The Internet of Things is here. Regardless if one believes it passé or that it hasn’t yet reached its promise, the Internet of Things (IoT) has already significantly, perhaps fundamentally, altered technology business relationships.

 

Before IoT, the networking revolution set the enterprise technology value chain. While, by definition, there is value throughout a value chain, the market focus of enterprise technology value centered on connection to the local network, local processing on the network, and aggregation into the enterprise intranet and the Internet. Here, equipment providers and integrators provided the connections, routing, and aggregation capabilities that every company needed for operation. The enterprise network sustained this value chain model until the rise of Cloud Computing.

 

Pre IoT Value Chain

 

With the Cloud came Big Data. Big Data created an opportunity for companies to use analytics to gain value from existing and available enterprise data. It also enabled the emergence of companies providing new services from Big Data. These services, not the equipment on which they ran, became a focus in the market. However, many commercial solutions failed to deliver on the Big Data value promise. Big Data survives, but sputtered as the market focus in the enterprise technology value chain.

 

Where Big Data failed to completely focus the value chain on data services, the Internet of Things has locked it in. As Big Data interest was raising, the smartphone market was blooming, creating a new network edge with environmental sensing capabilities and a continual flow of data from new applications. The “smartphone edge” also created opportunity to connect novel data from innovative hardware devices like the Fitbit and the Nest thermostat.

 

With great forethought, a few key startups like ThingWorx and big players like GE (with their originally-internal Predix platform) transformed Big Data systems, enabling customized services and integration of enterprise data with these new and innovative data sources. The IoT platform was born.

 

IoT has transformed business relationships and has moved the market focus in the enterprise technology value chain to services. The change of focus to services, with data provided from new sources on the network edge, has created a “vacuum” in the value chain where the equipment providers once were king. 

 

IoT Value Chain

Toppled from the market throne, networking equipment suppliers have found the need to feed IoT platforms with pre-processed data to support their equipment value proposition. But, few companies have the capability to source data, drive analytics to create data value, and build the infrastructure to supply the IoT service providers. Thus, opportunity exists for companies lower on the value chain move up creating new data processing capabilities to feed the IoT service ecosystem. This has led to a flood of edge-data startups and established companies with sensor offerings rushing to fill the vacuum. As equipment providers “partner-down” with these edge data enablers, greater value is created for everyone and the IoT value chain further solidifies.

 

The Internet of Things drives new business relationships. Change is opportunity and the disruption of the enterprise technology value chain by IoT is a positive. Economics is not a zero-sum game, and while there will always be some who fail to adapt, the opportunity exists for thoughtful, agile organizations to all gain in the IoT economy.

 

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