The Internet of Things becomes a real growth driver


(Published in The Produktkulturmagazin issue 4 2017)

From connected computers to intelligent digitalised habitats – the Internet of Things represents an enormous innovation boost. Smart, networked objects are finding their way into every industry, not only changing our private everyday lives and consumer habits, but also taking over factory floors. New thought and business models are in demand. 

In 1991, the American computer scientist Mark Weiser presented a revolutionary concept. He described the daily life of Sal, an average employee who uses technologies and devices that were considered futuristic at the time, such as tablets, and who lives in a smart home. He was the first to use the term “ubiquitous computing” to describe pervasive computers and information processing. Nowadays, we can smile placidly about what was once fiction: the internet has connected millions of people, while the connection of objects is advancing rapidly. 15 billion objects are currently connected with one another on the Internet of Things, a figure that is set to increase exponentially. Experts predict that 50 billion objects will already be connected by 2020. 

The Internet of Things, IoT for short, describes the connection of humans and machines, or rather machines and machines. Sensory elements enable objects to measure data and to transfer it to embedded computers. Information from the environment is recorded, connected and made available in the network, creating flexible and efficient systems that permanently provide information and operate automatically. Put more simply, everyday objects have become more intelligent, while devices become computers. Cars are now driving themselves and are part of intelligent traffic systems. Wearables gather their user’s training data in real time, production machines order their service technicians autonomously. The list can already be carried on indefinitely. Safety, increased comfort and efficiency are a promising market of the future. Enormous commercial potential lies in the interlocking of analogue and digital words, this applies to both consumer and company markets B2C and B2B as well as B2E - Business to Employee. New prognosis and operative models also open up in public sectors such as safety, traffic or crisis management. 

In the coming years, IoT is expected to harbour economic potential of up to 1,700 billion Dollars with high expansion rates of over 15 percent. Everything that can be digitalised is being digitalised. Products intended for consumers and equipped with sensors marked the beginning. Running shoes, for example, gather data during every training session. Athletes can track their performance and parameters such as distance ran, speed or calories burned through apps and share this data online or on social networks. The progress of networking also opened up new opportunities for Industry 4.0. Machines that are connected, that act autonomously and that are now even capable of learning promise enormous efficiency potential along the entire supply chain. 

Be it assembly lines perfectly coordinated with one another, with optimum stock keeping and automated maintenance, or self-driving agricultural machines that incorporate statistic data pools and weather data in real time during cultivation – IoT applications and successful machine learning has also been tested in the industrial environment. By now, our high web connectivity and the omnipresence of mobile terminal devices such as smart phones, tablets etc. have paved the way, as has increased computer processing power and storage capacities (clouds) as well as the availability of well-engineered analysis tools. However, there is also a need for efficient platforms that connect technical infrastructures and database functions with smart business services. IoT solutions of the future also provide service functions such as machine learning, big data, security, user experience, user administration, supported integration and APIs.

Intelligent mobile applications and industry-specific end to end processes ultimately pave the way to the highest level of digital transformation: the development of new digital business models. This presents instant opportunities for growth, regardless of the industry. Production and service processes can be solidly automated, offering product, content and service proposals. A never before seen 360° view of the target group grants more comprehensive and precise user and/or customer information. Based on this, respective commerce software solutions enable pinpointed decisions and offers in real time. Those who comprehend these advantages will dominate the market with completely new business models. 

Online worlds and stationary trade therefore finally interlink symbiotically thanks to the interaction of smart devices and efficient omnichannel software. Potential customers from our sporting goods example will be wooed across channels by offers deducted individually from the database and from past behaviour. If sensors in the shop measure that a customer is lingering in front of a shoe display for a long while, experts can provide their services with mobile equipment such as tablets. Customer service representatives will then have access to the customer profile, including individual preferences, training levels and personalised model recommendations. They will also be informed if the customer is a member of the loyalty programme, displaying individual prices and discounts and collecting points with a purchase. A display will of course show whether the product is in stock in real time. If it’s out of stock, various delivery and payment methods can be offered – which are again individually attuned to the customer.

The added value potential of the Internet of Things therefore doesn’t always involve offering more sophisticated hardware. The potential for differentiation is too short-term, while the capitalisable added value is proportionately low. Its full potential is open to those that understand that added value is developed through creating new additional offers and benefits. Our hobby athlete, as an example, will automatically receive a recommendation to change shoes in time due to their customer profile saved on the cloud, or they can complete paid fitness challenges on popular tracks in their area. The same applies to business models and service processes in the business environment. 

The hypothetical manufacturer’s intelligent and/or learning machines autonomously report maintenance requirements in time. If there is still a malfunction despite the report, then an automatic alarm is raised – including a report, error description and the spare parts required. The alerted service technicians are sent to the customer through time and fuel-optimised routes. Equipped with a smartphone and tablet, the technician will then read the error data on site, repairing the machine with the help of Google Glasses and real-time repair information. Being connected in this manner also enables the service technician to close optimised maintenance contracts and to provide information on recurring, automated spare parts deliveries “as a service”. The company can therefore not only react effectively to customer issues, but also open up new service bundles, consultation and sales routes. Service-orientated performance portfolios beyond rigid sales maxims and industry borders have therefore already become reality – networked systems that are capable of learning and predictive business models make it possible. Virtual hype will quickly become a real business opportunity for all those that are ready to invest and re-think.  

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