Should R&D or IT own Internet of Things (IoT)?


2015-04-10, 16:44 Posted by: Advisory

This is a question I hear often from my clients. Who should own IoT within the company, but for me that is the wrong question. It starts in the wrong end, because when asked people assume that things are going to stay the same and that the company will continue to have the same vertical organizations and that it will continue to deliver the same value to the same customers. Nothing could be more wrong!

For me IoT will over time change every market/industry at its core, it will be like a "new electricity". It is everywhere and touches everything. So when coming to who owns IoT there are some very important parameters that must be true:

  1. Mandate to influence the strategic direction of the company
  2. Mandate to view outside current value chain structures in the company and the market
  3. The company customers and the customer's problems the company solves define you - NOT your current product and services!
  4. Execution speed and a digital mindset where products evolve and grow over time

 

Looking at the four areas above neither of them are really something that R&D or IT shine at. Some  of the things that often are a challenge for each department are described below.

IT department

  • In many cases the IT department still have their main focus in infrastructure and deliver enterprise applications (crm, erp, office etc) at as low cost as possible. 
  • They know digital and IT from the enterprise perspective but it is not the same technology and mindset as when delivering customer functionality.
  • Execution speed and driving customer functionality has often not been a focus, instead the IT organizations are often internal service organization.

R&D

  • Digital and IT is something completely new for the R&D, not just the technology but also the processes and the digital mindset.
  • Often the R&D is organized around the current products and with a very clear value chain, digital and connectivity breaks that value chain if it is allowed to!
  • Execution speed and the ability to deliver new functionality over time are new to them

Some recommendations

I believe in that you need to start with why you exist as a company and why you connect your products, then you can look at how to organize. This must have a heavy outside in perspective where you truly must understand what the customers actually is trying to get done with your products and what their problems are around that. But this must not be a never-ending strategic project! You must get out of the building and get offerings out to customers early. So before you do the big bet (and totally restructure the company) you should enable as much as possible above in smaller contexts which has a focus on speed and the customers. Here I have seen and been involved in implementing many different approaches

  • Virtual organization with cross department manning
  • Small startup like structure reporting directly to CEO
  • Dedicated group within either R&D or IT
  • External strategic partner in collaboration with internal stakeholders

To learn more about what works and how to do it contact me!


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