Embarking on the IoT Journey

AUGUST 2019

The Internet of Things, known as the IoT, is a network of interconnected objects and systems that produces data. The real-time information it shares allows businesses to secure a competitive advantage through improvements in productivity and efficiency, as well as insight into customer needs. With the data shared by the IoT, companies can determine how the performance of one object impacts another, and better measure and manage company operations across the entire enterprise. IoT has many applications, ranging from data about how customers use products and services, to predictive maintenance in rail operation, the management of energy usage and factory floor optimisation. For example, real-time information delivered from sensors can reveal usage patterns that can change the way business is conducted.

Research has shown that while many businesses identify the growing importance of leveraging the IoT and digitalisation in daily operations, few have started to incorporate it. Out of approximately 750 executives polled by Siemens and Harvard Business Review, 74% of respondents said they believed the IoT will be a competitive differentiator, yet only 36% said they are using it in their core operations.

Modernising existing operations and implementing change management processes are the two biggest barriers to adopting the IoT. However, embracing the IoT and the digital transformation can lead to many benefits and competitive advantages.

In fact, by not investing in the IoT, businesses put themselves in danger of falling behind today’s industry standard and risk becoming obsolete.

The IoT helps companies create new customer-centric business models for their products. Previously, industrial business models centred on selling customers on the value that a product provides over its useful life. This is still an important component of business models today, but the way that value is being delivered is changing due to the growth of 'industrial consumerism'. Companies today need to focus more on the customer experience attached to the product being sold. This is how a company can differentiate itself from its competitors, and consumer experiences have a large influence on expectations in the B2B world.

As they increase their investments in the IoT, companies will have to prepare themselves for the threat of cyber-attacks. Despite the value that the IoT can provide, connecting machines and equipment to cloud-based platforms makes companies susceptible to online attacks. Given the increasing threat of cyber-attacks and data breaches in today’s technological world, companies and investors must be flexible and comprehensive in their due diligence when considering acquisitions. Proactively prioritising cybersecurity and implementing detailed incident response plans are essential steps businesses should take.

Companies should take a 'think big, start small, scale fast' approach as they incorporate the IoT into their operations. This involves driving IoT implementation from the business case perspective, not pushing a technology into operations simply because of its fascinating potential. Digitalisation is a key competitive advantage for all businesses to stay successful and relevant in the minds of consumers and end users. The IoT has already set sail, and companies must invest and drive business models that create consumer value in order to stay afloat.

Anthony Casciano is president and CEO of Siemens Financial Services, Inc. He also leads the business’s IoT efforts in the United States. Anthony and several other members of the Siemens’ leadership team were featured in ACG’s Middle Market Growth magazine where they discussed how Siemens is using the IoT to help companies navigate the digital transformation by bringing the physical world online in an article titled 'Navigating Digital Transformation with IoT'. You can read 'Navigating Digital Transformation with IoT' by clicking here.

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