Internet of Things

Turning the Long Tail around in the IoT

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A growing number of Internet of Things (IoT) vendors are teetering on the edge of Gartner’s “peak of inflated expectations” and risk falling into the “trough of disillusionment” in Gartner’s Hype Cycle because of slower-than-expected IoT adoption in 2015. Rather than face another frustrating year, I think there’s an opportunity to jumpstart corporate IoT initiatives in 2016 by turning around the “long-tail” idea. 

As I outlined in a previous SandHill commentary, there are five key organizational obstacles that must be overcome for enterprises to move forward with IoT deployments:

  1. Terminology: The meaning of the IoT term has to be clarified so organizations can better understand how it applies to them.
  2. Teamwork: Cross-functional collaboration must be encouraged to break down organizational silos that hinder innovative IoT projects.
  3. Tactics: Corporate executives must prioritize their IoT objectives to determine whether to focus on product innovation, operational efficiency or customer intimacy.
  4. Technologies: Identifying the right set of hardware and software pieces to support IoT projects span from sensors and networks to analytics and management systems.
  5. Talent: Finding experienced personnel with the right combination of technological knowledge and business acumen to understand how to apply IoT solutions to meet industry-specific needs. 

You can also add to these issues the escalating concerns about IoT security, privacy and data governance. 

These are big challenges, and most organizations believe it will take a series of “big bets” to fully address them, which only a few companies are willing to undertake. And the fear of making a big mistake is holding back many organizations from pursuing IoT initiatives at this point. 

I’d like to suggest an alternative approach that makes more sense. Put simply, I believe organizations should start small in the IoT environment. Given all the big questions and potential problems surrounding IoT, taking a series of small steps to test various IoT ideas and opportunities is a safer strategy. 

About 10 years ago, Chris Anderson popularized the “long-tail” concept to explain how an infinite number of niche markets could be spawned by the lowering of market barriers as a result of technological developments such as cloud computing and open source software. His long-tail theories made it more palatable for companies to pursue niche opportunities that emerged from bigger, more-established market trends. 

I believe the IoT idea is too big to gain momentum at the macro-market level until corporate decision-makers are more confident with their own IoT readiness. Therefore, the big idea of IoT will only gain acceptance after a growing number of small initiatives are successful. 

In other words, corporate executives should focus their attention on the long-tail opportunities at the front-end of the market life cycle. They should identify narrowly defined IoT pilot project opportunities that enable them to test their business objectives and technology requirements before they scale their efforts. 

From a business perspective, seeking to modestly reduce costs or improve operations is a feasible objective. In fact, GE built its billion-dollar IoT strategy, which it refers to as the “Industrial Internet,” on the simple objective of reducing its operating costs by one percent. As GE’s recent financial results illustrated, this one percent saving can translate into even greater profits and higher market valuation. 

Smart organizations are starting to emulate GE’s thinking and IoT strategy. They are looking for specific ways they can enhance their products with sensors and software-enable their services so they can better understand how they’re being used and improve their quality. The beauty of IoT is that it can produce measurable data that can be quickly analyzed and acted upon to demonstrate value. 

By employing this new approach to the long-tail idea, enterprises can leverage even the smallest IoT pilots to generate solid proof-points that justify broader deployments and serve as a steppingstone for more strategic IoT initiatives. 

Jeffrey Kaplan is the managing director of THINKstrategies, founder of the Cloud Computing Showplace and host of the Connected Cloud Summit executive forum series. He can be reached at jkaplan@thinkstrategies.com. 

 

 

 

 

 

 

 

Comments

By Pete Tarbox

Spot on, Jeff. Numerous companies have thrown away big loads of cash trying to develop their own grand IoT platforms. This is one of those areas where it makes sense to start small and then scale fast.

I’ll add one more point – in order to succeed at doing this, companies need to choose the right partners. They need to avoid technologies that have never been proven beyond prototyping – otherwise the scaling step will elude them.

By Frank Bennett

There is a lot of IoT froth and this makes sense. Interesting to hear your comments, Jeff, and how the “channel” will adapt to serving up IoT advice and end-to end implementation of IoT in this long tail scenario.

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