In the age of the internet, almost every human being is connected on multiple devices. Every day we interact with numerous touch points; PCs, smartphones, alarm clocks, smartwatches, Alexa’s, smart appliances or smart TVs. With Internet of Things (IoT), all these devices can be connected through the internet and user’s data can be shared among multiple devices to create a seamless user experience. Such data interactions between devices are now common, thanks to cloud storage and computing. Cloud technology helps to store the data on remote servers as opposed to local memory allowing people to have a common data storage space across different devices.
However, behind this simple technology that we use every day are the processing chips and sensors that transmit data to the cloud using the internet. In the last decade, engineers are able to design smaller chips and sensors that can be used in any of the day-to-day products which can then be connected to the internet. This ability has given rise to (IoT) which is building a more connected world and a more connected future.
Connected Products Driving Insights
Connected equipment in manufacturing, aviation, the supply chain, agriculture, healthcare, and many other industries, is creating more data streams and analytics potential, meaning that companies are gaining much greater insights into their business operations and how their customers use their products or services. When a company understands how its customers use its products, they can better fulfil their needs and improve the customer experience.
In many cases, this has been enabled by cloud platforms provided by the likes of Microsoft Azure, AWS, IBM, and Google (alongside hundreds of more specialized vendors), but there is also now a shift towards edge computing in some industries, in an effort to reduce the latency (and other drawbacks) introduced by relying on remote, third-party data centres.
Emerging Business Models
Since IoT products have 24/7 connection to customers, companies can leverage that connectivity to develop a recurring-revenue business model. Now instead of having a one-time sale, organizations can offer a subscription model in which customers pays a fee in return for continuous value.
A subscription model enables IoT products to implement many of the benefits available to software-only products. This allows companies to introduce an as a service business model for a system that includes both software and hardware.
The outcome based IoT business model is an example of an innovative approach enabled by IoT products. The idea is for customers to pay for the outcome, or benefit that the product provides, as opposed to the product itself. Smart inverters are one of the great examples of this. Manufacturers can monetize the cyclical power consumption but not the inverter itself. A smart inverter that collects power consumption data and switches between solar and grid’s power sources based on consumption patterns is one of the innovative product designs that paves the way for new business models.
Innovation in Product Design
Businesses have found new ways to create value for consumers with innovative IoT products that improves their daily activities. With the rise of home automation products and smart home solutions, regular home appliances are transforming into smart devices; TVs, air-conditioning systems, home sound systems, or refrigerators can be connected to one single central device, or cars, enabling control of all the appliances out of the home.
Toshibas’s smart air-conditioner unit is just one example, the unit automatically switches off if the sensor detects that the user is not present in the room, so that it is more energy efficient. Companies that successfully integrate IoT into their products in a way that benefits both the customer and their own internal processes allows organisations to move away from conventional business models to new revenue streams. The data acquired often holds value in itself; more significantly, customers can be offered subscription-based services that draw on the connected nature of the company’s products, often offsetting the initial cost of entry.
As consumers are being more aware of their choices and carbon footprints, companies are promoting their smart devices as a sustainable solution that reduce energy consumption. However, businesses must move beyond smart devices to create a sustainable home experience.
Tesla’s renewable power solution — Power Wall is one such example where IoT is critical for remote control and data management. The power of the technology is that it provides the possibility for companies, like Tesla, to tailor services to their customers and respond in real-time to unforeseen events. By collecting data from these devices, the companies can optimize their performance going forward benefiting both consumers and businesses.
Using IoT for Detection and Security
While there are several ways that the technology has created value for consumers and continues to be hyped, the B2B application of IoT is less know but that doesn’t mean it has any less potential. For example, GE, recently began installing sensors in its aircraft engines. These sensors allow mechanics to remotely monitor the health of each component and collect and record data on when repairs or replacements will be needed. Other examples include warehouses, assembly lines, security systems all use IoTs, not only to prevent breakdowns, breaches, and fire hazards, but also to better monitor the usage and wearing tear of machines.
In a traditional view, industrial sectors are only well-suited to use IoTs for improving data flow and document management. By live tracking through sensors, these organizations can measure the quality of production and optimize the cost of such dataflow. However, there are companies starting to move towards industrial automation, using IoTs to automate inventory management, an RFID sensor-based inventory management system that detects any reduction in inventory and automatically places an order to maintain ideal inventory levels, logistics and delivery, as recently trialled by Amazon, as well as several other business processes.
These trends show that IOTs have a key role to play in automation that is beyond IT processes such as data management and documentation. As the cost of connecting through the internet is reducing all over the world, the future holds great potential for discovering new use-cases of IoT. Combining this decreasing bandwidth cost and the need for competitive advantage are inspiring modern enterprises to embrace IoT technology.