by Terrence DeFranco, President & CEO, Iota Communications, Inc.
You’ve no doubt heard that the Internet of Things (IoT) is expected to be a multi-trillion-dollar industry in the next decade. Much of that optimism is predicated on the promise of greater efficiency gains for enterprises as a result of IoT data collection and analysis. But while generating massive amounts of gigabytes is fairly easy these days, it’s not easy to know what to do with all that IoT data. Most companies’ primary challenges center around increasing revenue, reducing operating costs and mitigating business risk:
Some companies are integrating IoT data analytics into their marketing automation platforms to create better user experiences. A manufacturer can track the load signature of customers using their products, enabling them to discover patterns in usage. And by pairing IoT usage data with demographic information, companies can learn to better segment their users and target them with specific promotions.
Reducing Operating Costs
Cost reduction is an ongoing challenge for many large companies; it’s also the main driver of most IoT data usage projects. Energy is a major operating expense, particularly for manufacturing industries or companies with process-intensive applications running continuously. Collecting real-time data around your company’s daily operations offers numerous opportunities to become more energy efficient. Sometimes companies start with a specific energy conservation goal, such as reducing demand charge, reducing HVAC energy consumption, or reducing power consumption in general (thereby reducing their electricity bill).
Mitigating Business Risk
Equipment failure is costly, not only because of the associated unplanned downtime, but also because of excessive spending on new, high-cost machinery. IoT sensors can help reduce the risk of equipment failure by collecting data on the vibrations and sounds associated with certain motors. If you’re monitoring that activity and the pattern abruptly changes in some way—such as the decibel level increasing by a standard deviation—that would create an alert that a failure could be imminent, giving you a chance to address an issue before equipment failure occurs.
Business goals evolve over time; plus, the data you collect can sometimes be applied across business areas, allowing for even greater efficiencies and process improvements. We can use the popular business concept of the Balanced Scorecard to explain what that means.
The Balanced Scorecard (BSC) is a strategic planning and management system many organizations use to track business performance and align departmental activities with overall company goals. The concept of the BSC came into being in the early 1990s and today is used by more than 50% of large U.S. firms. In essence, the BSC allows leaders to break down organizational goals into four perspectives:
- Financial goals for improved economic success
- Customer goals that will help you achieve a competitive advantage
- Process goals that help meet the expectations of customers and stakeholders
- People (learning and growth) goals that will help achieve the other three perspectives
An organization can only achieve its strategic objectives by considering all of these perspectives, each of which involves numerous metrics that reveal whether or not a company is on track for success. Working within the Balanced Scorecard template, IoT devices can deliver some of the necessary data that helps tell the story of your company’s overall performance.