Joining the IoT Fray? Let the Market Be Your Guide

Don't put your organization in the wrong bucket—take heed of lessons learned in the RFID industry.
By Kevin Donahue
Apr 20, 2015

My experience in the enterprise computing industry goes back to the 1980s, when I started as an IBM mainframe systems programmer, installed and configured some of the first truly distributed client-server implementations in the early '90s, and was embedded in the explosion of the enterprise middleware industry later that decade. I've worked for Fortune 100 companies, successful startups and failed startups. I've hung out my own shingle as a consultant, and have founded a company that counts a number of systems integrators and Fortune 100 companies as customers. Over the years, I have seen evolutionary technologies serendipitously take off and revolutionary technologies fall by the wayside. The one thing that has been consistent throughout my career is that organizations make pragmatic investments in solutions that address identified business needs. They do not invest in "technology."

There is no denying that the hype about the Internet of Things (IoT) is off the charts. Consumer devices may gain the majority of press attention, but my focus is on enterprise applications. If you can see past the hype, and perhaps look in the rear-view mirror, you might notice that IoT in the enterprise is little more than a confluence of evolutionary technologies: mobile devices and sensors, ubiquitous wireless communications, cloud computing and analytics. There is not a single technological advancement that can be regarded as breakthrough IoT technology.

Most of us know that Kevin Ashton was referring to radio frequency identification when he first described an "Internet of Things." While his initial reference goes back to 1999, Wal-Mart did not put the latest iteration of RFID on the map until 2004. It was supposed to revolutionize supply chain operations and help the pharmaceutical industry address issues with counterfeit drugs. The prediction was that in the not-too-distant future, RFID labels would cost just $.05 each and would be affixed to just about everything that was sent through the retail supply chain. But the fact is that unless key customers mandated that you use RFID, you probably struggled to find a a return on investment (ROI). And more than a decade on, fully commoditized RFID labels have still not reached the mythical $.05-per-tag price.

But end users realized that while they could not find an ROI for cheap labels for supply chain operations, they could justify tags that cost $6 apiece or more to help manage high-value assets. The customer had spoken, and the market for durable and on-metal passive RFID tags took off. The most popular tags designed to manage IT and health-care assets are rapidly approaching $1 each, and sales are booming.

Here is an important observation: The companies most successful at delivering solutions that use RFID do not consider themselves RFID companies. These are businesses that deliver solutions to specific vertical markets (health care, for example) in which they combine unique subject-matter expertise with the enabling technologies most appropriate for a specific customer project. RFID is one of many enabling technologies that may be included as part of an overall solution.

In an effort to be fully buzzword-compliant, I have noticed that several RFID firms are now attempting to reposition themselves as IoT companies. Some justify this by suggesting that since Ashton was referring to RFID, they have been IoT companies all along. Wearing my enterprise hat, I respectfully disagree. In the enterprise, "things" can include anything from blade servers and mobile devices to computer numerical control (CNC) machines on a factory floor and vibration sensors on highly specialized equipment.

These "things" must be network-addressable and support standard software interfaces (such as Java APIs) and enterprise middleware platforms. You will need to have someone on your team who is conversant in a wide variety of both legacy and emerging technologies, can describe where your offerings fit in the overall scheme of an IoT implementation and can articulate your company's unique value. This goes well beyond even the most sophisticated RFID asset-tracking implementations, but it is the price of admission if you want a seat at the enterprise IoT table.

Businesses that position themselves as a latest-buzzword company run the risk of putting themselves in a box, or of waiting for the market to come to them, which is exactly what happened in the RFID industry. Instead of rebranding for the sake of rebranding, listen to the market; speak with customers and partners to develop a strong understanding of their pain points, and how they are allocating budget dollars. Take an honest assessment of your capabilities and determine how they are aligned with emerging trends. Make sure your team is prepared to have a solution-centric conversation with potential customers, and develop strategic relationships with companies offering complementary products and services.

In the late 1990s, I worked in the market for emerging Internet-based technologies. While technology vendors were targeting their solutions at the dot-coms, enterprise customers adopted the technology to build corporate intranets. That was their "killer app." Early players in the RFID industry targeted Wal-Mart's suppliers, only to find that the real opportunities existed in enterprise asset-management solutions. If history is a guide, the "killer app" for IoT has yet to be determined. Don't put yourself or your organization in the wrong bucket; take heed and let the market be your guide.

Kevin Donahue is the principle consultant at The IoT Guy and a co-founder of specialty RFID tag distributor RFID TagSource. Find more of his opinions on enterprise applications at The IoT Guy blog, or follow him on twitter at @TheIoTGuy.

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