An October 2013 forecast by IDC predicts that by 2020, the Internet of Things will consist of 200 billion devices in a market worth $9 trillion dollars. A May 2013 McKinsey Global Institute whitepaper forecasts several tens of trillions of economic activity around IoT by 2025. Even if they are mostly wrong, it seems appropriate for enterprise to start making sense of the business opportunities just around the corner.
The IoT Is Underway, Full Steam Ahead
Today, the nascent IoT includes industrial sensors, mobile phones, wearable devices, PCs, servers and all the networking equipment tying them together. The universe of new sensors, smart devices and the multitude of ways in which they will communicate with us and other machines, however, is far larger than contemporary experience. We are on the brink of phenomenal growth in both the number and variety of industrial and consumer-level devices that will pop into existence over the next five years.
The obstacles in the way of IoT’s growth are substantial but so are the opportunities. Besides working hard to stumble across the “next big thing” in IoT, here are four ways in which enterprises can take advantage of the expected exponential growth instigated by IoT.
Improvements to Business Efficiency
IoT adds another dimension to companies’ quest for complete business digitization. Embedded smart devices will sharpen the assessment of assets’ value to business operations. Distributed throughout a business’ supply chain, for instance, IoT will measure supplier and production efficiency and responsiveness in the face of market fluctuations. Retailers will stretch thin margins further with IoT data, including multimedia that predict buyer behavior and detect new trends.
Big Data Bigger Than Ever
The IoT is about to unleash a tsunami of data. In the storage, management, preprocessing and analysis of these data lie revenue growth opportunities for Internet infrastructure companies and software services that assist customers in extracting its latent value.
Surveys indicate that a small fraction of companies consider themselves competent at identifying and acting upon key data in current data streams, and over 90 percent of smart device data is currently discarded. The monetary potential for companies that can help other companies deconstruct, digest and deploy decision-making solutions based on this biggest of Big Data seems unbounded.
The consumer-based IoT brings an even broader diversity of devices and communication protocols than the mobile device explosion underway now. This will bring exponential growth in connectivity also. These aspects plus a larger attack surface mean the potential for digital mayhem in our personal lives is a real concern. Threats to our personal security and privacy are opportunities begging for companies who supply effective means to detect and neutralize the perils.
Some see standards as quelling innovation, but that potential is muted when there is widespread participation by stakeholders. In the case of IoT, such participation will necessarily be cross-industry if the market disruption of IoT is ever to come to fruition as many hope and some fear.
The standards opportunity for enterprises that participate early and often is that competitors will not gain unfair advantage and to ensure that one’s own technology can be accommodated. Standards are vital to end users who want assurances of device interoperability and products that adhere to policies and regulation pertaining to privacy and security.
Anyone who claims to know what IoT is all about and where it is going should be regarded with intense suspicion. Few question that it will lead to greater productivity and economic activity, but where the highest value products lie is open to interpretation. In the face of uncertainty, however, there are path for enterprises to following in seeking value from IoT:
- By inward contemplation of how IoT can create operating efficiencies in their own business including pilot programs to verify value
- Devising or revising their Big Data strategy as the IoT wave builds, regardless of whether the organization is a producer or consumer of Business Intelligence analysis
- Examining security and privacy issues closely that may affect enterprise operations, IoT product designs and customer relations
- Committed participation in IoT standards efforts in order to influence their direction and details and to engender closer collaboration with other key players
The companies that make an earnest effort to understand IoT and what it means for their operations and revenues will likely find opportunities knocking on their door. In any case, they will be in the best position to respond effectively when IoT takes sudden swerves as is inevitable with any technological disruption.