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Driving Towards Digital Transformation and The IoT

Added to IoTplaybook or last updated on: 04/05/2019
Microsoft General Manager, IoT Strategic Accounts and Programs, Andrew Smith

Digital transformation is a core concern for modern business – not just within the IT team, but across the whole of the organisation. Gartner data shows that global IT spending will grow 3.2 per cent this year on the back of organisations looking to transformation projects to develop new competitive advantages.

“As enterprises continue their digital transformation efforts, shifting to ‘pay for use’ will continue. This sets enterprises up to deal with the sustained and rapid change that underscores digital business,” the Gartner report notes.

That same drive towards new business models and competitive disruption is also leading enterprises to seriously invest in IoT. According to predictions from management consultant, Bain, the combined markets for IoT hardware, software, systems integration, and data and telecom services will reach $520 billion in 2021 – more than double the $235 million spent in 2017. 

 

The demand for IoT is significant. The struggle for many organisations, however, is in ensuring IoT investments deliver value back to the organisation. A Forbes article notes, “enterprises adopting IoT are finding that vendors aren’t making enough progress on lowering the most significant barriers to adoption in the areas of security, ease of integration with existing IT, operational technology systems and uncertain returns on investment.”

And that’s where transformation comes back in – organisations are best poised to succeed with IoT once they have a digitally transformed, services-oriented environment.

The four stages of transformation

Microsoft General Manager, IoT Strategic Accounts and Programs, Andrew Smith, outlined four significant stages in the digital transformation journey:

“There’s a stage where transformation is about enabling technology,” Smith said. “It’s about establishing the sensors, collecting and storing and processing data, and from that gathering insights that you didn’t have before. At this stage you’re investing, but you’re not gaining anything directly from the investment.

“Then there’s a stage where the organisation starts to benefit by driving operational efficiency – perhaps this is a predictive maintenance use case, for example.

“Beyond this, there’s a stage where the organisation will start to use the insights and data to change both the nature of their offerings, and how they take those offerings to market. And that’s the point where we start to see organisations shift from a product-oriented to a service-oriented business model.

“The final step is where organisations leverage that new business model to generate additional revenue streams for the business – once you’ve got that service, what new services do you add on?”

The problem many organisations face when looking to invest in transformation and IoT, Smith said, was that they sometimes try to skip steps in the planning process – particularly in the forward thinking about how their investment will result in transformation, both for their organization and for their customers. This often leads to the project stalling.

“We often see companies get started on IoT by going straight into ideation and solution development, and get very quickly to proof of concept stage,” Smith said. “However, when they don’t bring the commercial decision makers along at the same speed as the technical decision makers, the project often doesn’t go any further than proof of concept.

“IoT requires a lot of different expertise from device connectivity to security through to application development and many more disciplines as well. Not many companies have every single discipline in-house, so they need to partner, but the partnership strategy might differ compared to the company’s traditional partnership strategy.”

The problem, he said, is that organisations often don’t consider the impact these IoT solutions will have on existing partnerships, customerschannels to market, not to mention the internal staff within the organisation – these considerations require a holistic  approach to business planning which goes beyond the traditional project planning approaches of many organizations

“Companies that have thought through business transformation before going into IoT tend to be the ones that are most successful in breaking through from point of concept to full deployment,” Smith said.

The meldCX example

One organisation that has seen significant success with the Internet of Things is meldCX. It provides its customers with a platform for application management and development and, in doing so, it has been able to solve one of the greatest problems that other organisations find when investing in IoT, according to CEO Asia-Pacific, AOPEN solutions and meldCX, Stephen Borg.

“A 2017 study conducted by Cisco showed that 60 per cent of IoT initiatives stall at the proof of concept stage and only 26 per cent of companies have had an IoT initiative that they considered a complete success. Even worse: a third of all completed projects were not considered a success,” Borg said.

“That’s where we can play a key role. We created the meldCX platform two years ago so we can offer customers not just IoT, but applied IoT. This involves combining software with hardware to offer an entire solution. Importantly, the solution also allows organisations to leverage existing code, so they can focus on the experience rather than needing to build from scratch. Effectively, we’re democratising IoT applications by dramatically reducing development time and cost, and eliminating grey areas or typical pitfalls.”

Highlighting the value of reaching the fourth stage of transformation, meldCX has been able to find additional revenue streams and services opportunities through its platform. “We initially built this for ourselves to facilitate for one of our customers, and we realised that we’ve solved such a problem, that we’ve made this available to all of our hardware partners,” he said.

For more information on IoT and digital transformation, don’t miss Andrew Smith and Stephen Borg’s presentation at the IoT in Action event in Sydney on March 19. Register to attend here

Can’t make it in person? Tune in for the IoT in Action Webinar Series.