New technologies play an important role in the evolution of the industries and how people and businesses interact. With any new advancement, expectations evolve and digital disruption happens.
One such disrupting technology is Internet of Things (IoT as some people call it that way) . It is defined as a system of interrelated computing devices, mechanical and digital machines, objects, or people that are provided with unique identifiers (UIDs) and have the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.
It is not only driving transformations but is also propelling how businesses function internally and externally. IoT like any other digital transformations is still unfolding. A lot many businesses want to adopt these new technologies, but the transition can be puzzling and finding the navigation may be difficult.
Data Never Lies!
A statistical analysis was carried out by IDG, IDC, and American Society for Quality on how IoT is reshaping the business practices and how easy or difficult is it to adopt the new technology. The survey had the following findings:
- 25% of the survey participants reported that the IoT transformation “sparked a new wave of innovation thanks to data that give us better insights”
- 20% said it had changed existing business models or strategies
- 16% said it had enabled them to push into new markets and industries
- 15% said it had lowered their cost base
- It emphasizes the fact that many companies investing in IoT are seeing payback from it.
- When asked about the Internet of Things’ impact of on business in general:
- 21% said that it already had had a major impact
- 52% said that it had a limited impact on business so far
- 57% agree “somewhat” or “strongly” that their progress with IoT did not happen as fast as they had expected
- 29% of respondents suggested the high cost of required investment in IoT infrastructure is the biggest challenge
- 26% cited privacy and security concerns
The above findings imply that IoT has huge potential, but currently, the adoption has been slow. Hence, there are numerous practical obstacles as well that come in between the proper implementation and adoption as well.
Also, according to the survey, IoT is reshaping the business practices in the following ways:
- Increasing operational efficiency
- Redefining market winners and losers
- Transforming business strategies
- Reinventing the product cycle
- Enabling real-time decision support from big data and data analytics
The IoT-based transformation has huge potential. But, to achieve this potential, it has to be tuned to the sector-specific and business specific needs carefully. Only then the business benefits will be realized.
Driving the Business Transformation
IoT has gained the momentum in last few years as the cost of sensors has declined and the processing power has increased. It is now possible to connect more things, devices, and people. In the future, everything in the surrounding will be able to communicate without human intervention.
This will transform the business in basic six ways:
- Growth-based transformation
A growth-based transformation is promoted by a new entrant in a market. When this happens, current businesses are forced to change themselves for better and to step-up their game.
This transformation also happens due to an extension of product lines resulted because of increased efficiency in manufacturing processes through IoT. This transformation can also happen to diversification in a product portfolio by upgrading the efficiency of equipment through IoT.
As per the statistics, IoT helps in enhancing the manufacturing process. An IoT-enhances manufacturing processes, the efficiency level is improved by 82% and customer service efficiency level are improved by 45%
- Reduction-based transformation
A company undergoes reduction-based transformation by sun-setting a product or product line. A company may decide to invest all the resources on a specific product or product line that is driving major revenue. Another way for reduction-based transformation is reducing the headcounts.
Numerous companies are adopting and utilizing advanced data analytics. Hence, the decisions are made based on the data. These decisions can be regarding policies or strategies. Not only real-time data can be acquired, but real-time feedback about the performance of products and product-line can be acquired. This helps them to make a right and informed decision. According to statistics, product defects can be decreased by 49% with the help of IoT implementation.
- Combination-based transformation
Combination-based transformations can be achieved through mergers and acquisitions. This helps the companies to minimize the areas outside their professional expertise. It helps in achieving an amalgamation of internal and external resources that focus on strengths and strategies. Hence, transforming businesses and dynamics.
- Separation-based transformation
Separation-based transformation happens when mutually exclusives entities part ways. These separations affect the businesses in more than one ways.
A lot of times, IoT implementation leads to new product categories and models that result in separation from the parent companies. For example, when 3D printing technology was adopted by car makers, they found a whole new market of micro-factories. This resulted in the separation of new business and model from the parent company.
- Strategy-based transformation
A new strategy resulting from a new vision can change how a company functions and operates internally and externally. These changes are vital to transforming people, processes, and technology. Adopting new technology is a big technical change which changes the narrative of the organization, starting a series of the chain reaction of transformations.
IoT is a disruptive technology affecting every aspect of the businesses. It is going to re-invent each process like quality control, customer services, design, strategies, revenue generation, manufacturing etc. New digital communication lines will be opened between customers and business for better feedback. These feedbacks would play a major role in taking the strategic decisions as they would be fact-based decisions.
- Optimization-based transformation
Business undergoes process optimization to gain strategic advantages in a market. These transformations can be technology adoption to increase the overall efficiency.
The efficiency can be increased by boosting manufacturing efficiency or reducing product defects as well.
IoT implementation can also help in reinventing the product cycle to boost the overall efficiency. According to statistics, 20% of product manufacturers utilize real-time information from the Internet of Things as a closed-feedback loop to product development and future improvements.
A right IoT implementation enhances the quality of business, products, services, feedbacks and operations, and give business enough bandwidth to experiment and innovate.