Our world is undergoing through the next wave of industrial revolution by rapidly connecting people, processes, data, and things in ways that were unimaginable just a few years ago. The Internet of Things (IoT) is at the heart of this revolution. IoT revolution has arrived earlier than expected, it will grow faster than expected and in many ways that are un-expected.
So, what does IoT mean? Technically, IoT refers to the universe of intelligent products, processes and services that communicate with each other seamlessly creating ubiquitous connectivity between humans, systems and systems of systems. A new generation of these smart products and services is based on the two pillars: connectivity & intelligence and is leading towards creating new engineering experiences for collaboration between humans and machines.
Research suggests that the IoT revolution will span across industries representing two-thirds of the GDP among top 20 economies of the world. In addition to private sector, governments are also investing big time in building the IoT ecosystem globally. Indian government’s recent ‘Zero defect, Zero effect’ slogan highlights the country’s first such policy on implementing IoT. Similarly, German ‘INDUSTRIE 4.0’ initiative seems to be playing a pioneering role in revolutionizing the manufacturing sector. Smart city, smart environment, smart health, smart agriculture, smart safety, smart supply chain and smart manufacturing are the key areas of focus and potential for implementing IoT.
Realizing the real benefits of IoT – The real business imperatives arising from adoption of IoT will be operational efficiency and incremental revenue generation opportunities. For instance, manufacturers could boost their productivity by as much as 30% by introducing sensors, automation and data intelligence. Even 1% improvement results into value creation of billions of dollars in present value if computed over a longer term.
Cisco’s recent study on IoT suggests that the number of connected devices is expected to grow to 50B by 2020 leading to the economic impact of $10T globally. As a matter of fact today, there are now more people on earth that have access to a mobile phone, than have access to basic sanitation facilities. So, everyday objects with their own IP addresses may soon be the norm and these data points might be absolutely true.
The key point to ponder here is what does these 50B devices consist of? And which of these devices will actually help us in reaping the real benefits of IoT?
In my understanding through various dialogues on IoT at multiple industry events such as World Economic Forum, majority of this constitutes of smart phones, tablets, smart watches and similar handheld gadgets. Contrary to the common perception, real IoT is not merely about connecting these gadgets but connecting capital-intensive physical infrastructure or assets, such as plants, buildings, electric grids, field vehicles, pipelines, cranes, cars, etc. Until and unless large part of these assets is connected to the handheld devices, real benefits of IoT such as improved uptime, efficiency and asset utilization, cannot be achieved. While many technologies depend on consumer needs and depend on their rate of adoption, IoT will largely be governed by business use cases that will create virtuous adoption cycles across an ecosystem. A large component of adoption will be driven by data intelligence; though consumer innovation will always remain an inspiration, the true ‘driver’ of IoT, is going to be the enterprise, government agencies and institutions irrespective of the consumer manifestations of IoT.
Ecosystems & Relationships will help win the race – If the primary beneficiary of the IoT age is to be the enterprise, then the onus of driving seamless adoption also lies with it. Delivering such outcomes will require new level of partnerships, mergers and acquisitions that we may not consider as “strategic fit” today. Technology leaders such as Microsoft, Apple, Google may find themselves partnering with companies that manufacture toothbrushes, hair dryers, meters and fire alarms – to name a few. The acquisition of Nest by Google is the case in point where an individual use case product required support by a larger ecosystem.
Organizations big or small, will need to drive the technology test-beds and have to keep room within their IoT budgets to allow for rapid prototyping, use-case testing and data evaluation so that they can quickly turn the ship in case the business case falters. The focus should not be only on sensor innovation itself but on where do we deploy and how do we integrate these smart sensors with the entire ecosystem – else we risk dealing with a lot of data but very little actionable information and intelligence.
Security & Data Rights: the elephants in the room – The increased connectivity of devices will lead to increased risks. Security of ‘IoTized’ systems has already raised its ugly head. For instance, DARPA has recently demonstrated hacking a car and ‘remote controlling’ it. A key part of the IoT is not only connecting the systems and processes but also securing the umpteen data that passes back and forth.
The other big question regulators, inventors, integrators and consumers will have to flush out, will be the ownership of data. GPS tracking, user behavior tracking among others have already created privacy related headaches for large enterprises. Creating newer and more personal points of data collection can exacerbate the fear and mistrust. Question is still open, who owns the data being created?
Legal and political structures will need to collaborate with global enterprises and respond rapidly and perhaps with measured force to such situations. Enterprises will need to develop new security and interoperability frameworks that span the entire cyber physical stack, from device-level authentication to application-level security. Keeping security and data privacy concerns front and central from the planning stage itself is a critical necessity and not just a check box item.
A Chance to Lead the Wave – In the context of IT service providers, IoT presents a huge opportunity to lead by creating first and best in class IoTized solutions developed through systems integration. Business models will evolve from products to outcome-based services and 80% of the IoT revenue will be derived from the services. New software platforms will emerge that will help create, distribute and monetize these services at an unprecedented speed and scale. The big winners will be the owners and partners of these new platforms and who can harness the network effect inherent in these new business models to create new kinds of value and revenue streams.
Today we are only seeing the tip of the iceberg when thinking about the vast potential that IoT can provide to our lives in areas such as health care, safety, productivity, energy management and more. The opportunity is very big and canvas vast. The key to win lies in picking the right partners and driving the change internally and in their ecosystem. The connected world is not a distant dream. It’s already here.