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What an energy sector use case teaches us about getting digital transformation right

TBR has kept a close eye on the energy sector as macroeconomic pressures have forced adoption of digital solutions to problems as old as oil itself. As the business of providing digital transformation services has evolved, TBR has increasingly seen use cases proving substantive, transformative change for companies not in the news or in every emerging technologies presentation. PwC provided TBR a deeper dive on one particular use case, which pulls together those two strands and serves as a useful marker for the present moment in digital transformation.

Show me how I can shrink my inventory using data and analytics

For an oil field services company, PwC deployed elements of its Supply Chain Opportunity and Optimization Platform (SCOOP) offering, including analytics and visualization tools. The company, an existing finance, tax and IT services client, admitted to having “no visibility” into its inventory, making it a perfect case for PwC’s Supply Chain and Data & Analytics practice offerings. By delivering prescriptive analytics across a single product line stored in more than 200 warehouses globally, through a visualization tool that “sold the project,” PwC identified opportunities for the client to reduce inventory by approximately 20% and reduce associated costs by as much as 5%.

Change management determines everything

In debriefing TBR, PwC shared some additional insights into what made the project a success — with success in part defined by the client’s decision to replicate the analytics-based approach across additional product lines. First, PwC baked change management into the engagement, declaring that “managing the change is part of everything we do.” While TBR has heard similar assertions around the criticality of change management in digital transformation engagements, PwC brought forward a few new elements, including a redefinition of the client’s operating model based on the talent the client would need to have on hand to gain the most benefit from PwC’s SCOOP solution. PwC planned upfront for the client’s talent needs and ensured the business model implications would minimize downstream efforts to train client personnel.

In addition, PwC considered the client’s needs to demonstrate success internally — to justify the costs, ensure additional investments, and keep the project funded and viable — and said simply that “change management includes showing that [the PwC solution] is working.” This marks a subtle shift of KPIs from measuring clients’ satisfaction with the consultancy to serving as part of internal change management. Pulling the various strands together, PwC noted that change management can be the most complex element in an engagement: “Training, communications, implementation, coaching, building the metrics, and ensuring changed behavior” all determine whether a project takes four weeks or more than 12 to go from visualization to full-on implementation.

Graphic for TBR's Management Consulting Benchmark

The IoT market continues to stabilize, with the overall market growing at a moderate accelerating CAGR of 24.8%

4Q18 Commercial Internet of Things Market Forecast infographic

TBR projects total commercial Internet of Things (IoT) market revenue will increase from $456.1 billion in 2019 to $1.4 trillion in 2024, a CAGR of 24.8%.

Topics covered in TBR’s Commercial IoT Market Forecast 2019-2024 include deeper examinations, such as trends, drivers and inhibitors of the seven technology segments we track (e.g., cloud services, IT services, ICT infrastructure, and connectivity), the 10 vertical groupings we cover (e.g., public sector, healthcare, manufacturing and logistics), and four geographies (i.e., APAC, EMEA, North America and Latin America).

In addition to a more in-depth examination of the aforementioned topics, we also delve into the rise of “bundles” and “packaged solutions,” and how vendor partnering is lowering cost of sales for IoT implementations.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

The IoT market continues to stabilize, with the overall market growing at a moderate accelerating CAGR of 24.8%

TBR projects total commercial Internet of Things (IoT) market revenue will increase from $456.1 billion in 2019 to $1.4 trillion in 2024, a CAGR of 24.8%.

It is important to remember that IoT is a technique for applying technology components, not a technology itself, which leads to certain drivers and inhibitors. Because it is a technique, IoT has an unlimited shelf life. Vendors that invest now and solidify their IoT go-to-market strategy will benefit in the long run. Methods for connecting equipment and solutioning may evolve, but the overarching technique is not going away. However, IoT growth is limited by the components and solutioning that compose the technique, including capabilities, standards and cost. This leads the numerous submarkets and sub-technologies of the IoT ecosystem to experience varied growth.

IoT revenue will accelerate as technological capabilities and standards mature and common solutions appear, culminating in lower cost and complexity.

Graph showing commercial iot market forecast alternative market performance scenarios 2019-2024

TBR believes an emerging growth accelerator is the fact that IoT offerings have evolved from the initial DIY stage to easily integrated components to component kits to, finally, almost complete solutions. At each point in this evolution, IoT becomes less expensive, less burdensome and less risky to customers, while still delivering business benefits. This greatly broadens the market, resulting in market growth and revenue growth for vendors that participate in this evolution.

However, customers remain concerned with the cost of IoT solutions, including the expense associated with transmitting, processing and storing data. The amount of data stored increases as IoT projects remain in operation, and a thoughtful data collection and storage policy is key to maintaining positive ROI.