Leveraging IoT for digital transformation
What is the role of IoT in enterprise digital transformation? In short, IoT solutions act as a connection between the physical assets of a business and the information technology (IT) infrastructure, leading to improved operational efficiencies as well as new and better customer experiences. To provide the impetus for implementing an IoT solution in your business, we will describe five areas where IoT can enable digital transformation in your business:
- Monitoring and managing assets and inventory.
- Increasing operational efficiencies and productivity.
- Creating smart factories.
- Driving new business models.
- Improving the customer experience.
Let’s start by reviewing one of the most common areas where an enterprise IoT solution can transform your business – monitoring and managing assets and inventory.
Monitoring and managing assets and inventory
A critical area where an IoT solution can transform your business is providing information on the health and location of various business assets, shipments, and stock inventory:
Figure 1.2 – Asset tracking and monitoring use cases
One of the leading areas where IoT can transform a business is asset monitoring and inventory management. In terms of asset monitoring, an IoT solution can provide automatic notifications on the health and location of business assets such as fleet vehicles/trailers, containers, pallets/bins, retail coolers, and machinery. This enables a business to reduce human error and improve daily operational efficiencies and asset downtime due to maintenance, also known as predictive maintenance. Business assets are the lifeblood of a successful business, so effectively monitoring and managing these assets is a fairly easy way to realize significant operational cost savings. An IoT solution is also ideal for inventory management, where the location, temperature, and stock levels of inventory are critical to the success of a business supply chain. An IoT solution with wireless technologies such as RFID, Bluetooth, Wi-Fi, and cellular in conjunction with the appropriate IoT devices and applications virtually eliminates the outdated manual processes associated with inventory management, which are prone to human error and theft, which increase the operational cost of a business. Along the lines of asset management is shipment tracking with IoT-enabled asset monitoring of not only location but also temperature, humidity, and tampering to directly validate the integrity of shipments. This will be discussed in more detail in the next section on IoT markets.
An IoT solution can further transform your business by improving overall operational efficiency and productivity through the seamless integration of business processes and systems.
Increasing operational efficiencies and productivity
There are many ways an IoT solution can increase efficiency and productivity in a business. In general, an enterprise IoT solution can efficiently tie inventory management systems and factory automation/monitoring with customer relationship management (CRM) systems and logistics for improved customer relationships and operational cost savings. In a factory setting, the data from IoT devices can provide unique insight into the production line processes and shipping delivery times, which helps operations complete quicker and more cost-effectively. Moreover, enterprise IoT solutions can reduce employee workloads and allow for further automation, creating cost-saving efficiencies. Industrial IoT (IIoT) solutions are revolutionizing the manufacturing industry by monitoring machine performance and conditions for predictive maintenance to eliminate production line bottlenecks due to machine downtime.
This leads to our third related area where IoT is transforming businesses, which is the Smart Factory.
Creating smart factories
IoT has been the enabler for factory automation and predictive analytics, which has been called smart factory:
Figure 1.3 – Evolution of Industry 4.0 and smart factories
As discussed earlier, IIoT solutions can create several operational efficiencies in a factory setting, which, together with the IoT data analytics from staff, supply chain, stock inventory, and machine health, allows for what has been called the 4th industrial revolution or Industry 4.0. The hallmarks of the smart factory in Industry 4.0 that have been enabled by IoT are predictive analytics for machine maintenance, inventory management, and smart production workflows that are more automated (for example, industrial robotics) for improved operational and cost efficiencies, as well as reduced waste. With a smart factory, potential disruptions are reduced, and production is both more efficient and predictable.
With the adoption of IoT, businesses are now also able to create entirely new business models, thus creating new revenue streams and providing added value to customers.
New business opportunities
Businesses that use IoT solutions have created entirely new service business models, which allow them to track and monitor the performance of their products over their full life cycle, enabling new value-added services for their customers. For example, in the healthcare market, IoT enables both RPM and telemedicine services, which we will cover later in this chapter. In the agricultural market, IoT enables crops as a service with full crop life cycle management from seed to shipment. An IoT supply chain logistics solution provides not only real-time location data but also data on the temperature, humidity, and integrity of shipped assets such as perishables, including pharmaceuticals and food, which provides significant value to end customers and consumers. These value-added services create a closer relationship and trust with their customers, enabling future business.
By implementing IoT solutions, businesses can now offer subscription services around these IoT-enabled value-added services that avoid the upfront capital expense associated with traditional products. With a continuous connection to customers through an IoT solution, businesses can now develop recurring revenue as-a-service models where the customer pays for continuous value. For example, several new IoT-enabled businesses offer fleet/asset management applications that provide a subscription-based offering to their customers to track and manage their fleet and other critical assets without the upfront capital expense for the devices or infrastructure. The as-a-service IoT solution model, which uses advanced data analytics, can be extended to many other subscription-based models, such as security monitoring as a service, health monitoring as a service, crops as a service, and predictive maintenance as a service.
Ultimately, IoT solutions not only benefit businesses but also customers with improved, more personalized customer engagements throughout the product life cycle.
Improving the customer experience
There are many ways IoT solutions improve customer experiences. IoT solutions allow businesses to collect data at various points in a product life cycle from the time it is produced to the time it is retired, providing deep insight into how the product is used to better personalize the customer experience. This improves customer loyalty and trust in the brand. For example, we are probably all familiar with the ease of making purchases at retail stores and kiosks using smartphone apps and smart point-of-sale IoT devices, which improves and personalizes the customer experience with that business. Retailers are also using IoT to manage shelf stocks and monitor shopper behavior to better serve in-store customers.
Now that you have some insight into how IoT can enable a digital transformation in your business, let’s review the leading IoT markets with some example IoT applications in each before considering some common business problems solved by implementing an IoT solution.