The right time to invest in the Internet of Things: It's now or never

Welcome to the customer-experience-centric and outcome-based world of 21st Century Enterprise (21CE). It’s agile and lean, service-oriented and ecosystem-driven. These are enterprises that are adapting to the 'digital revolution' and using the momentum to power their own growth.

What is setting many of these 21CEs apart is their inclusion of the IoT into their plans to transform markets and industries.

From Consumer IoT to Industrial IoT – the economic value of IoT

Gartner predicts the IoT to drive a global economic value-add of $1.9 (£1.4) trillion by 2020. A McKinsey Global Institute report goes one step further, predicting that the IoT will have a potential economic impact of $3.9 (£2.8) to $11.1 (£7.7) trillion in 2025, which amounts to about 11 per cent of the world economy. Although consumer-facing applications of IoT are where most of the current focus is, the report sees greater potential value from the IoT in B2B. Furthermore, out of the total top-end economic impact of $11.1 trillion, $9.2 (£6.4) trillion is expected to be from the business impact.

With significant potential value to be gained from the IoT, organisations recognise that they need to act now to start understanding how they can benefit. According to a global survey by IDC, 72 per cent of healthcare respondents, 67 per cent of transportation respondents, and 66 per cent of manufacturing respondents called the IoT transformative.

The real innovation in the IoT is set to take place behind the scenes in the Industrial Internet of Things (IIoT). The immediate impact will be in increased efficiency and improved asset utilisation. The IoT will help enterprises move toward new outcome based business models and enable new revenue streams through data driven services. From manufacturers to utilities, oil and & gas to transportation, aerospace and defence to semiconductors, the ability to have 'intelligent assets' provides a huge opportunity to optimise activities right across the organisation. This ranges from maintenance scheduling or repair avoidance to energy consumption, asset utilisation, reducing mean time to value and starting 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 its first year by more than $100 (£70) million. Similarly, healthcare industry studies have shown that continuous tracking of patients’ health through remote monitoring can reduce readmission by nearly 45 per cent. With the increased proliferation of smart devices, and the ability to leverage information to create a transformative impact on business processes and people, these smart devices will have far reaching economic and business impacts across industries.

Realising the full value of IoT

The true transformational value of the IoT cannot be realised if we just light up dark assets (or make them intelligent). Connected things need to be at the centre of a value cycle, which involves generating data from the things, optimising processes to change people’s actions, thereby improving productivity. For example, an airline manufacturer can optimise their MRO (Maintenance, Repair and Overhaul) processes to orchestrate the right spare parts and the right people at the right time by simply enabling their jet engines to transmit live data, such as vibration level, temperature, spare parts’ maintenance history, etc. 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 realise the full potential of IoT. There are of course situations where the final action is also thing to thing thus eliminating human intervention.

The real focus needs to be on connecting capital-intensive physical infrastructure or assets, such as plants, hospital equipment, electric grids, field vehicles and pipelines. We have to recognise that the IoT will not mean the same thing to everybody. It will all depend on the business problem that you want to solve. We need to define what is the fundamental problem in your business that needs to be targeted as it relates to the asset value chain? It is most likely that the IoT will be the solution. It’s also possible today with the massive power of big data and data science to parse the data being generated to identify potential problem areas.

IoT adoption – together we can!

Across the world there are many examples of companies that are using smart connected devices to transform how they operate – smart vending machines that flag when they need replenishment, connected cars that sense problems before they become catastrophic, intelligent grids that automatically monitor and optimise energy production, telematics that allow the location, movements, status, and behaviour of fleets of vehicles to be monitored and even smart elevators that reduce waiting time. IoT hence is not the future; it is here!
Given the complexity involved across a spectrum of technologies, adoption of IoT has to be looked at like a journey. We recommend the following approach in order to harness this significant potential:

1. Establish clear business objectives for your IoT programme

a) Identify business processes that could be streamlined to realise efficiency

b) Identify new opportunities to offer new value to your customers – both 'within the four walls' and 'outside the four walls' of the enterprise

c) Identify opportunities of adjacencies, both at the functional and industry levels

2. Establish a definitive roadmap for business outcomes, with a clear focus on an agile flexible approach that can support the identified business requirements

3. Identify & leverage the right partners from the IoT ecosystem – consulting, technology integration, technology partners, and specialist teams in new areas of technology. Leverage partners who are committed to a journey

4. Invest in your own teams with the right blend of process knowledge, technology & skillsets that drive transformation and change management

5. While some of this will be a journey into unfamiliar territories, there has to be a framework of governance for innovation and risk and change management to drive the journey forward

What makes a symphony sound so great? The violins, flutes, clarinets or trumpets? None of them alone but all of them together. Likewise, IoT is a challenge to create magic in isolation.

It’s 'Now or Never' to start the journey

With billions of dollars of business value at stake, the real disruptive potential of IoT is approaching fast. With the journey of IoT adoption neither being overnight nor a straight-line journey, it has to start now with its disruptive potential, otherwise – it’s now or never.

Sukamal Banerjee, Executive Vice President and Global Head of IoT WoRKS Business Unit