While most businesses are focusing their efforts to capitalize on the Internet of Things in areas that will generate immediate cost-savings and operating efficiencies, a number of IoT pioneers already are leveraging a new generation of connected products to fundamentally change their business models.
There is no question that the safest bet in today’s IoT environment is targeting narrowly defined deployments aimed at producing quick results. In most cases, this means adding sensors to existing products to enable organizations to react to problems more rapidly, reduce resolution times, achieve greater customer satisfaction and improve operating efficiency.
Concentrating on near-term opportunities makes plenty of sense, given the complexities and uncertainties associated with today’s IoT deployments.
The complexity stems from the challenges of cobbling together all the piece-parts that are required to deploy an IoT product, ranging from the sensor to the software to the systems that support it.
The uncertainty is compounded when an organization must assemble a connected product that will produce useful data and generate meaningful business results.
Given these challenges, it is no wonder that the idea of converting the product and service data into valuable insights that can uncover entirely new business opportunities is viewed as a longer-term, “nice to have” objective for most companies.
IoT’s Transformative Potential
GE has earned considerable credit for evangelizing about the significant benefits that can be derived from the Industrial Internet of Things, or IIoT, for those companies that are willing redefine themselves as software and digital companies. Yet it is still putting many of the building blocks in place to achieve its vision and gain a modest financial result from its efforts.
Following are three examples of companies that already are moving down the path of redefinition in the IoT.
- Philips Lighting has been a pioneer in developing new technological innovations in the lighting industry, but it recognized that it always would be fighting against the commodization of its product business due to escalating global competition.
Rather than continue to be forced to compete on price in an intensifying competitive environment, Philips decided to leverage a new generation of connected products to redefine its business. The company realized that it could utilize its new sensor-based light bulbs to deliver a new set of managed lighting services.
While installing lights is easy, and today’s light bulbs have an extended lifespan, sensor-powered bulbs produce data that can be used for a wider array of purposes. Movement sensors can trigger when the lights go on and off. Activity data can be used to program when and how they are activated. This type of information can make Philips Lighting more valuable as a supplier of lighting services than it was as a simple manufacturer of light bulbs.
- Emerson also is leveraging a new generation of connected products to redefine its business. Although it is still a manufacturer of heating and cooling systems, Emerson now is calling itself a provider of “comfort services,” because of the added benefits it can deliver via a new generation of connected solutions.
In the same way that Nest has popularized the power of smart thermostats in the home, Emerson is offering smart industrial systems for commercial environments.
- John Deere is redefining its business value in the agriculture industry. As its tractors and other agriculture machines become more durable, their useful life becomes longer. That has threatened John Deere’s sales revenue as its traditional product markets mature.
By installing a myriad of sensors into its products, the company now can generate reams of data that can help farmers do their jobs more effectively. John Deere is becoming an information services company rather than a traditional farm equipment vendor.
These are three examples of companies using connected products to redefine their businesses. As more organizations recognize the strategic impact IoT can have on their business, you’ll see many more leverage IoT to reposition themselves in a rapidly changing marketplace.