The Internet of Things refers to the internet-enabled network of physical objects that can connect and interact with one another. Sensors, networks, objects, and even humans can produce data that is picked up by connected devices and converted into one or more of a diverse range of actions and impulses.
They can close the gap between digital and physical, making the world ‘smart’ and lives simpler than before by automating decision-making and removing unnecessary human action. Devices can be coordinated and optimised in real-time, and the possibilities for usage are endless. Industry predictions on the total number of connected devices by 2020 range between 20 and 40 billion, and Cisco have valued the potential economic benefit of the IoT at $19 trillion over the coming decade alone.
The Internet of Things can and will have an enormous impact on businesses – from how they interact and understand their customers through to how they gather, capture, and manage their data effectively. Sensors and analytics can help businesses better know their customers and themselves, and differentiate themselves and their business model. Yet, as with many consequences of the digital age, success is reliant on data and its associated infrastructure: potential issues include data ownership, security, ethics, and standardisation of technology. The Internet of Things presents both a great challenge and an incredible opportunity for businesses to seize upon.
What does it mean for businesses?
As with the most well-known examples so far, the Internet of Things has huge potential for revolutionising how businesses interact with their customers – digitally and otherwise. By giving devices the ability to interact and make decisions depending on data received, the Internet of Things can join up previously unconnected processes and create a connected, seamless customer experience. Gathering data directly from customer action using sensors rather than slower and less reliable manual measurement ensures far higher data integrity, and can allow businesses to create an integrated business model that focusses on creating the best possible individual customer experience, as well as the ability to constantly re-evaluate and change near-instantly.
Customers can be individually measured, quantified, and catered for in a tailored manner and in return will invest their trust capital in brands that provide a relevant, differentiated service. Integration opportunities with other businesses can be identified and realised – and much more.
However, the Internet of Things is by no means a solely consumer-focussed phenomenon. Connected devices can be used to improve business process, with internal gathering of information from devices and people giving a richer degree of management information than ever before. Industrial products and processes can be harvested for data that can drive innovation, improvement, and quality assurance – an example being the use of sensors to monitor effectiveness and efficiency of water usage in agriculture.
Device and people issues can be identified, mitigated and resolved earlier than before, and process can be improved rapidly. A great example of the full-scale effect of this measurement is the use of sensors on players at various US Major League Soccer teams during training is used to build a physical profile of players, assess individual workload and performance, and provide early identification of injury risk – the data gathered influences strategy, people management, and performance quality.
Yet with all these impressive opportunities there are a number of key pressures for businesses to address. Despite the obvious wealth of “big data” that can be gathered internally and from customers, it is vital to focus on what you are gathering, and why you are gathering it. Just because data is available does not mean it is useful – data collection must be constrained to the necessary, and should be fully aligned with strategic priorities and relevant connected devices to deliver the most value. Businesses will need to align their business strategy with their IT infrastructure to identify and gather the right data, and ask the right questions of it if they are to achieve the best results.
Security concerns are also a key issue to address. Consumers are more sensitive than ever about data loss, particularly in light of recent public breaches of privacy. In giving up data to businesses, consumers invest a very fragile trust, which can be quickly and near-irreparably shattered. This threat is magnified when considering an enormous interconnected network – it is truly imperative that this is handled with the most care possible. With individual data already sufficiently possessed that Europol has predicted the first murder via IoT before 2015, it is crucial to prioritise robust cyber security and data governance.
As can be seen, the Internet of Things, and its associated connected devices, is wide-ranging beyond belief, and as a result has been seen as a somewhat nebulous buzz-word – a long-identified trend that never truly arrives. But this is not the case. With Google’s $3.2bn acquisition of home automation company Nest fresh in mind, and with technology and telecoms giants currently battling to establish a dominant standard to operate through, it is clear that the IoT’s dots are really starting to join up. There can be no doubt that the Internet of Things means business.