Over the weekend, I was glancing through some of the major company’s annual reports. Irrespective of the industry, whether it is Manufacturing or Transportation or Utilities, IoT is appearing as a strategic priority today. Organization’s annual reports rarely miss about digital vision and initiatives associated with it. This is a reflection that IoT is seen as a transformation force for the organizations. But many IoT conferences are talking about the Proof of Concepts (POC) and initial roadmaps only, rather than the real business values achieved through IoT...WHY?
IoT journey starts with a lot of bang, but over some period, these initiatives lose their momentum or move like a snail. As per Cisco's 2017 survey, close to three-fourths of the IoT projects are failing at the PoC stage. McKinsey's survey in May 2017 found that less than 30 percent of the POCs are starting to scale. 84 percent of the companies were stuck in POC mode for over a year and 28 percent for over two years...WHY?
The scene is not that bad now compared to those 2017 report survey results. The situation has definitely improved over the last two years. I have seen some of my customers achieving exponential value within 12 months of their IoT projects launched. Isn’t it amazing? Then WHY are they successful and many are still scratching the surface?
The real buyer of these IoT solutions are the business stakeholders who are looking for real answers to succeed, but they are not able to get that from the internal teams nor from an external partner. Because almost every vendor's presentation has the same POC use cases and same claim about the potential value generation. Many do not talk about the real value generated through IoT. In the end, customers are confused on what is the right step to realize the transformation journey through the IoT force.
Last month, I was exchanging my thoughts with some executives and some interesting perspectives came out of that discussion. I feel the real issue is not asking the question “WHY’.
WHY should one start the IoT initiative? WHAT should the business stakeholders be happy about? WHY should it be funded? WHY should your end customer buy this from you? Whether it is customer or business or the CEO...WHY should they be excited about this?
Of course, the answer is business value! And we all agree on that, but something is preventing all to come to a common ground and achieve it for real...WHY?
Is it all about Business and Stakeholder alignment, Talent and Skill gap or not having the right partner? Or something more than this? If this can be answered thoroughly, then IoT initiatives will scale up for sure. And I am already seeing many organizations who have asked these questions on WHY and figured out the answers before they even start talking about the PoC.
Why is There a Lack of Synergy Within the Organization?
IoT is seen as a revenue generator or operations transformation initiative and Business stakeholders really need that value reflected in their P&L statements. It is not a technology or a support function. This understanding is not the same across all the functions of the organization.
- As the technology teams get to know about the details on all the layers of IoT before their business peers, they start their POCs without direct ownership from the business teams. Slowly these initiatives face challenges of restricted budget and henceforth die.
- Sometimes Business owners take the decisions on IoT on their own as it is anyway new in the market and why should they depend on the slow IT department? This leads to multiple POCs across the same organization and almost on the same use case as well.
- Sometimes it is due to the inter-political climate within the organization or due to the lack of clarity on what objectives are being targeted to be achieved and what is the return of investments and who is going to manage the risks associated with it. There is a race on who starts first but less of a race on who will stand tall and deliver the value.
Any IoT initiative for the organization needs to be well-qualified for business outcomes before starting it.
Why Stakeholders Don’t Align on Business Outcome and Roadmap?
The whole point of performing PoC is to test the concept, validate the possibility of business value outcome and scale it quickly. However, most companies fall into a trap post-PoC. Technology teams state that it has been proven as a success and now Business owners need to fund and scale it further. But Business owners don’t see the value that will reflect on the P&L.
For any initiative to bring P&L impact, it cannot be achieved with a $100K USD PoC. It needs a business owner to create the roadmap and right teams to enable them on the launch and KPIs associated with this initiative clearly tracked and governed. It is not a technology initiative.
A high-level roadmap with functional architecture and requirements with a timeline view can help put digital train on the track. And definitely it is not to outsource this activity to some power point factories, but to engage the right trusted partner who can create this together with you and stand by it to deliver it till the end.
Why Companies Face Scarcity of Talent and Expertise to Scale up?
IoT is continuously evolving and to leverage its power, there is a need for continuously evolving skills and expertise. Companies mid-way through the journey realize that and it acts as a speed breaker on the IoT initiatives. Such a dynamic business environment calls for forming an ecosystem of partners and identifying and acting on needs before it is too late. Companies should identify right internal pool talent and groom them to drive these initiatives forward. The needed skillsets are not some data scientists and developers. The organization needs to groom people who understand business needs and is able to stitch it through technology.
Why Companies are Not Able to Achieve the Value, Even with Partners?
Believe it or not, IoT is not a single organization’s play. Companies need partners across several layers of IoT – such as hardware, device software, protocol stack implementation, gateway systems, backend systems, end user application, and analytics and so on. Every player in this ecosystem claims that they can deliver end to end IoT solutions.
It is important for us to go beyond their words and see the real benefits achieved and the path taken. To choose a right partner who helps stitching these ecosystems and also be able to deliver the value is the one to be chosen here. These players should have a clear value proposition, common goals and objectives to achieve demonstrable business outcomes.
Let’s answer the “WHY” in all possible ways and get answers before jumping on the PoC wave. Business value for organizations come through scale and not through PoC. So, it is important to look IoT in a scalable way so that business value can be realized.
Please share your opinions on this interesting topic through your personal experience and it will be a good learning for many who are planning to start or restart their IoT journey.