The growing list of Internet of Things (IoT) devices is only getting bigger — an estimated 41 billion IoT devices are expected to exist by 2027, according to Business Insider. Meanwhile, the Industrial Internet of Things (IIoT) subset is projected to reach $1.8 trillion worldwide by 2023—an almost 21 percent growth rate, per Data Bridge Market Research.
Despite this surge, the IoT sector still presents challenges to businesses new and old, Northern.tech founder and CEO Thomas Ryd recently wrote for Forbes. They must perfect a number of measures including security, safety, functionality and customer experience if they want to successfully compete in the IoT race.
Here are three considerations Ryd believes businesses should make as they enter the ever-expanding IoT market.
Plan for recurring revenue
When customers purchase software, they expect consistent updates and improvements, according to Ryd. Meeting this demand can be costly for businesses — security patches, maintenance, innovation and infrastructure can quickly minimize profits. The solution is for businesses to have some sort of revenue source attached to the software they offer. This will help offset the maintenance costs that will occur after a company sells its software product.
“Without (a revenue model), the product will fail due to security issues (missing patches) or dissatisfied customers (unmet expectations),” Ryd said.
Keep security in mind during the product design process
Supply chain attacks are the top security concern next year, according to Ryd. Additionally, Garter analysts predict that supply chain attacks will impact about half of global organizations within the next two years. As more supply chains are software-based, companies no longer have the luxury of “thinking about” bolstering their product security — it has to be done right away.
Regulations are taking the decision out of companies’ hands. The European Cyber Resilience Act requires security measures of the CE certification process, while the U.S. Cybersecurity and Infrastructure Security Agency (CISA) strongly encourages “for technology manufacturers to make their products secure as they design them.”
Develop better customer connection
In this new IoT world, selling a product to a customer and never hearing from them again is a very rare, possibly non-existent, occurrence. That is if a business wants a customer’s recurring business (and revenue), of course.
“Embracing a digital-first IoT world represents a fundamental transformation,” Ryd said. “In this transformation, companies must strengthen their connection to the customer — perhaps apparent in theory but more elusive in practice. Developing new smart products must be done with customer empathy and understanding.”
Data access is one of the main reasons working with customer empathy is so critical — and that empathy begins in the product creation stage. Businesses need customer data access for their smart products because they use that data to enact predictive measures. If customers deny a business access, their business model for that product could fail quickly. Working closely with customers early on helps ensure they will permit their data to be accessed.
Deploying a secure product is also key for customer retention. Security is a two-way street, however, according to Ryd. It’s not enough for a company to implement safety measures within their product, the customer has to consent to those measures being applied.
“Say your product requires security patches for the next n years to be applied via over-the-air updates,” Ryd said. “If your patching strategy needs open ports to function and you’re contractually obliged to update security patches, but your customer denies opening ports due to policy, sending field engineers on-site is the only option. The unexpected costs of this alternative will negatively impact your product’s ROI.”
Together, a recurring revenue stream, product security and a solid customer connection will help companies succeed in the growing IoT terrain. Failing in any one of those categories makes success much more difficult, however.
“Organizations must shift their mentality to succeed and match their smart products with revenue, security and customer empathy,” Ryd said. “As the world progresses further toward dynamic, commoditized and standardized technology, the winners will be those that understand and embed these factors into their strategy from the beginning.”
