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Author's profile photo PVN PavanKumar

Gaining value from IoT(Internet of Things) | Part 1

Imagine this – as you drive into a gas station to refuel your car, the sensors at the station scan your vehicle’s RFID or NFC code and then proceeds to relay pertinent information about you and the car to the on-premise retail outlet. The sensors also collect information from the in built intelligence system of your vehicle that identifies the number of passengers in the car based on the seat belts that are fastened. As you refuel, based on all the collated information, the fuel pump connected to the car’s in-dash system offers you customized discount packages on refreshments from the retail outlet. Welcome to the world of Internet of Things (IoT), and a glimpse of the potential impact IoT will have in our daily lives.

A well-defined IoT strategy can yield positive outcomes to a business. It is never the technology that imposes the implementation challenge, rather it takes into account the following key factors, which underpin every successful IoT strategy:

Note: The content of this blog has been divided into 2 parts; Part 1 and Part 2 


Well defined and measurable objectives

In the world of IoT, improving operational efficiency is going to be key for companies; Also, to retain their customers and to maintain brand equity, it is important that they provide product differentiation (by embedding intelligence), which takes customer experience to different and higher levels. Consequently, because of these reasons, the set of smart connected products would pave way to new business models, which help companies generate new revenue streams.

It is important for companies to effectively define business objectives around the following three broad areas. In addition, it is necessary that companies associate precise success criteria metrics to measure these objectives.

Improving operational efficiency 

The immediate benefit from IoT is automation that helps improve productivity and gain operational efficiency.

In a smart manufacturing environment, every machine is connected and every variable is continuously measured and analysed. This allows companies to make smarter decisions and prevent expensive downtimes; thus, helping them to achieve operational efficiency.

Embedding intelligence for product differentiation

IoT has evolved from a simpler M2M setup to a broader network of smart connected devices. With advanced sensors, processors, connectivity and software being included in the life cycle of wide spectrum of products ranging from medicine to clothing to infrastructure and so on, simply means that products are becoming intelligent and are doing much more than what they are supposed to do. 

The image below depicts a Smart Enterprise Cooler. While a regular cooler is responsible to just cool the products placed in it, a smart cooler on the other hand, helps transmits useful and relevant data to gain transparency, understand the usage pattern and health issues of the cooler – thus, transforming a standalone cooler to a revenue generating asset for the company. 

Beyond cost and energy savings, smart connected products also bring companies and end-consumers closer, leading to improved customer satisfaction and brand equity. This results in blurring industry boundaries, re-shaping the entire value chain and finally exposing companies to new competitive landscapes.

Generating new revenue streams with new business models 

The rules for creating market and capturing economic value have been in place for many years and were fixed. But, new business model innovations are possible with the rise of digital quotient amongst every line of business. This means that every business is being transformed to a technology business. For example, the boundary between the car manufacturers and the insurance providers are blurred or removed.

The fact that a product can now directly communicate with both the end user and the manufacturer without any dealer in between, allows companies to address the customer needs in real time, provide immediate product refreshes, and even enable improved services. With this, the very definition of the product is redefined – the solution and the experience that the end consumer gets is the “new product”, however the actual product that companies ship is just going to be a souvenir with the customers.

For instance, an Indian company adopted the model of selling purified water rather than selling water purifier units by IoT-zing them. With this subscription approach, consumers do not have to worry about shifting gadgets, because their subscription model would take care of that!

The broader benefits of this model are that you are charged based on the consumption, and these smart devices can also predict their servicing needs and connect you to the manufacturer of the machine directly without having to deal with a middle man or service providers.


To conclude, by defining clear measurable objectives, the expected outcome and the distinctive value proposition that a company can realistically achieve, will ultimately pave the way to success and competitive advantage.

Following key factors which underpin the successful IoT strategy has been discussed in the part 2 of the blog

  • Having the right data strategy
  • Internet of ‘partnership’ things (ecosystem play)
  • Start local and go global

The views expressed in this article are those of the author and may not reflect those of SAP .

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