Despite the current hype, most organizations have been on a digital transformation journey for some time. Typically, organizations only had to deal with one wave of technology evolution at a time. For example, in the 1980s we moved to the PC, in the 1990’s it was the move to e-commerce and the dot com era. Today, operations and IT professionals are dealing with four simultaneous technology shifts that include cloud computing, big data processing, enterprise mobility and Internet of Things (IoT). While each of these technologies is at a different phase of its evolution, all four have reached a level of maturity where they can be used today. Organizations are now faced with the challenge of upgrading to these solutions and combining them in new ways to deliver business value.
Today, the Internet of Things is the most exciting and least understood of these four technology areas. The move to IoT is about more than connecting sensors and collecting data . If implemented correctly, the IoT can transform a business process and entire industries. In its IoT benchmark research, Lopez Research discovered that there are three broad phases that companies traverse in deploying IoT strategies. Each phase builds upon the efforts of the previous phase. These strategies include using the IoT to:
Similar to the adoption of mobile and cloud computing, IT strives to make a process better with speed and access to information in the first stage of IoT deployment. For example, a manufacturer can provide a plant manager with access to alerts in real-time on a mobile device. Retailers can have up to the minute access to inventory availability and supply chain tracking. Meanwhile, telecom providers are using IoT and complex event processing to understand network issues and support customer care.
Using new sensors and analytics solutions, companies can improve a wide range of business processes with contextual data and real time analysis. For example, municipalities are using sensors in parking spaces to provide real-time parking availability and create variable pricing based on utilization. Maersk, an international shipping company, is using IoT to offer SLAs and audit logs that guarantee the health of the cargo as it’s transported. In this phase, a certain amount of automation can also take place by using baseline state information collected in phase one. For example, if a piece of equipment is vibrating too much, an IoT solution can slow down the manufacturing line just enough to ensure the equipment can operate without damage until a repair person can service it.
Transform the business with new workflows and business models.
In the final phase, a company’s products evolve into a combination of products, services and business models that leverage data and functions from connected devices and cloud services. Business model options may include shifting from physical goods to good with “as-a-service” models as well as combining software services with physical products. For example, connected home appliance come with software and can be updated over the air with new features. Hitachi provides another example of business transformation. It started by using IoT for predictive maintenance on trains. Now that the trains are instrumented, the company can offer new models such as Rail-as-a-Service. Today, John Deere has evolved from simply selling tractors to offering additional data services that help farmers improve yield by understanding what to plant and timing of the planting.
As a company progresses through the various phases, it shifts from replicating existing services to enhancing existing business processes with new functions. Many organizations focus on the device and connectivity elements of an IoT strategy elements first. However, there are several additional steps that IT and OT leaders should take to ensure a successful deployment that include:
Unlike technology trends such as network and telecom connectivity, the IoT use cases and strategies can vary dramatically by industry. While all successful technology selection and implementation strategies can benefit from understanding the use case, it’s critical to understand what you are trying to accomplish before selecting IoT solutions. For example, networking and telecom solutions are more similar than different across industries. Meanwhile, the type of IoT sensors, device protocols and analytics vary dramatically between industries such as healthcare, manufacturing and oil and gas. While there are several types of IoT solutions that have horizontal applicability, such as network security and energy management, vertical technology leaders should also be looking for solutions that support their specific industry.
2. Prioritize IoT use cases based on KPIs and make them quantifiable.
Within any organization, there are numerous ways that the IoT can be used. To get started, a company should define a set of tightly scoped use cases that support a key business goal, such as improving manufacturing efficiency by 5 percent, decreasing patient readmissions, and minimizing inventory shortages to boost to retail sales. The technology team also needs to define a process for capturing and prioritizing future requests based on KPIs.
3. Update existing security strategies with IoT in mind.
Minimizing threats from unsecured devices is a priority for every company but IoT can increase those threats. Over three quarters of the companies Lopez Research interviewed listed security as a key inhibitor to IoT deployments. Companies must evaluate security at the device and application level. Security should be present at all layers of the IT stack from the device, through the network, to the cloud. In many cases, a connected device doesn’t have embedded encryption or the computing power to run security software. In this case, companies should look at securing data at the LAN, the WAN gateway and application level. Unified endpoint management and identity strategies must also be updated with IoT in mind.
I’ll address all of these concepts and more during my keynote at the Bosch ConnectedWorld 2016. I’ll also be interviewing executives from Bosch Software Innovations, Dell and Walmart, about building innovation and digital transformation using the IoT. I look forward to seeing you there.