Monetizing The IoT

Exactly what is the Internet of Things good for and why?

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I hear it all the time: “Yeah, the IoT is awesome, but how do we make money on it?” Good question. And the answers are about a diverse as the definitions for the IoT itself.

There is a lot of excitement and enthusiasm for what the IoT will be and can bring across a wide diversity of industry segments. But the nagging question remains, “What can we do to make sure we make good business decision that will, ultimately, unveil the next generation of revenue-generating opportunities?”

There is no simple answer. There are plenty of metrics that need to be considered. Some are generic, some are industry-specific. But as with all plans, the goal is a good business outcome.

Some of the general questions involve what the IoT will improve for you that, in turn, will improve the bottom line. Can the IoT offer new revenue sources? Can it offer an improved efficiency that will translate into lower CapEx/OpEx? Can it help you do more with less? And these are just the tip of the iceberg.

However, this may be a bit simplistic. Drop the IoT buzzwords you’ll find it is really the evolution of M2M taken to new levels.

Ahhh…that clears up the picture a bit, at least for me. Now the burning question is, “How can I implement this advanced M2M technology to improve my bottom line?”

This angle, pretty quickly, allows you to identify where M2M will and won’t help. For example, on the CapEx/OpEx side, in the office M2M can automate a lot of functions in office machinery. It can automate maintenance and just-in-time supply without human monitoring. It can autonomously route workflow, and M2M communications can optimize utilization. Can it add a lot to AR/AP…well, probably not so much (although finance has never been my strong suite). But looking at the IoT as M2M presents a much simpler model to me.

So now, let’s say I am an IoT vendor. OK, so how will what I sell fit into the M2M infrastructure? That opens up a whole new world of possibilities. For our industry, it means chips, chips, and more chips…of almost infinite variety for a plethora of applications. There is also ample opportunity in sensors, intellectual property blocks, crypto chips, operating systems, and interface hardware, RF, IPv6 development, Big Data…the list goes on and on.

But in the end, one has to also be a bit of a visionary. True there is an ocean of opportunity, but there are also caveats. Do you want to sell a few billion chips for that smart toothbrush, or a few million for the smart car? If you want to sell the smart refrigerator chip, you may have to wait 10 or more years to sell the next run once the first run is produced. There are all kinds of new pitfalls in the game.

So what IoT strategy might one adopt? Well, here are some segments and what benefits could be realized:

Improved asset management and supply chain agility. An IoT solution can deliver data quickly, often in near real-time. This enables proactive maintenance before performance suffers or costly breakdowns occur, ensure JIT parts handling and optimize inventories, reduce shipping times, lower fuel costs, and anticipate future needs.

Improved products and services. Prior to the IoT, feedback from the field and customers was the injection that redirected manufacturing. In the IoT, connected devices and sensors will feed back not only critical quality assurance data, but also how the customer uses such products and services – also in real time.

Accelerated business efficiency. As machines communicate with each other, less and less human intervention is required. In generally, eliminating manual intervention from a process improves speed and reduced costs. When machines and sensors interact directly with enterprise resource planning (ERP) and customer relationship management (CRM) systems, automated functions such as marketing, communications, service scheduling, billing and account management can be implemented.

Boost collaboration. Instant, real-time data, available ubiquitously to all, means service, support, and sales teams can work together to deliver a better customer experience. Complex problems can be dealt with in as they arise and precise specialists, from any location can be quickly and easily be formed into virtual problem solving teams.

Well, much of this makes a lot of sense — at least on paper. But there really isn’t any reason most of it shouldn’t work. So, what do you think? Ping me if you want to start a discussion.