As the Internet of Things continues to charge towards the peak of Gartner’s Hype Cycle, more companies are making investments, sometimes substantial, into IoT technology. Gartner is expecting a total investment into IoT of $1.7 billion in 2017, with a total of 8.4 billion connected devices. The IoT vision being published across the internet is tantalizing; more connectivity leads to more data collection, more data collection leads to more insights, and more insights lead to more money. That is the IoT elevator pitch, and in many cases, such as with GE, Honeywell, and John Deere, that promise is being realized into a significant return on investment. On the other hand, many businesses are not realizing revenue from their IoT investments, and are left wondering why. They have well-designed things that are connected to the internet, a platform to collect, transfer and analyze data, and they have data; so why aren’t so many of these IoT investments getting off the ground?
The first reason might be that the organization is not aligned with the IoT vision, and does not know how to carry out that vision. If you have ever worked for a large corporation, you probably know that the left hand rarely ever talks to the right hand. A team working in one functional department may be re-creating something done in another department, but neither side has any idea due to a lack of communication and collaboration. With IoT, you tend to see a divide between business strategy and technology innovation. The business folks may build an innovation team to research and develop or purchase new technologies. The problem is the innovation team has little knowledge about the company’s overall business goals, strategy and operating model.
The second reason an IoT venture may fail is the company’s inability to integrate innovative technology into its existing legacy IT environment. Many times the IT support teams and corresponding IT landscape are closer to the business due to a mutual interest on cost cutting, manual workarounds, and business unit support. Over time, a once well-thought out IT landscape may turn into a cluster of hundreds or thousands of disparate systems and applications. Without rationalizing the existing IT environment, how can you make an informed decision as to what IoT platforms and applications fit into your company’s technology landscape?
Lastly, data. Data, data, data. Data is the reason your CIO convinced the executive team to make an investment into IoT, but data might also be the reason the business is not making money off this very investment. Prior to a cloud migration, most companies stored a limited amount of data, and each data point was typically validated by a person at some point in the process. Now with process automation, data warehouses, and data lakes, a majority of information a company owns or has access to is not viewed by anybody. Before a company can monetize data, it needs to turn data into information; and before a company can turn data into information, it must develop a robust filtering engine that can identify what data points in this giant lake need to be pulled, how each relevant data point is classified and in what context is this data analyzed. Many companies fall into the pit of collecting significant amounts of data with an IoT device but have no idea how to understand and gain value from it.
A word to the innovators: if you want to maximize your IoT investment and enable your business to continue to move at the speed of innovation, you must work closely with the business; the folks that manage the bottom line and the companies daily operations, to successfully integrate IoT as part of the organization. Before investing in the next IoT project, ask yourself the following questions:
- Will this investment fit into the company’s overall business strategy? If not, is there a solution that provides a better fit for the organization?
- Which IoT platform and related applications best fit with the organizations existing IT landscape?
- Does the organization have a data strategy that can support the exponential rise in data collection, and more importantly, that can make sense of the data in a way that results in monetization and an ability to establish governance?
Bringing the technology innovators closer to the day to day workings of the business is key to monetizing IoT. Even though the innovators were tasked to disrupt the organization’s industry and take the organization to the next level, it is only possible if they work hand in hand with the folks that built the business to its current state. Innovators: the next time you are wandering the office and see the guy who has been around in finance for twenty years carrying a flip phone and notepad, you might want to stop and say hi; because he or she might be the person who can help turn your futuristic ideas into a business asset, and you may be able to show them the new way of doing business, through innovation.