Why IoT? Three big reasons emerge from customer interviews

You may have read how Microsoft customers such as ThyssenKrupp Elevator and Rockwell Automation are applying Internet of Things (IoT) concepts to transform their business. Their deployments reflect the bottom-line impact that is possible with advanced IoT initiatives. For instance, ThyssenKrupp’s preventative maintenance for elevator uptime paved the way for reduced costs and a major competitive advantage.

And while there’s much to be learned from advanced players in IoT with complex concepts and solutions, there is also plenty of opportunity for companies that are just starting out with IoT. When you look at new IoT deployments in this emerging technology landscape, there are three key business fundamentals where companies of any size can gain.

No. 1: Reduce costs

In most industries, it’s easier to save on expenditures than to build revenue, and the same principle holds true when it comes to building value with IoT. So it shouldn’t be too surprising that creating efficiency and reducing the costs of doing business was the number one answer customers gave to the question of what they think they can gain from IoT in our recent study by Keystone Strategy*.

For companies struggling to streamline their vision for IoT and focus on the fastest time to value, reducing costs provides the shortest path to success. With ROI realizable within the first year, cost reduction is also one of the most influential ways for business group leaders to drive alignment when board approval is required for their IoT investment.

While nearly every company could benefit by automating data collection for analysis, other common IoT scenarios for increasing efficiency and reducing costs include real-time inventory tracking to reduce the time wasted searching for parts and ensure the right ones are always on hand. IoT is also being used to create some of the world’s most reliable factory lines. In healthcare, IoT can be used to vastly improve patient care, by automating medication systems. And in some cities, IoT is transforming life in urban areas by creating smarter traffic solutions. The reality is, scenarios to reduce costs are as many and varied as companies and industries themselves.

No. 2: Increase revenue

Increasing revenue is another big reason companies are looking to the Internet of Things today, but because it often involves building out the organization to accommodate the new business, it generally takes longer to realize ROI from the effort.

The rewards, however, can be substantial, and we’ve seen several customers leverage their initial IoT work into new services that can be added on top of products to generate post-sale revenue streams.

Remote monitoring and predictive maintenance scenarios are a prime example. We’ve seen how both Rockwell and TKE have expanded their business to become service and software providers as much as they are equipment manufacturers.

Rockwell uses their solution to monitor petroleum equipment in remote locations, with a team of support engineers at Rockwell headquarters keeping tabs on the health of their customers’ systems. In the case of a deep-sea petroleum pump that powers and offshore oil platform, any failure can be very expensive. But because of the instant flow of data allowed by connecting the pumps through intelligent sensors, Rockwell engineers are able to head off potential problems or drastically reduce downtime if an issue does occur.

No. 3: Transform the business

Over the decades, very few of our customers have told us that transforming their business was a key goal at the outset of their IoT initiatives, but many adopters have said they now see the potential for a data-driven transformation arising from their efforts.

The most common scenario for such a transformation is the ultimate maturation of additional revenue streams into a new business division, and certainly companies like TKE and Rockwell fall into this category. These companies are no longer selling equipment, but uptime, which is what their customers care about most.

Down the road, as more companies think through the application of IoT principles in their industry, there is the potential for this approach to be a truly disruptive force across many industries. It wasn’t long ago that nobody would have imagined a fleet of taxis carrying GPS devices connected to a central user app could revolutionize mass transit, but today it has.

But most companies don’t start out with IoT looking to disrupt an entire industry — They want to disrupt their own processes and work smarter. The key to doing so is to start small and be very focused at the outset. As the solution matures and capabilities grow, new opportunities will emerge.

*Source: Keystone Strategy, “IoT Influence Model Research,” March, 2015.