The media has broadly reported the consumer applications of IoT – with innovations from smart fridges that trigger shopping orders, through to smart meters to monitor home energy usage. But the truly transformative impact of IoT is being experienced most dramatically in industry.
It is this shift in the paradigm of industry that has earned the name Industry 4.0 (or the 4th Industrial Revolution). McKinsey estimates that 70% of the market value of IoT - which is set to total $11.1 trillion by 2025 - will derive from B2B applications. Furthermore, manufacturing, cities and health are the sectors at the top of the leaderboard for returning value from industrial IoT innovation.
But why are these sectors the ones to watch? In part it is because these are the sectors that face the most prominent problems – how do more with less. But behind the need for commerciality and sustainability there are other factors that must be met for IoT success. Firstly – these are areas where IoT has the power to transform business processes. Secondly, these are areas that are rich in investment and, thirdly, these are the sectors where new business models can be rapidly progressed from theory through to action.
In factories, IoT business processes are enabling predictive maintenance. IoT technology can predict machine failure, thus saving millions by avoiding production downtime. Cities can harness insight and technology to reduce congestion by managing traffic flows. Hospitals can monitor patient drug use and issue reminders to lower the rate of unnecessary patient returns – reducing pressures on over-burdened public services.
Investment in IoT follows solutions like these, where there is a clear, sizable market need – opening up the opportunity for profitable commercial solutions that can scale. But for us, there is an additional element – which is offering operational support alongside the cash to help investee businesses to focus, grow and scale rapidly and mature their business models in ways that make propositions genuinely compelling to customers.
A great example is, CageEye – a Norwegian agritech start-up. Their technology monitors salmon remotely gathering data on feeding habits to enable remote monitoring and feeding by farmers. Effectively this is “feeding as a service” and will decrease the cost and increase yield for farmers.
Selling a game-changing model like this into industry requires confidence, maturity and a stand-out pitch. But more than that – landing genuine IoT innovations that shift business paradigms requires industry leadership on the part of the buyer or buyers. Whether in agriculture, in industry, or in governments, IoT success hinges on early adopters who see the potential and who are prepared to engage with and action new ideas.
The IoT is spotlighting a need for courageous leaders with vision – who are able to take a view beyond the scope of their specific requirement to see how whole ecosystems of people, processes and technology can be transformed for the better.
These leaders must wrestle with a set of challenges that include data security and privacy concerns, requirements for infrastructure and networks, and managing change in relation to stakeholder arrangements and consumer behaviour.
Making industry 4.0 a success will happen because the world demands more efficient and productive industries. But it will be the quality of leadership in IoT projects that will decide the pace of change.
(From the blog originally published in IoT News on the 5th July 2018)