Archive for August, 2014

Internet of Things Delivers Business Value Now

The Internet of Things (IoT) and the economic ecosystem surrounding it are expected to become an $8.9 trillion market in 2020, according to IDC in published reports. And IDC may be conservative. Cisco estimates that IoT will drive economic value (increased revenues and reduced costs) to $14.4 trillion by then.

Business, however, doesn’t have to wait nearly that long. The IoT reportedly enabled global private-sector businesses to generate at least $613 billion in global profits in 2013, according to a study released by Cisco in June 2013.

With big numbers like that expect every enterprise IT systems vendor to jump on the bandwagon. Not only Cisco but IBM, Oracle, HP, and more. BottomlineIT last covered IoT six months ago here. Enterprise IT should begin following IoT closely. It promises to put IT at the center of a substantial future revenue stream.

The Cisco study reinforced exactly this point: Corporations could nearly double profits through greater adoption of business practices, customer approaches, and technologies that leverage IoT. Furthermore, it estimated that an additional $544 billion could be realized if companies simply adjusted their strategies to better leverage it. That’s where the CIO and IT come in.

The IoT isn’t exactly new. It has been around for years, mainly as private networks of sensors or machines wired to feed very specific data to backend systems for capture and analysis. More recently these systems went under the name of machine-to-machine (M2M) systems. Today’s IoT consists of a combination of sensors, technology, and networking all coming together to allow systems, buildings, infrastructure, and other resources capture and swap information.  

Bill Bien, Partner, Waterstone Management Group LLC, Chicago, suggests that technology executives think of IoT as “the next generation of the Internet, whereby objects interact, potentially independently, with each other and with their environment. It is the combination of distributed information processing, pervasive wireless networking, and automatic identification deployed inexpensively and widely.”  This will produce, in turn, “profound change that enables the extraction of value and analytics from distributed systems across enterprise and industrial value chains,” he adds.

Given the above, Bien continues, it is imperative for technology executives to understand the impact of IoT from two perspectives:


  1. Monetization opportunities offered by IoT in target markets (external focus)
  2. Optimization by improving the efficiency of their own supply chains and distribution channels (internal focus)

To put the conceptual IoT in practice, Bien’s organization analyzed 40 IoT use cases according to the type of distribution, supply chain, and customer information they generate and classified current and future deployments into four groups: control hubs, value chain transformation, monitoring & assessment, and decision support. In addition, to further frame the value creation opportunities offered by IoT, a use case-driven approach is needed to understand and prioritize the likely business impact of these use cases, he recommended. See the following chart, Categorization of Internet of Things Use Cases.

 david IoT Use Case Categorization

As a CIO you can tap the IoT to monitor and assess your business’s infrastructure and whatever other objects populate the enterprise for starters. From there, expand your thinking to the organization’s supply chain and any other value networks your organization maintains. Your initial emphasis will be on the left column of the use cases chart above. Eventually, you will want to add the right column where the bigger potential payoffs reside.

Finally, as your organization embeds intelligence into the products it sells you should consider creating an IoT around your own products to understand how they are used in order to create better designs, understand your customers more deeply, and improve operational efficiencies. Then, beyond just collecting deployment and usage data from your product IoT, you can leverage product usage and performance data to begin offering value added services to both differentiate your products and potentially generate added revenue.  The ultimate payoff will vary by the industry and size of your distribution and supply chain networks, but by all accounts it will be significant.




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