Internet of Things (IoT): What is it all about?

IoT

Internet of Things (IoT): Time for clarity, simplification and business view

Internet of Things, also known simply as IoT, is one of the hottest buzzwords and hyped-up topics in the global technology industry at the moment. The number of articles, seminars, training courses, academic research and commercial projects is growing very fast, and there appears to be no end in sight. IoT is being referred to as the next industrial revolution and something that will disrupt companies, business models and even entire industries. In the midst of all this fuss, there is also an increasing amount of companies asking themselves: “What is this actually? Should I be worried? Should I do something about this?”. In other words, while the hype keeps growing, so does the anxiety and lack of clarity, among companies of all sizes who are busy working hard at their core business and can’t afford spending much time and efforts into studying this topic.

We want to demystify this hype by sharing more clarity and a few practical thoughts on what IoT means, and what it could mean from a business opportunity -viewpoint. If you are interested in the basic facts as well as potential business opportunities related to IoT, keep on reading.

Getting the basics right.

What does IoT mean? Gartner Group, a leading global IT research and advisory firm, defines it as “The Internet of Things (IoT) is the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.”

In simple language this means that physical things can collect information, be connected to each other and exchange information. In practice these things can be for example sensors, smart phones, computers, household appliances, industrial machines – basically anything and everything – that is able to collect, process and send data for further use and analysis via different networks. The number of these physical objects is expected to grow from the current 1 billion to 50 billion by 2020. This growth is fueled by technology that keeps getting faster, better and cheaper – as an example, the cost of simple, inexpensive computers is currently less than 30 €, enabling IoT applications to be built at very low entry cost. Similarly also the cost of connecting the IoT devices to networks is becoming cheaper.

Raspberry_pi

Raspberry Pi, a credit card -sized computer for around 30 €, the best-selling personal computer in the UK and a popular platform for development of IoT applications.

After data is collected by the IoT device, the data needs to be sent, stored and processed somewhere as data capturing devices do not typically contain any memory. This is also a key enabler that allows to push the cost of data capturing devices into minimum. Most often the data is stored to a Cloud platform, which is in practice computing infrastructure that computers and other devices can access over the Internet. Cloud computing includes networks, servers, storage, applications and services that can be accessed and utilized remotely. Cloud computing enables economies of scale, similar to everyday utilities like the electricity grid or water supply. Companies can also avoid large upfront infrastructure investments, as they do not need their own dedicated infrastructure, but can instead use Cloud computing on a pay-per-use basis. Examples of global cloud computing platforms include e.g. Microsoft Azure and Amazon Web Services, and there are also many other, large and small, global and local providers of Cloud services.

The business value of IoT – this is the most important aspect.

Putting the technology aside, the key aspects for getting value out of IoT are the people, processes and the business environment in which IoT is planned to be used. The data gathered from the IoT solution has in itself no value – in order to gain value, the captured data must be connected to the business context, either as a standalone element or by combining it with other data sources. And even after this, the data must utilized, either to understand the problem at hand better, or by using it to make better and more accurate decisions. The exponential growth of different types of sensors and data-capturing devices means that only your imagination is the limit for what data to capture – just answer the question: what data would help me run my business better, and am I ready to start the IoT journey?

All this sounds already great, but the huge opportunities are actually far beyond just data utilization for improving the existing business – the major opportunities for companies are to form totally new business models that leverage newborn data as an asset that allows transitions to business models that were earlier beyond their reach. Those business models are often based on an idea or insight on how the already captured data can be applied to completely new contexts, and in some cases the raw data and sales of it is also a very viable business opportunity.

To emphasize again – the data itself has absolutely no value, unless it is used in a way that adds value to the organization or its customers. This might sound self-evident, however the reality is that many IoT initiatives are still much too technology-focused and lack a strong business opportunity -viewpoint.

Food for thought: examples of successful IoT solutions.

Here are a few examples of cases where IoT has really made a difference and enabled productivity improvements. These examples are just the tip of the iceberg, as new opportunities come up in all kinds of situations every day, everywhere, in every industry. It is worth noting that every company, organization and situation is unique, and needs to be studied from its own unique perspective, to achieve the best outcome and added value.

  • Performance optimization: The energy consumption of machines can be optimized using IoT solutions. As an example in the marine industry, energy saving solutions are available for ocean vessels, where vessel performance data is used to reduce energy consumption and harmful emissions, optimize routes and save costs. Similarly in manufacturing facilities, the performance levels, energy consumption and duration of maintenance breaks of the manufacturing equipment can be minimized.
  • Preventive maintenance: sensor data can be used to predict possible upcoming engine failures already before the failures occur, which helps to reduce the amount of unplanned maintenance breaks and saves costs.
  • Mobility and automation: IoT technology can be used to operate connected and autonomous vehicles such as cars, agricultural and industrial equipment, which reduces the dependency on manual operations, increases automation and enables vehicles and equipment to operate in difficult conditions where human operation is not possible.
  • Continuous measurement and surveillance of nearly everything: For example, it is not uncommon that quality-related related damages may occur in buildings over the years. In order to avoid costly renovations after it is too late, inexpensive and long-lasting sensors can be installed into the building structures to measure the humidity levels and other conditions, give an early warning if needed, and even automatically take corrective actions such as adjusting heating temperatures or air conditioning to avoid major damages.
  • Coordination of remote projects and activities: companies may have projects where staff and equipment is located in multiple locations, sometimes even across the globe, and the project leadership has a need to monitor the progress and coordinate the activities, ideally in real-time. This can be achieved by enabling the project staff and equipment in all locations to collect data on the status and progress, and share the data to a common Cloud platform, from which the project leadership can run relevant status reports and steer the next steps. With such a solution, project management is no longer tied to a time and a place, instead it can operate from anywhere at any time.
  • Transformation of an entire business: In a car, for example, software can be used to manage things in the car that earlier required physical, mechanical parts. This makes the manufacturers of the mechanical parts suddenly obsolete, possibly even out of business. Similarly in many other products, software can replace hardware, or enable completely new functionalities, which in turn can give birth to even totally new businesses or industries.

What to do differently and how to launch a successful IoT transformation?

As mentioned, a lot of the hype around IoT focuses on the underlying technology. Yet technology alone does not help to add value to your business. Here are 4 steps which we in the Sininen Polku team consider relevant when you are exploring IoT as a means to add value and increase the productivity in your business.

1. ASSESS the opportunity: From anxiety and lack of understanding to awareness and aligned technology- and business understanding.

  • Identify a diverse team of business- and IT leaders across your organization with whom you want to get aligned on the opportunities that IoT opens up to your business.
  • Start the process by looking at your overall industry, your existing strategy and mode of operations – not by looking at technology such as IT systems, sensors or Cloud providers. From a business opportunity –viewpoint, brainstorm ideas and create structured scenarios. Some of the key questions that you should consider are:

What are the main disruptive forces in IoT that could affect your industry and business?

Which of your business areas and –models will be impacted first? Why? How?

When the disruption happens, what is the best thing that could happen? What is the worst (such as new competitors with completely new business models)? When and how fast could the change occur? When it occurs, will you be the driver or a passenger?

2. CLARIFY the opportunity: from wild ideas to practical action planning.

  • Identify the most promising ideas and the quick wins. Which ideas are such that they can add value in the short term and be tested quickly in real life situations, perhaps even with customers and partners? Build prototypes and do pilot tests. Co-innovate with customers and other players in your value chain if possible – this will not only help build better IoT solutions, it will also help increase your brand image as an innovator.
  • Build the team that will do it. Who should be members of your transformation team? Are the people available? When can we start? Which competencies are needed, which are missing? Where to get external help and expertise for facilitating and implementing the transformation?

3. DEVELOP the solution.

  • Build and productize your solution. Apply the “fail fast, learn fast” –thinking. Develop in an agile, iterative manner where you start with the Minimum Viable Product first, and expand with additional functionality then in later increments.
  • If possible, involve your customers in early testing and adoption of the solution, to ensure smooth deployment.
  • Start to see and measure the benefits in reality!

4. OPERATE the solution.

  • Turn your IoT solution into a standard part of your everyday operation, to extract the full value out of it. At this stage you will have a solution that improves productivity and gives you a competitive advantage. Remember to ensure continuous improvements to your solution in order to maintain the benefits over time and to find new opportunities from IoT . This can be done for example through customer feedback, industry benchmarking as well as innovations that you and your team come up with.

Are you interested in business opportunities, added value and productivity improvements enabled by IoT? Do you want to discuss more on how to turn them into reality for you? Don’t hesitate to contact us, let’s have a chat.

Sininen Polku offers you a complete IoT Transformation Journey through the steps above, and we always tailor our offering to your business and to your needs – we help you extract the value out of the capabilities of IoT into your business.

Yours,
Sininen Kynä

 

PS: If you want to read more about facts and fantasy around IoT, here are a few good picks:

Harvard Business Review, “How Smart, Connected Products Are Transforming Competition”:
https://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition

“The Fourth Industrial revolution” by prof. Klaus Schwab, Founder and Executive Chairman of the World Economic Forum:
http://www.amazon.com/Fourth-Industrial-Revolution-Klaus-Schwab/dp/1944835008

“The Internet of Things” by Samuel Greenland:
http://www.amazon.com/Internet-Things-Press-Essential-Knowledge/dp/0262527731/ref=sr_1_1?s=books&ie=UTF8&qid=1460920256&sr=1-1&keywords=internet+of+things+%2C+MIT

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