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How will IoT Dominate an Organization’s Operation

What is IoT?

IoT stands for Internet of Things and describes the current trend of connecting devices to the internet.

The concept of IoT is characterized by two defining features: communication between separate devices and enhanced connections within one network on a worldwide scale. These features provide easy access to various information.

The number of devices that are being connected is growing at an exponential rate, and this is expected to continue in the future.

This growth is driven by several factors, including the increasing affordability of IoT devices, the growing demand for data-driven insights, and the increasing need for automation.

IoT is already having a significant impact on organizational operations and is expected to play an even more important role in the future. In particular, IoT can be used to improve operational efficiency, optimize supply chains, and create new sources of revenue.

Additionally, IoT can be used to improve customer engagement and create new opportunities for marketing and sales.


IoT is Reshaping the Leadership…

The applications of IoT in both business and personal settings are varied and growing. Amazon’s Echo Dot is a great example of a personal IoT application, while specialized apps for logistics are excellent examples of business-focused IoT applications.

Whether it’s used to control home appliances, provide real-time information about shipments, or simply make one’s life easier, the potential uses for IoT are endless.

With IoT, data can be captured and applied to add value to an organization’s processes, operations, customer service capability, and overall performance.

But it is not a simple or easy task…

It entails reaching across lines of business and into the extended enterprise, potentially disrupting business processes, hierarchies, roles, and responsibilities, and even changing the culture of the business.

Developing and implementing this kind of change requires leaders and teams with vast skills. Some of these include:

Strategic vision and ability to communicate the potential of IoT

  • An appetite for risk, agility, and stamina
  • Data analytics, IT development, and security expertise
  • Ability to work across silos
  • Customer orientation [1]

IoT will have a profound impact on leadership. According to Maria Thomas, chief consumer officer of Smart Things, an open platform for home automation and IoT, which Samsung acquired in 2014,

“IoT will impact the business models, corporate strategies, how some companies view and define their markets, and the investments that need to be made.”  

IoT devices are expected to generate 180 zettabytes of data annually by 2025, data that will require the most sophisticated and powerful analytical engines the world has ever known. [2]

Since IoT is bringing the physical and virtual worlds together, leaders will need to be able to manage large amounts of data and use it to make decisions.

They will need to analyze data and have technical skills and domain expertise to identify important data points and apply insights from data to deliver value for the organization.

They will also need to understand how different devices and systems are connected and how they can work together.

While most CEOs recognize the need to take an active role in their company’s digital transformation, the mountain of responsibilities on their plate has often meant taking a back seat to IoT program planning.

Their lack of input on implementation, coupled with the overly complex first-generation IoT platforms, has often led to organizational confusion on overarching IoT strategies with no clear value proposition for their use.

With IoT finally positioned to play a significant role in the strategic direction of organizations, it’s time for chief executives to capitalize on the IoT opportunity in front of them. [3]

How IoT is Changing the Way Organizations Operate?

When IBM announced the arrival of Digital Twin, a virtual or digital representation of a physical entity or system, the internet world buzzed with excitement.

IoT can provide valuable data for making informed decisions about the future of a business or organization.

It involves connected ‘things’ generating real-time data. That data is analyzed in the cloud and combined with other data related to the thing, plus the context around it.

The system is being used by organizations such as Airbus and Schaeffler. The organizations have transformed their operations and production processes, including design, maintenance, and servicing. [4]

IoT is already being used in business today to improve efficiency and productivity.

The possibilities are endless. With IoT, you can reap the benefits of having…

  • Real-time data to make quick decisions in response to changing market conditions.  Mercedes Benz’s Mercedes Me Connect app is a great example. Mercedes analyzed consumer preferences and responded with an app that makes it easier for drivers to connect with the car.
  • Identify patterns and trends that would otherwise be difficult to detect. For example, John Deere, a farm equipment manufacturer, employs the IoT in various ways to provide new and innovative products to their customers. These include self-driving tractors, intelligent farming solutions, and more where sensors constantly monitor crop levels & soil health and offer farmers advice on what crops to plant and what fertilizer to use. [5]
  • Improve communication and collaboration between leaders and team members. Livestock monitoring deals with animal farming. With IoT applications, ranchers can collect data about the well-being of cattle. By knowing timely about the sick animal, they can whip out and prevent a large multiplicity of sick cattle. [6]
  • Make more informed decisions about resource allocation. AWM’s Smart shelf is equipped with high-def optical sensors and edge displays, which display product pricing and information that sends data about actual inventory levels.[7]
  • Improve the efficiency of operations and reduce costs. For example, Amazon increases its shipping capacity by engaging Wi-Fi robots that scan QR codes on its products and track orders. [8]
  • Be more responsive to customer needs and demands. Big Ass Fans is a good case to study in this regard. They have created smart fans with light, speed, and temperature sensors. Tailoring fan speed based on the user’s comfort preference, this fan stands out from other ceiling fans on the market. [9]

Leaders need to be aware of the opportunities that IoT presents and how it can be used to create value for their organizations. They also need to ensure that their organizations are prepared to take advantage of IoT by investing in the right infrastructure and capabilities.

What IoT leaders do to excel and drive greater results compared to their peers is explored in the McKinsey report, What separates leaders from laggards in the Internet of Things?

The study is based on interviews with 300 IoT executive-level practitioners from companies with more than $500M in revenues implementing large-scale IoT strategies with projects that have progressed from pilot to production.

Enterprises from 11 major industry segments from Canada, China, Germany, and the United States were included in the survey.

McKinsey found that 16% of enterprises have IoT programs in production, delivering aggregate cost and revenue impacts of at least 15%. The study also found that 16% of enterprises lagged, attaining aggregate revenue and cost improvements of less than 5%. [10]


Challenges that Organizations Face in Implementing IoT

IoT is revolutionizing how businesses operate, but many are still hesitant to adopt it. While IoT software can greatly impact efficiency, customer satisfaction, and productivity in the long run, there’s a gap between understanding why to use it and the real value of putting its innovation into practice. That’s often why enterprises are slow adopters.

Compatibility of Different IoT Systems:

There are many different types of IoT systems, and integrating them into a working system can be difficult. Enterprises often encounter software conflicts when trying to link different systems together. Integrating IoT software with older, existing systems can be long and expensive.

Return on Investment Challenge:

Many executives find it difficult to accurately measure their IoT initiatives’ return on investment (ROI), which raises doubts about the impact and value of IoT for their businesses.

Companies tend to “fall in love” with new technology but forget about the business value it should bring them. The real value of digital initiatives can be seen and assessed more clearly if executives flip the question of ROI around…

Instead of looking for the ROI of a specific IoT solution, they should be asking how to calculate the ROI when using IoT to solve a business problem and create a lasting impact. Only when defining the business goal of the initiative as precisely as possible will executives accurately measure whether it will pay off in the future. [11]

Data Storage:

Real-time and continuous data grows exponentially, most of which is used for analytical purposes to generate insights. This data must be pushed back to a central terminal, which requires high-capacity and high-speed storage systems and advanced memory processing technologies.

Digital and Cultural Transformation:

The challenges of IoT are not solely technological ones. For employees and leaders alike, a cultural transformation is often required to take full advantage of IoT’s opportunities.

This requires a structured change management approach from the very beginning. By taking the time to plan and execute changes in a controlled manner, businesses can ensure that their employees are ready and willing to embrace IoT technologies.

Data Security:

As much as the concept of a stack of SaaS dashboards and glowing sensors excites you, data security is an ongoing and pressing problem.

IoT devices are increasingly under attack from cybercriminals, so best-in-class cybersecurity must be a core requirement for these devices.

Furthermore, reliance on and integration with existing IT networks should be minimized to minimize the impact on IT performance and the potential for hackers moving laterally into mission-critical areas.

The sheer volume of data generated by IoT devices can be overwhelming. Therefore, the security and privacy of IoT data are major concerns.


Think About It…

McKinsey found that IoT Leaders are 75% more likely than their peers to cite the preparation of a strong business case as a critical success factor for their IoT programs.

The study’s respondents with an IoT vision that includes a strong value proposition, a proven delivery model, and a business model that drives revenue are getting results faster than their peers. 35% of Leaders rate the importance of a “strong business case and vision for value creation” as one of the top three success factors versus 20% of laggards.

Leaders leave nothing to chance when defining how IoT will deliver business value through greater revenue or reduced costs. [12]

The use of IoT is only going to become more prevalent in business in the coming years. Leaders must be prepared for this and invest in the right infrastructure and capabilities to take advantage of IoT.

Additionally, they need to be aware of the risks associated with IoT and take steps to mitigate them. Doing so can position their organizations for success in the IoT era.

According to Alicia Asin, Co-founder and CEO of Libelium:

“Since we entered the age of information and telecommunications in the 70s, we had not seen anything similar to the Internet of Things in terms of its potential impact on process change and the power to create a new business ecosystem.”


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[1]. Spencer Stuart, Leadership for an Internet of Things World

[2].  Karen Lewis, IBM Business Operations Blog, 1st March 2017, Enabling IoT platforms to deliver business outcomes

[3].  Aaron Ganick, ChiefExecutiveGroup Community, 6th April 2021, CEOs Need To Take Leadership On IoT In 2021 To Drive Bottom-Line Benefits

[4]. Karen Lewis, IBM Business Operations Blog, 1st March 2017, Enabling IoT platforms to deliver business outcomes

[5,6,7,8, & 9]. Vinugayathri, Clariontech, Top 10 Ways IoT is Transforming the Businesses Today

[10].  Michael Chui, Brett May, Subu Narayanan, and Ridham Shah, McKinsey Digital, 7th January 2019, What separates leaders from laggards in the Internet of Things

[11]. Aymeric Sarrazin, Siemens Advanta, 4th August 2021, 4 Challenges For IOT Implementation – And How To Overcome Them

[12]. Louis Columbus, Forbes Magazine, 10th February 2019, What IoT Leaders Do To Drive Greater Results

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