IOT benefits

Internet of Things technology: More than just a purchase

“If you don’t change, you die”. High pressure is on to adopt the Internet of Things (IoT). But it’s not something you can just buy, plug-in, and play…

The IoT vision is attractive but vague

New, disruptive business models and start-ups that take over whole markets – every conference or trade fair I visited over the last years featured IoT technologies in some way or the other. I listened to many speakers about high level visions and also spoke to companies launching actual IoT technology products.

Often, I found the visions very inspiring but rather blurry, and the products themselves seemed to add little value without being part of a bigger plan.

You see, IoT is not just some kind of an asset that you can buy, deploy, and simply future-proof your business with. IoT is mainly an “enabler” – for new products, processes, services, and business models. As such, it’s a great challenge to determine how much value it adds, where and how to implement it, and how much to invest. This is where it gets difficult and where many companies get stuck.

Adopting IoT affects your entire company

At least when done properly. IoT’s underlying principle is for the digital world and the physical world to merge. Things become “intelligent” (…the definition of this “intelligence” could fill books though ;). This can mean, for example, that things like products, packaging, or transport devices are equipped with data storage or sensors to log and share data. Or it can mean things are enabled to act autonomously – like trolleys self-navigating across plants or production machines self-fulfilling and requesting orders.

So the actual value of IoT lies in the creation of new services and/or solutions through capturing, collecting, analyzing, and connecting data from the physical world. 

IoT value
IoT value

What all scenarios have in common: it’s never a one-way street with IoT. You will always get something in return: data to process and results from analyses to act upon. It’s a revolution in the best sense of the word and the reason why it will require new processes and eventually also new structures in a company.

Successful IoT implementations: some examples

The following examples clearly demonstrate how IoT technology does not only open up new business opportunities, but also quickly involves various organizational units across a company. They also show that an inspiring vision and full commitment of company management is needed:

  • Equipping your products with sensors to monitor and communicate status will optimize availability and maintenance. But you will also need to adjust service structures and spare parts logistics to make use of the new information effectively – like Schindler with its elevators and escalators.
  • And if you are a car maker, you may decide not only to sell but also to lease your cars – using IoT technology in a car-sharing model like Daimler’s Car2Go. This is probably best managed by a dedicated, entirely new business unit.
  • The perhaps best example is Apple. Its mobile products feature a multitude of sensors and a high level of connectivity. That’s IoT right there. It’s a true metamorphosis how Apple has transformed its business. In addition to high-tech electronics, the company now also includes the operation of its own massive ecosystem including platforms for software, services, and content.

How exactly can you benefit from IoT technology?

Get ready to work. It needs many analyses and a big portion of creativity to successfully implement IoT. You need to go back to IoT’s principle – digital and physical world merging – and what this means for your data and products. What data do you have? Where does it come from? How can it be processed to create value?

Step 1: Magnifying glass

You need to scrutinize your processes – from cradle to grave – and identify data and information that can potentially help to:

  • improve the processes you own or outsource;
  • increase the value of your products or services for your existing customers;
  • enable new ways of delivering your product or service; or
  • form the basis for new products and services or clientele.

Take a look at “the things you have out there”. Be it your products, their packaging, pallets, boxes, or any kind of manufacturing machinery. Or assets in logistics like conveyors, trucks, vessels, planes, or IT systems. Even staff. Of course, people are not “things” – but in this context they must be considered just the same, purely because they collect and process data, too. What or who captures which data at what point? How and when is it accessed, and for what? Which data with value potential is missing but could in theory be captured?

Step 2: Requirements

  • What kind of enhancements to the “thing(s)” would be required?
  • Are there any new “things” needed, and if so, what are they? This can mean machines or systems, but also includes, for example, knowledge.
  • Where and how would the organizational structure need to adapt?

Step 3: Cost and benefit

  • Transform your ideas into business models.
  • What is the market potential and what resources are required?
  • Create a business plan including estimated investment and expected ROI.

Far-fetched but sound? Be passionate about your ideas.

Once again, creativity is essential during this process. Is a company trading in screws a suitable adopter of the Internet of Things? Considering the simplicity of the product, those thinking inside the box might say “no”. Creative companies, however, see this differently.

Take look at the iBin, for example, from the world’s leading trader of connecting materials Würth. This bin features IoT technology that includes an optical ordering system. Through built-in cameras, it captures order information for products within bins directly at Würth’s customers’ sites. The data is then transmitted to the ERP system to trigger replenishment. An IoT-based Kanban system that’s truly adding value in supply chain management for both the customers and Würth.

What are your thoughts? In what areas of the supply chain would you consider IoT technology to add value? I’m interested in hearing your view on this and look forward to your comments  on LinkedIn.