4 Ways the Internet of Things will Completely Change Your Business
The Internet of Things (IoT) has been hailed as a game-changing phenomenon for consumers and businesses. IoT is the idea that any device or product can be fitted with sensors, tracked, and managed or acted on in some way through the Internet. This technology promises to change everything from the nature of product selection and services by businesses, to the competitive environment and how businesses of all sizes operate.
There are already 1.9 billion connected devices in use today and that figure is expected to rise to 9 billion by 2018. However, many business, in particular small businesses, are still unaware of what IoT is, and how it could impact their operations. These are four major ways that IoT could change your business, regardless of your industry or the size of your operations.
1. Smarter, real-time operations and efficiency gains
One of the biggest impacts of IoT on businesses of all sizes is the ability to connect more devices to the Internet, for the purposes of expanded business and operational intelligence to support great efficiencies.
As Microsoft terms it, IoT delivers ‘intelligent systems’ that are integrated in such a way that allows for inventory efficiencies and ‘unparalleled reliability and uptime’, all of which allows for insights that can support business objectives on many different levels. Microsoft agrees that in the coming years, many small businesses will start using these smart machines and devices in their operations.
The sensors that are ubiquitous to IoT devices and systems will play a significant role in this new landscape of information businesses. These sensors can be attached to anything from large infrastructure items such as bridges, to disposable consumer items like coffee cups and cartons of eggs to monitor usage or status and send data to the cloud.
What all this new data means for businesses is that they can collect not only more feedback, but feedback of a specific nature, to improve and personalise services to both consumers and business customers. Possible damages or malfunctions can be quickly repaired and low supplies can be automatically topped up without the end user reordering.
On a strategic level, IoT allows businesses to move quickly, in an agile manner. For example, less popular product lines can be removed quickly and in-demand products expanded.
2. New business opportunities and revenue streams
IoT is likely to be a boom for businesses when it comes to new business opportunities, smarter products, and additional revenue streams. It could change the way both consumers and businesses approach their product and service offerings, and open up new vistas for additional or substitute revenue streams.
For example, phones used to be mono-purpose devices that fulfilled a specific function – to make phone calls. Today, Internet connectivity means your smartphone delivers many more functions and has even become a product-delivery channel for digital products such as apps. Items such as smart tennis rackets, frying pans and yoga mats are already a reality. These smart devices are used to deliver additional functionalities such as coaching you on your yoga or tennis practice, and even guiding you through your cooking.
These smarter products can be designed to be once-off products in themselves, or they might be used – like your smartphone is used today – to allow businesses to deliver additional services on a paid basis. The user might be paying for the ongoing service and the delivered outcomes rather than the product or the hardware itself. All of these possibilities could allow businesses to diversify revenue streams and create new value streams for their customers.
Other possible smart products include smart waste management for smart cities, smart environment management, smart water, and smart, real-time industrial control.
3. Shifts in business models and organisational structures
As first-movers across industries act quickly to take advantage of the new technology, this will shift the competitive landscape. Other businesses will likely be forced to follow the market leaders who take advantage of the smarter, real-time operations and efficiency gains.
For some businesses, there could be a change of business model as they act in response to the changing opportunities or act as first-movers in their industry. A well-known example is the case of the machinery equipment giant John Deere, which has been adding data and information services to their tractors and equipment that are now connected to the Internet.
This information guides farmers on planting, plowing, and other essential farming activities. As such, John Deere now provides an information service as well as physical products to their customers. As GE’s CEO Jeffery Immelt says, ‘Industrial companies are in the information business whether they want to be or not’.
A change in business model will also require a change in organisational structures. One of the ways this could happen is the integration of the traditionally discrete units of product development and enterprise data management and analysis within organisations. As companies start capturing, applying, and sharing data from internal devices and products in the hands of customers, these two units will have to work together much more closely.
4. Cyber security and privacy implications
Even as IoT brings incredible new opportunities for businesses, there are risks to plan for. Cyber security and privacy is probably the most significant risk for businesses in the brave new world of IoT. A study by Hewlett Packard reviewed 10 of the most popular devices in some common IoT niches and found that 70 per cent of devices used encrypted network services, while 60 per cent of user interfaces were vulnerable to cross-site scripting. The majority of these devices did not require complex passwords for access. Yet, the risk of malicious attackers gaining access to other data through IoT data is real.
Data that is collected, stored, and shared and that is not appropriately secured can be vulnerable to hacking. Security of personal data is vital in order for consumers and other customers to have confidence in business brands and their services. In the coming IoT world, companies need to work with their internal IT teams and any external partners to protect private information with encryption, updates and patches, and any other necessary efforts.