How should businesses think about integrating their strategy with Internet of Things (IoT)?

In simple words, the Internet of Things (IoT) is the network of physical objects or “things” embedded with electronics, software, sensors, and network connectivity, which enables these objects to collect and exchange data. In reality, we have been living with the Internet of Things across the past few decades ranging from automated value chains with billing in enterprises to internet connectivity interacting with embedded sensors resulting in connected products today. Cisco has predicted the explosion of connected devices to about 50.1B devices across all sectors by 2020 (see the diagram below).

Recently there has been a lot of discussion about the impact of the Internet of things to businesses in different forums that I am invited to speak. As a digital business leader, I often examine and reflect on the question, “What is the strategy on IoT with our company’s business ?”. In fact, it is similar to the question that I have answered two years ago with mobility in general. Here’s an interesting forecast provided by Gartner on where companies will be spending on IoT.

Here is how I convey the business strategy with respect with IoT. First of all, it is silly to ask, “What is your IoT strategy?”. In my perspective, the first question is to ask, “What is the business objective that the technologies associated with IoT should be driving?” There are two major applications which IoT technologies are important to business goals:

• Gather, connect and broadcast business data between embedded objects such as sensors that provide crucial information to the business such that it can accurately make realistic forecasts on the business planning or processes. For example, a smart traffic lights system will convey data on whether the roads are jammed due to accident or road hazards via the cars connecting with each other with embedded sensors or eventually with wifi capabilities. With many enterprises moving away from traditional physical servers towards the cloud, the transmission of data across connected devices will become more and more pervasive in the marketplace.
• Facilitate business transactions for the customers or business users between embedded objects and devices (smartphones, tablets and personal computers). To make an object smart is not only to relay information but also facilitate the one to many or many to many business transactions within a network or business ecosystem. A common example is the dream of having sensors within shopping malls such that the user can make purchases via their mobile phone and at the same time, provide data such that the business can intelligently target the right products back at them.

To me, if the IoT does not facilitate the gathering, connecting and broadcasting of business data (whether public or private) and business transactions, then it has no place in the business strategy of the company. Ultimately, the ability to facilitate transactions from online to offline and back creates new channels for customers to interact with businesses. Hence IoT as a technology helps business to grow as a result.

We stand at a time where IoT will grow in the next decade, but at the moment, it is important for businesses to figure out why they should say no to IoT and how IoT truly empowers their business to expand new channels for customers to increase business transactions.

Photo Credits: 123rf.com and Gartner IoT related service revenue forecast (Dec 2014)