Elements of an Internet of Things Strategy – Part 1

Elements of an Internet of Things Strategy

What is management without strategy? Strategy is the vehicle that moves us toward our goals and visions. Since the Internet of Things (IoT) appeared a few years ago, I have seen companies hesitating to establish an integrated Internet of Things strategy. In this blog series on “Elements of an IoT Strategy,” I would like to point out the various issues within this complex topic. My aim is to give a little help to executives out there who would like to get an overview.

To gain a broader perspective, I talked to international experts during our internal IoT Architects meeting. We use this meeting to look at inspiring current projects, keep up with the latest technology that SAP provides, and come up with new ideas on how to support our customers, both today and tomorrow.

 

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When Does a Company Need an Internet of Things Strategy?

It is common to take an incremental approach to IoT scenarios. In some cases, we actively recommend that customers get started incrementally. We do this because we want our customers to walk along the learning curve step by step. Having some scenarios in place that allow operational efficiency for a specific process is a good start toward showing what is possible. The aim is to give people an understanding of the power of the Internet of Things, and then work alongside them to create an integrated IoT strategy, which can then be rolled out on a large scale.

Don’t get me wrong; this is just one example. There are many cases where it is reasonable to look at the big picture first; for example, when a company is transforming its business model. Making digitally-based services part of your portfolio requires an integrated strategy that pursues clearly-defined goals.

Status of the Internet of Things Across Industries

In our experience, the Internet of Things is being discussed in companies across all industries. Most companies quickly began to capture data, and intend to use their huge data lakes as soon as they know what to do with the data and how to process it.

We can also see that companies with products that can be easily equipped with sensors count on business models driven by the Internet of Things. This doesn’t surprise me. The beneficial use of IoT in these areas is obvious. Companies facing the greatest challenges are those for whom meaningful applications are not that evident. A good method for finding new ideas is Design Thinking. This is a creative strategy that focuses on the user; i.e., the customer. I can look back on many successful Design Thinking sessions I have held with customers. I will introduce this method in more depth in Part 3 of this blog series.

Another example is a company being challenged by a new digital player within its market who can address customer needs much better. In general, we are seeing a major trend of customers seeking a high degree of personalization. Businesses are being forced to dismantle their old ways of thinking and acting. Sometimes these threats speed up the creation of an Internet of Things strategy.

Sooner or later, all markets and industries will be dramatically confronted by digital transformation. This is the way of the future.

The Internet of Things as an Important Part of a Digital Strategy

The Internet of Things is an important part of an overall digital strategy, serving to enable efficiency and effectiveness. The main role of a digital strategy is to pave the way for change within an organization.

In the upcoming part of this blog series, I will take a look at the impact of the Internet of Things on business models. Companies that can find the answers today to the questions that customers will ask tomorrow will find themselves ahead of the curve in the future.

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