By Tom Woginrich, International Business Machines (IBM)
The Internet of Things (IoT) is radically changing the way businesses operate and people interact. Billions of devices, sensors, and chips—many of them simple, everyday objects—can communicate with us and each other. Hospitals can monitor and regulate pacemakers at long distance, factories can automatically address production line issues, and hotels can adjust temperature and lighting based on a guest’s preferences.
The IoT is changing the nature of products and equipment, as well as customers’ expectations of their partners and suppliers. Consumers are pressing for greater accountability and better outcomes from manufacturers for the products and services they provide. As more devices connect the user experience directly back to the manufacturer, it creates expectations that the manufacturer is aware a problem is occurring, and potentially even before it occurs. Organizations like John Deere used to “simply” provide equipment to farmers, yet these farmers are now expecting John Deere to help them use the equipment more effectively. These rapidly changing expectations create both opportunities and challenges. Michael Porter and James Heppelmann summarized it well in The Harvard Business Review:
Once composed solely of mechanical and electrical parts, products have become complex systems that combine hardware, sensors, data storage, microprocessors, software, and connectivity in myriad ways. These “smart, connected products”—made possible by vast improvements in processing power and device miniaturization and by the network benefits of ubiquitous wireless connectivity—have unleashed a new era of competition. (How Smart, Connected Products are Transforming Competition, 2014)