The Internet of Things (IoT) is an obscure sounding name for any collective technology, even in an industry sector where jargon and buzzwords are common.
To give a brief overview, the Internet of Things refers to a “collective of internet-connected consumer devices, manufacturing systems, business tools, customer service appliances, medical equipment, agricultural sensors and other things.”
Many of us are now somewhat familiar with the term in the consumer space, but it has plenty of business applications too. The market is set to boom, with analysts at IDC predicting that it will be worth a whopping $7.1 trillion (£4.5tn) by 2020, up from $1.9 trillion (£1.2tn) in 2013.
So what benefit does IoT offer to businesses? And are they ready for it, given that many enterprises are traditionally slow to respond to technological advances.
Certainly it seems that many of the well-known technology vendors around the globe are responding to this fast- growing industry niche; recently Samsung, Intel and Dell announced the launch of an IoT consortium, for example.
It is inevitable that enterprises do not yet see how the IoT can be applied to business, as is the case with many disruptive technologies.
However, the beauty of the IoT is in its many applications, which range from connected homes in the consumer market to data processing in the enterprise market.
IoT is, for businesses, just a means to an end. The adoption of the technology is useful for gaining competitive advantage as organizations utilizing IoT data will have the ability to make more informed and faster decisions than others.
To help organisations achieve this, IoT allows devices to connect and transmit data such as log files, for example. This data can be used to improve business processes by combining technologies such as big data solutions and predictive analytics solutions.
This then means that data from a variety of sources can be correlated and analyzed in order to detect data patterns or trends even in real time or close to real time. New “digital” business models will emerge for those companies which are adopting IoT, and taking advantage of it.
Other applications include:
- Connected advertising and marketing, where it is believed that the technology will see a lot of movement. In fact, Cisco, for example, believes that marketing will be in one of the top three IoT applications, alongside smart factories and telecommuting support systems.
- Batch processing of machine data – the data produced in the modern, connected world is increasingly valuable and the company that seeks to use this data to make smarter business decisions will be the most innovative and thus, successful.
- Manufacturing – processes such as production lines can be managed effectively by internet-connected devices.
- Smart cities – these are already becoming a reality and almost every aspect of a city’s day-to-day running can be managed by smart technology, such as power, waste, travel, parking, traffic management and much more.
- Predictive Maintenance – IoT can be used in real time to both monitor and diagnose equipment so that it can be serviced before costly breakdowns and outages occur.
These are just a small selection of how IoT can be used in a business and government (local or national) environment. However, as mentioned previously, it is necessary for enterprises and organizations to adopt these technologies quickly if they are to make the most of them.
This is especially true when it comes to the cloud. The technology has now matured as organizations have come to recognize the many benefits that the cloud affords, such as:
- No large, upfront capital investment – cloud models tend to be paid monthly
- Easily integrates the various data streams and provides a secure central repository to safely store and process data
- Flexibility to scale up on-demand as the number of devices and amount of data grows
So from the beginning, organisations should be looking at employing a cloud based platforms when it comes to data analysis from IoT devices.
Businesses Slow to Respond
According to a 2013 study carried out by the Massachusetts Institute of Technology (MIT), while 78 per cent of those questioned said that response to digital transformations was critical to their organizations, 63 per cent said that change was too slow to come about.
This appears to be due to a lack of vision at board level, which essentially means that there is a lack of understanding on how much disruptive technologies and the failure to adopt them can affect the bottom line.
A good illustration of this could be said to be the cloud, which despite being around for decades has only really begun to experience any real traction in business within the last couple of years.
Now, it is thought that the technology is increasingly important to board-level executives, with a 2013 study by IBM finding that its strategic importance was poised to double from 34 per cent to 72 per cent.
Whether we will see a similar pattern form with regards to the IoT remains to be seen. However, the value of the market itself and its value to business cannot be emphasised enough.
As Microsoft points out in its whitepaper Creating the Internet of Your Things, authored by Barb Edson, perhaps one of the issues that business leaders have is often due to conflicting information, which always tends to surround newer technology.
“We know that there are many conflicting messages in the marketplace about the massive scale and potential of the Internet of Things, so it is no wonders many companies are uncertain about implementing an IoT strategy,” the paper points out.
This however is actually not that surprising given the market is still at a fairly early stage. A 2013 survey conducted by The Economist revealed that 95 per cent of C-suite executives expect their company to be using the IoT in three years’ time.
Moreover, 63 per cent of all respondents believed that companies slow to integrate the IoT will fall behind the competition.
Addressing the IoT Confusion
With this in mind, companies must seek to understand the value that the IoT represents as well as how developing a sound strategy looks to unlock the potential of the technology.
A good starting point might be to consider the devices which are currently used within the business and how they can be utilized to enable better business processes.
“Simply put, these connected ‘things’ are producing large amounts of information. By tapping into those data streams and connecting them to the cloud and back-end systems, organisations can optimize business processes, make more informed decisions, identify new revenue opportunities, and understand and predict customer and partner behaviors in ways they couldn’t imagine before,” Barb Edson says.
He goes on to say that “data is mission critical” to business, and it is this, along with the extensive opportunity that IoT offers, which companies and leaders have to get their heads around.
The confusion surrounding any disruptive technologies does always seem to be a constant barrier to adoption and so business leaders would do well to better educate themselves on every new technology that comes along which promises to deliver a more streamlined, innovative and agile environment.
The Digitalization of Business
There is no doubt that those companies that prepare for and implement new digital technologies reap the benefits.
Digitally established companies:
- Enjoy 9 per cent higher turnover
- Are 26 per cent more profitable
- Have a 12 per cent higher company value
These are figures that all business would of course wish to achieve, but in order to do so they must become aware of the need for a sound digital strategy and seek to discover which aspects of the business would benefit from the implementation of technologies such as IoT, Big Data, the cloud and others.
However, such a fundamental change initiative must come from the top. Currently, it is clear that many CEOs are not putting enough emphasis on digital transformation and so in essence, are ultimately harming the bottom line of the business.
This means appointing an executive who can take care of digital transformation and has a solid understanding of where it can be applied within the business to effect the most valuable change.
Of course, in this regard it is also useful to appoint someone that possesses a solid understanding of the technologies themselves, IoT and others, in order to be able to properly implement transformation and increase productivity and new lines of business or business models.
In order to bridge the gap between IT, Strategy and Marketing and drive transformation, the role of the “chief digital officer” has been introduced and is becoming more and more popular.
With this in mind, there’s an urgent requirement in many organizations to link the CIO and CMO role activities as they begin to see more of an overlap in an increasingly digital world.
It should be the job of the Chief Digital Officer to moderate and steer this convergence, as well as to support and assist the CEO during the process.
IoT is going to have a big impact on customer expectations in terms of both real-time interactions and applications, which will become the de facto standard.
The pressure for organizations to speed up their Go-2-Market activities and subsequent processes, such as ordering, billing, deployment or logistics, for instance, will further increase. Those failing or slow to adopt run a severe risk of not being able to satisfy customer requirements.
This will of course result in a loss of market share for those organizations which are slow to respond, meaning that they will be forced to fight for their very existence.