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The Internet of Things - The biggest changes are yet to come

Internet of Things, Analytics, Tana

The internet of things will change how we develop and sell products, conduct business and, to a degree, live. We are now at a point where communication technology is so cheap and advanced that anything that moves or has a state subject to change, such as temperature, weight, pressure, etc., can be outfitted with both intelligence and connectivity. 

Over the last five years we’ve had the pleasure of working on projects involving intelligent traffic and machinery, usage-based insurance, connected homes and hyper-local services. During this time it has become clear to me that the internet of things will change the world in profound ways. 

Your value chain may never be the same again

The internet of things brings with it transparency. Providing things with connectivity makes a lot of information that was previously hidden, visible: is something on or off? What is its temperature? Does it need to be serviced? Did I remember to lock the door when I left for work? 

The internet of things changes the way we work and the processes involved. For example, maintenance will be proactive instead of reactive. 

Usually when people talk about the extent to which the internet of things changes our lives, these first two levels are what they are referring to. But this is just where it starts to get interesting.

The internet of things changes the very core of how companies operate. As a result, the nature of the vendor/customer relationship will be irrevocably changed, too. 

An example: a vendor sold some machinery to a customer and it’s sending in reams of data about its operations, as result of which the vendor will eventually know more about the customer’s business than the customer. The vendor will have detailed information about how the product is used, which will radically change R&D processes by making them feedback-driven and by improving product segmentation. The data will drive the need to change product rollouts and even companies in traditional industries like insurance will have to learn how to function like a software companies.   

The internet of things will change the entire value chain, as well as the value proposition to the customer. Instead of a machine, the vendor sells services and information. This level will have the most disruptive impact on business and will result in the bottom falling out of the business of many middlemen in a variety of industries. 

Analyze, analyze and analyze some more

And of course all this data coming in has to be analyzed, so analytics is one of the major factors driving these changes.  

An example:

Tana manufactures landfill compactors for solid waste management. The compactors are connected and feature an information management system that help customers get the most out of their machinery, as well as optional intelligent tools that help further optmize landfill operations. 

We created an app that turns the raw data provided into business information that helps increase profitability and generate savings through optimized landfill space usage, reduced fuel consumption and volume reduction, among other things. This has a major impact on the value proposition to the customer - instead of selling a mere machine, the vendor sells business intelligence. And there is no reason why machines built by other companies can’t be a part of the same network, which means that Tana’s value proposition is no longer tied to a machine. It’s now a service. 

Most companies are still operating in the first two levels of the change I’ve described. I believe the real action will be on levels three and four. 

And we’re getting there.