There’s a lot of hype around IOT. A lot of statistics. Big companies like Cisco, Goldman Sachs and Intel are are putting a lot of money behind it. Everyone seems to concur that it’s important, but most of the attention right now seems to be focussed around the physical stuff: connectivity, sensors and features.
That’s all great news for R&D departments, but a lot of people are trying to understand the commercial implications of IOT. They’re trying to figure out what IOT means to their business models. The financial stuff.
Scott Peza of Blue Hill Research recently wrote a great blog post called “How To Make Money With The Internet of Things.” I urge you to read the post in its entirety, but his conclusion does the best job of explaining the entrepreneurial possibilities of IOT that I’ve read in a long time.
It’s concise, lucid and compelling:
“I think those of us who comment on the space still owe you a good explanation of why you should be paying attention – other than IoT being the latest ‘shiny object’ in the business world. Here’s my pitch: if you currently sell products that collect some sort of data (or could be retrofitted to do so) and there is someone out in the world who would find that data valuable, IoT is a new revenue source for you. If you sell physical products that degrade or need to be serviced, IoT means you can offer remote monitoring services, or preventative maintenance services – new revenue streams. In the alternative, you can increase the attractiveness (and value) of those products by giving customers the ability to conduct that monitoring and maintenance themselves. If you sell services that could be expanded if you only had access to more data, it’s new money. And if you sell technology to help sense conditions, facilitate secure communications, conduct analysis, manage service provisioning and billing, or forecast and plan revenue – this market is going to need you.”
That’s a really solid 183 words (it could have been even shorter but I liked the intro). It’s got four concrete commercial use cases: data, diagnostics, value-add, and market share. But the last line is the real kicker.
Outside of the sensors and hardware industry, I think there are hundreds of companies out there that might be surprised to learn that they have huge commercial opportunities in IOT, no matter what their industry, or how they started.
Zuora didn’t start out as an IOT enabler, but today we’re handling the subscription-based financial platforms of dozens of IOT companies, including Arrow, Lytx, PTC, Motorola and Honeywell. The reason is actually pretty simple (and here are my 7 words on the topic):
IOT turns products into services.
So get ready. It’s time for your finance department to start thinking as creatively as your engineering group. Like Peza says: this market is going to need you!