It’s Time To Monetize The Data From The IoT
So far the conversation has been about ownership, privacy and many other issues surrounding IoT data. Now it’s time to discuss how the money will be generated.
We’ve all been looking at, thinking and talking about the Internet of Things (IoT) for some time now. Many of us have begun to implement IoT-based systems and solutions in our businesses and homes (“Alexa, are you an IoT device?”).
The majority of these, insofar as the commercial world is concerned, have been funded and implemented for specific applications, as with most IT-based initiatives. The time has come for the next wave: revenue-producing IoT.
We’ve been in Phase I
In its first incarnation, most IoT-related revenue came from the procurement of devices, software to link the devices with various systems, connectivity for same, analytics programs and so on. The new wave will be about how IoT can measurably affect money flows, first by enabling cost-savings then increasingly by producing revenues that weren’t being generated before the wide deployment of the IoT become economically viable.
We’re Entering Phase II
As with any evolutionary technological adoption, initially it’s about saving money, commonly called the better/faster/cheaper phase. Then it’s about doing things you couldn’t do before. And finally, entirely new businesses, and sometimes, industries, are built upon the new technology layer.
In parallel with these come the attendant monetary aspects: saving money, making money, making fortunes. It’s generally safe to say that with the IoT we are solidly moving into the second phase, therefore it’s about doing new things (we’ll focus on commercial “things” versus consumer here), and making money through them.
Show (Us) The Money!
With the appropriate nod to that movie everyone knows, what many corporate managers are starting to ask is: When are we going to start seeing revenues from all of this IoT investment? Sounds familiar, doesn’t it? Is this any different to prior waves such as desktop computers, local area networks, the Internet, mobile, the cloud?
Not really, but the IoT actually has the potential to be far more pervasive, and possibly, invasive. Let’s look at the latter opportunistically, versus being alarmed by it. Sure, we could end up having nanobots injected into our bloodstreams as a form of literal invasiveness, but in the business world we’re talking about technology penetration that beneficially goes both wide and deep. Of prior waves, only the rare few (railroads, electricity, aviation, telephones, the internet) achieve such a thorough infiltration of our commercial and personal existences. It follows that there is the potential for the financial opportunities produced by the IoT to be as lucrative, as suggested by numerous key studies by consulting and analytics firms.
As was first said well over a decade ago, Data Is The New Oil. If one drills (pun intended) on that metaphor, the phases of monetization are: finding; sourcing; obtaining; transporting; refining; transporting; delivering. Obviously transporting is in there twice since it occurs on each side of the petroleum refining process.
Interestingly, these phases map across IoT-generated data as well. Not a perfect analogy of course, but if you replace petroleum in its phases of refinement and delivery with IoT data, it becomes obvious that there is money throughout the chain. Raw sensor data can have monetary value, as can “refining” data à la performing analytics that lead to actionable information. And then there is the actual taking of actions, which in the IoT encompasses a large range of activities, most notably robotics. We’re starting to see projects, new divisions of large companies and startups staking their claims across the sourcing, refinement and delivery portions of the data supply chain.
Over time, it’s a good bet that sensor/IoT data will become valuable to those outside of the closed systems that generate it. At first it will be the secondary or tertiary usage of that data, and increasingly data will be produced purely for the purpose of selling it.
Who Will Pay For The Data?
We’ve seen that often multiple technologies need to come together for new opportunities to be realized. Ride-sharing requires GPS-enabled smartphones, low cost wireless data and cloud computing. Now automakers are embedding cellular data transceivers in their cars and trucks, which will be critical to over-the-air software updates, and vehicles piloting themselves. In parallel with the hardware, connectivity and A.I. elements of self-driving machines is the need for sensor data about the physical environments that the vehicles are moving through, or about to move through.
Conversely, the vehicles, bristling with sensors, will be able to generate data streams that could be useful for applications in the context of smart cities, energy monitoring, safety and much more. Doubtless some portion of these data streams can be charged for. Who pays the bill will likely include delivery companies, insurance carriers and others who participate in the overall transportation ecosystem. Taking a similar evolutionary view on sectors such as agriculture, energy, finance, manufacturing, retail, shipping and so on, uncovers IoT data monetization prospects throughout their respective data supply chains.
Phase III: The Biggest IoT Wave
If the history of technology adoption is any guide, the applications that will truly represent the second (doing things you couldn’t do before) and third (creating entirely new markets and industries) phases of the IoT haven’t yet emerged. The third phase is still largely the dominion of analysts, savvy pundits and science fiction authors. But parallel technology advances such as augmented reality, virtual reality, artificial intelligence. digital twins and yes, the Metaverse will undoubtedly combine with the IoT in ways that permanently impact both our commercial and personal lives.
Is This Where Your Next Revenues Are Going To Come From?
Since there is almost no industry or part of the world that will go untouched, it’s a good idea for you to keep tabs on what’s happening and determine how it can map onto what your organization does now, and model it into the future. The data that is generated by the infiltration of the IoT into your sector alone can have monetary value, directly and as something that can be vended. Software applications that you create to evolve your organization can carry you through one or more of the IoT’s evolutionary phases.
One thing is certain: the IoT is no longer “a” new thing, it’s one of the new big things. Watch this space.