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Internet of Things: A Business Case

The Internet of things has an amazing potential to transform every industry, both locally and globally. Being the CEO or CFO of a business, you must have asked yourself about the prospect of investing in the internet of things at one point or another. Today, I hope you get your questions answered. Being responsible for smooth functioning of an organisation, you must take every decision objectively based on various factors like cost reduction, increase in efficiency, feasibility and return on investment.

After spending countless hours perusing a number of articles and case studies on IoT and thinking about IoT investment pitches, I have compiled a comprehensive list that tells you the need to move to a connected ecosystem. Whether you are a small business owner or the owner of a multi-billion dollar brand, I am positive that you will be able to find something in here that will make you think about an investment in IoT.

Small Businesses
Small Businesses typically range from 15 to 50 employees. Now the big question: Why would a small and medium size business owner need connected solutions?
Take for example a store that sells a variety of clothes. The business relies heavily on supply and demand. If for some reason, the sales of a product ‘A’ fall and that of product ‘B’ increase, the manager has to inform the supplier to maintain the inventory accordingly. The manual solution to this situation will unnecessarily draw in time resources and need a lot of paper work and never-ending phone calls at both ends. How about getting rid of all this hassle for once and for all? Imagine if the sensor placed on the sales register was able to deliver real-time updates to the supplier’s computer, the demands would be adjusted automatically. The supplier will come to know that he has to deliver 30 units of product ‘A’ and 60 units of product ‘B’ in the coming week. This automation eliminates the repeated phone calls to the supplier and reduces the risk of misinformation due to human error.

Heavy industries
Being the CEO or CFO of, say, a heavy industry comprising thousands of employees, you have to factor in several things like feasibility, cost-benefit ratio, return on investment, shareholder sentiment, employee orientation and more before planning to invest in IoT.
In such an industry, IoT can fuel growth by reducing complexity and making daily tasks automated. For example, if you are the CEO of a power company, you could make use of a smart grid to manage the supply. The use of a smart grid can enable easy bi-directional flow of electricity. You could tap into the electricity generated by a solar cell when in need. The use of self-healing networks will reduce pressure on electricians as you can roll-out sophisticated updates to remove a fault. Lastly, when the meters are online, demand management can be done in a more subtle way. Currently, if a client ‘A’ needs more power, you have to fire up the reserve generators to meet the requirement. There is a considerable time lag in this case.  But, if the meters of all your clients are online, you could flash a message on their television sets asking them to reduce consumption for a while or you could control it at your end and meet the requirement of client ‘A’ with no time lag.

Take the example of a car manufacturing company. Car makers like Tesla are proposing to make smart cars which will be made up of connected parts. Such connected parts would be easy to maintain and repair. If the air pressure in one tire is critically low, the driver gets an alert as it is connected before it bursts and leads to an accident. One major criteria in this business is the time spent by the car in the garage for repairs. If the car is made up of connected parts, a majority of its functions will be governed by software rather than hardware. So, for certain ‘repairs’, you could just send a software update to the car over the air and voila! This saves your cost of manual labor and retains customers better.
A certain car maker was able to achieve high standards of security while keeping costs at bay in its attempt to deliver connected devices. The connected car now costs 3-4 times less than that of ICEs to make.​

Another example can be the manufacturing industry where a lot still depends on manual labor. If the machines on the shop floor are not connected, it is difficult to contain losses due to failure or non-performance of a single machine. Before you come to know that a certain machine has malfunctioned, it is too late. On the shop floor, every second counts! Imagine a scenario where machines are connected to each other using sensors. Suppose a machine in middle malfunctions, it can relay the message to the machines immediately after it to stop or slow down work until it is back online. This saves precious money and reduces the risk of sub-standard products. Moreover, maintenance of connected machines is simpler than that or offline ones.
A reputed manufacturing firm was able to achieve over 5% efficiency improvements saving over $200,000 per year by adopting Internet of Things approach.

Infrastructure industry stands to benefit a lot from the internet of things. Think of a scenario where the roads are connected to traffic signals and cars. The sensors attached on the roads will be able to relay information to the cars that run on it, thus providing the driver with real-time updates of possible speed-breakers or potholes on the road. Drivers can also be alerted about possible accidents or sudden halts on the freeway that will reduce accidents and save costs (maybe save lives!). If roads are able to identify the number of cars on the road, they would be able to relay it to the traffic signals. Hence, traffic signal duration can be monitored dynamically rather than in a static fashion.
A similar ideology can be applied to structures like offshore oil drilling platforms where certain loose parts can cause the structure to dismantle and result in casualties. If the same structure was constructed using connected parts, the parts that became loose could communicate with the manufacturer or the operator relaying a distress signal for the same. A recent study assumed certain savings and penetration level for the Internet of Things to estimate around $500 billion in cost savings!

Apart from the above mentioned businesses, I think the government of a country has a role to play here too. The government will be able to lower production costs, increase citizen safety and maintain systematic logs for the same if the businesses go the IoT way. The government can make provisions to provide for certain incentives for businesses adopting the connected approach in their daily running.

In conclusion, I would like to say that investing in the Internet of Things is a safe bet. Like every other new avenue, internet of things also has a heavy investment cost associated with it. But, the benefits from the same can be realized in the long term. To give you further incentive, a recent study predicted that almost 82% of companies will have IoT applications implemented in some way or the other by 2017! (Source  )

So, this can be your opportunity to be a pioneer rather than becoming a follower!

I think I have been able to cover several scenarios to make you think about moving your business to a connected paradigm. If I have missed out any business or any aspect, or if you have any feedback/suggestions, please leave me a comment below.