IoT provides and enables the connection between machines, devices, sensors or “Things” and software applications to drive business optimization, and Industrial IoT is the application of IoT in BtoB industrial settings.

The Internet of Things (IoT) continues to attract attention and generate considerable buzz. It’s a technology that has transformed consumer and business markets alike, inspiring a growing number of commercial operations to look at how IoT could help them differentiate and pull ahead of the competition.

As an IoT technologist whose career stretches back nearly 20 years, I’ve seen many outstanding examples of transformative IoT technology. But I’ve also seen too many companies allow themselves to be seduced by the hype and make costly mistakes. Much of this comes from a misunderstanding of what IoT really is.

IoT provides and enables the connection between machines, devices, sensors or “Things” and software applications to drive business optimization, and Industrial IoT is the application of IoT in B2B industrial settings.

Industrial IoT has the potential to add tremendous value.

Primarily, by creating new revenue opportunities, cost efficiencies and new customer dependencies but, companies that plan to tap into it should consider these three pieces of advice.

Don’t think of IoT as your strategy

IoT is not a strategy. It’s a toolbox that you can use to fix a business problem. But you need to identify that business problem first. If you start by asking, “How does IoT fit into our business?” you’re already going down the wrong path.

Here’s a real-world example:
A company came to me recently with an idea for applying IoT technology to paint-shakers that mix paint at hardware and paint stores. It’s a simple enough piece of equipment. But connect it to a network of intelligent machines and suddenly it can measure the gallons of paint that have been shaken in a day, a week, or a month. It can issue early warnings when repairs are needed so that business owners never have to miss an opportunity to sell paint because the shaker broke down.

Sounds great, doesn’t it? But look beyond the sizzle, and industrial IoT just doesn’t deliver value in this context. Paint shakers, it turns out, are inexpensive and reliable pieces of equipment. They don’t fail often and hardware stores generally have extras on hand, so preventative maintenance isn’t a high priority. And the data a shaker can collect is pretty much limited to the number of gallons of paint being shaken, something the store’s inventory system already does. So, where’s the value add? How will IoT help this manufacturer or their customers see greater success?

Always start with the business problem and then choose the right tool to address it. If you start with IoT and then backwards engineer a purpose for it, you’ll end up with an expensive solution to a problem that doesn’t exist.

Drill deep into verticals

In the consumer world, IoT is a cool technology with a broad market in the general lifestyle category. But in the commercial world, it’s the narrow verticals that offer the greatest promise. I would advise any company seeking success with IoT to take a very close look at specific verticals in the space.

Here are a few Industrial IoT examples:

  1. IoT applied to facilities management will enable the optimization of ventilation, lighting and temperature for efficiency, safety and operational performance
  2. IoT applied to food safety and the cold chain will improve toxicity testing, refrigeration leak detection, safety and regulatory compliance with remote temperature monitoring
  3. IoT applied to fleet and asset management will enable industrial field equipment tracking and telematics for tank monitoring
  4. IoT applied to environmental monitoring will enable greater insight into usage patterns and conservation opportunities for utilities including water, gas and electricity.

Don’t tackle Industrial IoT alone

Few, if any, companies are capable of building a complete, integrated IoT solution on their own. These are complex systems that require machines, hardware and software to interrelate flawlessly. As a result, the most successful examples are built on a close collaboration between two or more companies with complementary expertise.

Companies that specialize in bringing IoT technologies to commercial clients are most successful when they have built partnerships that enable them to stitch together end-to-end Industrial IoT solutions. Having a pre-assembled package that offers everything a company needs to make its products intelligent and connected gives these companies an advantage over competitors that can only offer one piece of the puzzle.

Similarly, companies that want to become more competitive by enhancing their products and services with IoT capabilities need to be prepared to partner with consultants and technologists who can provide the expertise they lack and help them translate the business need into a technology solution.

Here’s a great example of teamwork in action:
A well-known industrial instrument manufacturer makes valves and sensors, and they needed to differentiate in a competitive market. They knew their market, but they didn’t know IoT, so they partnered with a technology company I worked with for many years. This company provided cellular networking boxes that attach to the instruments and a cloud-based service to host the data, while internally, the industrial manufacturer developed the application that collected the data and published it to a dashboard. Through collaboration, the company was able to offer their customers an IoT solution that remotely monitors their valves and sensors, which saves time and money.

Unlock the real value of Industrial IoT

When applied to business problems, IoT can be truly disruptive. Listen for pain points like these, and use them as a springboard to innovation:

  • “We’re spending too much money on inventory because we don’t know what’s on our shelves.”
  • “Our salespeople spend too much time calling customers to see whether they need to replenish their supplies.”
  • “The downtime on our equipment is costing our customers too much money.”
  • “Our mobile repair people never have the right parts with them when they go on a service call.”
  • “Our margins are shrinking and we need to reduce the cost of servicing our equipment.”
  • “We’re in a highly competitive space and we need to enhance the value of our products and services.”
  • “We need to increase the “stickiness” of our products and services to increase customer loyalty.

 

Here’s the bottom line.

As Industrial IoT continues to evolve and mature, the businesses that see success in this space will be those that seek out promising verticals, avoid the hype, prioritize partnerships and above all, start with a solid business hypothesis.

 

LLR Partners believes in sharing the wealth of experience and expertise within our portfolio companies, network and teams in order to inspire and help accelerate growth for a wider community of business leaders. We hope you find these GrowthBits helpful and share them with your network. Read more growth insights and learn about our investments in Industrial Tech.