Executives have heard of the Internet of Things (IoT), but they’re understandably suspicious of all the hype. The one question that’s on all their minds is: where’s the money? Where and how will this new technology generate meaningful economic value for the enterprise? In the absence of a clear and compelling answer to this question, there’s a lot of interest, but relatively limited investment to date in a promising technology.

Unfortunately, most technology vendors, accustomed to selling products to CIO’s, rarely focus on the overall economic impact of this technology. And business executives often focus on some particular application that’s somehow gotten their attention without assessing more systematically where the highest economic impact might be achieved.

For these reasons, it’s helpful to step back and explore some broader approaches to answering “where’s the money?” Let me suggest three helpful frameworks to explore: enterprise financial performance, enterprise process economics, and performance improvement approaches.

Enterprise financial performance is perhaps the most obvious – it focuses on the basic economic drivers of revenue, expenses, and assets. Looked at through this lens, the early investment in IoT has been heavily focused on reducing the need for incremental asset investment. The owner of a fleet of trucks, for example, can avoid purchasing more of them if IoT connectivity increases the utilization of its existing ones. Various companies have used the remote sensing capability of IoT to dramatically shorten the lead-time between equipment breakdown and repair, thereby increasing utilization of the equipment. IoT has also been used to more effectively track inventory flows and reduce the investment required in inventory. These benefits are especially powerful in asset-intensive businesses.

But, is that all there is? Improving asset productivity benefits the bottom line, but the untapped opportunities for economic impact are in finding creative ways to deploy the technology to drive top-line revenue growth and expense reduction. So far, these have received limited attention. IOT provides much richer insight into the context of how individuals and companies use products and services over time, potentially helping to identify unmet needs that could be addressed through new products and services. For example, some retailers are beginning to deploy IoT to track customer movements in their stores so that they can offer targeted promotions and suggest other products that the customer might need.

A second framework focuses on enterprise process economics and specifically, the three core processes that drive the operating performance of a company: customer life cycle, product life cycle, and facility life cycle. In each case, the questions are how much does it (the customer, product, or facility) cost to acquire or develop, how long does it remain, and what profitability does it generate for each period? Once again, the early investment in IoT has been at the somewhat prosaic level of enhancing the performance of the facility life cycle. Companies install and connect sensors to increase utilization of a facility and, through more effective monitoring of conditions, extend its useful life – and this certainly matters a lot in facility-intensive businesses like manufacturing and retailing.

But there’s a lot of potential to deploy IoT to have significant impacts on customer life cycle and product life cycle performance. For example, by monitoring product use patterns with this technology, companies can gain the insight to design new products that create even more value for the customer – enabling them to accelerate adoption of new products and lower the cost of acquiring new customers.

A third framework focuses on performance improvement approaches. As noted, IoT has been effectively used to monitor equipment and activity to spot and address unexpected conditions, like imminent equipment failure. But there’s been much less attention to the opportunity to step back and assess patterns of performance over time. Systematic analysis at that level could suggest new practices and processes that could take the business to higher levels of performance. If, for example, you were able to see that a certain kind of environment or use tended to produce higher levels of product malfunction, wouldn’t you work to understand that problem better and make modifications to increase reliability?

More generally, companies are still deploying IOT as an optimization technology – a technology that can incrementally, and perhaps even significantly, improve performance, but that leaves the core nature of the business untouched. Here’s an interesting thought: what about harnessing the potential of this technology to disrupt entire markets and industries?

The data and insight generated from IoT, if properly harnessed, has the potential to unseat incumbents if they’re not the first to realize this opportunity. In certain markets like the automobile industry, IoT might be a catalyst for shifting from ownership to sharing models of business, disrupting the economics of traditional product vendors. Insurance companies might harness IoT to identify lower-risk customers and offer these attractive prospects much lower rates, leaving the high-risk customers to competitors.

Bottom line: there’s a lot of money to be made from this promising technology for the companies that know where to look. Managers who approach the possibilities using rational frameworks – to explore ways to boost asset and process performance, and improve approaches based on a better view of products in use – are more likely to spot the best opportunities for their companies. They will target the deployment of the technology, reduce the upfront investment requirement, compress lead-times to value creation, and increase the economic impact of their forays into the Internet of Things.