The Internet of Things (IoT) revolution is here, and it’s not going anywhere anytime soon. Gartner has predicted that an estimated 25 billion connected things will be in use by 2020. According to BCG, this will mean $267 billion will be spent on IOT technologies, products and services. To put this staggering growth in another perspective, IoT sensors and devices are expected to exceed mobile phones as the largest category of connected devices in 2018.
Harnessing the power of the IoT will be crucial to future success. Sixty-five percent of 1000 global business executives surveyed say they agree that organisations that leverage IoT will have a significant advantage. But 19% still say they have never heard of it. Put yourself in a position to take advantage of the IoT with this primer on the latest trends and applications.
The current state of IoT
The Internet of Things had existed before you had probably even heard of the term. In 2008 there were already more “things” connected to the Internet than there were people. By 2015, IoT market size was up to $900 million, and this is expected to grow to $3.7 billion by 2020.
Virtually every sector has started harnessing the power of the IoT. Adoption rates vary, but significant results are being achieved in manufacturing, distribution, logistics and marketing. Currently, most “smart” devices aren’t in your home or your phone. They are in factories and offices. But smart homes will become an increasingly significant part of the industry over the next few years. It’s estimated that by 2019, 1.9 billion connected home devices totalling around $490 billion in revenue will be shipped to consumers.
Don’t be fooled into thinking the rate of growth is going to slow anytime soon. Only 0.06% of things that could be connected to the internet actually are. That means just 10 billion of the 1.5 trillion things that currently exist are connected—leaving plenty of room for new IoT innovations.
The latest trends in IoT
As adoption of IoT continues to surge, a handful of trends have begun emerging that will shape the industry in 2017 and beyond. Below are six trends you should be watching out for.
- Businesses will deliver more services: Expect services, not products, to become the main revenue streams of companies in the IoT industry. Products will become a way of introducing consumers to the broader (and more lucrative) service.
- Cities will get smarter: In the same way that smart technology is improving homes, expect smart systems such as street lights, parking machines and public transport to provide safer, more cost-effective solutions to cities.
- Voice commands will dominate: We are already seeing the popularity of Amazon’s Echo, and Google and Microsoft are also developing speech-activated virtual assistants. Expect even more focus on audio commands to occur in 2017.
- Security will improve, but so will attacks: The question of security will become more prominent as attacks on connected devices grow. Security will improve, but so will the number of data breaches.
- Smart homes will become the standard: The adoption rate of smart home technology hasn’t been substantial, but expect growth to quicken as products such as the Echo increase in popularity.
- Global corporations will dominate: Corporate giants such as Samsung, Google and Intel will dominate every aspect of the IoT, either by buying up specialised companies or through their own research departments.
The global B2B opportunity of IoT
The IoT will create the biggest opportunities for business to business applications. This is despite coverage of IoT focusing on consumer products. According to research by McKinsey Global Institute, nearly $4 trillion worth of economic value could be generated by 2025 from B2B activity (factories, offices and agriculture) alone.
B2B opportunities will also be far greater in the developing world than other aspects of IoT. Advanced nations can expect to gain over 60% of the economic impact of IoT on average. This will be even more disproportionate in some settings such as homes, where advanced economies can expect over three-quarters of the economic impact. But because most of the economies of developing countries focus on manufacturing, they will be hotbeds for IoT adoption. As a result, the benefits of IoT will be shared much more equally between advanced and developing economies.
The key benefits of IoT for leaders
As with any other form of revolutionary technology, the IoT offers a wealth of benefits for those leaders who can harness its power.
- Innovative business models: A wealth of user data will give rise to innovative new business models that have the potential to completely change market shares. It is already happening in the form of app-based transport-as-a-service providers such as Uber. As companies are better able to track how and where consumers are interacting with their products these new revenue streams will become even more proliferate.
- Optimised operations: Smart devices can learn and improve operations in a way that humans can’t. Integrated sensors will capture data that can be used to improve efficiency and predict when maintenance issues may arise.
- Improved inventory tracking and management: Smart devices will allow businesses the opportunity to completely automate inventory management; allowing staff time to focus on more demanding tasks.
- More connected remote workers: If every device in an organisation is connected to the same network, employees will be able to work remotely like never before. Tasks that previously had to be completed in person, such as machine operations, will now be possible from anywhere in the world.
Essential IoT skills
Leveraging the power of IoT requires a highly specialised and in-demand skill set. Hiring the right talent will be key to your success. But you’ll also need to cultivate your enterprise’s culture in order to remain on the cutting edge of this constantly evolving industry. Here are the essential IoT skills that you need to add to your team.
- Security engineering: The more connected your business becomes, the more at-risk you are to cyber attacks. Data breaches have become increasingly common, and consumer awareness of data security is growing every day. A talented cyber security team is crucial to protect yours and your customer’s data.
- Big data analysts: As the wealth of available data grows, data scientists are in increasingly high demand. The rate at which your company can pivot and improve will depend on how well you can analyse big data.
- Machine learning: The smarter your products and systems are, the more likely you are to succeed. Hire data scientists who can create machine learning algorithms that will help devices make predictions and take action as a result of pattern identification.
- Circuit design: Computer chip design and development will need to be adapted as smart devices gain new capabilities. Being able to create increasingly complex circuit boards more efficiently gives businesses a much-needed advantage.
Key challenges of IoT
Executives won’t be surprised to hear that this level of technological change is not without hurdles. How you react to and overcome these challenges will determine the success of your business.
To succeed on a global scale, organisations will need to completely rethink company structure and job roles. IT will no longer be a department; it will be a role that spans the entire organisation. Intra-departmental collaboration will need to be encouraged as big data connects sales, marketing and logistics more tightly than ever.
In the same way that teams will need to change how they work together, devices will also need to communicate more efficiently to realise the full benefits that IoT offers. Increased interoperability between devices has the potential to add $4 trillion to the economy. But the vast majority of “smart” devices used at the moment only communicate with the manufacturer. It’s estimated that 40-60% of the IoT’s total economic value won’t be realised until interoperability is improved.
Greater connectivity exposes businesses to extremely high risks of cyber attacks. Everyone of a business’ millions of connected devices and sensors is a potential entry point for hackers, and one attack can bring down an entire company. But it’s not just break-ins that executives need to be concerned about. Risk from the black market of fake sensors and video data could be worth more than $5 billion by 2020. Cybersecurity is currently less than 1% of the total security budget for enterprises. This will need to increase significantly in the future.
IoT has the power to transform industries and revolutionise the way businesses use data. The ability to harness IoT’s opportunities will give global leaders an enormous competitive advantage. But leaders need to cultivate the right set of skills within their team, and a data-driven mindset, to transform this opportunity into reality.