Shankar Narayanan from Tata Consultancy Services tells us what makes a company a successful Internet of Things Leader
The emergence of the Internet of Things (IoT) is a pivotal moment in technology evolution, allowing companies to extend the benefits of the digital world across to the physical world. The productivity improvements and the business impact that this transition will bring are vast, and many organisations are already reaping the rewards. In fact, according to a recent global study conducted by TCS, 83 percent of companies who have invested in IoT initiatives have already seen an increase in revenue as a direct result.
This study also explored the behaviours that are most common among the businesses that are getting the most from their IoT initiatives. We used this data to identify a subset of businesses, IoT Leaders, that are ahead of the competition when it comes to this new technology. These Leaders reported an average revenue gain of 64 percent, compared to the average of 15.6 percent, in the area of their business touched by their IoT initiative and represented just 8 percent of the organisations.
So what is it that makes a company an Internet of Things Leader?
Leaders reimagine their businesses to provide more value for their customers. Customer permission is essential if businesses are to get all of the data that IoT technologies can provide and to get this permission, companies must give customers something they value in return. We found that Leaders devote a larger share of their IoT budget to post-sales product monitoring, which means they can provide better customer service in exchange for valuable information.
Leaders are also better able to make money from this value exchange by adopting new business models, product and service offerings, product bundles and selling data. Most Leaders (97 percent) have made at least one change to their business model since launching their IoT initiative, a stark contrast to the 25 percent of Followers who haven’t made any changes to date. A Leader’s ability to interpret IoT data and act on the results ultimately leads to increases in their profit margin.
Leaders also set themselves apart from Followers with their ability to recognise IoT’s potential to provide honest feedback about how their offerings are performing with customers. The data provides feedback in four areas: customer experience, the environment provided to customers, products en route to customers, and product performance. We believe this product monitoring is the primary reason why Leaders generated far more revenue from their IoT initiatives than Followers.
Of course, getting this data is only the start. The feedback IoT provides can often be unflattering so it is essential that Leaders are also more effective in dealing with employee resistance to IoT data. It is surely no coincidence that Leaders tend to have CEOs who confidently show their support for the integration of IoT in their business strategy. In fact, all of the companies we interviewed stated that without strong support at the top, their IoT initiatives might have failed.
In order to optimise data collected from IoT initiatives, companies must be able to handle truly Big Data and act on that feedback effectively. Our study found that Leaders organise themselves to act quickly and put more emphasis on the need to analyse and react to IoT data.
Leaders also make IoT reliable in the field, with a particular focus on reducing the risks of security breaches. Many of the companies that we spoke to had invested in security software to help protect their data against hacking and leakage.
Finally, Leaders are much more deliberative about their IoT spend. They are more likely to test it in one area of their business before triggering wide-scale adoption.
While there is no magic formula for success with any new technology, our research into IoT has demonstrated that there are some common attributes that the most successful organisations share. In order to be a Leader you must be flexible with your business practices, ready for the truth, and unafraid of change.
Shankar Narayanan is country head, UK & Ireland, Tata Consultancy Services
What do you know about the Internet of Things? Take our quiz!