Three Reasons Enterprises Invest in IoT

Even though the concepts behind IoT have been around for dozens of years, companies in the past have been hesitant to work specifically on IoT initiatives. Despite the hesitance, IoT is helping to keep many industries and businesses alive. Enterprises of all sizes are adapting and starting to incorporate IoT into offerings and operations. If you look closely, you will see how companies connect products to and receive data from the Internet without even knowing that it is IoT. This is because IoT is a technology shift, not an industry, and therefore has a vast number of applications.

We get quite a few customers that understand they want to implement IoT solutions, maybe as a part of a digital transformation, but they’re not sure in what capacity. The questions we always ask are, “If you could have any data about your assets, what data would that be, and what would you do with it?” Their response helps us determine their line of business goals and the best ways to meet them.

A company could look at a condition-based monitoring maintenance project to reduce operational costs, but it’s also possible for them to be creating new product lines that can increase revenue. For that reason, it’s not possible to focus solely on one part of a business when looking at IoT.

So let’s explore why companies invest in IoT solutions. Ultimately, there are only a few overarching reasons that companies implement new technologies: to increase revenue, to decrease costs, or to mitigate risk.

Let’s dive further into each.

When companies are looking to increase revenue, there are a couple of ways they can approach the challenge at hand: they can gain more customers, renew and expand orders from happy customers, or up-sell to current customers with different offerings. For many companies, these can be achieved by incorporating IoT into new or existing product lines.

For product manufacturers, staying ahead of competition is key to gaining customers. Product differentiators can make a sale and turn customers into advocates. This is why many OEMs look at IoT as an avenue for product innovation.

The IoT sensors integrated with John Deere’s tractors do all of this for them automatically, making the farmer’s life more efficient. On the flip side, by recording this data, John Deere can learn more about its users’ habits and adjust its products leading to happy customers that will continue to buy as they grow.

By doing this, John Deere’s customers are much happier and will continue to buy from the brand. Customers in the market for a new tractor may see this as a must-have feature and will therefore buy from John Deere. In fact, some customers like these capabilities enough that they’re willing to pay for them, with the onetime activation fee John Deere requires per tractor for the application and associated services. This value-add created an additional revenue stream for John Deere.

Cost reduction is a common high-level initiative at companies of all sizes. Many times, the most measurable cost reduction exercises happen in process improvement, especially in product manufacturing. There’s a reason there is an entire field dedicated to it: operations management. IoT can be beneficial, especially on the factory floor, in distribution, supply chain, or for logistics uses. Increasing machine uptime, more efficiently moving and managing goods and resources, and improving quality are all ways companies can decrease costs.

It’s not just industrial settings that are looking at automation to reduce costs. A smart campus certainly uses IoT for cost reduction, from building operations to resource optimization.