How IoT will expand the definition of digital transformation?

Imagine a sensor inside an offshore drilling rig. This sensor monitors the integrity of the gas turbine as well as regulates the pressure of the oil well 8,000 feet below the ocean surface. It constantly detects, transmits and checks for damage. This sensor generates data that might not have been available a few years ago, but today provides critical information to the offshore industry.

What is different now from five years ago? Simply put, the Internet of Thing (IoT) has entered the picture.

IoT is one of the spokes to the technology hub that is driving the fourth wheel of Industrial revolution. It revolves around machine-to-machine and man-to-machine communication. It is built on cloud computing and networks of data gathering sensors; it is a virtual connection. It comes up with operational visibility to make instant and effective decisions to boost quality and to optimize time and money.

According to a report by McKinsey, IoT’s economic impact will increase to $11 trillion a year by 2025. In addition, IoT devices are projected to increase to 20-40 billion devices by 2020.

Smart connected products reflect a whole new set of technical possibilities that can assist organizations to gain a huge competitive advantage. A huge leap in the productivity will be generated through these products as these products communicate to organizations as and when they are being used. This creates an improved understanding of the product in live operation and can generate valuable insights. For example, many engine manufacturers are using sensors to detect performance of these engines in real time and driving predictive maintenance decisions.

Improved data insights helps enterprises take better decisions thereby enabling better value creation and data capture. Data is the core of value chain. Before IoT, organizations ran their operations and made decisions based only on warehouse data. It could take days, weeks or even months to attain intelligence from this centralized data. It could take even longer to make decisions based on these findings.

In the age of the IoT, however, connected devices can generate real time data from diverse data types and in a huge volume. Thus these devices can communicate with each other in an ecosystem. These interactions can be recorded and analysed through advanced analytics capabilities to generate extremely valuable insights.

The goal is to use digital processes and real-time information to speed up or improve experiences, something that can certainly be achieved in IoT.

Embracing IoT for Digital Transformation

IoT helps build smart connected products to provide new functionality, increased reliability, greater product utilization, and product capabilities. These will disrupt business models at the core offering new opportunities for value creation and value capture. With the help of smart connected products, the entire industry will be reshaped or it will create new industries.

IoT devices have the potential to establish a deeper, real-time connection between organizations, supply chains, and customers. Just as an example, think of how Uber has transformed the transportation business. With real-time location and traffic data, Uber tells you exactly when you’ll get a ride and when you can arrive at your destination. This is an example of how a real-time IoT feedback loop can improve the customer experience.

There are plenty of other examples: automobiles and trucks will be connected to cloud analytics that can predict maintenance problems, saving time for drivers or operators. Health devices can be connected to monitoring systems to track patients at risk. In consumer services, digital data can be used to deliver more personalized services including targeted offers and custom coupons.

Global organizations are considering IoT to be a strategic tool of business scalability and how it is helping enterprises generate new and innovative user experiences. Innovating customer journey is the starting point of digital transformation. Enterprises face the challenge of shifting from traditional business models to a mass-market approach, which is hugely customer-centric.


Currently, IoT technologies and business models that utilize IoT are immature. It is essential for enterprises to understand how IoT can enable transformation in their businesses. Security and identity issues are major roadblocks. Business and technology leaders must reconsider how traditional approaches to cybersecurity, identity and access management works in an environment involving vast number of connected devices. Not only security, the lack of compelling business cases is a major impediment to IoT growth for enterprise. The business justifications almost certainly exist, but they have not yet been articulated and quantified by most enterprises, thereby, struggling to find their place in IoT-enabled landscape.

The way ahead…

The evolution of business models from one-to-one to many-to-many opens up a very attractive opportunity for leveraged growth. IoT technology creates an opportunity to re-think business models at a fundamental level and to harness new ways to create, deliver, and capture value. It is ultimately about the ability to harness the power of pull, moving from conventional push-based business models that suffer from diminishing returns to scalable pull-based business models that for the first time offer the potential to harness increasing returns. While opportunistic deployments of IoT are beginning to generate attention, the real potential of this technology will only be realized when executives embark on a more systematic assessment of the economic and strategic value of this technology.

Aniruddha Guha Sarkar is the Senior Vice President of Engineering, Interra Information Technologies Inc.


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