It’s been estimated that about US$ 130 billion worth of new monetisation avenues have been created due to IoT-related services. A large number of companies have already increased their revenues due to the application of IoT.
“In the next five years, businesses are going to deal with an existential threat,” says the American management consultant Geoffrey Moore.
This statement should be taken very seriously. The market is now changing so dramatically that customers’ expectations are changing too. Today, we all have different expectations and everything is becoming more and more sophisticated.
So, Geoffrey Moore is right again when he says, “If you do not change now, then you will not be in the business anymore.”
And this has proved to be true. If companies that have been in the business for 80-100 years do not change over time, they will no longer remain in business. There are a lot of examples of such cases, both locally and globally. The market is changing and so are customer expectations and experiences. Tracking these changing trends ought to give us a clue about where the market is headed and what’s going to happen next.
According to Satya Nadella, CEO, Microsoft, “Industry after industry is being transformed as we speak, and that’s the real opportunity for us, collectively.” He adds, “This is perhaps more so than ever in our history where technology is not just adding capability but also changing business models.”
The impact of digital technology
Today, 8 per cent of India’s GDP has been impacted by digital technologies. This is great evidence of how digital technology is playing a role in our lives and in our enterprises. But the more exciting news is that by 2021, digital tech is expected to impact 60 per cent of India’s GDP.
Currently, there are 60 million devices that are already connected to the IoT across India. By 2020, 1.9 billion devices are going to be connected. This figure is going to be a US$ 15 billion opportunity, just for India. These are not hypothetical figures anymore. The power of IoT is going to create a huge difference for all of us.
Sectors like utilities, manufacturing, transportation and logistics as well as automotive have already benefited immensely from this technology, resulting in double-digit growth. There are certain verticals in which IoT adoption is picking up, such as healthcare, retail and agriculture. The impact of this technology is not in just one or two segments, but across industries.
There is no vertical untouched by IoT any longer. It permeates smart cities, healthcare, manufacturing, logistics, energy and utilities, refineries, process manufacturing, oil and gas, and banking and insurance. Improvements are happening and the impact is going to be visible across all these verticals.
About US$ 130 billion worth of new monetisation avenues have been created due to IoT-related services. A large number of companies have already increased their revenues due to the application of IoT.
Digital transformation and its imperatives
Microsoft believes that there are four imperatives to digital transformation – engage customers, empower employees, optimise operations and transform products.
The first is about the customer experience – it is about how this can be improved by offering a service based on the right information, or how you will create an experience that will have an impact. Technology, especially IoT, is creating that value.
The second imperative is how to empower your employee. In any industry, empowering employees has to start from the rock bottom level of the organisation. That’s where the operators and the supervisors will actually get to know how the technology is going to create an impact and improve productivity.
The third imperative is optimising operations. Whether it is manufacturing, smart cities, healthcare or energy utilities, there is a defined set of operations in every sector. It is important for any industry segment to optimise these operations to get real-time visibility, cut down management costs, and improve efficiency and productivity.
The fourth aspect to digital transformation is transforming the products. If yours is a product company or an industry OEM, then the first thing to know about transforming your product is to understand how customers are using it. Then, you can come up with the best variant depending upon the feedback received from the market (regarding how customers are using those products and their expectations).
If you combine this data with your current assets, then a lot can be done in the engineering and R&D side. By harnessing the power of digitally-acquired intelligence and insights, you can transform the product.
Think of a scenario in which you can create a differentiation for your business, and that’s where you are going to gain revenues.
How to capitalise on IoT
There are three things that anybody and everybody can do with IoT – improve efficiency, innovate and transform businesses.
Efficiency: IoT will help cut down the cost of operations or the uptime of the equipment, and thus contribute to cost saving.
Innovation: This is about how fast you are with respect to product innovation. Your new offerings, new variants and new products have high chances of getting sold in the market if they can create better customer experiences. IoT helps with that.
Business transformation: By harnessing the power of IoT, companies like Piramal Glass are getting real-time visibility and cutting down on downtime.
The company has deployed a real-time plant monitoring system at 46 lines across different countries and reduced manual data gathering by 40 per cent. This has enabled the firm to improve employee productivity by 25 per cent. The company has transformed its entire manufacturing operations using IoT, and has seen a 1 per cent improvement in production efficiency and a 5 per cent reduction in defects.
Not only in the private sector, but IoT is creating a great impact in the government sector as well. The technology is being used by the Central Pollution Control Board to assess and control pollution levels in the most revered river of the country—the Ganges.
IoT connects to the heart of the business
Reed Hastings, CEO, Netflix, says, “Companies rarely die from moving too fast, and they frequently die from moving too slowly.”
This is a powerful statement, and it is actually happening with the rapid changes in technology. Today, technology is empowering businesses, so there is a lot of pressure to implement it.
IoT is not a technology revolution. It is a business revolution enabled by technology. Neither is IoT new, it is almost 11 to 12 years old. When Microsoft started with embedded systems and used it for robotics, CNC machines and a lot more, we had all the typical IoT processes in place then itself—capturing signals from these assets to gather intelligence and generate analytics out of it. So, the technology was already there, but it is now transforming businesses.
According to the technology curve, intelligence begins in the cloud, and moves on to IoT, AI and the edge.
IoT is possible because of the cloud and the globally available infrastructure – the compute, the storage, and the networking power available, are all making IoT a reality.
It is not just about harnessing the power of the devices, the assets and the signals, and coming up with intelligence and analytics at the cloud level, but it is also about the ability to move this intelligence from the cloud to the edge. That is so critical in today’s world. Your car is going to become a super-powerful IoT edge device in the future. And that gateway is going to create the entire experience from your home to your office (when you are on the road). The intelligent cloud and intelligent edge are going to play a vital role in the future.
IoT and AI cannot be separated. While IoT harnesses signals from sensors and devices managed centrally by the cloud, AI creates the insights and intelligence out of it.
Once you have the intelligence, how can you spread that intelligence without depending on the cloud? In India, where there is a connectivity issue, IoT edge is going to play a vital role.
How to simplify complex IoT projects
When it comes to IoT, security is really critical. IoT poses unique security, privacy and compliance challenges. You have to be very aware about these aspects, and this is the area in which many companies are investing heavily.
Next, let’s look at complexity. There has been a disconnect between IT and OT (operations technology). Lack of IT-OT integration will impede efficiencies. So, teams should come together and work together to create business differentiation.
And the last aspect is managing data stored in silos. Pick up the information required for your business. There is no need to move all your data into the cloud. IoT gives you the ability to connect to siloed data, irrespective of the OS or protocols. Today, companies, their customers and partners are so passionate about IoT because it is going to be central to their business strategies.
The IoT value chain starts with devices, maybe with security built inside chips, and moves on to machine-to-machine communication. It involves a lot of things like security, connectivity and services. Many partners will come in…consultants, systems integrators, independent software vendors (ISVs) and auditors who will review your entire IoT engagement from a security standpoint. That is why a business capability is required to deliver IoT solutions. A single entity is not going to deliver the business transformation that IoT technology promises.
Microsoft to invest US$ 5 billion in IoT
Microsoft will invest US$ 5 billion over the next four years on IoT. The vision is to give all customers the ability to transform their businesses with connected solutions. The key motivation behind this investment is to secure the entire chain of communication—from devices to channels to cloud security.
Martin Luther King said, “If you can’t fly, then run. If you can’t run, then walk. If you can’t walk, then crawl. But whatever you do, you have to keep moving forward.”
So, the technology is there. You need to be focused on business objectives and keep moving. The result is bound to follow.
Note: The above article is based on a talk by Virendra Chaudhari, IoT sales head – India, Intelligent Cloud, Microsoft, at IoTShow.in 2019, held in Bengaluru. Giving the keynote address, he shared his perspective on where we are headed with respect to technology and how it is going to impact businesses. The talk has been transcribed for publication in Electronics Bazaar by Vinay Prabhakar Minj from the Electronicsforu.com Network.