New applications being ushered by the Internet of Things (IoT) are creating incredible opportunities for companies of all types and sizes to fashion new business models. For instance, tire makers Pirelli and Michelin are embedding their tires with sensors that are allowing the two companies to collect data about vehicle performance and road conditions. This information is then passed along to drivers and to the vehicle’s telematics system as a means of improving safety and efficiency.

The distribution and use of IoT data by these tire makers represents a significant change to their existing business models. Tires sold by Pirelli and Michelin no longer represent a one-and-done transaction. Instead, tires are being sold as a set of value-added services where consumers are also able to receive information that helps them achieve better fuel economy, improve safety, receive proactive notifications about maintenance services that may be needed based on Big Data analysis, etc.

While these represent tangible examples of how IoT is introducing transformative business models for two manufacturers, there are countless ways that companies in other industries can leverage the capabilities offered by IoT data and services to spawn new business models. Auto insurance companies now offer plans that utilize data generated by car sensors to base premiums on actual driving behaviors instead of projections.

Healthcare companies are embedded sensors in medical devices used by patients that can continually transmit a patient’s condition to their physician. In fact, McKinsey Global Institute projects that these types of continuous monitoring could reduce treatment costs by 10%-to-20%.

Thanks to their horizontal view of the enterprise, the CIO can play an instrumental role in helping business leaders to identify ways in which IoT can be leveraged by the enterprise or even by specific business units to create new, value-added services for existing customers or new potential customers.

For instance, a consumer packaged goods (CPG) company may identify new uses of sensors with packaging that could be marketed to other companies in the supply chain. Commercial real estate and energy companies can create new services for commercial real estate clients where the use of sensors can help to control lighting and temperature settings.

As additional applications for using IoT continue to emerge, the CIO will also play an important role in helping the CFO and other members of the C-suite to identify the legal implications and risks associated with transmitting and using personal customer data that’s diffused by sensors and connected devices. The CIO and CSO can identify security vulnerabilities in corporate networks that are used and steps that can be taken to mitigate exposure.

Meanwhile, the CIO and CSO can also work with the CFO and the Chief Compliance Officer to evaluate regulatory requirements such as the forthcoming EU Privacy Regulations to determine what steps are needed to fulfill regulatory obligations prior to launching any IoT-driven applications and services.

Paving a roadmap into the future for the enterprise isn’t just a technology play. It requires CIOs to carefully identify and assemble all of the components that play a role – including people, processes, risk mitigation and assessment, regulatory requirements, etc.

Designing the future roadmap requires IT leaders to recognize where the business is headed – and anticipating change. “It’s about the digitization of the enterprise,” says Stephen Katsirubas, SVP & Global CIO at Crocs, Inc. in an HMG Strategy video. “We’ll continue to see the consumerization of IT in terms of leading the way for what companies will soon have to follow.”

Key Takeaways:

  • New applications being ushered by the Internet of Things (IoT) are creating incredible opportunities for companies of all types and sizes to develop new business models.
  • As additional applications for using IoT continue to emerge, the CIO will play an important role in helping the CFO and other members of the C-suite to identify the legal implications and risks associated with transmitting and using personal customer data that’s diffused by sensors and connected devices.
  • Thanks to their unique horizontal view of the enterprise, the CIO can play an instrumental role in helping business leaders to identify ways in which IoT can be leveraged to create new, value-added services for existing customers or new potential customers.