Internet of Things: New Business Models and the Road Ahead
The Internet of Things (IoT) is now firmly enmeshed in our lives. From fitness bands and Bluetooth enabled keys, to health monitoring devices, we are already leading a well-connected life. And yet, some of the numbers around IoT can still take our breath away. According to Gartner, by 2016 we will have 6.4 million ‘things’ connected to the Internet and that 5.5 million new things will get connected every day. Yes, you read that right!
The Internet of things (IoT) is a network of objects embedded with software, sensors and internet connectivity allowing them to send and receive data. Now, what does this mean for businesses? Through our own experiences, we know that the evolution of ‘smart and connected’ devices is poised to deliver tremendous benefits and efficiencies to businesses as well as individuals. But that is not the only value IoT offers. ‘Things’ connected to the Internet generate huge volumes of data, which can be leveraged by businesses to improve their operations, enhance their understanding of their customers and also devise new offerings and products.
Business Models around IoT
While IoT primarily revolves around the devices, products or appliances that are connected, the business models deal more with the data generated from the devices. Consider the Healthcare industry for example. Wearable devices today help many people monitor their fitness, sleep and health habits. This has led to healthcare and other ancillary businesses using this data to offer highly personalized nutrition and fitness solutions. Monitoring devices are helping hospitals and healthcare providers get real-time patient data and deliver timely care.
In manufacturing companies, data-collecting sensors in factories give visibility into performance status and real-time alerts, enabling preventive maintenance. There are many potential cases for the banking and financial industry too. Imagine making a payment or filing your taxes with a single tap on your watch!
In the coming years, IoT will fuel ‘as-a-service’ offering, with companies providing fully managed devices or appliances with performance guarantees built in.
How Internet of Things can help Small Businesses
Data is changing the way we solve problems. Individuals use data to lose weight or change spending habits. Large corporations use big data analytics to optimize supply chains and understand customer behaviour. Meanwhile, small businesses still rely on their gut for important decisions. They need to adapt and take advantage of the IoTs rich data to keep up with the big guys. IoT can open up many opportunities for small businesses.
• New business models and revenue diversification: Create new customer touch points and service lay
• Real-time information on mission-critical systems: Better tracking of assets, inventory and resources such as power, water, labor and other inputs. For example, getting notified automatically when your clothes are ready to be picked up at the dry cleaner
• More efficient and intelligent operations - Improved data analytics plus ambient time tracking and billing for exact work done can empower small businesses.
The key is to identify opportunities where IoT can play a role in delivering tangible benefits. An interesting example I came across was how retail store owners can monitor how many customers walk in, how long they stay at a particular spot and where they congregate with cameras and sensors. Real-time heat map data can help a store owners deliver tailored messages to their customers and optimize their marketing or sales strategies.
The Long Road
With all the buzz around it, organizations are yet to achieve maturity in the monetization of IoT. The biggest challenge is leveraging the connected devices to develop a cohesive customer experience and product management framework.
Companies need to focus first on managing the vast data volumes that are generated by their devices. Cost-effective storage and effective harvesting of the data to feed back into the relevant business processes is critical to earn the desired ROI.
The other major challenge is security. With all of the data generated by devices coursing through the electronic ether, there are serious and legitimate concerns about the security of this data. Illegal access of this data exposes millions of consumers to potential privacy breaches. Tampering of data can have far more serious consequences as businesses increasingly automate business processes and actions to follow analysis of data generated by the connected devices. Inaccurate or tampered reporting of a patient’s vital stats, for example, may have life threatening consequences. Organizations also have to worry that compromised devices can allow hackers entry into their corporate networks.
With enterprise perimeters all but vanished, traditional approaches to safeguarding access are not valid any more. Experts predict that most security attacks on organizations will now be targeted at the cloud – which is where most of the IoT data is stored.
In its report on the IoT security market, Gartner predicts that global spending on security for the Internet of Things (IoT) will reach $348 million this year. It also stated that the focus areas for security will be the management, analytics and provisioning of devices and data. Finally, it said that IoT security will be dependent on cloud security measures, and that over half of the IoT deployments will use some form of cloud-based security service.
For most CIOs responsible for assessing the impact and adoption of connected devices in their business, the IoT is like a self-propelled juggernaut – It is too big to ignore and is only getting bigger.