Transforming business models with Internet-of-Things

IoT can provide huge gains in terms of operational efficiency. It can predict when assets and equipment need maintenance or replacement before breakdowns occur; track materials, products or vehicles to streamline value chains; and even monitor the safety of employees to ensure less accidents on the work floor. However, beyond the improvements in efficiency, accuracy, and safety of operations lies the more disruptive potential of this technology: the ability to create entirely new business models, which combine products with new data-driven services.

Rolls-Royce and GE Aviation for example, have moved to a consumption-based model for their aircraft engines by monitoring the performance of the engine through insights and condition-based maintenance.  IoT solution providers such as Amazon likewise base their pricing model solely on usage, without minimum fees or mandatory service utilization. This power-by-the-hour model creates a more cost effective service rather than just selling a product once. Nevertheless, even now these opportunities become more and more within our reach, many companies still struggle to implement them successfully. Moving towards a service-based model can prove to be risky if you do not ensure that your IoT initiatives are business driven, secure, and reliable.

Find a business driven purpose for IoT
First and foremost, initiatives involving IoT should be driven by a business problem or need. Not all products prove to be good carriers for sensor technology, and the costs of implementing this technology can be quite high. Integrating insight-driven services in your value proposition should be supported by a business case that shows exactly how the insights will create additional value for the customer.

Securing your IoT products
Securing your IoT products is of massive importance and is one of the most important aspects when delivering IoT embedded products to your customer. Many companies that develop IoT solutions make the mistake of preferring speed to market over properly securing their devices. Research has revealed that eight out of ten of the devices tested didn’t require a password stronger than 1234, with home automation and medical devices having the weakest protection of all. As an organization it is vital to protect your own and your client’s data, especially if your data insights are extracted from products that are in your client’s environment.

Understanding the technology
Not only the business model changes when implementing these solutions. The roles of people within the company and their responsibilities change as well. Managers should realize which algorithms are in place and what purpose they fulfil. This does not only help secure the company against any violation regarding the use of analytics and data, but can also help stakeholders understand and embrace the value that IoT can bring.
Independent of how you apply IoT technology the risk of resistance is always there.

IoT is opening up great opportunities for a connected future. Nevertheless, before diving into these possibilities it is vital for companies to determine the business value that can be achieved with IoT, while developing a thorough understanding of the technology itself and its associated risks.