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  September 6th, 2016 | Written by

IoT: The Case for Business Value

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  • IoT data itself doesn't provide business value.
  • Applying analytics to IoT data=Analytics-of-Things.
  • IoT is not applicable only at the operational layer.

Why should business executives care about the Internet of Things?

That’s these central question answered by a recent paper written by Richard Hackathorn, president of Bolder Technology.

The short answer is that it’s all about the data that can be collected from IoT devices. But it’s self-evident that the data itself doesn’t provide business value, it’s the analytics applied to the data—what Hackathorn calls the Analytics-of-Things (AoT)—that does the trick.

The white paper presents its case through studies of how several companies implemented AoT and the benefits they derived from it. One of the companies, a manufacturer of large complex vehicles, started with IoT to manage the daily maintenance of individual vehicles purchased by customers. By monitoring whether sensor readings were within specified limits, the company identified specific components for repair or replacement.

Sensor streams from each vehicle are transmitted back to the company where analytics are applied.

Among the benefits derived from this operation was in the detection of unnecessary maintenance. The company experienced a high percentage of false positives where vehicles were serviced unnecessarily based on sensor data. By improving sensor analytics the company reduced unnecessary maintenance costs while maintaining safety.

The company also used IoT for fleet management, extending analytics so that managing and maintaining equipment can be optimized across all fleet customers. This enabled the company to renting vehicles to customers. Under this new power-by-the-hour business model, the paper explained, customers “have the option of purchasing a specific number of usage hours with a specific probability of uptime.”

The company also uses RFID sensors to automatically track assets on the manufacturing floor. Applying analytics to the process enabled the company to forecast supply-chain disruptions.

A global automobile manufacturer decided that data, analytics and innovation would be differentiators for their products. Auto makers have been equipping their vehicles with sensors for a decade, but since the data was not centrally collected and analyzed, only service technicians actually used the data.

Now, the company is using data for monitoring conditions of batteries, improving the handling of battery warranties.

The analysis also extends to customer services. With customer permission, over 80 percent of all cars are digitally connected to send and receive data between the car and the company’s IT infrastructure. Customers are notified when parts are wearing out and when maintenance visits are due. This saves both the company and the consumer time and money.

A pilot program is now connecting cars with each other, the company, and local municipalities, to provide real-time information on road and traffic conditions.

Several recurring themes were evident in the eight company profiles presented in the paper. One is that companies often start using AoT for a single purpose but then develop programs for additional areas which sometimes bring innovative business value-added service offerings and revenue streams tto the company.

Another was that contrary to popular opinion, IoT is not applicable only at the operational layer. “Long-term value impacts of IoT come from maturing operational IoT use cases into strategic AoT business initiatives,” the paper concluded. “In other words, IoT use cases should evolve upward within this pyramid, which requires executive leadership based on a strategic vision.”