Finding Business Value in The Internet of Things
More and more devices will be Internet-connected, driving the revolution of online data to an entirely new level. According to Forester and IDC there will be 20 - 30 billion connected devices by 2020 - while others claim up to 200 billion connected devices. It is estimated that Internet of Things (IoT) devices will generate 5 trillion gigabytes of data every year, creating revenue opportunities of more than $300 Billion for technology vendors, telecommunication providers and device makers. The total IoT opportunity is expected to exceed $1.4 trillion by 2017.
But what is Internet of Things? Today we are missing a common definition. Based on how it is described by industry thought leaders and various vendors, the closest definition that I could come up with is this:
The Internet of Things – is a network of uniquely identifiable (intelligent and non-intelligent) endpoints (i.e., objects, sensors, and devices) that record and communicate with each other as well as with other systems, to exchange near real-time information about their environments; with the goal to automate and improve processes and decision making.
Exactly how many devices will be Internet-enabled; how much data will be generated; and how big is the total opportunity, is anyone guess. But one can easily assume that there will be a lot more endpoints - 10x to 100x or even more, than what we have today. Each connected endpoint can have multiple sensors, adding up to 100s of billions of sensors.
In order to connect and collect information for all of these objects, it is reasonable to assume that current networking and communication technologies, energy requirements, security and privacy models will not be able to scale in a cost-effective and sustainable model.
To extract business value and collect meaningful information from billions of such connected IoT devices – many of which will be battery operated; deployed in different locations and communicating different types of information, following are the major areas of considerations:
- Networking and Communications
- Low Power Consumption
- Standards and Ecosystems
As we can see from the figure above, the Internet of Things is not one market but a set of overlapping markets with strong connections to data and analytics. We will discuss each of the above consideration and shifts in technologies in future articles.
Maintaining long-term ROI is key to winning in the IoT market. Managing OpEx of millions of devices is paramount for deployment, provisioning, support and maintenance. Even small improvements in any of the following areas (see figure below) can help improve ROI and ability to scale. Such improvements can create differentiation and competitive advantage in one or multiple areas, leading to the desired business outcomes.
IoT is not about simply adding features to existing devices like a talking fridge or a brilliant washing machine that detects garments inside it and starts automatically. IoT requires an approach that demands careful consideration of what features should be added - to which device, in the first place. For example, if you live in an apartment building with a shared washer and dryer, it would be tremendously helpful to know whether these appliances are currently being used and what is the best time of the day to do laundry.
IoT is transformative to both existing end points and new ones. Business value can easily be found in operating efficiencies; improving communication and security; simplifying platforms to accelerate development and time-to-market, and custom and advanced analytics to quickly extract meaningful insights and distinguish between valuable information and noise.
Many components of IoT ecosystem already exist and the key challenge for entrepreneurs and senior executives is to identify where does the value for customers lie and how to reduce cost and complexity of integrating these components into a complete solution that will offer a compelling case for customers to invest in such solutions.