Challenges Regarding the Use of the IoT in the Digital Transformation

The flagship technology of the digital transformation, the Internet of Things promises many benefits for business units. These promises are often fulfilled through collaboration with start-ups. How can we establish the conditions for fruitful innovation?

Nowadays the digital transformation is something that no sector can avoid. Confronted with markets that are increasingly competitive, companies must undergo a transformation in order to become more agile and more efficient. The implementation of innovative technologies such as the Internet of Things (IoT) allows them to rise to these challenges. Very often this transformation is desired by various business units within these companies: they are aware of the potential that technologies such as the IoT offer when it comes to increasing the value of the services they offer.

Use cases for the IoT in all sectors

Many IoT projects began within the industrial sector, with a focus on use cases such as predictive maintenance or real-time production monitoring - sources of savings for companies. However, the impact of the IoT is not solely financial: it can transform the entire value chain.

In France, many industrial markets are thus shared between three or four SMEs (small and medium-sized enterprises). "If a competitor ever emerges offering the same products at a lower price, these companies have no choice but to innovate," emphasizes Bertran Ruiz, CEO of IoT Valley. A historic manufacturer of supermarket trolleys could, for example, design a connected trolley capable of recognising products, thus sparing the user a trip to the checkout. In a presentation for the Genesis platform, Ludovic Le Moan, President of IoT Valley and CEO of Sigfox, also cites the example of household appliance manufacturers. "By installing sensors in their appliances, these companies can enable any player to offer predictive maintenance services directly, removing the need to go through intermediaries such as the distributors' after-sales services."

Other fields are currently actively exploring the potential uses of the IoT. This is particularly true of the construction industry, with the "smart building " concept - intelligent buildings in which sensors enable the adjustment of the lighting, the heating or maintenance interventions based on the occupancy of the rooms.

Several services are also being developed in the area of smart cities, such as connected car parks that enable the optimisation of occupancy levels and facilitate the everyday lives of drivers, or connected control boxes capable of collecting factual indicators regarding the environment, with a view to correlating this data with the sense of well-being perceived by the residents.

Among the other sectors at the cutting edge of the IoT are the water and energy distribution sectors, with connected meters or smart networks that are capable of detecting leaks.

The Internet of Things  also presents interesting opportunities for agriculture and transport. "Half of lorries on the roads are currently driving empty, en route to pick up their cargo: acquiring a better measure of the physical world could put an end to this stupidity and reduce waste," illustrates Bertran Ruiz.

Another major potential market for the IoT, the medical sector, is encountering legislative challenges that must be addressed, which is slowing the implementation of projects, in particular with regard to questions surrounding the protection of healthcare data.

With the ever-increasing accessibility of technologies, more and more industries are becoming interested in the IoT. For Ludovic le Moan, "every sector can envisage potential use cases for the IoT, since the sensors and connectivity have a very low cost of entry. In the world of fashion, for example, this can mean connecting an expensive handbag, to offer protection against theft."

While business units can easily recognise the benefits of the IoT in helping them resolve the issues they are facing, very often they do not know where to begin when it comes to implementing this type of technology, particularly within MSBs. According to a study conducted by Bpifrance among directors of SMEs, the complexity of the matters at hand (34% of those surveyed) and the lack of competence (32%) are thus the main obstacles to the digital transformation.

Within large corporations, it is more often organisation and culture that slow down innovation. "Through innovation, it is the future value of the company that comes into play: this premise, which seems obvious, is not, however, grasped by many companies, which still function on the basis of the preservation of an income, " analyses Bertran Ruiz. Furthermore, digital products are often at the heart of disagreements, with the ISD on the one hand, which must maintain a certain level of stability, and on the other hand business units that would like to innovate, but do not always take the necessary precautions in terms of security. This situation often results in companies sticking with the status quo.

In order to innovate, companies thus need more agile partners, in particular, start-ups.

How do you initiate (and maintain) the dynamic of innovation?

In a report on the topic of open innovation (interoperability, open standards), the AIOTI (Alliance for Internet of Things Innovation), an organisation created by the European Commission in 2015 in order to support the IoT ecosystem, argues that "large-scale pilot projects are essential in order to move value propositions that have to be demonstrated within a complex and realistic environment on to the next stage".

In actual fact, companies struggle to make the leap to deployment, even when collaborating with start-ups. This observation is equally valid in BtoB as it is in BtoC, in mid-sized businesses (MSBs) as in major corporations. All experience the same difficulties in structuring themselves in order to progress more quickly towards the deployment stage. "If companies do not adopt an ambitious approach towards innovation, this will result in blockages. They thus find themselves with many Proof-of-Concept (PoC) prototypes that do not come to fruition and never reach the deployment stage," observes Bertran Ruiz.

It takes on average 3 years for a company to acquire a certain level of maturity with regard to innovation, that is, before it can move beyond pilot projects and step things up a gear. In order to be able to initiate a dynamic of innovation in a sustainable manner, several points must be taken into consideration.

1- Start internally, with "quick wins"

For a company that wishes to integrate the IoT into its digital transformation, it is preferable to begin with internal projects, ideally projects that are not too close to the core business, and thus avoid having to manage complex organisational implications. "The most simple method is to look at your own operations in order to identify weak points. Creating value for your clients is another step, and one that requires a more delicate approach. The idea is first to acquire experience working with an internal process, so as to then move, little by little, towards use cases with greater risk, but with much greater potential gains," advises Bertran Ruiz.

2- Plan deployment budgets right from the start

It is important that you plan budgets specifically dedicated to the deployment of future solutions right from the start, "even if you do not yet know what they will consist of," insists the director of IoT Valley. For Ludovic Le Moan, the important thing is that you initiate a virtuous cycle. "Players such as local authorities, which do not always have the necessary resources, must find partners that can provide initial investment: private or public banks such as Bpifrance, or even crowdfunding. »

3- Anticipate deployment right from the PoC

From the start of the PoC, you must have deployment in mind, ensuring the necessary indicators in order to evaluate the financial impact, the consequences on a human resources level, potential time-savings... You must also consider the training courses that must be implemented for employees. "A mistake that many start-ups make is to accept a PoC, even though no provisions have been made for the follow-up. In these circumstances, deployment never comes to fruition," observes Bertran Ruiz.

4- Communicate regarding the results of the PoC

"During the PoC, you must exceed expectations. You must not simply content yourself with achieving the requested objective," warns Bertran Ruiz. After which, you must communicate internally regarding the achieved results, using photos, videos and testimonials that aim to generate enthusiasm.

What form of governance must be implemented to drive innovation?

Initially, innovation and digital transformation have often been allocated to the marketing or communications department. However, in order to help projects reach the deployment stage, it is better that we entrust them to an innovation committee rather than an isolated department. This committee must include representatives from the executive management, the purchasing and IT departments, the legal department and the various business units. "It is vital that executive management be made aware of innovation, as it can completely transform their business model within a period of 3 - 4 years. They cannot delegate this responsibility, as it impacts the strategic vision of their company," insists Bertran Ruiz.

As for the IT and purchasing departments, they must redefine their role. The IT department must establish the necessary conditions in order to integrate all of the services selected by the various business units, while also ensuring their security. "They must be able to adapt their rules for a pilot project in order to avoid delaying trials. If the planned budget for a PoC is €10,000, it is unreasonable to demand compliance with ISO standards, for example, even though this constraint is perfectly feasible for deployment," specifies the IoT Valley director. For its part, the purchasing department must monitor the terms of payment: too long and these can stifle start-ups.

Matters relating to intellectual property can no longer be underestimated, as they are vital to fledgling entrepreneurs. They require patents and licences that enable them to consider commercial operations. It is down to the legal department to be vigilant, to avoid going too far when it comes to "locking down" a project.

Another factor that is key to success is the presence of operational leaders within this committee; employees who play a major role within the company, without necessarily occupying a management position. Finally, key partners can also be invited to participate.

By proceeding in this way, the entire company will be involved right from the start of the projects. "The committee must have clear objectives, it is not simply a matter of drawing up a roadmap. The deadlines, scope and objectives must be specified: for example, within two years we want to have deployed three new solutions across all of our industrial sites," explains Bertran Ruiz.

Who should be entrusted with the deployment of IoT projects?

In order to accelerate the deployment of innovation, companies require capable partners who will assist them in the long term, especially on IoT projects. "In this type of project, scoping is important, as there are physical aspects that must be taken into account. If the project falls into the hands of technophiles, it is condemned to failure," emphasizes Bertran Ruiz.

In his opinion, one error that companies often commit, especially large corporations, is that of treating a start-up like a service provider rather than a partner: "They go looking to purchase a solution, rather than approaching innovation like a joint project".

In order to facilitate collaboration with start-ups, companies can call on trusted third parties, such as IoT Valley. "The job of a start-up is not simply to manage deployment. In this context, the role of the project manager is key. When project controlling is performed internally, teams often find themselves bogged down in complex procedures, which slow down the project and dilute responsibilities. In order to avoid these pitfalls, we provide companies with independent project managers, who are accustomed to working with start-ups and who can ensure that projects progress," outlines Bertran Ruiz.

Points to remember

All sectors can build use cases around the IoT when the entry cost is low.

Innovation must be structured in order to accelerate the deployment of projects.

The management of innovation must be entrusted to a committee, with implementation entrusted to a project manager familiar with start-ups.