Gartner identifies four fundamental usage models to unlock value from the Internet of Things
As the Internet of Things grows rapidly, it is linking millions of assets, including devices, people and places, to deliver and share information, enhancing business value and competitive advantage, and creating new business opportunities. In this early and emergent phase of development, entrepreneurs are experimenting across such a diverse range of sectors, applications, business models and technologies in their efforts to uncover value.
According to Hung LeHong, vice president and Gartner Fellow this creates confusion and makes it difficult for others to easily identify the potential in their own geographies, industries and business sectors.
LeHong says that although the Internet of Things has a very wide applicability, some enterprises may be too quick to dismiss the value of the Internet of Things in their enterprises because the examples of what other enterprises are doing don’t match their own environments.
“A recycling company or vending machine operator, for example, may not find any applicability for the Internet of Things when reviewing how a hospital is connecting its patient-monitoring equipment to the Internet of Things. However, on closer inspection, these companies will discover that the reason the hospital has connected its equipment is to cut costs on nurses’ rounds to monitor patients. Any company operating remote devices has opportunities to use this same model. Remote assets that require manual rounds for the purposes of emptying or replenishment, such as recycling bins or vending machines, can benefit from the same approach the hospital took. The underlying commonality is the business case to reduce the costs from doing the rounds by connecting assets to monitor status.”
Despite their diversity, Gartner believes that all current examples can be simply categorised into four basic usage scenarios, each of which presents clear business opportunities for end-user organisations.
1. Manage — Looking at the Status of the Asset to Improve Utilisation
This model is essentially involved in the optimisation of asset utilisation within an environment. As various assets (which could be a device or piece of equipment, or a location, such as a meeting room or a parking space) are connected and are able to provide up-to-date status information, then utilisation can be optimised through appropriate systems to match assets with needs. The assets may be simple and report very limited data (occupied or vacant, for example), or they could be very complex (such as a jet engine) and involve multiple sensors reporting real-time streams of data, which may amount to terabytes per hour — but this does not detract from the essential value model.
2. Monetise — Charging for Usage of the Asset on an Incremental Basis
This is a specific business model that is about the monetisation of a physical asset by accurately measuring usage. It enables a (potentially very expensive) capital asset to be used as the basis for a usage-based service. This brings business opportunities to replace capital expenditure with operating expenditure, more-accurate plotting of product life cycle and more-effective preventive maintenance. An example is monitoring engine hours, actual load, fuel usage and so on of a piece of equipment to bill usage against actual wear and tear. By combining this information with location, speed and time information, the enterprise can accurately assess additional charges to reflect the risk. This could apply to a “pay as you drive” vehicle insurance service, a clear example of the application of this use case to physical objects not actually owned by the enterprise itself.
3. Operate — Using the Asset to Control Its Surroundings
This model builds on the well-established realm of ‘operational technology’, which is technology used to manage the equipment and processes inside manufacturing plants. Operational technology is increasingly moving away from the proprietary and isolated architectures of the past to exploit more mainstream technology, software and architectures and, in doing so, coming in some cases under the CIO’s and the IT department’s purview. Simple examples to control a valve, but in a more complex example, the data from thousands of sensors might combine weather and atmospheric conditions with water flow, pressure and depth information to manage entire water supply or irrigation systems. It will reduce the need to physically visit the remote device, and avoid hazardous environmental conditions around the device.
4. Extend — Providing Additional Digital Information or Services Through an Asset
A physical supply chain ends when a product or asset is shipped. However, when that asset is connected, a digital supply chain continues to exist in which digital services and products can be delivered to that asset. In effect, the physical asset is extended with digital services. Simple examples might be automatic (perhaps subscription-based) downloads of firmware to a device to provide new capabilities or rectify newly identified faults. Owners of a connected automobile may download the ability to upgrade or extend the driving mode of the car. More-complex examples might be the provision of advisory information (such as imminent part failure, and excessive wear or overheating of a device) to avoid the costs of failure through preventive action. Media content is a digital product that could be sent to any connected asset, such as streaming movies to a train seat.
Although much of the spotlight today is on the Internet of Things, the true power and benefit of the Internet comes from combining things with people, places and information systems. This expanded and comprehensive view of the internet is what Gartner calls the Internet of Everything