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Internet of Things: Pick the right colours of lipstick

IoT is the infrastructure for the next wave of platforms, but building ecosystems of trust and integrity is vital in order to fulfill its potential.

17 december 2018
Door: KPMG, partner

IoT is the infrastructure for the next wave of platforms, but building ecosystems of trust and integrity is vital in order to fulfill its potential.

In the 1990s, Kevin Ashton - who at that time worked for Procter & Gamble and later became a technology pioneer at MIT - puzzled over the fact that shops kept running out of a certain colour in their selection of lipsticks. He envisioned a future with lipsticks having Radio-frequency identification (RFID) tags that would indicate when certain colours would be sold out. Ashton is believed to be the first to speak of the `Internet of Things'.

A few decades later, IoT is exploding with billions of machines and appliances that are connected to the internet, ranging from thermostats and cars to fitness trackers and delivery vans. In this hyperconnected world, many managers feel they have to prepare for a tectonic shift and must jump on the IoT bandwagon fast before it's too late. Move fast and break things is the Silicon Valley mantra.

However, as with most new technological concepts, it also makes sense to step back and analyse the real value and the basic prerequisites for success.

Sangeet Choudary, a well-known expert in the field of the platform economy, offered an intriguing notion about the potential value of IoT during his visit to Dutch Transformation Forum in November. In a simplified version, it boils down to this: The current wave of powerful platforms such as Uber and Facebook has been powered by the smartphone; the next wave of platforms in many other sectors such as logistics, agriculture or banking will probably be turbo-powered by a mature IoT. In other words: IoT is the infrastructure for the next wave of platforms.

This is just one of the factors that show how important (and strategic) IoT can be for the future business model of companies. Of course, many companies have opportunities in other domains such as cost optimisation, improving customer intimacy or safety. All in all, this means that IoT not only offers potential for efficiency and effectiveness in the current business - making sure the lipstick colours are well stocked - but also leads us into a whole new domain of value creation in the emerging platform economy.

IoT also has some very obvious Achilles heels.

The complexity of IoT is unparalleled as a consequence of the sheer volume - tens of billions of devices and appliances will be connected - and the variety in data formats, communication standards and other parameters. This calls for a solid approach towards security, privacy and trust. One of the apparent dangers is cyber risk: we don't want refrigerators joining botnets that carry out cyber-attacks that may disable a wide range of appliances thereby disturbing vital processes. Prominent researchers have warned us about potential Wild West scenarios if we fail to build trusted environments. On a side note: these trusted environments are a prerequisite for platforms to succeed.

Organisations that aim for sustainable success with IoT should therefore not only have a clear strategic view on the potential, but should also warrant sound measures to build a trustworthy infrastructure.

Create value-driven opportunities

The good news: there are excellent opportunities to build ecosystems of trust and integrity and thereby to create value-driven opportunities for customers. It is all about using the right tooling, making sure that hardware is certified, building on solid and standardised network infrastructures etc. Success with IoT boils down to a combination of a well thought out strategy and a solid preparation. IoT projects therefore need a tailor-made mix of expertise in various domains, such as strategy, security, data and infrastructure. One could say that it's about picking the right colours of lipstick that suit the occasion.


Marthe Stegehuis
Consultant KPMG TP Digital Advisory

Julie de Bruijn
Consultant KPMG TP Digital Advisory

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