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Want to take full advantage of IoT for your business? Look at the whole value chain.


October 15, 2014 - 0 Comments

This week at the Internet of Things World Forum in Chicago, I premiered Cisco’s blueprint for vertical Internet of Things (IoT) success. When we envision how we can provide value to our customers, we don’t just look at one device or one use case. We want to completely transform how that industry does business. So, we consider the entire value chain of each industry, and then focus on business outcomes that will make the biggest impact.

Methodology for IoT Success

Cisco’s IoT Value Chain approach can be boiled down to three steps:

  1. Lay out the value chain. In each industry, multiple players work together to take an idea to revenue. Identify the key five to seven stages of your industry’s value chain to find dependencies that hinder progress.
  2. Identify transformative business outcomes. Each stage has unique potential for transformation by IoT. Consider the top goals and challenges faced at each stage of the value chain and imagine how IoT can impact them.
  3. Define solutions that match your strengths. To maximize the value that your organization can create and capture, prioritize functionality that delivers on those business outcomes.  We typically focus on two or three opportunities per entire value chain where Cisco can add the most value.

Let’s consider what happens when we apply IoT Value Chain analysis to the automotive industry. We’ll look at two points in the value chain as examples.

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At the manufacturing plant, IoT-enabling factory equipment can raise the overall equipment effectiveness (OEE) by 10-12 points from a typical 60% to a best practice OEE of 70% or more. That 10-12 point increase in OEE can translate to 20-30% increase in profit margin for the manufacturer.

At the other end of the value chain, auto dealerships need to earn customers’ trust by offering differentiated maintenance and repair services. In the traditional service model, a single mechanic can only read the sensors of a car when it is brought in. An IoT-enabled brand of cars can analyze real-time engine and tire health sensor data across every vehicle sharing that model. Looking at trends and anomalies can empower dealer service departments to make predictive maintenance recommendations. Those proactive communications can mean the difference between a brief preventative visit and costly surprise repairs. When a service department can promise to know your car better than any other shop, customers stay loyal for a lifetime.

There are opportunities for transformation all along the value chain. Our partners can build industry-tailored applications and services that leverage new IoT capabilities. Our customers can lead their industries in exploring IoT possibilities across all points of the value chain, from their supply chain to their customer service departments. And you’ll continue to see Cisco bringing forth new and meaningful ways to connect the unconnected. Let’s build the future of IoT-enabled industries together.

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