The growth of the IoT industry is impressive, with examples of new use cases continuing to develop almost daily. However, although the industry may be booming, if organizations move too far away from the objectives digitization was designed to address — enhancing day-to-day experiences — the market risks stagnation and undoing the rapid progress that has been achieved so far.
Jason Kay, CCO at IMS Evolve, explains that while a priority for IoT is creating more efficient processes, ultimately those efficiencies should also address issues that are key to the customer experience. From food quality to environmental standards and minimizing product waste, these objectives will not be met solely by automating processes, but by automating outcomes.
There are several possible theories as to why businesses are not making the projected progress towards successful digitization. Overwhelmed by the number of choices when it comes to innovative technologies? Projects with unrealistic goals? A belief, encouraged by some IT vendors, that digitization requires high-cost, high-risk rip-and-replace deployments? Although worthwhile considerations, these are the symptoms, not the cause. The reason for the lack of progression towards effective digitization is that the outcomes businesses are working toward have no correlation with the core business purposes.
Isolated digitization projects with siloed objectives deliver limited value that can be easily absorbed by unavoidable business costs shortly after project completion. These short-term enhancements make ROI difficult to prove and make projects highly vulnerable under C-suite scrutiny.
In order to accelerate the digitization of an organization, a new approach is required. Although disruptive strategies may appear threatening to current business models, when these projects are executed correctly they not only deliver aggressive ROI and efficiency gains, but present the opportunity to explore new revenue streams and business models. By prioritizing the core objectives of the organization, tangible business value aligned with clearly defined outcomes can be identified, as well as opportunities to reduce costs.
In some ways, the IT industry has inadvertently incited this situation by offering new technologies that on face value appear forward-thinking and innovative, such as artificial intelligence and augmented reality, that don’t deliver tangible value to customers. IoT systems and propositions that have weak ROI due to requiring significant investment and a total infrastructure rebuild causing massive disruption to day-to-day business also waste valuable time and money. As a result, this confusion creates a challenge for businesses to establish viable, deliverable and future-proof digitization strategies. Furthermore, if the focus does not progress from single, process-led goals, this confusion will only continue and the perception of IoT technologies will deteriorate.
Through business-wide collaboration that focuses on the organization’s primary objectives, the true potential of digitization can be achieved. Without this outcome-led approach and with a misplaced focus on digitization projects that fail to add up to a consistent strategy, organizations will not be able to capitalize on the opportunity to use existing infrastructure to drive business value.
Consider the deployment of an IoT layer across refrigeration assets throughout the supply chain to monitor and manage temperature. A process-based strategy would priorities creating efficiencies, as well as potentially utilizing rapid access to refrigeration monitors and controls, together with energy tariffs, to lower costs and energy consumption. However, limiting an IoT project to one single, energy-reduction initiative may fail to demonstrate the full potential of ongoing benefits to management.
By collaborating with multiple teams, such as food safety and compliance, maintenance and merchandising, the scope of the technology can drastically increase. Real-time data from refrigeration assets can be contextualized with merchandising data to automate temperatures and correlate with the specific produce type within the case. With produce being kept at optimum temperatures, shelf-life will improve, waste will reduce and basket size may even increase due to aesthetics and availability. In another example, real-time monitoring of refrigerated asset performance can be used to inform and improve maintenance productivity, moving from reactive to predictive regimes, again improving asset availability and performance and therefore, product quality and customer experience.
There are now multiple opportunities to reduce waste, improve productivity and increase sales from one single IoT deployment, going far beyond incremental energy cost reduction and using the same existing assets and data used for energy management.
Sustainable digitization strategy
In order to move toward a future-proof, strategic realization, businesses must consider how digitization will address wider organizational outcomes, including the impact on customer experience, sustainability requirements and macroeconomic impacts. Collaboration across multiple teams is key to achieving this, as confidence in the project grows due to stronger business case and business-wide commitment to the project long term.
Placing a focus on using legacy infrastructure provides an opportunity for numerous business wins. Digitization can be achieved quickly, without disruption and at a significantly reduced rate. The risks are reduced and return on investment is delivered rapidly by using proven and scalable technologies, offering the chance to release value that can be reinvested into additional technological advancements. Furthermore, with an outcome-led approach, digitization gains the corporate credibility required to further boost investment and create a robust, consistent and sustainable cross-business strategy.
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