In my role as CEO of an analytics company, I have the opportunity to speak to many business leaders in midsized companies ranging from commercial to public sector, manufacturing to financial services. When the conversation turns to the Internet of Things, I find that many have yet to consider the opportunities this coming tsunami brings to first movers. Many are unaware of the term “Internet of Things” or its shorthand “IoT.” But it is beginning to show up in business-centric publications more and more. Here are a few examples.
IoT as the Third Internet Wave
Goldman-Sachs – Our Thinking – Outlook Infographic highlights the reasons for the coming wave of IoT enabled companies reporting that in the last ten years:
- Sensor costs have dropped by 54%
- Bandwidth cost has dropped 40%
- Processing costs have dropped 60%
And Goldman-Sachs predicts that, “The Internet of Things is emerging as the third wave in the development of the Internet. Personal lives, workplace productivity and consumption will all change. Plus there will be a string of new businesses, from those that will expand the Internet “pipes”, to those that will analyze the reams of data, to those that will make new things we haven’t even thought of yet. “
Shifting Rivalries, Shifting to Servitization
In Harvard Business Review – How Smart, Connected Products are Transforming Competition the authors state:
“Smart, connected products have the potential to shift rivalry, opening up numerous new avenues for differentiation and value-added services. These products also enable firms to tailor offerings to more-specific segments of the market, and even customize products for individual customers, further enhancing differentiation and price realization.”
Among other benefits, IoT will create opportunities for product companies to provide new, recurring revenue streams from the add-on services they can provide. This product-service combination is known as servitization. Professor Andy Neely, University of Cambridge, defines servitization as “the innovation of organization’s capabilities and processes to better create mutual value through a shift from selling product to selling Product-Service Systems.”
Nuggets of Material Value
Forbes – In Search Of The True Value In The Internet Of Things, written by Joe McKendrick, states that, “The real value lies in being able to capture and analyze the data that comes from the sensors at the endpoints of IoT — and that needs to be the few nuggets of data that are of material value to the business.” I agree with Mr. McKendrick. IoT provides a textbook opportunity to focus popular technologies such as big data and machine learning to shine a bright light into the dark corners of devices providing opportunities for new business models and more efficient business processes.
IoT for All
In summary, IoT has escaped technology labs and has entered the mainstream business. With the lower cost of sensors, ubiquity of the Internet and low-cost cloud services, IoT solutions are within reach of even the smallest of companies. Those that make the first move in their industries can score tremendous strategic advantage. Are you a visionary business leader ready to plan for and capture the value IoT can bring to your organization? Stay tuned: My next blog post will tell you how and where to get started.