Is the Internet of Things the New Dot-Com Era?
Fifteen to twenty years ago we were in the middle of another frothy, technology-hyped revolution — the Dot-Com era. Mass adoption of the Internet promised radical changes in business and our everyday life and a new social and economic Utopia. In those halcyon days, stock prices were on a tear, venture capital money flowed like water, and countless start-ups greedily chased the pot of gold. Could the most recent technology revolution, the Internet of Things, be another Dot-Com experience?
Like the Dot-Com revolution the Internet of Things is the culmination of radical advances in four core technology pillars: 1) Connectivity (dial-up modems of yesteryear vs. mobile data and high-speed broadband today); 2) Data (the browser vs. big data and analytics); 3) Cloud (CompuServe and AOL vs. cloud storage and computing); and 4) Things (PC computer vs. smart phones, sensors and other machines). Like the Dot-Com era, technology visionaries and strategists could see that the perfect storm of the disruption in these core technology pillars would herald the dawn of a new revolution in how business was done and society operates. While everyone could see this new horizon and the benefits that it would bring, no one was really sure of how to get there or where the money would come from.
Businesses saw the value when they connected their businesses and unleashed the value of the Internet. Customers and employees could now serve themselves, businesses processes were re-designed for a connected world and businesses found new online products and services to offer. But, it was not a direct path. Some companies immediately embraced the Dot-Com world, many had false starts and many others took a long time to jump on, or the revolution passed them by completely. The technology vendors and providers faced similar challenges adapting to the Dot-Com era. For some, the frothy bubble offered huge new markets. However, after selling the initial vision and promise the sale became much more complicated and competition started to commoditize products and erode margins. Customers eventually didn’t just want the technology; they wanted to know the business case, what to do with it, and how to re-design their business to capture the promised new value.
Like all technology revolutions, the path was not a straight line. We had sock puppets and business models based on the illusive quest for eye-balls, and outrageous promises of new businesses and social upheavals. But, in the end we got there. No one today would argue that the Internet has not added immeasurable value to the world and changed our lives forever. The Internet of Things is similar to where we were two decades ago, at the start of the Dot-Com era.
There are some huge estimates of the value that will be created by the Internet of Things. While some of these optimistic values may never be realized, like at the dawn of the Dot-Com era, we know that IoT will not only add tremendous value, but will fundamentally change businesses, the economy and ultimately society. We are already witnessing companies capturing significant new benefits from implementing IoE in their businesses. For example, GE is using data from sensors in its jet engines to do proactive maintenance, Barcelona is becoming a smart city to save costs and improve the quality of life for its citizens, and many utilities are installing smart meters to remove meter reading costs and better manage local energy usage. But, we are still very much in the early days of the IoE revolution with many companies knowing that they need to do something but not sure, what or how. A recent study by Harvard Business Review and Verizon found that less than ten percent of enterprises had deployed IoE initiatives. And, of that small minority only 56 percent of those had an IoT strategy. What does that say for the 90 percent of companies who have yet to implement IoT initiatives? And, like the Dot-Com days the technology vendors and providers have yet to figure out how they will make money. Nor, is it clear who will win and who will lose in this new technology provider arms-race.
The Dot-Com experience can serve as a useful reference model for how the Internet of Things revolution may unfold. There is little doubt that the promise of IoT will be realized, and more. But, we need to heed some of the key lessons of the Dot-Com era to make sure that businesses and vendors alike share those promised benefits:
- Ensure that you have a clear and compelling monetization model and a well-developed business case in place for any IoE initiative.
- Focus on the use case and how the technology supports it, rather than the other way around.
- Recognize that people are a critical component to any successful implementation and ensure that change management is a key component of any program.
- Re-design the business (processes, organization and business models) around the IoT initiatives to achieve the promised value.
- Technology vendors and providers need to focus on open technologies, flexibility, and new business models and financial arrangements. They also need to help their customers identify and realize the potential business benefits through consultative selling and services.