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The Internet of Things: Fresh potential for businesses but with familiar pitfalls

by Andrew Stillwell , 21.08.2014

The Internet of Things (IoT) is coming, and will transform the way businesses function forever. Many organizations are still unsure exactly what the IoT is, how they’re going to take advantage of its huge apparent potential, and vitally, what new threats it poses...

A definition and a forecast

The IoT can be defined as “physical objects capable of communicating through the internet without human intervention,”(1), or anything equipped with tiny internet-connected sensors that generate actionable data.

The impact of this revolution on businesses is likely to dwarf even that of smartphones and tablets: “The installed base of ‘things,’ excluding PCs, tablets and smartphones, will grow to 26 billion units in 2020, which is almost a 30-fold increase from 0.9 billion units in 2009.”(2).

The race is on

Right now, the world’s premier technology companies are investing to ensure they’re at the cutting edge with IoT. Google has acquired Nest Labs, who produce thermostats capable of learning user behavior; Apple is rolling out wearable technology; Cisco has announced IOX, which allows IoT sensors to process information without connecting to the cloud; and mobile operators are looking to provide connectivity and management platforms. Many burgeoning tech companies are innovating in this space as they look to disrupt markets dominated by bigger competitors.

The opportunities generated by the IoT are numerous. They include internal efficiencies, cost cutting, improving customer satisfaction, and greater profitability. Industries such as healthcare, retail, transport, energy and manufacturing are already taking advantage and others are expected to follow. After all, IoT usage in internal office environments and across supply chains can benefit everyone.

IoT in action

The real-world applications for IoT are almost endless. In Manufacturing, sensors could signal central system when faults occur, saving money, raising quality and boosting customer satisfaction. Fleet Managers could benefit from telematics data to minimize costs, just as parcel courier companies already do to save time and fuel. Utility companies are also using IoT technology in the present, taking data from smart meters for analysis and instantly detecting power outages, while in Healthcare, the industry is exploring wearable patient devices to monitor vital signs and communicate directly with medical staff.

Turning awareness into readiness

While most IT professionals know the IoT is coming, and seek to take advantage, less than half say they’re actively working to prepare their business. (4) This is surprising when you consider how many were caught out by the rapid onset of BYOD (Bring Your Own Device). There are ominous similarities here. Like BYOD, the IoT will trigger a sudden increase in devices requiring a network connection. The difference is, this time the demand will be very much greater…  It’s vital businesses are prepared to meet the significant challenges presented by the IoT as they look to reap the benefits.

Security - The biggest threat to any business from the IoT is security. Hackers and malware already routinely target connected mobile devices and exponential growth in embedded connected technology offers more easy ways to gain access through company firewalls.

A key challenge will be keeping track of what’s connected to the network at any time, and protecting businesses from the risks created by these connections. There will be greater scope than ever for employees and other divisions to connect new ‘things’ without the knowledge of IT. Businesses will need to ensure central security hardware, software, and protocols are in place and that network access and data transfer is impossible to all except trusted, authenticated ‘things’.

Network capacity  - According to a study commissioned by Infoblox Inc. in the US and UK, many businesses don’t have the network capacity to handle the additional demands of numerous extra connected devices. (5) More than half of the 400 IT professionals surveyed reported that their current network was at full capacity right now.

Data centers - Inevitably the IoT will create a huge quantity of data. It will need to be secured, managed, processed and analyzed but existing data centers will not have been set-up with this workload in mind. As a result, rapid expansion may be needed to meet this challenge, and a significant growth within the data center market may follow.

IT skill gaps - Just as mobile working trends have, the IoT will place increased pressure on IT functions to support growth and expansion opportunities. This will further stretch technical and IT resources and increase the requirement for highly skilled workers in these areas. This may require process change, training, and talent recruitment to plug IT workload and skills gaps.

Increasing inequality - For small and medium sized businesses (SMBs), the IoT could create a vicious circle that will widen the inequality between them and larger enterprises. The workload/skills gap threatens to disadvantage SMBs as they have fewer technical specialists and less talent to call upon in this area, so less opportunity to seize upon economies of scale when looking at return on investment in IoT. However, the capital and resource investment required for SMBs will be much lower than for Enterprise.  Those who understand the IoT and can concentrate investment in the right areas may be able to steal a march on larger competitors while they are trying to manage the scale of the opportunity.

Prepare to prosper

Now is the time for businesses of every size to prepare for the IoT, before connected ‘things’ begin to proliferate and swamp unsuspecting networks. Beyond the pitfalls there are huge potential rewards.

Andrew Stillwell is Divisional Director in GfK Market Opportunities and Innovation. He can be contacted at andrew.stillwell@gfk.com.

1 - http://www.marketwatch.com/story/the-enterprise-is-ready-for-the-internet-of-thingsbut-57-of-networks-are-not-2014-06-30
2 - http://www.marketwatch.com/story/the-enterprise-is-ready-for-the-internet-of-thingsbut-57-of-networks-are-not-2014-06-30
3 - http://www.information-age.com/technology/mobile-and-networking/123457785/next-big-thing-preparing-internet-things-enterprise
4 - http://www.computerweekly.com/news/2240222183/IT-departments-not-preparing-for-Internet-of-Things-despite-expecting-it
5 - http://www.marketwatch.com/story/the-enterprise-is-ready-for-the-internet-of-thingsbut-57-of-networks-are-not-2014-06-30