With IoT, any company can enter the SaaS market

We’re at a precipice when it comes to the internet of things. Everyone loves prognosticating about the implications, but many are still unclear about how exactly IoT will impact their businesses. Still, it’s clear the tide is turning quickly. In a July McKinsey survey, 98 percent of respondents said most companies in their industry are planning enterprise IoT initiatives. And the two main areas where those companies plan to use IoT is in optimizing service operations and improving visibility into operations.

Since most companies are just beginning their IoT journey, those priorities make sense. The first question leaders ask is, “How can I use IoT to improve my company?” So the answers focus on the in-house operational advantages the connected technology can impart, which is why most use cases we read about today involve internal improvement: Manufacturers using sensor data to preemptively repair machinery before they break down. Warehouses employing fleets of autonomous robots, all communicating with each other to move goods around the facility. Utility companies installing smart meters to more effectively manage energy flow into buildings.

These operational enhancements will help companies become more streamlined and efficient. But the real upheaval that IoT will have is by transforming all types of companies into SaaS companies.

By collecting and analyzing data from all of their customers’ connected devices, companies can then offer additional subscription services — like predictive maintenance, track and trace, and performance management. According to the McKinsey survey, only 14 percent of respondents cited new product and service offerings as a top IoT priority. As more companies understand just how profoundly IoT can add to their bottom line, that number will increase dramatically. Here are a few examples of how this strategy is already playing out.

An industrial tire provider places motion, location, and impact sensors in each tire it sells. When its customers buy and start using these tires in the field, they generate reams of data as they operate. The tire company gathers and analyzes that information. Once it has enough historical performance data, it can offer a predictive analytics subscription service to future users.