Unless you have spent the last few years living under a rock, you are undoubtedly now aware of the Internet of Things (IoT), the voraciously hyped phenomenon that promises to revolutionise every industry and every home.

That is a tall order for any newcomer to deliver, but perhaps an even taller one for the IT departments that tasked with deploying and supporting it.

From a business perspective, IoT brings together people, processes, data, and things to make networked connections more relevant by turning information into actions.

And as a consequence, the ecosystem that makes up the IoT market is both vast and complex, including modules/devices, connectivity, purpose-built platforms, storage, servers, analytics software, and IT services, to name just a few.

This vast and complex ecosystem inevitably creates a broad range of constantly evolving challenges, with security being chief among them being security, closely followed by integration.

Questions about data security always surface when any device is attached to a corporate network; however, in the IoT scenario, these devices don’t look like — and often don’t behave like — a traditional server, storage array, or network router or switch.

In addition, the IT department usually understands the type of user that is accessing the network and data — but in this case, IT may find it difficult to know how best to communicate with a tractor, a robot, a car, or even an entire building!

However, in the bigger scheme of building and running an IoT environment, IT and C-level leadership have a new mission.

At the business unit level, line-of-business managers are being pushed to move faster, ask for more information about their customers, interact more with their supply chain, and listen and respond to their customers.

As part of this shift, IoT is poised to play a significant role in helping businesses become digital companies — in fact, IoT strategies are likely to impact traditional business models in many different ways.

For example, consider the business evolution that occurs as a traditional enterprise becomes a digital enterprise and moves away from being a pure-play product provider.

Value chain

Indeed, given the proliferation of IoT sensors and the accompanying explosion of information generated at every location where a sensor is connected, it is inevitable that business dynamics will evolve and mature over time.

Currently, businesses that make products and sell them to their customers remain in business because they invest heavily in their value chain.

They try to augment benefits and create profit at every point in their value chain. Their value model is wrapped up in the value chain.

However, today we see a shift in how lines of businesses are being asked to engage with their customers. Customers need to be at the centre of their business strategy rather than at the end of the value chain.

And the outcome of this is that value chains will lose their relevance over time.

To respond to this, businesses have been steadily making the transformation from selling just products to now selling a mixture of both products and services.

The business value model is now based on business agility as the competitive advantage is centred around being able to spin up (or down) services that the customer now consumes.

These services continue to be built on a product’s foundations, which then slip down in terms of sales priority over time.

Eventually, as more and more data is made available to both the customer and the lines of business, the value model becomes one based on the network value of a very broad ecosystem.

Vast and complex

This complex business model is very much driven by open, collaborative, and integrated business partners and rules.

And as IoT deployments have moved from proof of concept to genuine production environments, we have seen IoT business models emerge that incorporate these new kind of value models.

These business models reflect the needs and maturity of a company becoming a digital company and, as such, will change the way that IT departments will engage with IT suppliers.

As previously noted, the IoT ecosystem is vast and complex, bringing together market players that previously had no reason or inclination to work with each other.

How enterprises choose to deal with this new reality is the next big question. And whether it is through partnerships, acquisitions, or seismic shifts in their business models, the primary focus must remain on the customer.

The columnist is group vice-president and regional managing director for the Middle East, Africa and Turkey at global ICT market intelligence and advisory firm International Data Corporation (IDC). He can be contacted via Twitter @JyotiIDC. Content for this week’s feature leverages global, regional, and local research studies undertaken by IDC.