Esmeralda Swartz @ThingsExpo Slides: ▸ Here

In the last blog we started the conversation on our findings from @Cloud Expo 2015 and @ThingsExpo 2015 as the industry came together to explore the impact of Cloud and Internet of Things (IoT) on business models as we know them. While often the focus of IoT are consumer services and the sometimes over-simplification of what constitutes an IoT company or service, one area there is no disputing is the significant advancement in the Industrial Internet (a term made popular by GE). Ongoing improvements in sensor technologies - including performance, miniaturization, cost and energy consumption - make intelligent products more accessible.

Industrial machinery, such as locomotives, wind turbines and jet engines, can come equipped with hundreds of sensors that measure more than 100,000 data points per minute. The physical and digital worlds are converging with sensors and sensor data that can automate and track both product distribution and customer behavior in the physical world to turn traditional supply chains upside down. Data is rapidly becoming the currency of the Industrial Internet economy and the foundation for new software-enabled services across supply chains.

In the transition from connected devices to connected marketplaces, software is at the core while hardware is at the edge. Agile software, cloud computing and universal communications are all challenging the notion of what something costs and how long it takes to do it. Machine-to-machine (M2M) solutions have historically been specific and problem-driven, concerned primarily with squeezing out efficiency from information provided by connected devices. On the other hand, although IoT solutions leverage the existing M2M infrastructure, they solve much more complex innovation problems across and between supply chains. IoT gains momentum from an open information paradigm, APIs interoperable products, ubiquitous connectivity and cloud solutions.

Similar to the specific functionality of M2M solutions, traditional industry supply chains are linear and often siloed, focused on the efficient movement of physical goods. As companies now tap the IoT and shift their focus from products to service outcomes, these rigid models become liabilities. New digital entrants will increasingly disrupt established structures and relationships by taking advantage of new software, the speed and scale of the Internet and agile business models. In order to compete and win, incumbent companies will need to shift their business practices and begin thinking in terms of horizontal ecosystems.

Developing the necessary technology capabilities to deliver business outcomes is hard. But, ecosystems are critical to the success of the everything-as-a-service economy (XaaS), as even the largest companies will find it difficult to own the entire digital value chain. We have to remember that the digital marketplace will evolve at a rate of change not shared by physical industries. Being part of an ecosystem enables companies to focus on core capabilities and quickly adapt to change. We cannot easily map the businesses and business models of today onto the possible business models of tomorrow. Whatever we dream up could be wrong. But the biggest mistake of all is to assume that things stay unchanged. The right ecosystem and IoT technology stack ensure that we are prepared.

• A Must-Attend Event: @ThingsExpo | #IoT #M2M #API #BigData #RTC