However, IoT not only offers a multitude of opportunities to make existing business processes more efficient and better. The potential to use previously unavailable data opens up a wide range of possible new business models.
However, companies must embrace change and understand that there is an increasing shift in the value chain:
1. value shift from hardware to software
In the future, products will be less and less an assembly of physical components, but will increasingly consist of a complex Combination of sensors, control units, user interfaces (human-machine interface) and software. The increase in customer requirements and the large number of legal regulations mean that software is playing an increasingly important role in product development.
Take the automotive industry, for example: A mid-range car now has around 70-100 control units that collect and process almost all the data available in the vehicle. Taking Tesla as an example: the vehicles are networked and send the data to the Californian car manufacturer's headquarters in order to monitor usage data. In addition, new software versions, for example, can be installed in the vehicle "over the air". Although Tesla manufactures, produces, markets and maintains cars, it does not see itself as a traditional car manufacturer. The fact that Tesla's headquarters are not in Detroit, but in Silicon Valley, underlines this.
This is why companies of this type are increasingly asking the legitimate question: "What business am I in?" [1].
2. value shift from product to service
The trend is Away from product sales to solution provider. After all, the customer does not usually want to buy a drill, but wants to drill a hole [2]. This insight is not really new in itself, but it is easier and better to implement with the new technological possibilities.
Example consumer goods industry: Philips now offers usage-based models where the customer no longer buys the lamps but purchases the service to ensure that the rooms are lit as required. This model means that the customer no longer has any initial costs for the purchase of the product and only incurs costs when the light is actually used [3]. The underlying concept is Product-as-a-Service [4] called.
This quite drastic change, which across the entire value chain from product development through marketing and sales to after-sales service, naturally has a lasting impact on companies. Companies that are successful in the future will not only need the necessary skills for the Design and implementation of these novel solutions, but must also provide the necessary IT infrastructure and IT security in the company.
Finally, it is worth taking a look at the Advantages from a business perspectivethat Internet of Things technology offers:
- Strengthening customer contactIn the Stone Age of the automotive industry at the beginning of the 20th century, Henry Ford did not know who had bought the car and how it would be used. James Heppelmann, CEO of PTC, put it like this: "Vendors no longer have to act as if the products are on the dark side of the moon after they are in use"[1].
Tesla and co. now know very well who is using the vehicle, how it is being used and what data is being collected in the vehicle. The Relationship with the customer is thus becoming narrower and more needs-oriented. - Better understanding of product usage: The Knowledge of the product's usage details enables the company to better understand customers and their product usage behavior. Companies can incorporate this knowledge into the development of future product generations.
- Optimization of process times: By knowing which spare part is defective, the service technician can already take the relevant parts for the job. The resulting benefit is that the company can optimize its Drastically reduce process times in repair and maintenance can.
Not only companies, but also customers benefit significantly from the use of IoT:
- More service performance: By knowing how the product is doing at all times, the service technician can make better and, if necessary, faster decisions. As a rule, the customer has Significantly less downtime of the product, even in the event of repeated failure.
- Improved products and services: By knowing how and in what context the products are used, companies can ensure in the long term that they offer better productsas this knowledge flows back into the product development process.
Read part 1 here: IoT - from newcomer to market breakthrough
Read part 3 here: IoT decision in your company: Weighing up the opportunities and risks sensibly
Sources:
[1] Harvard Business Review, November 2014 issue, page 66
[2] http://www.brandeins.de/archiv/2007/design/ratatazong/
[3] http://www.ellenmacarthurfoundation.org/case_studies/philips-and-turntoo
[4] http://circulareconomytoolkit.org/products-as-a-service.html
[5] Image source: ©-vallepu_Fotolia.com
