By Stuart R. Levine
Published In, The Credit Union Times

The “Internet of Things” can bring remarkable benefits as well as substantial challenges to today’s ever-changing business environment. No industry will remain untouched, as physical assets are equipped with sensors to create interconnected electronic network systems that record, process and transmit information. McKinsey Global Institute estimates IoT will produce $11.1 trillion annually in global economic value.

Business-to-business transactions are projected to generate upwards of $5 trillion in global GDP as manufacturing, agriculture, energy and real estate industries incorporate IoT advancements. IoT can optimize operations as electronically tagged and interconnected sensors are embedded into equipment and products throughout the manufacturing, inventory and supply chain. These smart networks can track production, performance, and location of physical goods. New business lines emerge as hard asset providers integrate hardware, software and services. Industrial machinery suppliers move into providing services as well by applying in depth knowledge of how assets function across an industry. They can assist customers to operate more efficiently than they could by themselves. Product development incorporates service development as value is co-created with customers.

In healthcare, interconnected monitors, devices, computers and other equipment will help to inform medical choices and business decisions. The full cycle of the patient experience will be tracked ever more meticulously, from pre-intake through care provision and thorough analysis of patient outcomes. Ultimately, such integration should dramatically reduce the tremendous downside risk in wrong treatments, medicines or even advice.

Aging populations in the developed world are expected to rely even more on IoT. Look to Japan where 25% of the population is 65 or older versus 15% in the US. Just 1.6 working-age Japanese support each senior or child under 15. By 2050, the ratio is projected to decrease to 1 to 1. Japan had a ratio of 2:1, the current US level, in the rapidly expanding 1980s. In Japan, innovative technology uses such as robotics, artificial intelligence and aspects of IoT are being employed to help serve the elderly.

Unlocking the vast benefits of IoT brings challenges as well. Any “silo” approach spells failure. The CEO must ensure a culture of collaboration incorporating data technology functions across the enterprise. The Chief Information Officer must have constructive working relationships with the senior leadership team. The CIO and IT managers must integrate into more comprehensive areas of the business. These analytics experts and data scientists must connect to senior decision makers and frontline managers to optimize insights from voluminous data sets. The CIO and Chief Marketing Officer become partners with the CEO to capitalize upon data-driven customer knowledge. Information mining can stimulate innovation and allow the organization to embrace change faster, developing service-oriented products that reflect the customer voice. IT becomes a communications center, not a cost center, using data to better serve the organization and its customers.

The most valuable people in today’s organizations possess strong technical, analytical, communication and leadership skills. Therefore, technical professionals must be great communicators and ever more business savvy, while managers outside of IT must adeptly use technology. A culture of focused continuous learning enables leaders to become both high-tech and high-touch.

Traditional organizational roles will be even more challenged, as managers incorporate technologies that are new. Senior management will have even more reliance on the tech savvy generation, who themselves must develop into effective leaders. In the world of Big Data, information replaces instinct in decision-making. Moreover, as AI continues to improve, management will incorporate artificial intelligence into decision-making.

Data does not speak for itself. Leaders must understand the information, extract the relevant actionable insights from it and communicate these insights effectively and strategically. Despite the potential value, often information generated by IoT sensors are underutilized or worse yet, ignored.

Importantly, a reliance on interconnected technology creates massive cybersecurity risks. Greater interconnectivity means more points of vulnerability and larger system failures in the event of a breach. Malicious hackers, for example, can cause life-threatening problems in the case of healthcare. A learning culture integrates sensitivity to cyber-risk into the organization’s DNA.

The convergence of operations technology and information technology presents new and expanding market opportunities, but the right organizational culture must be in place for it to work. Core values of cooperation and continuous learning are essential. These values can guide the vital alignment of your people. The resulting win-win environment allows you to attract and retain the smartest people, who will enable IoT technology to serve your organization and your customers.