Are SMBs missing out on the Internet of Things?

Small and midrange businesses (SMBs) are considered to be the backbone of the European economy. They make up nearly 99 percent of business enterprises in the European Union, employ more than two thirds of employees, and account for more than half of the EU’s gross value added. Yet they have so far played only a minor role in digitalization.

Small and flexible with short decision-making routes, SMBs should be predestined to take digitalization forward. The reality, however, is different. In Germany, 61 percent of CEOs feel they are driven rather than drivers, according to the Digital Business Readiness study conducted by IT consultants Crisp Research. In many other European countries the situation is much the same.

 

The key drivers are, for one, increasingly individual customer needs and, for another, market constellation changes. So far, however, the pressure does not appear to have been strong enough – because at more than half of German SMBs a digitalization strategy exists, at best, on paper.

 

Digitalization promises competitive edge

 

Yet the digitalization of in-house corporate processes is seen as a crucial measure to ensure long-term competitiveness in the world market. Digitalize your business processes and you will enjoy clear competitive advantages today. So why wait? The Experton Group has looked into this question and found that for many companies going into digitalization is mainly a matter of resources and knowledge.

 

The self-assessment by SMBs that they lack sufficient financial resources is a prejudice that M2M and IoT providers regularly encounter in discussions with customers. Yet the fact is that falling sensor and module prices and low-cost mobile data connections have made solutions increasingly affordable in recent years. Costs are frequently geared solely to the number of devices connected. So SMBs can afford to test digitalization without high levels of investment and additional risks.

 

The challenge of growing complexity

 

Implementing and operating M2M solutions has also required a high level of specialized knowledge. The more M2M solutions find their way into daily business, the more complicated they are to administer. How is an SMB that in some cases may not even have an IT department of its own to ensure that its devices are configured uniformly and use the latest software? And how is it to connect measurements taken by different devices and to integrate them into its existing corporate IT? These questions have frequently gone unanswered.

 

Today, cloud-based M2M and IoT platforms provide a tried and tested solution to this dilemma. Their advantage is that they standardize the central functions of M2M applications and transfer them to application-independent development and administration platforms. Ready-made functions for all of the typical aspects of an M2M application make it among other things easier to take an inventory of devices, to evaluate data and to manage alarms. That makes it much easier for small and midrange enterprises to use M2M and IoT solutions extensively.

 

Economic advantages amount to trillions

 

The McKinsey Global Institute’s latest report, entitled The Internet of Things: Mapping the value beyond the hype, identifies in addition to these challenges IT security and data protection as action areas. They, however, require integrated solutions. If manufacturers and users collaborate closely on them it can be worthwhile. The McKinsey consultants expect the global economic benefits of the Internet of Things to total up to $11.1 trillion a year from 2025.

Tags: small and midrange businesses , smbs , smb , Internet of Things , Machine-to-Machine , M2M , IOT , digitalization

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