The technical details of what’s underneath the Internet of Things (edge devices, communications protocols, data aggregation, etc.) aren’t likely top-of-mind for practitioners who deal with invoices, payments, and other finance-related items on a day-to-day basis. What’s important is the impact that IoT is having on business in general. Along with IoT comes a new wave of service-based businesses, many of which rely on subscriptions as the foundation of their revenue streams.
We all have connected devices, from our phones to our cars to our homes (and perhaps even our appliances). The same applies to businesses, where not just computers but previously “dumb” machinery like manufacturing equipment and HVAC systems are increasingly able to monitor their own condition and report back to an outside service for error-detection and management. For every object, there are one or more things that can be monitored: heat, humidity, sun exposure, structural integrity, etc. And for each condition that can be monitored, there’s a potential service to alert owners to those conditions — or even to proactively address conditions that are reliable predictors of future problems.
IoT In Focus
The question for finance practitioners is: how are those services delivered, measured, and billed? On the AR side, it’s a matter of ensuring that we’re accurately invoicing customers based on their chosen subscriptions, usage, etc. On the AP side, there’s the possibility of bringing the complexity of telecommunications invoices to a larger array of spend categories. This is an evolving area where there are more questions than answers. What’s certain, however, is that it will be a very active source of conversation (and perhaps required specialization) in the coming years.