IoT: Monetisation through Commoditisation (the ‘What?’)
Introduction
IoT has been and will continue to be one of the most popular and longest lasting buzzwords in tech history. When Kevin Ashton coined the term “Internet of Things” in 1999 to dress up a supply chain RFID project at Proctor&Gamble, he wouldn’t have thought his timely hack of attaching the project to the then hottest trend “Internet” would come this far and get this big. But it has and will continue to be.
Probably one reason for its popularity is, that unlike some of the other tech waves, Internet of Things applies to a broader audience, from consumer to SMB all the way up to large enterprise and Governments; almost being as universal as the Internet itself.
My focus here is only the Commercial IoT market; which in simple terms means any IoT technology, product or solution targeted towards For-Profit/Not-For-Profit private organizations and public/government organizations. And this is only an attempt to;
- Provide my viewpoint of the state of play in Commercial IoT market based on my IT/OT/IoT experience & engagements.
- Share my optimistic view on how we can monetize from IoT by focusing on business value creation.
Summary
It’s a fairly long write-up, so I thought I’d bring the Summary to the top, to make it easy for you to decide early enough if it worth the read. I hope it would be, at least for some :).
Part 1
- State of Commercial IoT is not at the desired stage, despite the big hype and the inflated expectations behind it.
- It’s a result of multiple reasons, but mainly the challenges in integrations and the difficulty in identifying ROI have contributed.
- Considering IoT as ‘Monetisation through Commoditization of a technology’ provides us with a way to take a business value-centric approach to IoT.
Part 2
- The key monetisation element as I see is analytics and looking at the big picture, IoT sensors are only one tool of a bigger solution driven by analytics.
- To be able to deliver true business value, quickly, some key steps I have identified with our experience.
- How we can leverage additional (existing) data sources together with IoT/sensor data to deliver exponential value, fast.
- Discuss some key capabilities the analytics tool need to possess, in our experience. (Caution: no silver bullets, or OSFA)
So what’s wrong with Commercial IoT?
Nothing wrong, just some challenges that delays monetisation; for both customers and solution providers.
Above is my easy way of explaining what IoT was supposed to be, and what it really is at the moment (at least for most organisations I have engaged with)..
What are the reasons?
Short answer is, IoT became too complicated even before it has become real. The breadth of the subject itself is partly responsible. And he hype and inflated expectations, should own the rest in my view.
While it’s not anyones direct responsibility, it was the ripple effect of above three things combined. IoT is not one use case, it’s hundreds or even thousands, and take one organisations; at least 10 of them would apply. That combined with the urge created by the hype to try all, and expectations of outcomes make it difficult for organisations to figure out where to start.
The extremely crowded product/solutions market (unusual, for a technology so early in its lifecycle) adds fuel to the problem, leaving organisations scratching their heads trying to figure out where to start. The biggest challenges organisations face today are;
- Integration: connectivity & data acquisition
- Security
- Finding ROI
Integration:
Reality is, at the moment, most organisations are too occupied with the plumbing; Trying to connect a variety of sensors to a network or two and visualise the data on a dashboard. As I mentioned earlier, Integration has become one of the top challenges.
Challenges in integration is inherent to the nature of IoT in my view. Referring back to my earlier point, where organisations seeing the number of ‘IoT use-cases’ relevant to them, sometimes take on a project to build an IoT ecosystem that will cater all of them. The challenge in that is with the extremely fast phase IoT technologies are evolving, a month is a long time. So trying to build a one-size-fit-all solutions for the present and the future is hard to say the least.
Security:
Security is a universal challenge with any technology, and I’'m not a security expert to go into detail. So I’m not going to try :)
Finding ROI:
To me, this is a fundamental problem. Especially for a business organisation, a project cannot exist in the first place, if there is difficulty in justifying ROI. But with IoT, like with any new technology, comes a buzz, a hype, and some organisations who brave the technology wave to leverage the leading edge tech.
But, unlike previous such waves, the breadth of use cases and integration challenges have made the realisation of value harder. Most of the time we have seen organisations getting stuck in plumbing, and quickly getting lost in detail and losing direction. Sometimes just getting data on to a dashboard and providing a simple visualisation is considered a big win.
While it’s an important and critical step to success, I feel there is very little effort put to understand the end outcomes and how that is going to create value for the business/organisation; bottomline — how can it save costs, or generate revenue. To deliver the true business value, you require powerful (big) data analytics capabilities that can;
- Index data from various sources
- Correlate and analyse multiple datasets in real-time
- Deliver actionable insights in the form of a) visualisations in form of live dashboards, scheduled reports, b) alerting & notifications c) automation actions
Further as the technology cycle matures, the challenges too will evolve. Once the plumbing is in place, the focus will be on the quality of input and output (it can’t be different from any other functional system!).
Quality of Input will be directly influenced by;
- Accuracy & reliability of ingested data, not just sensors but all related.
- Continuity of data
Quality of Output is predominantly influenced by the capability of the Data Analytics platform to help create business value. So having the required powerful analytics capabilities will play a big role.
Monetisation through Commoditisation
To me, at its core the concept of IoT is about ‘Monetisation through Commoditisation’!.
To explain the concept, let me take the below two examples of similar technology waves that opened up a whole new channel of monetisation.
Digital Camera; While you can argue Digital camera itself was a commoditisation, Mobile camera not only took it to different level, but opened up a completely new monetisation model for companies which haven’t even existed before.
Compute; again the compute itself was commodity to a level, but the ‘ Cloud’ took it to a different level by making it equal to utilities. And the big winners are not the computer hardware companies, but the likes of AWS and Azure.
So how can we relate this to IoT?
Yes, it’s about commoditisation of the sensors, leading to monetisation from the Analytics outcomes.
Thank you for reading this article. Hope you found this article useful. Would love to hear your feedback, thoughts or even any critisisms (ideally constructive :)).
If you enjoyed so far, continue to read Part 2
Kushar Perera, Head of Innovations @ DNAConnect