The Internet of things (IoT) journey started over 3 decades ago. Its potential impact on world economy and society is mind-boggling. This evolution will be the result of considerable efforts across several industries (devices, telecom, IT) and both national and international institutions. IoT enables objects to collect and exchange data with remote systems. Thanks to ubiquitous connectivity and data analytics in the cloud, a recommendation or an action is performed to improve quality of service or efficient resource utilization.
From Telematics to IoT
The idea of connecting and controlling devices emerged in the early 80’s. The idea evolved into what was referred to as “telematics”, which in turn evolved into “M2M” (Machine to Machine) in the early 00’s, when aggressive deployment of fixed and mobile broadband connectivity was implemented in the most advanced economies in the world.
Today, industry analysts forecast an exceptional growth of connected devices. Among those, Ericsson and Cisco predict 20-50 billion connected devices by 2020 and over 500 billion before 2030. The World Bank projects that by 2020, the IoT impact will be close to 6% of the global economy value, with almost 60% of its impact consisting of redistribution of revenue across different industry players. Consistent cross industry efforts are behind these projected aggressive developments:
- The electronic component industry has tremendously enriched the offering of low-cost, low-power sensors in the past decade, while unit costs are projected to drop a further 25%-40% in 2016-2019
- The telecommunication industry is globally deploying data connectivity and evolving to 5G to reduce device energy consumption and improve latency and speed for IoT use cases
- The IT industry has enriched Cloud analytics portfolios and the cost for storage dropped in the past 10 years from $10 per gigabyte to below $0.10
- Governments, international institutions (e.g. EU commission), and industry associations (e.g. GSMA) identified, developed and started deploying concepts to utilize connected devices for improving quality of life of citizens (e.g. smart cities) and effectiveness of industrial operations (e.g. smart utilities or industry 4.0 initiative)
Harvard Business School Professor Michal Porter extensively articulated the disruptive effect that connected devices will have on the “products economy” which will face fierce competition from emerging service-centric models such as cars as a service, jet engines as a service, lawnmower as a service, etc. All in all, articles and studies describing how IoT will create business value through applications in operations, customer experience, new service offerings and business models are today practically endless.
IoT today – not just futuristic visions, but also concrete solutions for customers, enterprises and society
The industry is continuously promoting new concepts, with artificial intelligence (AI), virtual reality (VR), augmented reality (AR) and self-driving vehicles being just a few recent examples. At the same time, the very early M2M services which simply aimed to measure and increase the efficiency of selected enterprise processes (i.e. logistics, machinery utilization and work fork force management), have finally overcome the hurdles of the past and are today concrete solutions ready to be successfully deployed in operations.
A strong emphasis is indeed put on futuristic IoT solutions including AI, VR, AR and self-driving vehicles. On the other hand, as you’re reading this post, thousands of citizens, employees, companies and public administrations have started experiencing intelligent roads, intelligent street lighting, intelligent trash bins or smart metering solutions to increase security, convenience and efficient utilization of resources. Just a few years ago, engaging in M2M, implied challenges like:
- Complex value chain with multiple players, none in true control of end to end delivery
- Complex technical interoperability at all levels of the solutions: connected device, communication link and IT back end
- Substantial up-front costs, difficult to predict
- Lead times of months, often years
- Complex and costly life cycle management
- Concerns on IT security
Todays’ improvements are concrete, especially when considering “simple” applications to measure and increase efficiency of machinery, vehicles and mobile work force:
- The IoT value chain is still evolving, but players like system integrators and specialized companies targeting specific verticals are today comfortably managing the end to end scope
- Pre-integrated solutions built on industrialized platforms for the management of connectivity, applications, devices and data mining are a working reality
- Costs for active and passive devices, connectivity, data storage and analytics are substantially reduced and predictable thanks to emerged “as a service” business models
- Pre-integration allows deployment lead times of weeks or months (depending on level of customization)
- Life cycle management starts being included in the “as a service” fee
- Improvements in IT security are continuous
In conclusion, the possibilities for enterprises to measure, analyze and actuate actions to generate savings for machinery, goods and field force utilization is a concrete and viable opportunity today.
The challenge of value realization is now shifting from the Innovation lab to the Board room
So far, only a few companies have succeeded, after sizeable and long lasting efforts, in getting tangible benefits from IoT. Some are engaging in trials, but the clear majority is not yet engaged at all. the Three top priorities for enterprises will be: 1) increasing awareness about the concrete business opportunities created by IoT 2) anchoring a common understanding across the organization 3) gradually transforming operational and business models. The impression is that the key question for enterprises will soon not be “if”, but rather “why”, “how” and “when” to engage in IoT and digital transformation.
Companies who succeeded in deploying IoT include for example Rolls Royce aviation, who disrupted its business model from selling aircraft engines to number of “flying hours”. The transformation was a response to challenging market conditions. It got high priority and full engagement at all levels of the organization. It required substantial time, almost a decade, and effort in rethinking and transforming the complete company operational model from book keeping to production, sales and support.
The number of companies engaged in trials is rapidly increasing and spread across most industries. Technology focus, lack of a common language across the organization, and weak alignment of vision, strategy and operational model are common pit-falls preventing successful deployment into operations. Today companies who are not yet engaged with IoT are still the majority, but this scenario will likely change rapidly.
Cupole can help companies succeed in the IoT transformation
Cupole is engaged in supporting companies in the digital transformation journey. We can help companies increase their awareness of the IoT potential, facilitate the development of a holistic vison, identify concrete short-term and long-term business opportunities, size cost and benefits, identify gaps to be filled, recommend actionable roadmaps and drive or support execution. We’ve developed a strong ecosystem including competences to innovate, design, and develop solutions in the IoT area.
“Today the possibility for enterprises to measure, analyze and actuate actions to generate savings for machinery, goods and field force utilization is a concrete and viable IoT opportunity“