IoT is now the hot topic of conversation in nearly every industry, and with good reason. A.T. Kearny, a global management consulting firm, estimates that by 2020 the IoT revolution will result in $3.5 trillion in revenue redistribution, creating massive opportunities and huge risks resulting in new winners and losers.
Think of it like the revolution that happened when Apple introduced their first iPod and iTunes. For the first time, a software tech company came to dominate the music industry. And that completely overhauled the way we think about our music in terms of quality, pricing, delivery - everything. Things were never the same again.
Then Apple introduced the iPhone and revolutionized the phone and camera industries by either putting many of the traditional players out of business or forcing them to adapt to the new business model where Apple had a huge first-mover advantage.
IoT offers a similar opportunity for the fast movers and innovators to not only dominate their existing spaces, but also get into new ones and dominate those. While the advantages are clear, many companies are wondering where to start and how to overcome the basic barriers to entry.
As is common for any emerging technology, there are many unknowns and entry barriers as corporations start considering IoT as a viable business line. Here are some of the most common ones, along with recommendations for how to overcome them:
1. Short-Term Focus vs. Long-Term Value-Based Approach - One of the most common and biggest barriers/risks is lack of awareness of what IoT is and the right way to enter this market. Corporations consider getting into IoT for one or more of the following reasons:
- They want to get ahead of the competition
- They want to check the IoT box to keep up with the competition.
- They have done their research and see real value and opportunity in the IoT space.
Most companies, when starting, consider getting into IoT for one or both of the top two reasons without doing due diligence on the third. The problem with that approach is that even if companies launch their IoT products as planned, they will not get maximum value from their connected business. That's because they don't have a clear strategy beyond launch on how to derive long-term ROI from their connected products, services and ecosystems.
2. Cost - The second common barrier to entry is the initial investment that is needed to launch the first IoT product. Launching a connected product is like launching a new business entity as opposed to just adding a feature to an existing product. Hence there are costs for setup, development, testing and launch requiring significant upfront investment. Understanding this and building a solid business case to justify that investment is key - and not always easy to do.
3. Unclear Return on Investment - If you have not gathered enough information about IoT market to understand trends and opportunities and how to use them to your advantage, and you don't have a solid business case, you will run into problems justifying your ROI. It is very important to understand the IoT cost/benefit curve as shown in Figure1 to set realistic expectations and reap long-term benefits. A significant portion of the ROI comes from the data that is gathered from the connected ecosystem on areas such as consumer behavior, popular features, usage stats and energy/power consumption patterns. The intelligence derived from the collected data, if utilized properly, can enhance the entire value chain, including new product features, services, marketing, branding, sales and support.
Figure1: IoT Cost-Benefit Curve
How to overcome the entry barriers to IoT and set yourself up for success
1. Increase your IoT awareness. Familiarize yourself with the IoT space by learning about the latest IoT trends, opportunities, best practices, gotchas, etc. Consider reading IoT books and blogs on building successful IoT businesses (e.g., http://www.iot-inc.com), get hands-on experience using different kinds of IoT products, and understand the benefits and challenges. It is absolutely key to be up-to-date on the space you are venturing into to set yourself up for success. And there is a lot to learn.
2. Conduct a discovery workshop. Once you have familiarized yourself with the IoT space and general trends and how they might apply to your business, conduct discovery sessions/workshops within your organization. Include multiple stakeholders and teams to get a clear understanding and alignment on your motivations to get into the IoT business, use cases, roles, dependencies, ROI, etc. Ideally all the stakeholders who participate in these workshops should have gone through the IoT awareness essentials material as a prerequisite to get familiarized with the space.
3. Agree on your IoT business case. At the end of above steps, you should have a solid business case and a high-level architectural proposal for your first connected product/service.
4. Construct a project plan. Based on your findings and conclusions from the learning and discovery phases, craft a detailed project plan by identifying the right partners for development and testing, major milestones and timelines, then architect a robust end-to-end solution. Make sure to assign a dedicated project/program manager to run your IoT program; it requires significant collaboration across multiple cross-functional stakeholders and partners to track tasks and manage deliverables.
5. Have the right perspective. Last but not least, recognize that your IoT product line is not an extension to your current products. It's a distinct business entity requiring clear ownership and a focused value chain, encompassing sales, marketing, support, etc. So plan accordingly.
Spending time and effort up front in the learning and discovery phases will give you a huge advantage in understanding and defining your IoT strategy/vision with minimal investment. It will also help maximize your chances of success by clearly identifying the path forward with a high-level project/product plan, actors and potential timelines.
If your company does not have the resources or expertise to drive all the above tasks, consider working with an IoT consulting firm that can provide expert guidance to educate you about the IoT space, evaluate the feasibility of launching your IoT business, and plan the right execution path to achieve your goals.