Tuesday, June 23, 2015

How to Monetize the Internet of Things


Several years ago, one of my colleagues commonly used the phrase “data exhaust” to observe that so many business processes occurred without any attention to the metrics they produce. In other words, these processes generate valuable data that is being ignored or treated as waste products.

Today we have the Internet of Things (IoT) movement. At its heart, IoT is about leveraging our ability to control and measure devices, sensors, and virtually any living or inorganic item. In this realm, data exhaust is gold.

Remember this old adage? “If it’s measured, it can be managed.” With IoT, if it’s measured, it can be monetized.

This is the real breakthrough that IoT brings us. Businesses will discover wholly new sources of revenue from being expert at the collection, correlation, and packaging of data insights. This knowledge will come from massive amounts of data relating to a broad range of things.

This isn’t an entirely new trend. Look at the online advertising market that has been powered through the monetization of page views and click-through rates. During the first Internet boom, the most common business model could be described as "get a ton of traffic, then figure out how to make money".

Often, the way those businesses tried to make money on that traffic was to use display or text advertising. Advertising is fixated on impressions. Making money from advertising is still possible, but it's no longer as easy as building a site and putting some ads on it. Impressions, after all, are a means to an end.

Fortunately, there are a number of business models from which to choose, and IoT is a driving force for innovation around the value of data – for advertising and well beyond.

My career focuses on the world of technology-enabled business processes. Using the interconnection of people, processes, and systems, I often explore “How do we improve efficiency, accuracy and resilience of business?” Up until recently, we’ve lacked the ability to generate, store, correlate, analyze, and interpret real world data so that we can impact our future, not just record our past. 

Today, I see virtually unlimited potential in the exhaust that was previously thought to be without value.  Before you internet-enable anything it’s best to know what decisions can be made differently as a result of this new connectivity.

It’s a great time to be open-minded about new sources of value. Data exhaust can help us make better decisions about the allocation of precious resources. The best ideas will look nothing like what we’ve done in the past

In my mind, IoT is about the Internet of Thinking.

Peter Allen has many years of operating experience as a top executive of rapidly-growing multi-billion dollar companies and in assessing sales and marketing effectiveness. He is now a Boston-based Managing Director at Alvarez & Marsal.


Image: horstjens/Flickr





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