Why old business models won’t work for the Internet of Things
The first wave of the Internet of Things (IoT) has focused on very high-value operations. However, although we have seen great strides in connected cars, jet engine monitoring and remote healthcare management, the potential of many industries remains untapped. Indeed, we have only scratched the surface of what the Internet of Things makes possible. Early adopters of IoT technologies can expect to save money in operating costs that can be used to fund additional transformations, demonstrating for all to see that the potential of IoT technologies is growing as quickly as the Internet of Things itself.
Though the Internet of Things represents an unprecedented opportunity, many enterprises that try to get into the IoT game are daunted by the complexity of doing so. Sometimes they are put off before they begin by the cost and complication of IoT solutions. Other times, they treat the Internet of Things as merely another computing platform to plug into old business models.
Successful enterprises, however, strategically change their business model to account for the Internet of Things, preparing themselves to scale today’s IoT solutions to support tomorrow’s hundreds of billions of things. In particular, enterprises must heed five significant considerations when putting in place an IoT strategy that can scale with the Internet of Things.
There are already billions of connected devices on the planet and more are connecting everyday, demonstrating the scale of the opportunity represented by the Internet of Things. Indeed, despite gradual penetration of connected technologies, most of the global economy still resides in industries not considered to be “IT-intensive.” In part, this may be because such industries as agriculture, transportation and logistics have been historically poor fits with personal computers, which are better suited for desks and offices. But the Internet of Things is changing all that as connected devices make inroads in every level of industry, providing data and insights that are integral to industry transformation.
In a network as large as the Internet of Things is becoming, security and privacy can present formidable obstacles. If the Internet of Things is to undergo widespread adoption, then privacy and anonymity must be integral features of its design, allowing users to take control of their own privacy. To attain to the full potential of the Internet of Things and of the devices it connects, we must overcome security challenges by combining education with interoperability and good design, as well as by designing security features proactively—not reactively.
Even companies that have found quick, easy ways to enter the IoT market must consider a long-term strategy, for many IoT devices will have long life spans. What’s more, each device created for the Internet of Things must be designed with an eye to enabling connectivity with future devices. As other connected products introduce or acquire new functionality, existing IoT devices must be able to keep up.
Similarly, today’s acceptable security measures may be rendered starkly insufficient as the Internet of Things develops. With that in mind, developers must design connected products that can adapt to meet the needs of a growing and increasingly demanding infrastructure. Only by creating durable and adaptable devices can companies create a long future for their connected products.
When developing a connected solution, focus on bringing compelling benefits to users. Many connected devices are advertised as being connected—but nothing more than that. Yet simple connectivity does not make a device smarter or better than competing devices. Rather, connectivity and intelligence are merely a means to the same end as ever: a compelling product experience. A smart, connected toaster is of no additional value unless its intelligence and connectivity help it beat the competition at making toast. Market success relies on a simple, compelling value proposition: expand the core functionality to enhance the user experience.
Succeeding in the Internet of Things means breaking away from old business models and developing new approaches suitable for a highly connected world. Products such as toasters and door locks worked without apps and service contracts in the digital era, and they can continue to do so—for, unlike PCs and smartphones, they are not inherently interactive.
Thus developers must focus on creating value for clients and users when they design products for the Internet of Things. Certainly the conversation gets interesting when the television starts talking to the toaster, but such solutions can quickly become cumbersome. As technology propels the Internet of Things forward, companies must create strong business models to back the technologies they introduce.
Taking the smart road forward with the Internet of Things will mean rethinking business models and strategies. To deliver real value using the Internet of Things, business and technology leaders must reimagine their technology strategy to focus on providing privacy and autonomy at radically low costs. What’s more, the business models guiding such solutions must use collaboration to create value in highly efficient digital economies, all while offering users an enhanced product and a compelling experience.