Your Competitors are Doubling Down on IoT: What You Need to Know so You Don’t Get Left Behind Part 3 of 3
This is the final blog in our three-part series on The Internet of Things (IoT). As we have previously seen, IoT is a technology wave that will affect both large manufacturers and small & mid-sized businesses (SMBs). In other words, it will affect your business and if not, then your business is probably still using rotary dial phones and IBM Selectric® typewriters. Since most companies are forward-looking, these topics are dedicated to them.
In part two, we saw how IoT is changing the way companies operate with mobile apps and a specific example of The Lake Companies’ trailblazing solution, Beacon-Trak®.
World Participation in IoT
We are currently seeing the greatest levels of IoT adoption in North American and European companies. It is forecasted that North American companies will spend 0.45% of revenue this year on IoT initiatives, while European companies will spend 0.40%. Asian-Pacific companies will invest 0.34% of revenue in IoT and Latin American firms will spend 0.23% of revenue.
We are also seeing that in some companies, IoT is already having a big impact on customer service, product and service customization, and revenue. According to a report featured in the Harvard Business Review, companies with IoT programs in place reported an average revenue increase of 16% in 2014 in the areas of business where IoT initiatives were deployed. In addition, about 9% of firms had an average revenue increase of more than 60%. The biggest product and process improvements reported by companies were more customized offerings and tailored marketing campaigns, faster product improvements, and more effective customer service (in part, from being able to identify product problems before customers even knew about them.)
IoT in Manufacturing
In gaining benefits from IoT, industrial manufacturers are far ahead of 12 other major global industries. They reported the largest average revenue increase from their IoT initiatives last year (29%), and they forecasted that they’d have the largest revenue increase from IoT initiatives by 2018 (27% over 2015). Industrial manufacturers were also in the lead for using sensors and other digital technologies to monitor the products they sold to customers, with 40% of the companies doing so. They were second in IoT spent, at an average $121 million per company, close behind the travel industry’s $129 million.
What Determines Success of IoT
The Harvard Business Review reported that companies with the greatest revenue increases from IoT initiatives differed in seven key ways from firms with the lowest gains:
- Early IoT leaders are more likely to digitally re-imagine their businesses and produce substantial value for customers instead of just value for themselves.
- They deliver that value through new business models, product and service offerings, product bundles, and data.
- They are more likely to see the breakthrough potential of IoT: getting the ultimate truth on how their products and services are performing for customers, as well as actual usage patterns.
- IoT leaders organize themselves to act rapidly based on this performance and customer usage data.
- They are better at dealing with internal resistance to hearing the truth that IoT technologies reveal about product and service performance.
- They make IoT reliable in the field, especially to reduce the risks of security breaches.
- They make small test investments before making broader and bigger ones.
The Lake Companies is doubling down on IoT technologies like Beacon-Trak® to help solve the business problems of our customers. IoT is not going away anytime soon and it’s our mission to guide the companies we serve on the path to success.
SCM World, a Gartner Group research and advisory company, conducted a survey on smart manufacturing and IoT and found that while 20% admit that their factory operations are completely offline, that number is expected to drop to zero in five years.
Price Waterhouse Cooper (PWC) surveyed U.S. manufacturers to learn more about what they are doing (or not doing) and what plans are geared toward building more sophisticated data-driven businesses. Their survey found that manufacturers fall roughly into one of three groups: early adopters, sideliners (doing little or nothing), or waders (those beginning or planning to adopt). Some key findings include:
- 35% of U.S. manufacturers are currently collecting and using data generated by smart sensors to enhance manufacturing/operating processes
- 34% believe it is “extremely critical” that U.S. manufacturers adopt an IoT strategy in their operations
- 38% currently embed sensors in products that enable end-users/customers to collect sensor-generated data
We have seen how IoT is reshaping the world of manufacturing. In the next couple of years, even more options will be made available for manufacturers. IoT is much more than just the latest buzzword. It represents the next big thing that will carry both small and large manufacturing businesses into the future.
For more information on how you can move your company into the future by automating your back office and increasing visibility and efficiency on your shop floor, please contact us today!