It has been dubbed the fourth industrial revolution, and for many, the arrival of the internet of things (IoT) will be one of the most disruptive technological shifts of all time.
Beyond the media hype and talk of connected fridges and household appliances that alert you when you are running out of food, the IoT is going to transform the way businesses think about their manufacturing processes and the way they manage data to make key decisions.
Because, at the very core of all of the IoT is data. As Google’s Eric Schmidt has pointed out many times, if we recorded all human communication from the dawn of time up to 2003, we would require around five billion gigabytes of storage space – the connected world now creates that much data every two days, and it is only going to grow, as the IoT gains wider adoption, particularly in the manufacturing space.
The McKinsey Global Institute recently estimated that the Internet of Things could generate $4 trillion to $11 trillion in value globally in 2025. These large numbers reflect the IoT’s transformational potential in both consumer and business-to-business applications. Technology and buzzwords come and go with the seasons, and it’s tough for businesses to try and keep up, yet, all the signs point to huge disruption, particularly in the manufacturing space, where analysts have identified tremendous opportunity for innovation and the transformation of the supply chain. But, where do you start?
In this article, we look at some of the key opportunities and threats from the IoT, as well as providing businesses with a survival guide to avoid them being left behind in the race for connected everything.
Opportunities for all
Gartner analysts forecast that 4.9 billion connected things will be in use in 2015, up 30 per cent from 2014, and will reach 25 billion by 2020. This will be especially important in manufacturing where the ability to network sensors and enable machine-to-machine (M2M) communications will transform design, production and the capability of the overall supply chain.
It is the coming together of manufacturing technology and data, but at the same time much more than that. In terms of manufacturing the IoT can act as a bridge between back-end ERP systems, supply chain management and customer facing relationship management tools. It will impact every aspect of manufacturing process and no organisation should sit on the sidelines and watch – they will simply be left behind, as others shift to more effective models.
This is not simply future gazing, either. IDC survey results show that 55 per cent of discrete manufacturers are currently researching, piloting, or in production with IoT initiatives.
The declining cost of sensors and increased accessibility to new technologies have already – and will continue to – affect all industries though, not just manufacturing.
In healthcare, although IoT hasn’t really taken off yet, the potential for devices to improve patient care is huge. Some hospitals for example are already using smart beds that can adjust to ensure appropriate support, or alert nurses when a patient is getting up. Other examples of IoT devices could be wearable devices that feedback patient data to doctors when specific care is needed.
Insurance is another interesting sector for IoT. If you think about the sheer volume of consumer devices that can be IoT enabled, insurers will need to ensure that as this trend becomes mainstream, they can deliver the appropriate digital services and add a greater granularity of data to their traditional models of insurance risk modelling.
Facing the challenges of a ‘connected everything’ world
Despite the huge potential opportunity of IoT, cynics would argue that market numbers are sheer speculation, amplified by industry analysts and self-serving tech vendors. The techno-skeptics have been out in force, which is of little surprise given the early stages of IoT adoption we are currently at. I would argue that we should use the cynicism and scepticism as a driver to make the internet of things even more effective, which is why we will consider some of the key challenges facing the technology as it moves into the mainstream and how these can be overcome.
Security and privacy: High stakes, serious consequences
Given the very notion of the technology, it’s unsurprising that security is one of the first areas businesses are considering. We’ve heard everything, from high profile instances of hackers taking control of a connected car from 10 miles away and crashing it into a ditch, through to consumer web cameras and home connected appliances being compromised by hackers, due to their networked state. In the business world, this leads to a need for much broader risk management, not just from external hacker threats but also from internal employees and poor implementation of the technology.
Addressing the issue of IoT security, Udo Helmbrecht, executive director of the European Union Agency for Network and Information Security (Enisa), said: “I can predict there will be applications which are not secure, because they are done by inexperienced people, and statistically you will then hear of more threats…It’s very cheap to have these Internet of Things sensors. You can buy for a few dollars sensors, processors, you can put it together – plug and play … What we currently see is a do-it-yourself Internet of Things. None of these people think about IT security.”
Safety is another issue. Factories may be reluctant to move to M2M processes, powered by the IoT, due to an inability to predict how these systems will stand up to the test when fully automated. Human suspicion around robotics, and technology more broadly in the workplace is typified by questions around the safety of the connected car. MIT’s Auto-ID Center Director Kevin Ashton believes rather than questioning if the machines are up to task, the question should be: “Are human-driven cars safe? The answer is no.” More than 3,000 people around the world are killed in car accidents every day, according to the Association for Safe International Road Travel , and most of these deaths are caused by human error.”
Helping to accelerate IoT through standardisation
The issue with the development of such an all-inclusive technology is standardisation and interoperability, widely recognised as two of the biggest challenges to the success of IoT. Standards bodies and consortia are important, but many fear it will be tough for companies to come together to agree on terms. Certainly a ‘better together’ approach is what is needed for IoT adoption to accelerate.
One example is the Open Fog Consortium that Dell recently joined along with ARM, Cisco, Intel, Microsoft and the Princeton University Edge Laboratory, with a common goal of reducing the time needed to deliver end-to-end IoT solutions, through the development of an open architecture.
Other consortiums we’re involved in include Industrial Internet Consortium (IIC) – a group focused on specific use cases in industrial market segments such as transport, oil and gas, industrial automation, manufacturing, etc; the Open Interconnect Consortium (OIC), formed to drive interoperability of existing networking standards; and the Thread Group which was created to find the very best way to connect and control products in the home and SMB markets.
These are just a few of the groups out there focused on standardisation, with new ones being created all the time, all helping to lead to real change and action.
However, despite the ongoing work in this area, everyone is aware that it will take a few years for standards to be fully vetted and adopted, and organisations risk getting left behind if they wait for it to happen before they get going with IoT.
Organisations should instead start small, put security first and architect with analytics in mind. Experimentation needs to happen as without this organisations will never understand the art “of the possible”.
Bridging the internal culture gap
Another challenge to IoT project success is a cultural one. IoT is where the Information Technology (IT) organisation and Operations Technology (OT) teams (think Engineering, Manufacturing and Facilities) have to bridge their differing business approaches to create a unifying platform for both sides.
The OT organisation is the one typically driving IoT initiatives. IT involvement is likely to evolve and grow over time, but they have concerns about technical fluidity, the lack of security and the inconsistent architecture. As we’ve worked alongside our partners and early adopters to develop the edge gateway, we learned that one of the useful roles we can take on for IoT is that of mediator between Operations and IT. To the IT side we want to say: IoT has put the IT into OT, so accept it as a new challenge and opportunity. For the OT folks: Adding an IP address to an OT device carries it into the oversight of the IT department, and it becomes a stakeholder.
Yet, despite these challenges, the IoT represents a tremendous opportunity for many organisations, and the benefits look set to outweigh the risks. Below, we examine a number a key areas that businesses in this sector should think about if they want to get ahead of the curve and successfully embrace the internet of things.
Security and Managing the IoT Environment: What are the risks? How will the hazards, risks and exposures affect their operations? Is there a clear strategy for what actions should be taken, such as who needs to be notified, the plans to respond and the mitigation available.
Making Decisions and Shaping Processes: How will the business apply their people, machines and vehicles to perform their operations at a profit? How can they optimise those decisions using real-time analytics? How can businesses understand the huge pool of data now at their fingertips, to make better decisions about product development, production, customer engagement and supply chain management?
Control – Analysing the Terabytes: The volume and complexity of data generated by the sensors, devices and equipment in the Internet of Things can overload traditional network infrastructure and data management and analysis tools. Not all the information generated is critical, and sending all data to the cloud or datacenter often uses up expensive bandwidth. Plus, in some cases, a real-time or near-real-time response is required, so latency is a problem as is being disconnected from the backend network. Placing an industrial-grade, intelligent gateway at the network edge allows it to integrate and normalise data from the sensors and act much like a spam-filter for the IoT network, passing only the meaningful data to the cloud, datacentre or control room.
Where to start: Key considerations
Having looked at the risks and some of the questions businesses should be asking, here are a number of key tangible steps for organisations to follow as they look to survive the world of the IoT.
Return on investment should not be a dark art with any technology investment and the IoT isn’t any different. Measure success and put a number on your IoT investments that links back to broader business requirements, such as improving product quality, reducing customer returns or driving new revenue opportunities.
- For connected products and Product-as-a service, ask how sensor information, location data, or connectivity can disrupt your product model and look at this from an execution perspective in designing, manufacturing, and servicing the connected product.
- Consider where you may need to invest on new resources and skills to make your IoT implementation more successful. It is not just established technologies, such as networking, infrastructure management and security, but also emerging areas, including big data, mobile, analytics and the cloud which must be addressed.
- Remember that nightmare when you implemented disparate ERP, SCM and CRM systems and tried to make them talk? Well, integration in the IoT world can be as equally challenging and it’s best to address this in the planning phase and understand how this will work.
- Buddy up with a partner with not only deep-rooted knowledge in the IoT, but that also has a roadmap to help you with your journey further down the line. Continued innovations in technology will mean few businesses will simply implement and stand still. This will be a disruptive evolution that will require a partner with a long-term technology outlook.
We are about to experience one of the most significant period of technological disruption ever witnessed, with monumental change for businesses of all sizes. IoT will transform the way businesses think about everyday processes and question the very values of common sense. Your companies’ ability to adapt, innovate and thrive in this ambitious new time will determine who tomorrow’s winners and laggards will be. Innovate or die.
McKinsey cautions that by the time these disruptive technologies are exerting their influence on the economy in 2025, it will be too late for businesses to plan their responses. Nobody can afford to be the last.
Dermot O’Connell, executive director and general manager of OEM, Dell EMEA
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