This article is published by IoT Evolution Magazine, 3rd quarter 2016.
Column: Analyzing IoT
Posted with permission.


Leading Indicators for Enterprise IoT


By Sal Yazbeck

 

As we continue at this juncture with the so-called second wave of IoT, the focus appears to have passed the early idea testing stages, and is now engaged on development of real-world business cases.


For the enterprise market, a few key areas are presented here as feedback from the market trickles in. The following points briefly highlight some of the leading indicators.


From Cost Saving to Innovating

IoT in the enterprise is essentially about optimizing or transforming business processes – asking if there a better way to do something than the way it is already being done. In some cases, it is about creating new processes that were/are not in place. Initial considerations were thought to be around implementations that could save costs, such as reduction in the use of electricity or gasoline. Though, a recent survey conducted by research firm TECHnalysis Research reveals that in 43 percent of the cases, business implementations focused on improving processes/innovation, while 38 percent accounted for saving money, and 19 percent reflected making money.

Innovation is occurring in several business areas, including process manufacturing, workplace safety, as well as asset management and monitoring. Applications in workplace safety include interest in HoloLens where workers interact with holograms to view safety zones around them. Other safety applications include remote monitoring of heavy machinery, such as trucks on a mining site, for mechanical functionality and operator alertness. In the asset management and monitoring area, interests include a focus on improving inefficiencies and the ability to rapidly scale services.


The Business Models

As the industry focus continues on its transition toward innovation and improving processes, IoT-focused business ideas and models also continue to evolve. For instance, indications show that proposed ideas are being weighed around a 10x factor where improvements in processes show a 10-fold improvement. The idea being that lower improvement factors may come across as marginal and that the next idea may show more promise. As for business models, currently common adoptions such as thing-as-a-service focus on delivering higher reliability in services as offered through, for instance, predictive machine maintenance. 


A relatively newer concept, which is said to be working well, focuses on delivery of value-based outcomes. Under this scenario the vendor installs an IoT solution for a business, though not based on its development cost, but rather on what that installation is worth to the business. In turn, the vendor receives a percentage of new revenue realized by the business through that IoT installation. For an enterprise, this potentially means faster IoT implementations with less upfront investment. And this model may further offer a strategic push for adoption at this early IoT stage until the market gets better understood and fair market prices are developed.


ROI Will Be Slow

Another key area centers around identifying a timeframe for achieving a return on the investment. The market feedback on this is that while there is widespread optimism, the ROI returns will be slow to show for several reasons. One possible area could be in IoT’s complexity. On this topic, TECHnalysis Research notes that enterprise IoT is challenging to design and deploy, and difficult to sell within an organization, including from one business to another. The firm adds that this realization is contributing to a slow uptake and is limiting the impact of IoT. One respondent to the recent survey shares this view through a company’s IoT experience in the form of “massive workforce pushback at every level, hard to implement, harder still to display positive signs of effectiveness. Acclimation time is probably three times the expected norm.”


Still, on the upside, and as previously expressed, there is a positive transition occurring in several business areas with companies showing strong signs of consideration for innovative business cases. And it’s becoming increasingly clear that the IoT is about forging the right partnerships. Companies need to properly assess what internal strengths already exist, and identify problem areas where outside help is needed to fill a void in expertise.




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