In April 2020 Matt Hatton and William Webb published a book entitled ‘The Internet of Things Myth’, exploring why the last decade has not been as successful for IoT as might have been hoped or expected. Previous articles on IoT Business News examined the challenges represented by poor product development and the lack of dominant standards for wireless communications. Other missteps by suppliers, as discussed in depth in the book, included focusing too much on valuation, being too eager to move along the value chain, and failing to realise their own organisational limitations. However, not all of the blame for poor IoT adoption can be levelled at the vendors. Adopters also struggled with the complexity of implemented IoT. That is the focus of this article.
Early IoT implementations were generally appended to existing practices, simply offering a more efficient way of doing things. For instance, monitoring refrigerated shipping containers as a way to ensure the cargo had been cared for within acceptable parameters. Very valuable, but not likely to necessitate a fundamental change in how the shipping company operates. As the complexity of the application increases so too does the requirement to change business processes. Take for instance Anticimex, a pest control company, which introduced remote monitoring of its traps, an upgrade on the previous requirement to send a person to check them regularly. This relatively simple switch to a remote monitoring solution necessitates a new approach to customer care, workforce scheduling and more.
As further complexity is layered on, the implications for commercial and organisational change grow even further. One of the more extreme examples is any IoT solution predicated on providing an ‘x-as-a-service’ (xaaS) business model, such as paying for jet engines or agricultural equipment based on the number of miles flown, or amount of grain gathered. These types of approaches necessitate a substantial overhaul of the way in which the organisation operates. For instance, the shift from a capex-based model (where the client pays up-front for the hardware) to an opex-based model (based on ongoing payments) will transform the Finance department, with a recurring revenue model and a much greater loading of cost onto the balance sheet. That’s in addition to adapting to a completely different sales model, ongoing customer care requirements, demand for field service technicians and so forth.
The change implicit in embracing IoT, and particularly the most sophisticated models, within an organisation ranges from disruptive to transformational. Adopters of IoT must give ample consideration to the commercial and operational implications of deployment, and make the appropriate changes within their organisations. This is often much more challenging and time-consuming than the technical changes. What are the big barriers? The fundamental issue is that it is harder to change organisational working practices and business models than it is to adopt new technologies. In the book we examine eight major areas that are likely to be disrupted within an organisation if it is truly embracing the opportunities presented by IoT. These include the adoption of new processes, the acquisition of new skills, the switch to new business models, the need for new partners and the over-riding requirement for a well thought-out change management strategy.
It is notable the extent to which adopters of IoT have ignored the more challenging transformational forms of IoT that require them to make the changes noted above. IoT deployments have focused almost exclusively on ‘low-hanging fruit’ of simple efficiency saving based on streamlining internal processes. Done correctly IoT is transformational to many aspects of an organisation’s operations. It’s not possible to harness IoT without also being able to make the necessary changes to people and process.
In the book we offer a series of recommendations for enterprise adopters on how best to position themselves to make those people and process changes. These include:
- Be bold. Some people will advise you to start small, and it’s true that the quickest ROI is usually from the simplest deployment. BUT you won’t find a competitive differentiator in incremental change.
- Adopt a ‘systems-first’ approach. Look at your internal processes and systems and work out what you want to change and how you will go about changing it to take advantage of IoT. Start from the business process and work back.
- Put someone other than IT in charge. The IT department needs to focus on the day-to-day running of the IT systems, rather than business transformation, which is implicit in IoT. A CTO would be great. And an evangelist at Board level can make a huge difference.
- Make sure you’re planning commercial and operational changes as well as technological. It is a common mistake to focus on the technological aspect of testing and deploying IoT to the detriment of the commercial. The two strands need to be managed in parallel.
With approaches such as these, enterprises can make the necessary changes to embrace the transformational possibilities presented by IoT.