Part One of this article focused on the need for a clear, defined strategy when adopting an IoT system, which is something that has to come from C-level management. The early role of IT is to ensure that the appropriate technology and architecture decisions are made.
Part Two covers the role of management in evaluating the internal changes that should be part of the strategy.
Industrial companies are becoming software and services centric. Therefore, manufacturers need to integrate staff with varied work styles and from more diverse backgrounds and cultures. Software development goes at a much faster rate than that of traditional manufacturing, says Bob Emmerson, freelance writer and telecoms industry observer.
Manufacturing businesses are divided into functional units such as R&D, production, sales, marketing and IT. With the emergence of smart, connected products, however, this model breaks down. The need to coordinate across product design, cloud operation, service improvement, and customer engagement becomes continuous and never ending. Functional roles overlap and blur.
In addition, completely new and critical functions emerge, e.g. the need to manage all the new data and customer relationships that are based on customer experiences. And real-time feedback from devices in the field challenges the regular centralised command-and-control model of management.
Olivier Beaujard, VP Market Development at Sierra Wireless, said, “The benefits and opportunities with IoT are so great that organisations definitely need a laser-like focus on aligning the technology to their business objectives. And a recognition that IoT is a rewarding but significant transformative force. What we see in the most successful IoT deployments is how the strategy embraces change that can reshape the entire business model. This could be about making a leap from selling products to selling services or having a completely different relationship with your suppliers or customers.
“What can be missed in a strategy is how by creating a new form of customer interaction, you are unleashing a flood of new data that you didn’t have before. Strategies must consider how to discover and analyse these insights and properly exploit them; and do so at an incredibly fast pace,” he added.
In addition, manufacturers must keep producing and supporting conventional products, and that’s not likely to change for some time. Right now in established, innovative manufacturing companies smart, connected products represent less than half of all products sold. This indicates that the on-going coexistence of the new and the old will complicate organisational structures.
Evaluating what needs to change should not be done retroactively, i.e. in response to issues that arrive when the IoT system is up and running. It should be part of the strategy and it is clearly something that should be discussed with the relevant staff in order to get their buy in.
We’re going to see a number of significant changes in the way that companies conduct their business. Less obvious is the need for a methodology in order to ensure that the changes align with the IoT strategy. This process should uncover changes that would have a disruptive impact on the business, thereby indicating the need to refine the strategy and bring everything into alignment.
According to Boban Vukicevic, MD of Comgate.: “There is a potential pitfall that might endanger profitability when entering the IoT arena, which Clayton M. Christensen introduced in his book, “The innovators’ dilemma: when new technologies cause great firms to fall”. It comes from the fact that disruptive technologies introduce very different value propositions, which means that the technologies can progress faster than market demand. Therefore, efforts to create better products than the competition and obtain higher prices and margins can result in suppliers that “overshoot” their market.
They give customers more than they need or ultimately are willing to pay for. On the other hand, as Christensen argues, disruptive technologies that may over-perform today may be fully performance-competitive in the same market tomorrow.”
Hasty entries into the ultra-competitive IoT market are likely to result in expensive failures, therefore it is vitally important to start with formalised analysis of the company’s products and services, its resources and capabilities as well as the customers, the competition, and the environment in which the company operates. This process is needed in order to create a robust strategy, which in turn enables the creation of a realistic, cost-effective business plan. Then, having realised these key objectives, businesses can move on to the creation and deployment of their intelligent connected products.
The author of this blog is Bob Emmerson, freelance writer and telecoms industry observer
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