2015 will be remembered as the year of the Internet of
things. The tipping point when IoT went from the back
rooms of the technology world to become mainstream.
The consultancy McKinsey
estimates that the Internet of Things - a world where up to 50 billion things (or devices) will be
connected to the Internet – could create up to $11 trillion per year of new
economic value to business and society. The
term Internet of Things traces its origins to 1999, but it is only over the
last year or so that the realization of its transformational potential has
reached the business community and the general population. The number of research reports, conferences
and media articles devoted to the topic has exploded. With the media making the connection between
the smart home and the connected automobile IOT has begun to become part of the
popular parlance. In fact, a Google
search for Internet of Things reveals 725 billion results.
Google Trends also reveals
that 2014 and 2015 were pivotal years in the dawn of the IoT revolution, as
evidenced by the explosion in the number of IOT related searches. Over the past two years there have been big
announcements from all of the major car manufacturers of their connected car
initiatives, lots of M&A activity in the technology industry as they race
to supply the revolution, and major global alliances of telecom providers being
formed, to provide the underlying connectivity and infrastructure. But, most of all, we are actually starting to
see some of the promised transformational benefits of the Internet of Things
becoming a reality.
Companies like GE have
connected sensors to their jet engines to provide near real-time monitoring of
the health of their engines, reducing airline spending by 10-40%. In shifting from rules-based maintenance to
more predictive driven intervention, GE has fundamentally shifted its business
from one of selling jet engines to airlines to providing a comprehensive,
engine-as-a-service offering. Using GPS
and vehicle monitoring sensors many utility companies are now able to more
accurately monitor the performance of installation and repair personnel. General Motors uses sensors to monitor humidity
to optimize painting; if the conditions are unfavorable, the work is routed to
another part of the factory, thereby reducing repainting and maximizing plant
uptime.
The oil and gas industry is
probably one of the most advanced users of IoT technology with new production
platforms containing more than 30,000 sensors, connected through a
sophisticated central control and data management systems. IoT is also creeping into our everyday lives,
with home security, thermostats and monitoring connected to data analytics and
all controlled through our smart phones.
With an estimated 130 million consumers worldwide using fitness trackers
today, the reality of more efficient, and personal effective health care is starting
to become a reality.
It is not just businesses
that are reaping the benefits of the IoT revolution. Cities around the globe are
beginning to build out new digital services such as smart lighting, traffic,
waste management and data analytics to reduce costs, tap new sources of
revenue, create new innovation business districts and improve the overall quality
of urban life. Real-time bus information is now available in New York City,
Chicago, Singapore, and many other cities, significantly improving, not only
the wait times for riders, but the operations of the transit authority. Similarly, by using real-time data to adjust
the timing of traffic lights to improve traffic flow Abu Dhabi has been able to
speed traffic flow in the city by up to 25 percent.
Telecom companies have
realized that the IoT revolution holds for them the promise of new found
revenues in connecting the projected 50 billion things. The number of cellular machine-to-machine connections grew
28 percent in 2014 and is estimated to reach to 1 billion connections annually
by 2020. AT&T reported that it has
more than 22 million IoT devices connected to its network. Recognizing the huge opportunity afforded by
the IoT revolution, the large French telecom operator Orange recently announced
that €600 million ($670 million) of its revenues will come from the Internet of
Things related businesses by 2018. Leading
technology companies like Cisco, IBM and Ericsson have all realized the
opportunities of the next technology revolution by creating IoT business units,
new product lines and extensive marketing campaigns. Industry analysts, consultants and other
technology services companies have similarly organized to benefit from the
Internet of Things.
The
dawn of the IoT revolution may have begun but it will still be some time before
its transformational powers will be fully felt.
There are a number of technical, business, regulatory and perception
obstacles that must first be overcome. We
are still very much in the early days of the IoE revolution with many companies
knowing that they need to do something but not sure, what or how.
Recent
Cisco research of enterprise IT and business decision makers revealed that
their top 3 challenges with implementing IoT initiatives in their businesses
were: 1) security of business data; 2) standardization of IoT infrastructure
and compatibility with business systems; and, 3) cost of implementation. The critical issues of security and data
privacy are critical elements that are being addresses, but we still have a
long way to go to allay these justified fears around IoT implementations. Equally, there are organizations and
committees that are working hard on establishing IoT standards to ensure
compatibility between all of the different IoT components.
The
current IoT technology and solutions environment is very much a Tower of Babel
when it comes to interoperability and compatibility. Government regulation will no doubt play an
important part in shaping security and privacy, driving standards and forming
the legal framework for such leading-edge innovations as self-driving cars and
autonomous machinery. The IoT supplier
market is currently very fragmented with a multitude of big and small companies
providing single pieces of the IoT implementation – devices, application, point
solutions, different platforms, etc.
Now
that the Internet of Things has gone mainstream these challenges will be
resolved and IoT will become a fact of life for businesses and society
alike. In fact, one day IoT will cease
to exist. In the future, it will be hard
to imagine that all things weren’t connected and that the extraordinary
benefits of IoT hadn’t always been with us.
I
welcome the Internet of Things to 2016 and beyond. I can’t wait to see how this new technology
revolution continues to transform our lives.
