The Future of IoT isn’t a Tech Strategy — It’s a Business One

Marc Teerlink
Aug 5, 2019 · 7 min read

This post was co-authored by Steve Mauchline and Sijesh Manohar.

The future of IoT
The future of IoT

For many years, we’ve been predicting how many devices (or things) will be connected to the internet by 2020, 2025, etc..

In fact, it’s estimated that by 2020 there will be at least 20 billion things connected to the internet, or about three items per person. Is that all?

The Future of IoT

So, what will the future of IoT in 2020–2025 (and beyond) look like? Research firms like Statista project more than 30 billion devices by 2020 and 75 billion by 2025 will be connected.

The bottom line is that we’re talking about a significant amount of ‘things’ that present a lot of data capture/information. And, with that, many opportunities for those who see the potential value and (candidly) profit that can be derived from various approaches to IoT use cases.

Accordingly, a realistic view is needed on what your organization defines as ‘return on investment’ when compared to business strategy.

Warning: All projections for the Internet of Things are subject to change

Customer expectations versus the possibilities? Show me the money!

The retail industry provides a unique series of interactions with customers across virtually all ages, backgrounds, employment types, disposable income, etc.

Retailers also have an appetite for the use of technology to interact and engage with customers. The limitations, then, are (seemingly) only limited by our ability to imagine the possibilities.

That’s a critical point — how can we imagine viable and workable use cases (out of so many possibilities) AND see what retail as well as other industries either have already executed on them or plan to do so?

To bring this to life, let’s give some examples of where IoT-supported tech has been used with a high degree of success:

1. Optimizing Perishable Inventory

One of the biggest challenges for a food retailer is the very short shelf-life of its inventory. As such, retail freezers and coolers need to be in proper working condition to ensure safety and quality of food items.

To support this, we’ve worked with a food retailer who equipped its freezers and coolers with sensors that regularly record the temperature. When deviations are realized, alerts are sent to the store manager. Over time, the retailer automated this process — moving beyond manual recordings when store associates periodically recorded the temperature.

As it happens, coolers and freezers can over or under cool. With simple automation, freezer vendors are immediately alerted to changes in temperature, thereby ensuring food safety at all times. This assists in further reducing food spoilage.

Another food retail dilemma: We work a firm that had a problem with certain perishable goods received in loading that were left unattended for too long before being moved to the cool storage. This resulted in excess spoilage / waste. Using IoT technology, combining temperature and RFID passive tags, we created a timely warning system to send alerts when pallets are left in non-refrigerated environments.

2. Customer Experience

Several retailers are using various IoT technology solutions to improve overall customer experience in stores.

One retailer implemented a camera and sensor system to automatically detect queue lengths in order to dynamically open up checkout counters when needed.

Another European retailer has implemented a sensor system in a bottle recycle machine to automatically detect when the machines are nearly full so they can be emptied in a timely manner, helping to minimize customer inconvenience.

IoT technology has also transformed vending machines to become smarter, which helps retailers study consumer interaction and consumption patterns and implement optimized replenishment plans. As a future extension to this, we’re working with innovative retailers to fully automate unmanned stores with sophisticated cameras and sensors.

3. Driving Change in the Retail Industry Starts with Design Thinking

Sometimes you need to initiate some distance from how you’ve always done things and look at it from another perspective. That’s design thinking in a nutshell. It’s not always about a moonshot — mostly it’s about doing things different, with a better, faster outcome — at less cost, time, and effort.

You can help accelerate the process by having thought about the potential ‘wins’ for your organization. The examples here demonstrate how even investing a relatively small amount of time can uncover and return much more. IoT is a lively topic, and rarely a week or two goes by before another imaginative use case is discussed by technology analysts, or a new device hits the shelf.

If creating net-new examples is too hard to imagine as a starting point, let’s bring the focus back to IoT in retail and what some would argue is the most obvious and compelling use of IoT .

A significant challenge in retail is potential lost sales or missed opportunities to sell. Often store retailers don’t have in stock the exact product a customer wishes to buy in-store. This problem cannot be solved by overstocking items — rather it requires innovative design and thinking.

Knowing all of the locations of stock in store can prove challenging, and sometimes ‘available stock’ can be damaged or unavailable due to various types of shrinkage. IoT Technology can help minimize some of these issues.

Usage of low-cost RFID passive tags on items can help pinpoint stock within a store, and innovative shelf sensors can provide a more precise count of inventory on the shelf. Getting the actual stock count in the store helps the forecasting and replenishment process become more accurate, ensuring that replenishment quantities are optimized to the actual situation.

RFID, of course, is not a new technology, yet like many technologies, the price or cost of usage has decreased to the extent that the ‘trip point’ for use is no longer just for premium retail products. Now, products that retail for just a few dollars have the potential to enable a solid return on investment measured in months, not years, typically.

Like many other sensor & tag technologies, it’s the insights from this data that are arguably of equal or even greater value than the pure ‘accuracy’ that justify the initial investment. RFID will pay for itself solely on the improvement of inventory accuracy and the positive impact on sales (this is a topic that could fill many pages of blog on its own). Based on that, what ‘insights’ are as valuable as inventory accuracy?

Let’s look at one example — an apparel fashion retailer. Utilizing RFID technology, you could know what garments, styles, and colors customers take into a fitting room, which items are not taken in as regularly, and what ends up getting purchased. Think about what this would allow your merchants to do with targeted customer marketing.

Using another IoT technology like Edge enables you to get hyper-local and deeply understand individual customers in individual stores and link these insights to ‘why,’ using a blend of experience and operational analytics, provides a huge competitive advantage. Edge allows extending parts of the business process to run locally.

Focused on local needs, Edge technology can be used to collect detailed level sensory information from various parts of the store to calculate specific store inventory for each item. It can also recommend when to move the stock from the back of the store to the shelves.

This process can run completely in a local-mode and can synchronize with the central systems periodically, or when it’s required for other central processes to run, such as forecasting and replenishment.

So what does all of this mean?

The price of sensors and tags has decreased to the point where the debate has moved from whether investing in IoT tech is for ‘premium’ customer segments to the competitive advantage provided by IoT to every aspect of retail ripe for thorough assessment for 2019–2020 investment.

IoT tech is not the solution to all retail problems, but it can be a significant player in delivering the value from emerging tech to retailers who are seeking competitive advantage in an increasingly challenging retail environment.

IoT is a Business Opportunity, Not Just a Tech Opportunity

We started this blog with the question of whether or not one should keep experimenting while waiting for greater maturity, or if you should plan and get going (to monetize) a robust IoT strategy. (A question balanced with not investing too early, versus investing too late.)

In short:

1. IoT is real– It’s present — and there are lots of data and opportunities for those who engage.

2. IoT is viable- we provide actual company examples to help make it more concrete.

3. Design Thinking can help make the ‘getting started’ process easier.

4. Finally, it’s about getting practical– advice on how to ‘go do it’ — what’s stopping you?

To get an edge on the Internet of Things, successful strategies are typically based on a small, on-premise hub and a cloud-based approach to realizing the benefits. It is opening up the extension to the basic use case such as AI and ML. Since some of the benefits from IoT require moving to a partial cloud, that will need to be planned as well.

We often tend to think about IoT with the focus on the growth of sensors and devices, but when you take a step back, it’s about developing and utilizing a strategy to combine IoT and ML through AI and RPA- in a manner that delivers the step change desperately needed in the competitive world of retail. Not just a tech opportunity — IoT is a business opportunity!

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Marc Teerlink

Written by

TED Speaker, Corporate Serial Entrepreneur, AI monetization, Innovation Driver, ibmwatson alumni, Proud Father, Sailor, Global Citizen, Alpha Nerd, GlobalVP@SAP

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