When a manufacturer sells a magnetic resonance imaging (MRI) machine to a hospital, that sale represents the hard work of a dedicated sales team that has gone through a process to create a needs analysis, tested the functional specs and generated a financial proposal. That effort often takes months and can be charted in the sales funnel of the company’s customer relationship management (CRM) platform. But what happens to the conventional sales process when the machine in question is able to order its own replacement?
Through remote monitoring and support, the Internet of Things is already transforming how health-care providers use MRI machines, by reducing downtime and automating scheduling, which allows a single machine to serve more patients. Proactive fulfillment capabilities means a machine can order its own supplies and, as a result, eliminate costly shortages and surpluses. The impact of the IoT beyond health care and MRI machines will be breathtaking—Cisco predicts that there will be 50 billion connected devices by 2020—and it’s clear that business models, as a result of this device revolution, will radically change and sales funnels will collapse.
Software By Subscription
As it turns out, subscribers are better than buyers because a subscription model establishes a persistent relationship between buyer and seller. Once a business subscribes to a service, there’s a lot less friction when it comes to renewing or adding the next service. Achieving a lower cost of acquisition has always been a goal of subscription models, but as the IoT automates things like upgrades, support and cross-selling, subscriptions will effectively scale themselves.
In the very near future, many common consumer and capital purchases will be wrapped and bundled in services. We see examples of this in telecommunications, in which business mobile phone plans package devices with rate plans for a monthly fee. Incremental sales occur, such as when a business hires a new employee, but the utility of the sales funnel is limited once the initial plan is purchased.
Light Bulbs and the Value Proposition of IoT Subscriptions
In one future of IoT business models, light bulbs—you’ll pardon the pun—can shed light on just how omnipresent IoT-powered services could become.
Several companies currently sell the so-called smart light bulb. As connected devices, these bulbs can be programmed to turn on and off at the tap of a smartphone or touch screen, or they can be scheduled to go on and off through the manufacturer’s own back-end services. But those are light bulbs you would buy individually at retailers like Home Depot.
If, in the near future, a business were to subscribe to a light bulb service provider, it wouldn’t be difficult to imagine those bulbs ordering their own replacements. But there’s another value proposition lurking in the background.
Lighting could also tell you a lot about productivity at a workplace, because a strong correlation may exist between hours worked and lighting used, and if usage were to be integrated with hardware and software usage, a clear picture would emerge of how productivity and performance ebb and flow in the business. Data analysis could signal the need to add personnel during times of intense work, or to schedule downtime when thing get slow. And what if one of the quarterly reporting requirements to Wall Street were a company’s utilization index that, along with financial performance and other factors, measured use of capital? Analyzing data collected by devices could lead us to find the keys to working more smartly and efficiently.
IoT Will Supercharge Sharing and Profit
Today, Airbnb and Uber are the poster children of shared services. In businesses, human resources are increasingly outsourced and the cloud has enabled shared IT services. But what happens when shared services hit Main Street?
Nearly every bakery needs its own delivery truck, but that vehicle probably sits idle for most of the day because bakers deliver bread in the morning. Now, imagine that same truck as an autonomous vehicle operating as a shared service. Configured with an embedded IoT device, the truck could schedule its own tune-ups, navigate itself to common destinations and order its replacement, but it could also put itself to work for another business during downtime. Rather than the baker investing in a truck and managing it, the vehicle would manage itself because it would be part of a shared service designed to execute against the distribution schedules of the multiple subscriber companies it served.
Shared services enabled with IoT analytics could have a profound commercial impact by helping to drive down costs through improved capital efficiency. A new ecosystem built around the nexus of IoT intelligence and the shared service economy would remove some of the leverage that larger organizations currently enjoy, and allow the long tail of commerce to drive more innovation and profit.
IoT Journal: http://www.iotjournal.com/articles/view?13595/