Why B2B businesses need IoT – part 2


Although Business-to-consumer (B2C) ventures have caught most of our attention, a number of factors still stand in the way of a successful takeoff. Affordability is still a problem, with connectivity rates not dropping fast enough. Many consumers are also taken by “app fatigue”, as having to coordinate between dozens of apps that each control one or a few of the smart devices or appliances in their lives is making life more cumbersome than convenient for them.1 More importantly, consumer-facing ventures are still struggling to find the balance between innovation and familiarity, to find ways to incrementally introduce users to digitally-oriented behaviour patterns.

Business-to-business adoption of IoT technology, on the other hand, is forecasted to occur more rapidly, and generate a far larger proportion of the resultant revenue. McKinsey, for instance, estimate that B2B IoT deployments will account for nearly 70 percent of the value in the next ten years, creating $11.1 trillion a year globally in economic value.2 Of this value, 62 per cent will be generated in advanced economies, and 38 per cent in developing economies. However, the report also observes that this difference in economic impact is reflective of current spending priorities, wage rates and costs. The transformative potential of IoT is much higher in developing economies which have fewer legacy systems to displace and could therefore “leapfrog” past advanced economies in IoT implementations.

If leveraged properly to their fullest potential, IoT applications promise great transformations to both the internal and external faces of enterprises. That is, IoT applications offer transformative possibilities in relation both to operations infrastructure and architecture, and to customer relationship management, marketing and brand management. For now, it would serve us well to separate out these two domains.

Optimising operations: Making enterprise infrastructure efficient and responsive

The Internet of Things offers enterprises across sectors an unprecedented opportunity to rework their operations architecture and infrastructure. Until now, such optimizations hit a wall because of the inability to capture the minutiae of data from the interaction of various machinic, human and digital elements that comprise different enterprise environments.

However, with the possibility of deploying thousands of low-cost sensors that can map the finest of details of these environments, operations optimization is set to enter a new order of possibilities:

a) Retail Spaces:

While retail environments have undergone significant changes as a result of the rise of digital commerce, real world retail spaces continue to retain their importance even as they become more fully integrated with digital spaces and technologies3. IoT solutions offer real world retail spaces a continued competitive capability in the context of a shift to omni-channel shopping which erases the boundaries between offline and online spaces.

As a report by Accenture, points out, IoT solutions are giving retailers new ways to connect directly with smart-phone toting customers, where previously these customers were feared for their tendency to “showroom” (use the retail store for a first-hand physical experience of the product and then purchase online from competitors)4.

A key development here is the possibility of real-time, last-mile, individual-specific promotions based on a combination of online and in-store data obtained through identification of individual customers by in-store beacons.

Data obtained from such beacons could further be used for layout optimization, improved staff allocation and improved customer relationship management programmes, making the retail experience more responsive and simultaneously more efficient5.

Another tangible possibility offered in this direction is the development of automated checkout systems based on automatic scanning of electronic tags on items in a shopping cart and automatic billing to customers’ mobile payments accounts. This would generate savings for both the retailer and the customer by reducing cashier staff requirements and checkout queue timings.

And finally, IoT solutions could also be used for reducing inventory shrinkage (through pilferage and theft) and for inventory optimization.6

b) Office Spaces:

While office spaces have in the past been subjected to various forms of surveillance and data gathering, these have often run the risk of being either too intrusive to provide employees with a comfortable working environment, or too lax to provide sufficient information for insightful use of the environment. Through the use of wall or floor-mounted sensors (possibly in conjunction with smart badges or other wearables), office spaces can now be monitored for usage patterns of various kinds.

The data thus produced could be used for everything from turning off lights in unused parts of the office to regulating HVAC (heating, ventilating and air conditioning) controls to more efficiently deploying cleaning and maintenance resources to even restructuring office architecture for more efficient space utilization and for promoting better and more efficient intra-office interactions for gains in productivity and individual performance.7

IoT solutions for office spaces could also come in the form of wearables customized for the enterprise environment. Initial forays in this direction include the possibility of augmented reality headsets (which could overlay virtual instructions into the user’s view) to minimize the scope and duration of on-the-job training, smart watches for use in inventory processes, fitness trackers for implementing corporate wellness programmes and so on.8

c) Industrial Production Spaces:

In industrial production spaces, operational efficiency is a matter of having comprehensive, real-time visibility of the production process in order to maintain production volumes without suffering downtimes due to problems with machinery or operations personnel.

IoT solutions offer just such visibility, delivering the opportunity to insulate greater parts of the production process from human error through precision monitoring. As this article argues, the vastly increased information flow from the various elements of the production process means that, “Decisions will be based on knowledge and wisdom, not theory or guesswork. Better decisions mean fewer mistakes and less waste.”9

Moreover, IoT applications make possible real-time monitoring of production equipment with enough accuracy to shift equipment maintenance away from reacting to breakdowns in machinery to proactive prediction and prevention of breakdowns.10

IoT applications could also radically improve inventory management, based as they are on actual inventory data rather than being based on predictive estimates that govern current rule-based inventory systems. This will allow enterprises to tie minimum necessary amounts of capital in inventory without thereby disrupting production through a lack of inventory.11

In hazardous operating conditions such as mines, the use of robotic equipment such as driverless vehicles increase worker safety, as well as promoting worker efficiency through teleremote, which reduces the downtime for such activities as shift changes and from blasting operations.

d) Logistics:

Nowhere is the value of the IoT more recognized than in the distributed space of global logistics and shipping. From enhanced tracking of goods through electronic tagging to more efficient utilisation of shipping containers to improved logistics routing of freight and delivery services, the various elements of the logistics sector can derive great benefit from the increased visibility across disaggregated spaces that the IoT provides.12


[1] “App fatigue is killing the Internet of Things (and my phone battery), TheInquirer.net, http://www.theinquirer.net/inquirer/opinion/2445326/app-fatigue-is-killing-the-internet-of-things-and-my-phone-battery
[2] “An executive’s guide to the Internet of Things”, McKinsey.com, http://www.mckinsey.com/business-functions/business-technology/our-insights/an-executives-guide-to-the-internet-of-things
[3] On Solid Ground: Brick-and-mortaris the foundation of Omnichannel Retailing , A.T. Kearney, https://www.atkearney.com/documents/10192/4683364/On+Solid+Ground.pdf/f96d82ce-e40c-450d-97bb-884b017f4cd7
[4] The Internet of Things: Revolutionizing the Retail Industry, Jonathan Gregory, Accenture Strategy, https://www.accenture.com/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_14/Accenture-The-Internet-Of-Things.pdf#zoom=50
[5] “Four Ways the Internet of Things will Innovate the Retail Industry”, Forbes.com http://www.forbes.com/sites/ibm/2015/12/28/four-ways-the-internet-of-things-will-innovate-the-retail-industry/#638584dfcc4d
[6]The Internet of Things: Mapping the value beyond the hype, McKinsey Global Institute, https://www.mckinsey.de/sites/mck_files/files/unlocking_the_potential_of_the_internet_of_things_full_report.pdf
[7] “How the Internet of Things is changing work”, FastCompany.com, http://www.fastcompany.com/3052936/the-future-of-work/how-the-internet-of-things-is-changing-work
[8] “Wearables in the workplace: The tech taking over your office in 2016”, Wareable.com http://www.wareable.com/wearable-tech/wearables-in-the-workplace-the-tech-taking-over-your-office-in-2016-1404
[9] “7 Things to know about the Internet of Things and Industry 4.0”, Modern Machine Shop, http://www.mmsonline.com/articles/7-things-to-know-about-the-internet-of-things-and-industry-40
[10] “Improve Maintenance with the Internet of Things”, Reliable Plant.com, http://www.reliableplant.com/Read/29962/internet-improve-maintenance
[11] “Internet of Things adds intelligence to supply chain”, Enterprise Apps Today.com http://www.enterpriseappstoday.com/supply-chain-management/internet-of-things-adds-intelligence-to-supply-chain-1.html
[12] “The Internet of Things and the Future of Marketing”, McKinsey & Company, http://www.mckinsey.com/business-functions/business-technology/our-insights/the-internet-of-things-and-the-future-of-manufacturing


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