Nearly every highly populated location in the world is now connected to the internet. As a result, connectivity is a critical business capability and one that is growing ever more important. One reason for this is the staggering growth of Internet of Things (IoT) devices. Marc Pégulu, Semtech’s Vice President of Internet of Things, observes, “The Internet of Things is a cohesive system of connected computing devices, mechanical and digital machines, or objects with the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. The use of IoT continues to grow in many typical areas, from smart cities and connected offices, and, into a larger enterprise point of view, throughout manufacturing, transportation, and utility organizations. Making use of connected sensors and other IoT devices, however, has made its way into more unexpected industries and use cases too.”[1]
Despite the growing ubiquity of IoT devices, McKinsey & Company analysts Michael Chui (@mchui) and Mark Collins note, “Successful implementation still eludes some.”[2] One reason successful implementation is illusive is because, as Pégulu explains, the IoT is an ecosystem. Every part of that ecosystem must work in harmony. Chui describes the IoT as embedding “digital technologies into the physical world. For example, we’re seeing digital technologies embedded in cars and in buildings. You connect those physical objects through digital network connections back to computers, and that simply is it. That’s the Internet of Things.”
Where are IoT Use Cases Growing?
Initially, the primary focus of the IoT was the industrial sector. For that reason, many pundits began referring to it as the Industrial IoT (IIoT). Collins observes, however, that IoT is now making a big impact in the consumer sector as well. He explains, “[There has been] massive growth of the connected home. Rewind the clock back five years ago, and the average American house had one connected device in it. We fast forward five years, and homes have over five connected devices on average. This shift has been born in part out of real innovation in technology with smart speakers, as well as us being caught in our homes for the last two years because of COVID-19. We’re investing in the area around us, both to improve and make our lives easier.” Chui and Collins go on to report that their research found that some of the fastest growing areas for IoT implementation include consumer applications, healthcare (e.g., health in hospital acute-care and residential-care settings), factories, cities, and other work sites.”
On the consumer front, they note, “We also saw a real excitement around human productivity in the retail setting to really enhance what the experience can be for shoppers while also enabling companies to optimize both their revenue growth and their cost price. … One of the remarkable things we’ve seen is that companies are deriving value from using these technologies. Whether it’s in the factory, in healthcare, or in the automotive industry, we’re seeing more and more cases where real value is growing and being created.” Members of Forbes Technology Council identified a number of ways any business can leverage the IoT.[3] They include:
1) Optimizing marketing opportunities. “This area is still relatively untapped, though it has huge potential. Marketing teams can use the IoT to gather detailed data on potential customers, create targeted marketing campaigns and approach leads on an individual basis.” Council members note, however, that dealing with the oceans of data generated by the IoT can be daunting. In order to derive value from it and ensure that it is being handled properly, they recommend using artificial intelligence and machine learning technologies.
2) Improving building management. More cities are trying to become so-called smart cities. Pundits have pointed out that to make cities truly smart their infrastructure, including buildings, must embrace smart technologies. Those technologies inevitably lead them to IoT solutions. Council members note, “Simple building management remains the cornerstone in any IoT deployment. Think thermostats, shades, lights and access control. IoT is a fabric of different technologies that all pivot on the building maintenance system initially deployed.” Sustainability is becoming a significant issue for all businesses. Not only do they face increased regulations, but, in some cases, their very existence will depend on how sustainable they become. IoT solutions can help improve sustainability.
3) Offering personalized services. Today’s consumers are becoming a bit more demanding. They expect personalized service and IoT can help deliver it. Council members explain, “IoT is paving the way for opportunities to employ computer vision via cameras and other visual sensors. It helps provide greater insights into customer behavior, requirements and critical aspects of an organization’s operations. IoT provides companies with data about each individual to deliver personalized services.”
4) Utilizing digital assistants and voice search. Siri and Alexa are now household names. They also represent a new era of natural language processing that affects consumer behavior. Council members note, “One way to leverage the growing power of IoT is to optimize your website for voice search. It’s estimated that voice sales will hit $40 billion by the end of the year.” They add, “One way just about every business could leverage IoT is by using the devices as digital assistants. As consumers, we are used to asking Siri or Alexa to perform various tasks, such as reciting the weather forecast. Imagine the uses in everyday business.” There are pitfalls that need to be avoided in this area. Chui and Collins explain, “Privacy is absolutely a factor as we think about consumer preferences. … Some companies make their value proposition based on privacy as they go forward. But what we also see is a tension for users because they want the convenience that many of these IoT devices can bring. They’re seeking to balance these trade-offs between privacy, ease of use, reliability, ease of installation, et cetera.”
5) Leveraging advanced analytics. As noted above, Council members suggest that the full benefits of IoT ecosystems can only be enjoyed when artificial intelligence and machine learning technologies are in play. In today’s fast-paced business environment they also suggest that real-time monitoring of data is critical to stay ahead of the competition. They note, “Any business that conducts services in the form of machines, humans and equipment will benefit a lot from IoT. With all devices emitting data on their performance, businesses can monitor the data in real time, leading to a growth of revenue from predictive maintenance and service insights with a more personalized customer experience. This can lead to differentiation and high-value new services.” AI-based solutions, like the Enterra Global Insights and Decision Superiority System™, can help businesses ensure their decisions are based on the latest data.
Concluding Thoughts
As Chui and Collins noted at the beginning of this article, successful IoT implementation still eludes some companies. Two of the reasons for this, they state, are that IoT implementation is “being treated as a technology project” and, even though “the technology has changed, the actual way of work has not.” IoT implementation is part of a required digital transformation and it requires a holistic approach. Sociologist Tricia Wang (@triciawang), explains digital transformation requires “a total paradigm shift in the culture and operations — it’s not just about buying the latest digital tool, but about creating a new system, new cadence, new mindset.”[3] And this new system must be embraced by the entire corporate ecosystem. Collins explains, “Ecosystems are absolutely critical as we think about the landscape going forward. … No single vendor can secure an entire IoT value chain. Rather, we need people who work together to integrate almost each layer of the stack to bring this together. … We have not seen that emerge in IoT as of yet. And the emergence of that through an ecosystem play or through some other play is an unlock that we would be excited about.”
Footnotes
[1] Marc Pégulu, “Where Does IoT Exist in the World? Expect the Unexpected.” RT Insights, 14 July 2022.
[2] Michael Chui and Mark Collins, “IoT comes of age,” McKinsey & Company, 7 March 2022.
[3] Trevor Miles, “Let’s be clear: Digitization is not the same as Digital Transformation,” Kinaxis Blog, 8 December 2017.
