IoT is becoming a reality. New products and gadgets are being developed to provide consumers with more information about the state of their health or how they can lower energy consumption. The biggest threshold refers to the uncertainty regarding the protection of privacy and the risk of “hacking”.
Are there good examples of successful IoT applications? Actually, no big breakthroughs so far. Due to the lack of standards in the IoT field of play, the battle for the consumer remains entirely open. There are at least 25 ‘generic’ IoT platforms (large, like Google, Microsoft Azure, and small), and also a large number of Industrial IoT platforms (IIoT) in the making, as promoted by General Electric (Predix) and Bosch. These compete for putting a standard in place and there is no clear winner yet.
The user/customer is forced to place a bet regarding the selection of the (I) IoT platform provider. That may prove to be an expensive gamble afterwards (platform does not deliver what was promised, a platform switch is difficult to do), but a late choice can also be expensive: “no pain no gain, no guts no glory”.
Integrated management of the value chain is crucial.
The real value of IoT lies in a direct reduction of costs and/or higher quality of the services for the user. A gadget can be fun to show off or offers a ‘ sexy ‘ image for the company itself, but does not lead to a significant improvement in business operations (lower cost, higher margins) or a real innovative product breakthrough.
The question will be who will benefit most from the introduction of IoT. In general, that happens only when actually the product offerings changes into a service whereby parts of the value chain are being managed by an “orchestrator“:
• offering in an integrated service for sustainable heat supply instead of buying a boiler installation (moving from input-to output-contracting);
• financing the construction of a hospital including the maintenance of the installations and (part of) the medical equipment (example of “Smart Buildings” and “Managed Equipment Services”);
• from ‘ push ‘ to ‘ pull ‘: providing the service only when necessary, such as emptying waste bins if they are full, activating street lightning if there is movement, filling the fridge on demand etc.
The creation of integrated value chains will be the real ‘ battle field ‘ of the IoT era.
Many existing companies and suppliers will find it difficult to defend their role or to adjust within the chain, but the ‘ First mover ‘ may soon reach a relatively big lead in case the service offered is quickly adopted by the users. Affiliation with a dominant ecosystem through co-creation will be very decisive for the future survival of the partners and newcomers within the newly designed value chain.
In order to accellerate this proces, user and consumer organizations can play a significant role here by stimulating or even enforcing the desired change. By combining the demand and specific requirements in a call for tender (end-to-end), the supply side will be forced to innovate and co-create. Ultimately the benefits provided to the consumer/end user will be key. This will then lead to an optimised value chain that delivers what has been agreed at the lowest possible price and according the sustainaibility requirements which society is demanding these days (like carbon reduction and recycling etc).
This is where “the Internet-of-Things ‘ will cause actual disruption.
Director/Owner of Harvest Moon boardroom Consultancy bv