The Internet of Things (IoT) is clearly gaining momentum – a testament to its potential to improve customer experience, drive down costs, and transform business operations. As organisations evolve from successful, one-off pilots into broader IoT deployments new thinking is required to ensure IoT truly delivers.

How for example, does a food retailer advance the concept of using IoT to reduce refrigeration energy consumption to create a more sophisticated approach that addresses the critical business issues of food safety, quality and wastage? How can the business then leverage IoT economies of scale to drive incremental value? And what opportunities exist to exploit existing machine data alongside new devices to create new, automated business processes?

IoT business model

Over the past 12 to 18 months, organisations across every market have embarked upon pilot IoT deployments to prove the value of the data derived from a vast array of devices and sensors. By leveraging and contextualising the data and embedding information within existing core processes, from stock management to logistics, organisations have begun to drive measurable value.

> See also: When will IoT devices and connections start talking to one another?

In the main, however, these deployments have been single solution – designed to demonstrate the viability of the technology rather than addressing core business issues. Now that the potential of IoT is established, it is time to evolve beyond these single issue deployments and determine how best to embed IoT across the business as a whole.

While IoT is, by its nature, eminently scalable, taking IoT strategic is not simply a case of adding new devices. To derive maximum value, organisations need to take a step back from the technology and adopt a business first approach.

Sophisticated concept

The Internet of Energy Things is a prime example. With an estimated potential market worth of $22billion by 2020*, there are very significant opportunities for organisations to use temperature sensors to reduce energy consumption, even sell power back to the overstretched National Grid.

But it is important to consider just where power consumption sits within the overall business model – no organisation can risk jeopardising customer service, product quality or efficiency simply to reduce energy costs.

And this is where the strategic thinking is required. Take the food retail industry for example, which candidly admits that supply chain complexity has meant it is easier and safer to chill all food to the lowest temperature required (by meat) meaning an annual over-chill by millions of degrees. The result is not only additional cost but also some impact on food quality, with watery yogurt a familiar bi-product of over-chilling squeezing the product.

Of course, these retailers already collect vast amounts of data from their refrigeration units, along with all the other machines used across the supply chain. What is required is a way to harness an IoT infrastructure to use this real time information to manage the control settings on each unit.

By integrating the data from the existing machine sensors with supply chain and merchandise systems as well as the fridge control systems, each machine can be automatically set at the temperature to suit the specific contents, removing instances of over-chilling. As a result, not only is energy consumption reduced but food quality is actually enhanced and food wastage minimised.

Economies of scale

Extending IoT into strategic deployments also raises new considerations about the technology. The business transformation outlined above requires the management of millions of dynamic data points collected from thousands of sensors every minute of every day. It also requires genuine analytics – rather than threshold breaches – to continually assess the underlying condition of each machine.

The cloud infrastructure models and centrally managed big data analytics that have been used to support many one off IoT proof of concept projects simply cannot manage the vast data volumes required to deliver the real benefits of IoT.

To achieve these real-time, automated operational actions that respond to events to transform efficiency and cut costs, organisations will need to embrace a different approach.

> See also: How the Internet of Things is changing business models

By deploying processing capacity at the source, data can be executed at the edge, in context with other local data if required, and the actionable insight shared with the central resource. This model is cost effective; it leverages existing infrastructure and investment and, most notably, provides a platform for incremental expansion of IoT.

And this is key; while IoT standards are still to be defined, a strategy that includes interoperability with other IoT platforms will ensure an organisation can evolve and leverage one infrastructure to deliver a set of applications at a scale and pace that suits the business.

As organisations increasingly look to extend their use of IoT, it is becoming essential to recognise the underlying business opportunity. Whether that is reducing food wastage or improving collaboration with business partners, the speed with which IoT can be deployed and value delivered will depend upon the strategic vision and C-Suite understanding of IoT.

Of course there are technology considerations – not least in getting the right infrastructure model to collect, collate and analyse billions of data points. However, it is those organisations that develop a clear strategic vision to embed IoT within core operations to drive measurable benefits that will lead the way.

Sourced from Jason Kay, Chief Commercial Officer, IMS Evolve