October 05, 2020 - 1005 views|
Here are the five levers for using IoT data analytics to advance decision making capabilities and create new sources of recurring revenue.
As the world adapts to a new normal and braces for the next normal, businesses are increasingly dependent on all things digital. Pre-pandemic, organizations crafted Internet of Things (IoT) strategies in hopes of creating intelligent, data-driven products, operations and services — few of which reached widespread use. In the face of today’s challenges, businesses are more sharply focused on executing full-fledged IoT implementations. But it hasn’t been easy.
Recently, we commissioned Forrester Consulting to assess how companies can escape pilot purgatory and reliably scale their IoT implementations to truly add organizational value.
One of the more intriguing findings in the resulting report is what Forrester calls the five key levers for quickly moving IoT pilots to scaled initiatives. The analysis was based on the impact of each lever to quickly move IoT initiatives past the pilot phase through effective executive team commitment, as well as support the necessary planning, technology, skills and execution of IoT initiatives.
Forrester ranked these levers from most to least impactful, using factor and regression analysis of the aggregate survey responses. In order, these five levers include:
Here’s the dichotomy: While the data/analytics lever was assessed as least impactful, this is precisely where the greatest value is to be found. On a closer look, though, this is unsurprising, even inevitable. Since data/analytics requires the greatest level of IoT maturity, its impact is only starting to be felt. Once businesses get the other four foundational pieces in place, they can forge a productive link between analytics and massive IoT datasets.
Data challenges and opportunities
When companies move beyond collecting data to mining relevant and timely data in operations and services, they can understand not only what has happened and why it happened but also what´s likely to happen next. This enables them to make the best possible decisions quickly and with the least risk. To become this type of “always-aware” enterprise, businesses require usable data from all relevant sources.
Similarly, with the advent of the smart-product economy, businesses must be able to not just collect data but also manage its scale and security. In both the consumer and industrial contexts, a company’s data management strategy will dictate the success of its connected ecosystem.
This dimension refers to “servitization” opportunities and new business models built on smart, connected products, in which businesses create knowledge-based service offerings around their existing product portfolio. An example is a global manufacturer of pumps that we helped recast itself as a provider of data on water delivery (see below).
Servitization is here to stay, as forward-looking companies seek new business models to create opportunities for recurring revenues, with relatively low capital expenditures, to contend with shrinking margins for unintelligent physical products.
Developing the capabilities for always-aware insights
The following examples highlight the impact of IoT data analytics on creating always-aware operations, products, operations and services:
Assessing next steps
It’s important not to underestimate the difficulty of generating actionable insights from IoT data. In the Forrester study, businesses (which were categorized into Novice, Aware and Committed categories depending on the scalability of their IoT endeavors) were asked about their top challenges around data analytics when scaling IoT. Based on each category, we’ve developed recommended next steps for becoming an always-aware enterprise.
While data/analytics may not have emerged as the most important lever for scaling IoT today, it’s an imperative factor for deriving value from IoT deployments. While the challenges are by no means easy to overcome, businesses seeking to maximize their use of IoT data analytics can gain insights from more mature organizations, especially to accelerate their modern decision-making capabilities.
Vivek Diwanji, Senior Director, IoT and Engineering Services and Shivanajay Marwaha Associate Director, IoT Strategy and Advisory, contributed to this blog.