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How to monetize the Internet of Things

With $6 Trillion of new value up for grabs many organizations are still struggling to monetise the IOT

Big Data
21January

Over the next ten years the Internet of Everything will, according to leading analysts, create between $6 Trillion and $33 Trillion of new value. The term Internet of Everything encompasses at least six other multi trillion dollar mega trends as shown below.

The key word in this phrase that you need to pay special attention to is the word ‘New’ because unlike other trends that simply replace existing ones, the Internet of Everything gives every organization an opportunity to create new value that didn’t exist before. The world is full of hundreds of billions of dumb devices all waiting to be connected.

The chair you’re sitting on? Dumb. The table you’re sitting at? Dumb. The floor you’re standing on? Dumb. The food you’re eating? Dumb and yes even food in the future will be smart but that’s a topic for another time.

Value is in the eye of the beholder

Value is an interesting word, in part because different people quantify it in different ways, but also because it’s fluid in nature and changes over time. Business leaders however, whose mission it is to ensure the future prosperity of their organization will more often than not define it in business terms. They will consequently measure the value of something by the degree it helps them reduce business costs and risks and by the degree that it can help them grow revenues.

When analysts around the world decided to quantify the value of the Internet of Everything they used a traditional empirical measure – money. If the Internet of Everything will create at least $6 Trillion of new value how can you capture some of it and translate it into something that helps your organization become more prosperous?

Commercially the value generated by the Internet of Everything falls into one of two pots – its ability to radically improve the operational efficiency of your organization and its ability to help you build new revenue streams while complimenting old ones. In other words it’ll help you reduce costs and grow income. So how do you find and extract the value from these smart devices and apply it to your business? Information has a lifecycle and, like any lifecycle there’s a beginning, a middle and an end but ironically we need to begin at the end - with the results you want to achieve.

Start at the End

As I established earlier, business leaders focus on only three key forces – cost, risk and revenue and this is where we’ll begin our journey. Choose the Force you want to move the dial on and be specific about the results you’d like to achieve. Not only will being specific help focus your thoughts, but it will give you goals to aim for. However, if this is your first outing then don’t beat yourself up if you over shoot or under shoot your goals. In my example, I’m going to use the Internet of Everything to reduce global food prices and create a new revenue stream for my agricultural business so no pressure. I want to discover a new revenue stream for my business that will help me add 5% to my top line, improve customer loyalty and differentiate me against my competition. Sound familiar?

For those wondering why I’ve chosen to try to discover a new revenue stream it’s because in my experience it’s the harder of the three Forces to influence – reducing cost and risk is relatively easy but discovering a new mass market revenue stream requires creative thinking so assemble the right team of experts and be prepared to think outside of the box. Let’s begin.

Find the right data to combine

By now you should all know that information has more value when it’s combined together with other data streams. Choosing the right streams to combine is going to be one of the most challenging problems you’ll face, so now you’ve established your goal criteria your next task is to select the right streams to combine. For this you need to have a clear understanding of the streams available to your organization. In other words, you need to know what sensors you have in your estate and be able to quantify what they can measure and know where they are. At this point it’s probably worth noting that this is where many organizations today fall down because very few organizations audit sensors and ergo have no way to understand what information is available to them. If, for example, I asked you what sensors you had, where they were and what data they captured, would you be able to give me an accurate answer? Probably not, but once you have this information it should be easy enough for you to understand the function, capability and position of particular sensors in your organizations ecosystem and begin innovating a new revenue stream, or alternatively, working out how you can leverage the data from them to reduce operational costs and risks.

Save the Planet and reduce the cost of Bread

Moving on to my example a GPS sensor in a tractor has a specific function - it will allow you to monitor the vehicles location. Similarly a spectrographic sensor has a specific function - it will help you measure the absorption, emission and scattering of Electromagnetic Radiation (EMR) of an object. In isolation neither of these two sensors sound particularly interesting but with the right perspective, knowledge and foresight, the right team will realize that by combining the data streams from even just these two sensors will allow farmers to increase their crop yields by an average of 20%. At the same time it will help them reduce the amount of herbicides they use, reducing their impact on the environment. If you’re wondering how we can achieve these results using just two sensors the answer is so simple that even a child could understand it. Using GPS you can record your tractors movements around a winter wheat field, meanwhile spectrographic sensors embedded in the crop sprayers mechanical booms use hyperspectral analysis to determine the EMR biosignature of all of the plants it’s passing over. To a layman all of this will probably still mean nothing and if you don’t have the right team of experts in place then you’ll have just scored an own goal and missed a golden opportunity. Subsequently I can’t stress enough how important it is that you have the right subject matter experts in your team because a spectographer will be able to tell you that every plant has a different biosignature. Now, armed with this new information, your team can create a system that allows the sprayer to differentiate weeds from winter wheat plants so when - and only when the sprayer detects a weed - it’ll spray it with the right amount of herbicide with pin point accuracy, reducing waste, maximizing yields and inevitably growing top line.

Now Bank it

At this time congratulations are in order – well done you’ve just helped increase global food production. But how do you turn this into a value your business can bank? Well, as we’ve already seen you’ve just used the Internet of Everything to create new value and once you’ve quantified it and proven it works, you need to develop a go-to Market plan. In this case, for example you could sell the insights that the information from your agricultural machinery has just gathered back to the farmers as a service – after all, not only have they just reduced the amount of herbicide they have to buy and know which areas of their land are more prone to weed outbreaks but they’ve also got 20% more winter wheat to sell. So now when we look back at our goals of achieving better customer loyalty, differentiating our organization and improving our top line have we succeeded? Well this was only an example but perhaps we did… however, what might be more interesting to you is the fact that the Internet of Everything doesn’t just give your organization the opportunity to identify a few new revenue streams but many. There are billions and billions of new uses cases waiting to be discovered and the only way you are going to increase the prosperity of your business is to get out there and work on finding them. Good luck!

Conclusion

The Internet of Everything presents every organization with an unparalleled opportunity to reinvent itself and the relationship with its customers. Realizing the benefits relies on your ability to understand the sensors in your estate and assembling the right team.

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