09/30/2016 12:26 pm ET Updated Oct 01, 2017

Does Crossing the Chasm Apply to the Industrial IoT World?

According to "Crossing the Chasm," for a new technology to become "mainstream," it needs to cross the chasm, moving from the early adopters or visionaries to the early majority, or pragmatists. Yet some people wonder if this famous technology adoption/diffusion model applies to the Industrial IoT space as well, in particular, to smart energy/infrastructure.

It seems to be that in the short-term - that the "chasm-crossing" theory by Geoffrey Moore does not fit our smart energy industry too well. In the energy industry, there is currently still a massive challenge in the way of applying Moore's model - regulation. If we take a more long-term view, however, and look to the telecommunications industry, I believe that we will begin to see an energy utility industry that is increasingly becoming more consumer-driven. Just as smart phones, the Internet, and IoT communications revolutionized the telecommunications industry business models and consumer spending behaviors, I expect a similar revolution to occur in the energy infrastructure industry with consumers driving the change. In other words, in the long-term, the Smart Grid will eventually cross the chasm with prosumers leading the charge.

If the Internet of Things (IoT) is the internetworking of physical devices, vehicles, buildings, and other items -- embedded with software, sensors, and network connectivity that enable these objects to collect and exchange data, then the Industrial IoT (IIoT) is simply the industrial subset of it. Although the IIoT's potential payoff is enormous - the most conservative independent estimates place spending on the IIoT worldwide at $500 billion by 2020 - the IIoT is a major trend with significant implications and cautions compared to its "consumer IoT" counterpart. Some implications and cautions include platform fragmentation and a lack of industry standards, privacy, autonomy and control, security, and environmental sustainability impact, which all lead to more stringent regulations, particularly in the energy industry.

The preliminary signs of such a revolution, however, are still visibly underway in certain parts of the country. For example, New York's Governor Andrew Cuomo has asked his public state commission and chairman of energy and finance, Richard Kauffman, to fundamentally shift utility regulation to meet the needs of a more distributed, consumer-focused energy system. In fact, according to one recent Gartner research report, "Top 10 Trends Shaping the Energy Industry in 2016," technology innovation and new consumer engagement models are already beginning to disrupt the energy sector, forcing regulators and industry leaders alike to explore new regulatory frameworks and business models for more sustainable energy provisioning. Smart technologies are at the heart of this energy industry revolution.

Here is a proposed 3-step process to help the energy industry and their consumers to more readily "cross the chasm":

Step 1: Modernize Infrastructure & Improving Operations

It may be easy to overlook the importance of modernizing existing power infrastructure, but the bottom line is that we cannot rebuild our power grid from scratch. We have to rely on intelligent technologies to improve the systems we have in place, improve power quality and security, and enable consumers to have a role in their power usage. All technologies from field automation devices to software integration to planning services provide energy providers with unprecedented levels of control over their operations through both improved hardware and digital technologies.

Step 2: Enhance Efficiency & Cost Savings

Focusing on digital technology drives efficiencies across an energy provider's business by increasing the opportunity to integrate new renewable generation and distributed energies into their system. More importantly, intelligent management of grid assets can drive significant value through operational efficiencies.

Step 3: Business Transformation Services for More Value-Added Consumer Services

The value to an energy provider goes far beyond basic operational enhancements or efficiency, ultimately leading to major change to the business value for the energy provider, typically reflected in the form of new products and services that are outside of the traditional business model.

One way the industry can "cross the chasm" is to make Smart Energy and the IIoT more mainstream. Instead of talking about kilowatt hours, the energy industry must explain to consumers and regulators how a smart meter will empower them to better manage their energy usage. Instead of talking about power interruptions, explain how the applications of smart technology will help the industry safely and quickly restore power during outages, with the resulting economic savings. Instead of talking about demand response or energy efficiency, explain in plain everyday language how smart technology is enabling consumers to become "prosumers" (consumers and producers of electricity) with their solar panels and electric vehicles.

As an industry, we are in the midst of an once-in-a-lifetime transformation - to transition our energy infrastructure from the 20th to the 21st century and "cross the chasm." To do this right, we must get ahead of the challenges, be agile, and embrace the opportunities.

Sonita Lontoh is Vice President of Strategic Marketing at Siemens Digital Grid.