Excerpted from The Internet of Things.
The potential impact of the Internet of Things (IoT) is enormous, with some estimates suggesting that adoption of IoT technologies and systems will add as much as $15 trillion to the world economy over the next 20 years. With development of IoT in relative infancy, now is the time for business leaders to consider how their companies can utilize IoT to improve their performance and gain competitive advantage. To do this, companies will need to do the following:
Evaluate what IoT applications could mean for the business. One way of discovering the opportunities enabled by IoT can be to think “use cases” in which everyone in the organization, from the CEO to front-line employees, are empowered and expected to see opportunity not just for productivity gains but for creating new operating and business approaches based on new data and new ways to work with that data. While experts may be required for implementation, the use cases should begin with the people most familiar with the business, allowing them to brainstorm the infinite possibilities for business transformation. Consider questions such as:
- If our company today had ubiquitous and virtually free access to an Internet of Things, what new products services might we be able to offer?
- How might we modify our processes to reduce or eliminate manual data entry or other manual tasks?
- Looking at our analog assets (real estate, machinery, vehicles and other non-digital “things”) what business advantages could we gain by enabling them to communicate wirelessly?
- What long-standing business issues that have vexed us in the past might finally be solved with the way that IoT collects and shares data?
Define and commit to the necessary investments. These include investments in the technologies and human resources to identify and execute creative IoT applications. An important consideration will be the current state of the company’s IT infrastructure (both software and network) and its data-analytics foundation in terms of its ability to collect data through IoT. In making their investment decisions, most companies will be watching the examples of the early adopters to see which applications have resulted in meaningful and lasting value.
Identify and manage the privacy and security issues. As Internet-connected devices become increasingly embedded in the home, in businesses and in public services such as water and electricity utilities, security and privacy are enormous considerations. As businesses and governments try to keep pace with the advancements in technology, the challenge will be to find a balance that protects consumers but allows for innovation.
Evolve their organization and culture to become more “digital.” Businesses that will be most adept at leveraging IoT will be agile, willing to “test and learn” and have a multidisciplinary approach to product and business model development. Capital-intensive organizations — those most closely related to physical things — are likely to reap the greatest benefits from IoT, but may have further to go to evolve their organizations and culture.
IoT may require new business unit structures to grow new lines of business, new channels to monetize them and new expertise in technology and analytics. For CEOs and management teams, this means recruiting executives from more diverse industry backgrounds to spur innovation in areas less central to the core business, and to create and manage the newly imagined businesses.
Learn more about the opportunities and consequences associated with the Internet of Things.