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Think of how the human body works. And you’ve demystified the Internet of Things.
Your body has many parts that perform separate functions and are coordinated to respond to environmental stimuli or personal desire.
For instance, what happens when you touch a hot object? In not up to a second, your nerves sense the heat, and send signals to your spinal cord, which sends a message to your muscles to contract and move your hand off that object.
In this case, the spinal cord did the coordination. And in other instances your brain will do.
The Internet of Things (IoT) operate more or less like the human body.
In fact, this technology is a network of dynamic interlinked components that sense context, transfer data, process information, and initiate action.
However, a lot of businesses still struggle with the technical complexity of these systems. And most at times they engage with technical partners without first assessing the value this technology will bring to business.
So, I’m here to show you what a business leader should know about the Internet of Things. And how to assess its implications for your digital transformation strategy.
I. Let’s Demystify the Internet of Things
While the applications of IoT are very vast, the technologies on which it depends are relatively simple conceptually.
That is to say no matter how complex an IoT system is, we can break it down into four components:
- Sensors. These are all the devices that gather data about context. Just what the sensory nerves on your finger did when you touched a hot object.
- Communications. These are tools that enable the flow of information between other components. Just like the neurons that transferred the ‘hot’ signal from your finger to the spinal cord.
- Intelligence. This is the analysis capability that makes sense of data and determines desired actions. Just like your brain and spinal cord interprets signals sent from your finger to determine the right action your muscles should take.
- Actuators. They produce an active response as a result of information gathered by sensors or instruction from intelligence components. Just like your muscles contract to withdraw your finger.
Internet of Things in a real life example
Imagine an inventory system. Such that each item has an RFID tag and an incorporated GPS device.
These sensors send data about the item’s location, or temperature to a database somewhere.
And then the data is queried and analyzed to extract insights that answer the questions:
- Are there any shipments that are stuck in traffic at a specific time of the day?
- Which items are selling better at which locations?
- Are there stock shortages, or overstock?
- What demand levels should the company expect next month, next quarter, next year?
Then the system sends the response of the first question to an automated process that schedules shipments, so it adjusts the next day’s schedules such that shipments only take place when traffic is low.
In short, this is how the components work together to achieve operational efficiency.
Almost everything will be connected
We’re seeing more and more implementations of IoT technologies with different levels of complexity in agriculture, health care, manufacturing, retail, entertainment and many other industries all over the world.
David Evans, former chief futurist at Cisco clearly pointed out how almost everything is getting connected.
“Today, literally anything can be connected, including tennis rackets, diapers, clothing, vehicles and, of course, homes. And although people may find this unsettling, the network is also starting to include biological things: Today, pets, crops, livestock, and the clothing on your body can be connected. We’re not far from an Internet link you can actually swallow as a pill.”David evans, former chief futurist at cisco
And we have more trends that support this.
Gartner anticipates they’ll be 25 billion connected things in the world by 2021 — a number that surpasses the 20.4 billion they estimated for 2020.
In subsequent posts, I’ll get into the details of how IoT is enabling the digital transformation of specific sectors in the world, and the lessons you can draw for your organization.
And I’ll make sure to inform you through email, about the next article.
Now let’s explore how this technology can help your company.
II. Internet of Things supports the coordination function of Management
So, how is an organization designed? Let’s get back to basics.
It turns out that everyone cannot do the same thing in an organization. That’s to say some people focus on product development and marketing, some on finance, some on HR, and so on.
In fact, it is this differentiation, also called specialization that allows the organization to develop strong competencies. But then, these competencies must be integrated to work in synergy towards achieving the organization’s goals.
Decades of management research revealed that the task of balancing differentiation and integration, is the fundamental challenge of when designing an organization.
Fortunately, the Internet of Things is helping organizations overcome this challenge.
Think of each component of an IoT system as a computer, or call it a machine. Each machine specializes to in achieve a particular goal. And then all of them integrate together to fulfill higher goals.
In short, machines can – and should – help managers, but managers do much that machines cannot.
So how can Internet of Things help your organization to succeed with digital transformation?
IoT could substitute for workers
Most factories allocate routine tasks to machines, to achieve efficiency, and give humans more time to focus on higher tasks that require judgment.
In fact, analytics coordinates sensors and actuators to automate processes formerly run by humans. This is where the internet of things meets artificial intelligence.
However, we can’t say technology will replace all works. But where cost, speed and quality are important elements of competitive advantage, especially for routine processes, it is a good idea to look for opportunities where computers can do the work.
IoT could complement workers
In customer service, technology now helps to detect emotions in a customer’s voice in real time, and to issue warnings and advice that prompt a call center employee to adjust the tone of communication to soothe the customer.
Therefore, the technology serves as a complement to workers in this case.
And by processing thousands of data points in an instant, computers supply humans with relevant information at the exact moment they need to make important decisions.
IoT could help workers to perform complex processes
Weather stations sense temperature and wind anywhere in the world, enabling meteorologists to understand and predict changes in weather. These folks won’t be able to do this without the weather stations.
Therefore, IoT can enable managers to perform processes they could never do on their own.
Now, let’s talk strategy.
III. Internet of Things helps to build digital capabilities
Adopting a technology is not enough to create business value. This really applies to all digital technologies.
And the value created really depends on how you choose to implement the technology.
Leading organizations proceed by mapping the features of IoT technologies to the challenges the organization faces, or to opportunities it wants to pursue, and then create innovations to improve that part of the business.
As a result, there are three areas where IoT can help to develop digital capabilities: customer experience, operations, and business models.
Let’s take it step-by-step.
Firstly, Internet of Things helps to transform customer experience
We live in a digital age, where customers use social media tools like Facebook and Twitter to access company offers and talk about their experiences.
For instance, you can think of Smartphones as sensors. Businesses collect location and other data through mobile applications, and then use this data for analytics to predict customer behavior.
As a result, this helps to create personalized experiences for customers.
So, when thinking of customer experience, you should consider where IoT technologies can help you to:
- Understand customer behavior and design the customer experience from the outside in
- Increase reach and engagement of customers
- Maximize the use of customer data
- Mesh physical and digital experiences to enhance the customer experience.
Secondly, Internet of Things helps to transform operations
This technology enables the automation of manual processes.
For instance, you can program machines to shut down automatically when potentially dangerous situations arise.
And so, when thinking of transforming operations, you should consider where the technology can help you to:
- improve decision-making with gathered data
- revise the way employees go about their work, and
- increase transparency about how and why decisions are made
Thirdly, Internet of Things helps to transform the business model
IoT technologies have proven to drive aggressive transformation by helping to alter the structure and focus of businesses entirely by transforming the business model.
And so, when thinking of transforming your business model, you should consider where the technologies can help you to:
- Radically shift what you sell, how you sell it, and how you make money from it
- Re-imagine the nature of your competition or reconfigure your value chain
- Move from a set of local units to a truly global one
- Move from products to value-added services
- Enter brand-new markets.
Now, to Conclude…
So far, we explored the four components of the Internet of Things technology. And the analogy with the human body helped to solidify the purpose of this technology.
And then, finally we explored how you can use the capabilities of this technology to transform your organization.
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