for all types of wearable and stationary medical devices.
Such IoT analytics solutions are now being provided in these and other industries as a service. They are also being used to cut back operational costs in cases as diverse as validating warranty claims on leased equipment or balancing rented cloud server capacity to meet the customer SLAs. The great variety of possible data analytics applications, the expanding scale, and the requirements for latency and accuracy all make IoT analytics a challenge in itself, from both the business and the technical side. Finding clear monetization strategies for their data will help companies thread their way through implementation challenges and claim a sweeter spot in the marketplace.
Cloud as a core expertise
The cloud used to be a matter of convenience and extra safety, but in the time of the IoT it is at the very heart of the business. New connected devices bring more value to the consumer market, but only as long as the cloud part is up to scratch. That said, the cloud for the IoT is more than just infrastructure - it is also an IoT platform, connectivity, security, and a DevOps management tool.
For this reason, modern companies must get really involved with their cloud strategies for their entire IoT stack. As the IoT permeates all of the company’s departments, it clearly becomes a core competence, not merely a facilitating technology that the cloud used to be. Product departments utilize the IoT to create breathtaking new features; Operations personnel take advantage of real-time visibility of the production workflows; Marketing gets a deeper insight into the customer behavior; and Sales unlocks new engagement opportunities in a broader marketplace.
An IoT cloud is also about a company’s continuous innovation strategy. To avoid the trap of over-reliance on a specific technology vendor, many companies opt to maintain key IoT solutions as their private assets. It can be a branded or an open-source IoT platform that can be used for new product development at will. Ultimately, the owners of IoT enablement technology will possess the most valuable expertise and data for the further improvement of their and their partners’ products.
We expect a large number of companies to leap at the opportunity and take the lead in IoT cloud innovation to gain a significant business advantage in their markets. However, giants with large in-house IT departments cannot take it for granted, since open-source IoT technology may effectively help any company to top the charts.
Customer-centric digital strategy
IoT-powered products create multiple new ways for the companies to interact with their customers. Most of these products support a variety of options for new services and have a great potential to bring personalized user experience into play. In fact, in such fields as consumer electronics, healthcare, hospitality or retail, customer-centric digital transformation is the biggest promise of the IoT. Not just being content to remotely control their smart devices and transfer data, customers will differentiate between vendors by the wow effect of their “personalized” IoT products. Are businesses ready to deliver?
Not many of them. Some major impediments are still the half-hearted scale of IoT implementations and numerous misconceptions about IoT data analytics ... but also the lack of consolidated digital strategy on the whole. This issue makes the role of Chief Digital Officer critical in streamlining the digital transformation across separate departments of the company as well as in striking a responsive chord among shareholders.
To get results fast and not get lost in the overall “digitization” effort within a company, the user experience must be a priority. IoT data can help companies understand what the user wants and channel their product development into the right field. Such data becomes the single most valuable resource that makes companies like Tesla worth more than Ford and GM and also opens new partnership opportunities and monetization strategies.
Establishing IoT ecosystems
The IoT is increasingly a space for exciting business collaboration. Collected in one application, customer data often has collateral value for various other applications. For example, insurance companies could benefit from the client’s health stats provided by his or her health monitoring devices. In practice, some companies already distribute fitness trackers among their clients and reward them for meeting their fitness goals.
On a larger scale, partnerships between different companies from the same or different lines of business can result in unique innovations and more comprehensive IoT solutions. This is particularly the case for wide-area projects such as Smart City or Smart Energy, but also whenever companies can complement each other’s technology stack, service portfolio or customer data set. Consider a Telecom operator that partners with a smart home vendor and enables 24/7 managed services for smart home users. In other use cases, they can sell subscribers’ preferences analytics to OTT providers, support businesses with location-based advertising, or lend their infrastructure edge to third-party applications.
There are countless opportunities for every sector so revisiting the company’s partnership strategy might be a key part of a successful IoT integration. Having control over IoT enablement technology gives you a wide variety of options to engage in such partnerships, and so does having access to valuable data, infrastructure, and smart products R&D. Do your SWOT analysis to know which avenues to explore.
Preparing for AI
AI has been in the spotlight for some time already, making an especially convincing case in predicting what users want in all kinds of settings. According to the latest reports, automated recommendations are responsible for more than a third of what people buy on Amazon and around three quarters of what they watch on Netflix! Facebook is also among the AI frontrunners as it uses machine learning to recognize and display relevant content to users, whether text, photos, or videos.
The IoT will bring a lot more AI-infused opportunities to life. Following in the footsteps of online giants, smart device vendors may use AI to delve into user behavior data to continuously enhance their products UX and introduce new value-added services. Virtual assistants, voice and image recognition, and AR applications are all set to dramatically expand the capabilities of modern smart devices.
AI can also effectively complement the IoT in reducing the cost of physical operations. Some logistics companies, for example, use robots in their fulfillment centers, and also apply AI to categorize inventory and decide shipping logistics. Agriculture companies already use drones and computer vision applications to monitor their fields and decide the optimum harvest time.
The biggest cloud providers already offer APIs that provide machine-learning capabilities to other companies. But the necessary engineering talent is scarce and get snatched up like hot cakes. Even if AI is not exactly up your alley at the moment, it is time to start taking it seriously … So be prepared.