Is your business ready for the day everything has a sensor?
One day in the very near future, we will wonder how we ever survived in a world full of ‘stupid’ devices. From washing machines to lights to thermostats, soon our homes will be full of sensors connected to a network.
This proliferation of sensors will also reach our cars, offices, and factories. Soon, every “thing” will have at least one sensor: the World Economic Forum predicts the number of connected devices will more than double over the next few years, from 22.9 billion in 2016 to more than 50 billion in 2020.
That is equivalent to nearly five connected devices for every single person on Earth.
A new world of insight
Driving this proliferation of smart devices are the falling costs of sensors, computing power, and bandwidth, which have opened the door to the creation of vast networks generating unprecedented volumes of data. By analysing and leveraging this data, business leaders can make smarter, more informed decisions about nearly every aspect of the business.
Big data is now the fuel that drives the global, digital economy. Here too, advances in Machine and Deep Learning (which must be “fed” by big data sets) are helping us to comprehend and act on the signals and patterns that are buried in the noise. An investment in analysing and understanding data in real time will increase competitiveness and lay the foundation for more efficient and responsive business processes and smarter decision-making across the entire business.
However, business leaders need to develop and drive an effective strategy to enjoy the true benefits of these IoT-driven big data insights.
only 25% of business leaders have a clear strategy
From gut feeling to smart planning
In a study conducted on behalf of SAP by Oxford Economics, 81% of global business leaders believed that the Internet of Things is critical to their organisation’s future success. The appeal of IoT is clear: where much of today’s decisions are made on a gut feeling, IoT enables business leaders to base decisions on real-time data gathered from the growing number of connected devices.
The same study, however, found that only 25% of business leaders have a clear strategy for IoT.
This lack of strategy is inhibiting business leaders’ ability to act when something unexpected happens. Instead of acting on hard data, leaders are left to go by gut instinct, which is rarely – if ever – an effective alternative.
Unlocking the potential of smart devices
The Internet of Things offers business leaders an opportunity to revolutionise the way they plan for logistics, maintenance, security and more.
For example, a factory running on smart devices linked to a digital core that provides real-time analytic capabilities can reduce capital investment into equipment by 3% – 5% by extending the life of machinery, according to a 2015 McKinsey study. Maintenance costs of smart factory equipment can be reduced by 10% – 40%, and equipment downtime reduced by 50%, providing a potential economic impact of $630 billion by 2025.
One of the key aspects of unlocking the true economic potential of smart devices is the digital platform supporting IoT applications.
New business models
When previously static business assets suddenly become smart, entire new revenue streams and business models become possible. Effective use of sensors linked to a real-time digital core with predictive analytics capabilities can virtually guarantee that a device produces the desired outcome.
This raises interesting possibilities around the idea of ownership: soon, we may subscribe to a set number of clean utensils instead of buying a dishwasher, or a farmer may subscribe to a predetermined volume of crops harvested instead of making the significant capital investment into purchasing a combine harvester.
We are currently at the early stages of a global revolution in business, industry, and government. With billions of sensors entering our everyday lives, the world will soon be a lot smarter.
Is your business ready?