Internet of Things: What makes IoT projects successful

IoT. Internet of Things. Hardly any entrepreneur who, in times of increasing digitalization, has not yet thought about how he could use this technology profitably in the age of industry 4.0. But what is the best way to make use of the countless application possibilities? What do the winners do differently from those who are rather hesitant and thus do not use the existing potential properly?

 

The IoT specialists of the management consultancy McKinsey have worked out in an extensive, highly readable report what makes IoT projects successful. As part of an elaborate survey, 300 companies that had led their IoT programs beyond the pilot phase were asked about their experiences. The real influence and tangible financial benefit of IoT projects varied quite considerably: even among companies with high IoT expenditures, there is a significant gap between the top group and the lower level. Around one sixth stated that their companies had benefited significantly from their IoT projects in the form of aggregated cost and revenue effects of at least 15 percent. At the other end of the spectrum, about one-sixth of respondents also indicated that their IoT efforts had only led to an overall improvement in revenues and costs of less than 5 percent.

But what exactly do the leaders do differently from the hesitant ones?

It is much more than just luck: the survey results clearly show that the aggressive companies are successful. Through the consistent implementation of a large number of IoT projects, they quickly enter the IoT learning curve and pass the point at which new applications generate significant added value just as quickly. In this way, they develop a clear vision of the commercial opportunities associated with their IoT projects and align their entire organization from the executive level to the bottom line to this common goal. They implement their IoT plans pragmatically and build their IoT offerings around existing products and services. And they rely on experienced external partners to provide them with sophisticated IoT technologies.

McKinsey's IoT experts define nine best practices that are critical to the success of companies' IoT projects:

• Implement lots of use cases

• Change business processes to unlock the IoT’s value

• Define how the IoT will create value

• Spur action from the C-suite

• Mobilize the entire company

• Start with existing offerings

• Tap into an ecosystem of partners

• Prepare for cyberattacks so they don’t slow things down

 

The successful implementation of IoT projects is not only about technical decisions. It is also about well-founded decisions about the complete business basis: strategy, leadership, investments, organizational change, partnerships. IoT Leaders complement their technological capabilities and decisions with consistent business discipline and a bold, enterprise-wide commitment to a clearly defined approach. 

So the most important conclusion of the McKinsey IoT report is:

The active are rewarded. The most important of all "lessons learned" therefore concerns the existing courage to implement: the willingness to learn by doing, i.e. to simply implement the first IoT projects, is decisive for the success curve. Or, as the report says: "The most surprising finding from our survey research is that IoT leaders implement many more potential IoT applications than their less successful peers. That might sound obvious. All other things being equal, one could reasonably predict that implementing more IoT applications produces more benefits. What’s less obvious is that the IoT has a steep learning curve, such that companies that get an early start or move quickly will reap the rewards of their efforts before slower-moving companies. Moreover, IoT leaders change business processes to capitalize on the potential of their IoT applications, and they go after opportunities to use advanced IoT end points such as autonomous vehicles and wearable devices. In these ways, the IoT rewards aggressive players."

 

The complete McKinsey Report is available to all interested readers here: https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/what-separates-leaders-fro