Greg Corlis | 14 May 2020
If the Internet defined the first two decades of this century, then the Internet of Things (IoT) will be a gamechanger for the next two decades and beyond.
Consumer culture has been at the forefront of driving IoT adoption so far. The rise of wearable technology, smart home appliances, navigational sensors in motor vehicles and ubiquitous virtual assistants all show how IoT enabled devices have become the norm in our daily lives.
Within many enterprises, however, the level of IoT adoption remains low, even though many executive leaders recognize that IoT can deliver value to their organisation through increased efficiencies, waste reduction and automated processes.
KPMG’s most recent Technology Industry Innovation Study1, found that IoT is ranked as the technology with the greatest potential to drive future business transformation and long-term value, especially around improved business efficiencies, increased profitability and cost reduction.
The problem is that most executives have yet to fully embrace an IoT strategy to transform their business; shaping a new relationship between organizations, customers and others operating in their supply chain.
To do so will involve using IoT sensors and networks not just for monitoring and evaluation but also for insight. Analyzing data from a connected ecosystem provides better operations and services for the entire organization. Thus, building trust with customers and suppliers who want to know their data is secure, and for organizations to make informed business decisions, knowing they can trust the data collected.
Moving forward the real value of IoT will be realized when it is integrated with other technologies that are transforming business.
How then, can executives best shape their IoT strategy? KPMG’s recent work with clients and within its own organization suggests the following four lessons will be crucial.
- A connected economy requires strong leadership
Given the most prominent IoT solutions to date have been consumer focused, we have found it has taken a little while for executives to get their heads around how IoT will affect their enterprise.
Some enterprises are more mature – industrial manufacturers, for example, have been experimenting in IoT for a long time – but even those companies have struggled with the limitations of moving beyond their wired infrastructure.
Increasingly, however, executives are exploring how IoT can drive efficiency in the organization, cut costs and reduce downtime. As a result, we find they are starting to allocate greater resources to IoT developments throughout the organization.
As with many instances of innovation adoption, a well-considered pilot project to solve a specific business problem can help executives see the bigger picture and possibilities of wide-scale IoT adoption. Take the example of Fleet Management companies that, thanks to IoT, are able to stay connected with all of their assets around the US and the globe providing insights into the fleet’s health, location and driver habits. As a result we’ve seen a reduction in operational costs and an increase in positive customer experience.
- Connect the IoT dots in your strategy
As IoT and the other technologies that underpin the Fourth Industrial Revolution become part of the business mainstream, executives need to think about the value of all these connected systems working together.
Unlocking the value of this connected ecosystem requires a mind-shift. In the past, businesses considered these technologies in isolation. Even when they understood the ability of IoT to connect many different aspects of their enterprise, bigger possibilities often remained unrecognized.
Ask yourself: how do I integrate IoT with my cloud platforms? How do I integrate IoT with my existing data lakes and data pools to create new data sets that deliver analytics to supercharge operations and add financial value across the organization?
Connecting the IoT dots is just as important when working with outside suppliers. Take sourcing and supply chain analytics for the manufacturing sector as one example. If a company has IoT data on the precise consumption of raw materials, that information can be quickly integrated back into the supply chain so providers can better respond to the demand.
Likewise, IoT means a retail company can track inventory more accurately and responsively. When inventory is getting low for a product, new orders to suppliers can be initiated automatically. Over time the company can build a fully informed data map of its production schedule.
- Rethink the connected customer relationship
Perhaps the biggest transformation IoT will bring is in the way businesses interact with their consumers. Take the healthcare sector: already healthcare providers are using IoT devices for preventative and predictive care, monitoring patients to identify potential cardiac events or other critical medical issues.
And yet the potential for IoT adoption is so much greater. It will start to scale as patients develop the same level of comfort and confidence in the technology that the companies supplying the services already possess – having experienced IoT’s ability to minimize faults and improve operational efficiency.
In turn, consumer confidence in IoT diagnostics will help speed adoption of the technology, foster greater innovation and generate better products and services as companies learn from the direct feedback they receive from their IoT products.
Similar things are happening in the hospitality sector today. Hotels now are developing connected IoT infrastructures that can identify and shape frequent guests’ preferences by interacting with their mobile or wearable device. They can process automatic check-ins, set the hotel room temperature to a guest’s personal preference, select the TV channel ahead of arrival and even suggest room service based on their previous choices. In this sector, connecting individual IoT devices to an integrated architecture can provide a much richer, personalized customer experiences.
- Build supply chain trust through connectivity
The full potential of a connected IoT infrastructure will depend on the trust people have in it, the way it is being utilized and its effect on security and privacy. However, it is the supply chain where building trust for connected IoT systems will be most keenly felt.
Most enterprises don’t trust each other, especially when it comes to sharing data. Technologies like Blockchain and associated Distributed Ledger Systems are helping to create more transparent and secure inter-company data flows. Yet for IoT systems to really benefit connected organizations, those involved must see common value and trust that shared data is protected and respected.
On one level new data security solutions for IoT networks such as “wrap around” protection for all sensors in the network can offer some reassurance. However, the real issue is cultural not technological. Your supply chain needs to be convinced that it will be more successful by sharing IoT data across organizations rather than isolating it.
Change is on the horizon. The new generation of connected consumers seem less concerned by privacy issues, if it gets better services in exchange for sharing online information. But new debates are emerging about who really owns the data – the consumer or the company?
One thing is certain. Hyper-connectivity is here to stay and will influence nearly every part of our daily lives. For businesses to thrive in this connected universe, a network of trust around IoT will be just as important as the insights gleaned from the data.
For more insight on data-related topics, please visit our data-driven technologies article series page.
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