3 Ways to Embrace the Internet of Things in Your Business

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As the Internet of Things (IoT) surrounds us – and the cost of embedding intelligence and connectivity gets cheaper – companies are now focusing on how to successfully compete in the IoT.

The IoT is moving beyond selling connected, intelligent products. In fact, it is more than selling services. It is now expanding to deliver compelling experiences over the life of the product. IoT is the new “Business of Things.”

Still in its infancy, we are entering an era of billions of connected devices. Gartner estimates there will be more than 25 billion connected devices by 2020.

Connecting “things” with unique IP addresses has been possible for over a decade now, but the commoditization of sensors, processors and memory now make it commercially viable to make every day “things” not just connected, but significantly intelligent.

To explore how businesses can compete and be successful in this new era, the IBM Institute for Business Value conducted the Business of Things study.

Primary research for the study included the Business of Things Jam, a global, online discussion on challenges in monetizing the Internet of Things. Participants in the Jam included almost 2,000 business leaders and visionaries in 70 countries. More than half of the participants were from the electronics and high tech industries.

The new study found three steps to navigate the Business of Things:

Step 1) Treat ‘things’ as agents.

As things in the IoT become increasingly cognitive – capable of learning, adapting to end-user needs and interacting via natural language – they will begin to behave like “agents,” significantly simplifying and enhancing the product experience.

Cognitive devices cannot only learn and become more intelligent over the life of the device, communicate in natural language with a high degree of confidence and context, but also discover new insights based on user behavior, which can be used to build a stronger relationship with end users.

The combined power of machines assisting humans, made possible by cognitive computing, can create new roles and opportunities and a more empowered workforce than would otherwise be possible.

Step 2) Cooperate through the complexity.

The IoT is reshaping the electronics industry, making it more complex and heterogeneous than ever before. Industry boundaries are expanding, requirements to support multiple standards are increasing and traditional retail channels and supply chains are disappearing. Collectively, these forces are driving the need for platforms that can manage this complexity by orchestrating devices and services seamlessly.

Step 3) Identify the opportunities.

As companies begin to embrace new identities in the IoT, aligning their organizations will be an even bigger challenge.

Sixty-three percent of the Jam’s poll respondents ranked organizational challenges, such as skills and executive support, over technology challenges to be successful in implementing an IoT strategy.

The journey to build a successful IoT organization begins with identifying the company’s role in the IoT, including evaluating core competencies and opportunities for differentiation.

Building the right leadership and skills follows, while creating a culture that is continuously improving and innovating. Successful IoT leaders will monitor success and drive changes more rapidly than ever.

The greatest inventions are those that become invisible, like electricity and the Internet. If the Business of Things becomes so pervasive that it is the normal course of business, the IoT would have once again reorganized the life of the world.

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In related news:

• Whirlpool Corp. and IBM announced a new collaboration to connect Whirlpool connected home appliances with IBM Watson services, including cognitive analytics, to provide more personalized services to consumers.
• Under Armour announced it will transform personal health and fitness through IBM Watson.
• SoftBank announced it will use Watson to power its Robotics’ Pepper.

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To learn more about the new era of business, visit ibm.com/outthink

A version of this story has appeared on Forbes.