Why IoT is not a technology solution—it's a business play

Publicado el 25 marzo, 2019

Senior Director, Azure IoT Marketing

IoT Hero

Enterprise leaders understand how important the Internet of Things (IoT) will be to their companies—in fact, according to a report by McKinsey & Company, 92 percent of them believe IoT will help them innovate products and improve operations by 2020. However, like many business-enabling systems, IoT is not without its growing pains. Even early adopters have concerns about the cost, complexity, and security implications of applying IoT to their businesses.

These growing pains can make it daunting for organizations to pick an entry point for applying IoT to their business.

Many companies start by shifting their thinking. It’s easy to get lost in technology, opting for platforms with the newest bells and whistles, and then leaning on those capabilities to drive projects. But sustainable change doesn’t happen that way—it happens when you consider business needs first, and then look at how the technology can fulfill those needs better than current processes can.

You might find it helpful to start by thinking about how IoT can transform your business. You know connected products will be an important part of your business model, but before you start building them, you need to make sure you understand where the market is headed so you can align innovation with emerging needs. After all, the biggest wins come when you can use emerging technology to create a “platform” undergirding products and services that can be extended into new opportunity areas.

To help you plan your IoT journey, we’re rolling out a four-part blog series. In the upcoming posts, we’ll cover how to create an IoT business case, overcome capability gaps, and simplify execution; all advice to help you maximize your gains with IoT.

Let’s get started by exploring the mindset it takes to build IoT into your business model.

Make sure business sponsors are invested

With any business-enabling system, organizations instinctively engage in focused exploration before they leap in. The business and IT can work together to develop a business case, identifying and prioritizing areas that can be optimized and provide real value. Involving the right business decision-makers will ensure you have sponsorship, budget, and commitment when it comes to applying IoT to new processes and systems and make the necessary course corrections as implementation grows and scales. Put your business leaders at the center of the discussion and keep them there.

Seize early-mover advantage

Organizations that are early in and commit to developing mastery in game-changing technologies may only see incremental gains in the beginning. But their leadership position often becomes propulsive, eventually creating platform business advantages that allow them to outdistance competitors for the long term. Don’t believe it? Just look at the history of business process automation, operational optimization, ecommerce, cloud services, digital business, and other tech-fueled trends to see how this has played out.

Consider manufacturing. The industry was a leader in operational optimization, using Six Sigma and other methodologies to strip cost and waste out of processes. After years of these efforts, process improvements became a game of inches with ever-smaller benefits.

Enter IoT. Companies have used IoT to achieve significant gains with improving production and streamlining operations in both discrete and process manufacturing. IoT can help companies predict changing market demand, aligning output to real needs. In addition, many manufacturing companies use IoT to help drive throughput of costly production equipment. Sensors and advanced analytics predict when equipment needs preventive maintenance, eliminating costly downtime.

How companies are using IoT today

Johnson Controls makes building-automation solutions, enabling customers to fine-tune energy use, lowering costs and achieving sustainability goals. The company built out its connected platform in the cloud with the Microsoft Azure IoT Suite to be able to aggregate, manage, and make sense of the torrent of facility data it receives. Through its Smart Connected Chillers initiative, Johnson Controls was able to identify a problem with a customer’s chiller plant, take corrective action, and prevent unplanned downtime that would have cost the customer $300,000 an hour.

IoT can also enable new business models. Adobe used to run its business with one-time software sales, but the company pivoted to online subscription sales as part of its drive to create a digital business, according to Forbes. While the move seemed risky at the time (and initially hurt revenue), Adobe’s prescient move has enabled it to dominate digital marketing, creative services, and document management. Now, of course, the software industry is predominantly Software as a Service (SaaS). Adobe is building on its success by pushing even deeper into analytics. The Adobe Experience Cloud uses Microsoft Azure and Microsoft Dynamics 365 to provide businesses with a 360-degree customer view and the tools to create, deliver, and manage digital experiences and a globally scalable cloud platform.

When connections with customers are constant and always adding value—everyone wins.

Think about IoT as a business enabler

It’s helpful to constantly stress to your team that IoT is a new way to enable a business strategically. IoT isn’t a bolt-on series of technology applications to incrementally optimize what you have. That may seem at odds with the prevailing wisdom to optimize current services. Yes, organizations should seek efficiencies, but only after they have considered where the business is headed, how things need to change to support targeted growth, and whether current processes can be improved or need to be totally transformed. In the case of Johnson Controls, service optimization is a core part of the company’s value proposition to its customers.

Yes, IoT can reinvent your business. And yes, constant, restless innovation can be expected until IoT is fully embedded in your business in a way that’s organic and self-sustaining. Adobe has used its digital platform to extend further and further into its customers’ businesses, providing value they can measure.

If you haven’t started with IoT, now is the right time, because your competitors are grappling with these very issues and creating smart strategies to play the IoT long game. Disruption is here and will only get more pronounced as platform leaders rocket ahead.

As you plan your journey with IoT, there’s help. In forthcoming blogs, we’ll be looking at:

  • Building a business case for IoT—Why this is the moment to be thinking about IoT and developing a solid business case to capture market opportunity and future-proof your organization.
  • Paving the way for IoT—Understanding and addressing what gaps need to be overcome to achieve IoT’s promise.
  • Becoming an IoT leader now—It’s simpler than you think to start with IoT. You can use what you have and SaaS-ify your approach with technology that makes it easy to connect, monitor, and manage your IoT assets at scale.

Need inspiration? Watch this short video to hear insights from IoT leaders Henrik Fløe of Grundfos, Doug Weber from Rockwell Automation, Michael MacKenzie from Schneider Electric, and Alasdair Monk of The Weir Group.