The proliferation of connected sensors in everything from machinery to packaging is generating orders of magnitude of more data for CFOs and leadership teams. The resulting analysis doesn’t just explain their operating better – it reveals new business opportunities, too.
We’ve got used to the idea of the “value-adding CFO” whose data-driven view of the business helps identify opportunities for investment in innovation. With near-ubiquitous connected sensors – producing granular data about operations, logistics, customer interactions and product use – their analysis has become increasingly strategic.
In this era of the Internet of Things (IoT), what’s at stake isn’t just efficiency and productivity. This wealth of new data allows the complete re-imagination of the business. Today’s analytics can process the big data generated by IoT in ways that would have been impossible a few years ago.
Yet the potential from the current ecosystem is still just beginning to be understood.
Today we’re seeing smart parking spaces in Dubai, an IoT service layer that augments third-party businesses and helps them build new relationships with their customers. National Statistics is using data from smart meters to understand when people are at home to time their surveying visits.
The cloud means we can access, analyze and act on real-time data generated by IoT sensors embedded in products after they’re sold. Many businesses use this data to offer a service, rather than just sell a product. The same data, aggregated and anonymized, can be a product in its own right and if analyzed in conjunction with AI can be a gold mine to understanding peoples’ behavior and new product opportunities.
Those who use their new understanding of people’s behavior – and potential efficiencies in their own value chain – can design whole new products or services and business models. It’s compelling: IoT provides enterprises an ability to connect not with their devices, but with their customers. No wonder the World Economic Forum is predicting the number of IoT devices will exceed 20 billion by 2020.
Vehicles are set to be this decade’s big IoT breakthrough known story. Connected via the cloud, the sensors embedded in today’s cars can tell manufacturers a huge amount about their performance, help them service their customers proactively – and reveal usage patterns.
But the key to success for others will be those companies that have the people and technology to understand typical customer usage patterns for their connected devices, can identify anomalies and then have the integrated supply chain, customer service or development systems to re-imagine and execute delivery, servicing or new product design fast and efficiently.
It’s the finance team who can have the imagination to convene cloud-enabled IoT initiatives. The CFO’s position at the heart of the enterprise puts them in pole position to derive value from the IoT data revolution. It speaks to their traditional focus on risk (IoT can revolutionize liability and auditability) and cost (through productivity). More importantly, it helps them see opportunities to deliver growth from new business models.
As powerful new technologies such as IoT become mainstream, we are starting to grasp their potential for transforming how we work and create value. Over the last decade, productivity growth globally has slowed across all sectors, but CFOs can lead the next wave of prosperity, creating intelligent finance functions able to effectively seize the opportunities created by these technologies and best practices they continuously deliver.
Explore the productivity data, compiled by the OECD, for your country, in our interactive infographic.