Will all businesses shift to product platforms, enabled by IoT?

Profile picture for user cebess By Charlie Bess March 17, 2015
Summary:
Charlie Bess sets the argument for businesses becoming more service focused and enabled by IoT but points to the need for IT to be better aligned to the business

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Earlier this month, diginomica published a post titled: The Internet-of-Things isn’t ‘up for grabs’, it is a diverse new phase of the web that focused on turning M2M into IoT, “by figuring out how services can reach the end user.” That article was primarily focused on IT vendors, but really all businesses need to take this service perspective to heart.

The view describing the relationship between IoT and services is key. For businesses this shift will involve a range of capabilities that are currently approached by most in isolation. Part of that isolation is likely caused by the constraints place by the lack of ‘alignment’ between IT and the business. Capabilities like:

  • Gamification– to shift the behavior and improve service adoption. Someone is always keeping score.
  • Analytics and automation – to recognize the context described by the information flow and then take action based upon it. After all, it is the action that matters in the context of a desired business outcome.
  • Even back-office ERP systems that are the system of record for the organization and keep that big-picture business financial view.

These capabilities need to be assessed and integrated from a business-centric perspective and mined for service possibilities. I firmly believe the concept of enterprise architecture will need to break out of the womb of IT in their effort to tackle these larger business issues.

That is because the IoT enabled service business is not just about the internal use of information to make a business more efficient or effective. It is all about the tantalizing and potentially transformative possibilities for the industry and its consumers as a whole. I guess the most striking example is Tesla which has taken the concept of the serviced motor vehicle to an entirely new level. You don't go get a Tesla serviced, its software is updated remotely.

Most product segments are in the process of turning into service platforms that enable deeper integration and impact across the range of their value chain. Examples I’ve seen in recent years are products like Webkinz – this is essentially a doll with a digital, virtualized element that helps build a stickier relationship. Another is the capabilities of LED lightbulbs like the Philips Hue and the new service possibilities that come from that. It is quite a shift from the on-off perspective with a bit of dimming here and there from the past. Then we have the service enabled, learning thermostat in the shape of Nest.

These product segments have been around for well over a hundred years and yet when viewed from a service perspective, whole new domains of value open up. The shift is underway whether the business is an industry laggard or thought leader.

It is early days and there is much innovation to be seen before we can say that 'as a Service' is business as usual. Nevertheless, businesses need to ask themselves “What can a service perspective mean to me?” as well as “What could it mean to others?”

To some extent it’s the Wild West out there and those that grab the land with enough will to hold it, win out. The rules of engagement for everyone in specific segments have yet to be written. That's an opportunity because those who write the rules usually get to win the spoils. Writing those rules then needs to be a central part of business strategy. If you don’t have those skills around the table, find them. They are the first part of the jigsaw that becomes the picture of the 'new' in an IoT enabled world.

Featured image via Lux Capital